-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NaE6S7LOcnrP5tdTXaJAe/9mqI7mGBt4Cd/bBFXymhS1azcQRta7A1v9njxM5P9u N9VPOYRe9AicLFThQ88Cuw== 0000898080-95-000028.txt : 19950607 0000898080-95-000028.hdr.sgml : 19950607 ACCESSION NUMBER: 0000898080-95-000028 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19950606 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST UTILITIES CENTRAL INDEX KEY: 0000072741 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042147929 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-08507 FILM NUMBER: 95545290 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01090-0010 BUSINESS PHONE: 2036655000 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 POS AMC 1 POST EFFECTIVE AMENDMENT File No. 70-8507 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________ POST-EFFECTIVE AMENDMENT NO. 1 TO FORM U-1 APPLICATION AND DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ____________________________________________________ NORTHEAST UTILITIES 174 Brush Hill Avenue West Springfield, Massachusetts 01089 CHARTER OAK ENERGY, INC. COE DEVELOPMENT CORPORATION 107 Seldon Street Berlin, CT 06037-1616 ____________________________________________________ (Name of company filing this statement and address of principal executive offices) NORTHEAST UTILITIES _____________________________________ (Name of top registered holding company parent of each applicant or declarant) Jeffrey C. Miller, Esq. Assistant General Counsel NORTHEAST UTILITIES SERVICE COMPANY P.O. Box 270 Hartford, Connecticut 06140-0270 ________________________________________ (Name and address of agent for service) The Commission is requested to mail copies of all orders, notices and communications to: Mark Malaspina, Esq. William S. Lamb, Esq. Charter Oak Energy, Inc. LeBoeuf, Lamb, Greene & MacRae P.O. Box 270 L.L.P. Hartford, CT 06140-0270 125 W. 55th Street New York, New York 10019-4513 Northeast Utilities ("NU"), West Springfield, Massachusetts, a registered holding company, and its wholly owned subsidiaries, Charter Oak Energy, Inc. ("Charter Oak") and COE Development Corporation ("COE Development"), both located in Berlin, Connecticut, (collectively, the "Applicants") hereby file this Post-Effective Amendment Number One to their Application and Declaration on Form U-1 (HCAR 26213; File No. 70-8507) (the "Amendment") under Sections 6(a), 7, 9(a), 10, 12(b), 32 and 33 of the Public Utility Holding Company Act of 1935 (the "Act") and Rules 45 and 53 thereunder, for the purpose of obtaining a modification of the authority previously granted to the Applicants in the Securities and Exchange Commission's (the "Commission") order dated December 30, 1994 (HCAR 26213; File No. 70-8507) (the "December 1994 Order") to set the aggregate amount that NU is authorized to invest in Charter Oak, Charter Oak is authorized to invest in COE Development and Charter Oak and COE Development are authorized to spend on authorized power development activities, at $400 million for the period from January 1, 1995 through December 31, 1996. The Applicants also wish to clarify certain issues involving their existing authority to make loans to unaffiliated developers and other matters. The Applicants have also clarified their existing quarterly reporting obligations. Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS A. Description of Charter Oak Pursuant to the December 1994 Order, Charter Oak and COE Development, either independently or through participation in joint ventures, are presently authorized to pursue preliminary development activities with regard to investment and participation in QFs throughout the United States, independent power production facilities that would constitute a part of NU's "integrated public utility system" within the meaning of Section 2(a)(29)(A) of the Act ("Qualified IPPs"), EWGs and FUCOs and to provide consulting services to such projects. Charter Oak and COE Development may invest in QFs and Qualified IPPs after obtaining Commission approval and may invest in, and finance the acquisition of, EWGs and FUCOs without prior Commission approval ("Exempt Projects") subject to certain limitations. In addition, the Applicants also have authority to issue guarantees and assume the liabilities of subsidiary companies for pre-development activities, and contingent liabilities subsequent to operation with regard to Exempt Projects. The Applicants also have been authorized to acquire interests in, finance the acquisition, and hold the securities of, one or more companies ("Intermediate Companies") engaged directly or indirectly and exclusively in the business of acquiring interests in, holding the securities and financing the acquisition of one or more EWGs and/or FUCOs without filing specific project applications with the Commission. The Applicants are authorized to issue guarantees and assume liabilities subsequent to operation with regard to such projects. Intermediate Companies may effect adjustments in their ownership interests in Exempt Projects. Intermediate Companies as well as the Applicants are also authorized to participate in joint ventures that are in the business of owning and developing Exempt Projects. The Applicants may liquidate, dissolve or sell any Intermediate Company within 45 days after the Applicants determine that the purpose for owning such Intermediate Company no longer exists. The current authorization permits NU to invest, and Charter Oak to spend, up to an aggregate amount of $200 million for the period from January 1, 1995 through December 31, 1996 to finance these activities, subject to certain restrictions. Prior to January 1, 1995, the Applicants had invested $32 million in authorized activities leading to an existing aggregate funding authorization of $232 million. Specifically, NU's investment in Charter Oak, and Charter Oak's investment in COE Development, Exempt Projects or Intermediate Companies may take the form of acquisitions of common stock, capital contributions, open account advances, and/or subordinated loans (collectively, "Investments"). Open account advances or subordinated loans bearing interest do so at a rate based on NU's cost of funds in effect on the date of issue, but in no case in excess of the prime rate at a bank designated by NU. Charter Oak may also obtain debt financing from unaffiliated third parties, anticipated to be banks, insurance companies, and other institutional investors ("Debt Financing"), as long as the total of all Investments together with any Debt Financing does not exceed the total funding authorization of Charter Oak. The Debt Financing which Charter Oak may obtain pursuant to this authorization may not exceed a term of 15 years or bear a floating interest rate in excess of 6.5% over the then applicable prime rate (the "Applicable Prime Rate") at a U.S. money center bank to be designated by NU. Similarly, any Debt Financing backed by NU's guarantee is limited to a term of 15 years and will have an interest rate not to exceed 6.5% over the Applicable Prime Rate. Charter Oak may also pay commitment and other fees not to exceed 25 basis point per annum on the total amount of the Debt Financing. ____________________ Since the Debt Financing is included within the total funding authorization for Charter Oak, any guarantee by NU is not counted towards the total funding authorization limitation. The Applicants' authority with regard to the issuance of guarantees and assumptions of liability is also subject to limitations. Guarantees and assumptions of liability made for projects requiring prior Commission approval are presently limited to preliminary development activities and, absent additional Commission approval, may not involve guarantees relating to construction financing or permanent financing. The total value of guarantees and assumptions of liability with regard to projects requiring prior Commission approval issued pursuant to existing authority and outstanding at any time may not presently exceed $20 million. The term of any such guarantee or assumption of liability may not exceed five years. Until such time as there is no possibility of a claim against Charter Oak or NU, the full contingent amount of any guarantees or assumptions of liabilities count as part of the authorized development activities limit. The full contingent amount of guarantees and assumptions of liability made for preliminary development activities as well as development activities for Exempt Projects also count as part of the authorized development activities limit requested herein. The guarantees and assumptions of liability relating to Exempt Projects are not, however, subject to any other specific dollar limit except the overall authorized development activities limit. In addition, pursuant to the December 1994 Order, Intermediate Companies are authorized to acquire interests in Exempt Projects through the issuance of equity securities and debt securities, with or without recourse to the Applicants, to third parties, subject to certain limitations. The aggregate principal amount of debt securities issued by Intermediate Companies to persons other than the Applicants may not exceed $600 million at any one time outstanding. Within the $600 ____________________ To the extent that Intermediate Companies issue guarantees of financial obligations of any other company in connection with their authorized activities, the full contingent amount of any such guarantees would be considered as outstanding indebtedness for purposes of this limitation. million authorization, the aggregate principal amount of recourse debt may not exceed $150 million at any one time outstanding, provided that no more than $100 million principal amount of such debt securities at any time outstanding may be denominated in currencies other than U.S. dollars, and the respective limitation for non-recourse debt securities may be not more than $600 million outstanding at any one time and not more than $400 million denominated in currencies other than U.S. dollars, provided that in any case in which the Applicants directly or indirectly own less than all of the equity interest of an Intermediate Company, only that portion of the recourse or non- recourse indebtedness of such Intermediate Company equal to the Applicants' equity ownership percentage shall be included for purposes of the foregoing limitations. Although the amount and type of securities issued by Intermediate Companies, and the terms thereof, including (in the case of any indebtedness) interest rate, maturity, prepayment or redemption privileges, and the forms of any collateral security granted with respect thereto, are negotiated on a case by case basis, no equity security having a stated par value may be issued or sold by an Intermediate Company for a consideration that is less than such par value; and any note, bond or other evidence of indebtedness issued or sold by any Intermediate Company will mature not later than 30 years from the date of issuance thereof, and will bear interest at a rate not to exceed the following: (1) if such note, bond or other indebtedness is U.S. dollar denominated, at a fixed rate not to exceed 6.5% over the yield to maturity on an actively traded, non-callable, U.S. Treasury Note having a maturity equal to the average life of such note, bond or other indebtedness ("Applicable Treasury Rate"), or at a floating rate not to exceed 6.5% over the Applicable Prime Rate; and (2) if such note, bond or other indebtedness is denominated in the currency of a country other than the United States, at a fixed or floating rate which, when adjusted (i.e., reduced) for the excess, if any, of the prevailing rate of inflation in such country over the then prevailing rate of inflation in the United States, as reported in official indices published by such country and the United States government, would be equivalent to a rate on a U.S. dollar denominated borrowing of identical average life that does not exceed 10% over the Applicable Treasury Rate, as the case may be. Charter Oak has also been granted authority for itself and its subsidiaries to make loans (on either a recourse or non- recourse basis) to unaffiliated developers of Authorized Power Projects as part of its financing of the acquisition of interests in such projects. Such loans shall count against the overall funding authorization. Finally, authority has been given for Charter Oak employees (who are employees of Northeast Utilities Service Company) or other NU Service Company employees (collectively, "Service Company Employees") to provide a de minimis amount of services to affiliated Intermediate Companies, EWGs (both foreign and domestic) and FUCOs, subject to certain limitations. Unless otherwise authorized by the Commission or expressly permitted under the Act, the total number of Service Company Employees engaged in rendering such services may exceed, in the aggregate, 0.5% of the total NU holding company system's employees and no more than 1% of the total of Service Company Employees at any one time. In addition, unless otherwise authorized by the Commission or expressly permitted under the Act, the provision of services to affiliated domestic EWGs and Intermediate Companies will be made at cost pursuant to Section 13(b) of the Act. The Applicants may provide such services at market rates to affiliated foreign EWGs, Foreign Intermediate Companies and FUCOs, which are companies that do not derive, directly or indirectly, any material part of their income from sources within the United States and are not public-utility companies operating in the United States. B. Request for Modification of Authorization Regarding Investments and Expenditures NU and Charter Oak would like the Commission to modify the present financing structure between NU and Charter Oak to increase Charter Oak's funding authorization to $400 million for the two year period from January 1, 1995 through December 31, 1996. By utilizing up to $400 million in funding over the next two years, NU and Charter Oak will be able to make the necessary equity investments in authorized projects while maintaining their present level of involvement in preliminary development, development and administrative activities. NU and Charter Oak are seeking to increase the investment and spending limit to $400 million over the two year period, based on Charter Oak's revised projection that its 1995-96 administrative, pre-development, development and equity investment expenses will be approximately $283 million. The remainder may be used for financial guarantees as authorized. (A revised statement of estimated expenditures for 1995-96 is attached as Exhibit H-1.) Accordingly, NU and Charter Oak request authorization to increase the limitation on NU's investment in Charter Oak and Charter Oak's authorized investment in COE Development, and Charter Oak's and COE Development's expenditures over the two year period, to $400 million from the $200 million presently authorized. As in the previous authorization, NU's investment in Charter Oak, and Charter Oak's investment in COE Development, Exempt Projects or Intermediate Companies may take the form of acquisitions of common stock, capital contributions, open account advances, and/or subordinated loans. Open account advances or subordinated loans bearing interest will do so at a rate based on NU's cost of funds in effect on the date of issue, but in no case in excess of the prime rate at a bank designated by NU. Any investment by NU or Charter Oak in the equity securities of Charter Oak, COE Development, Intermediate Companies or Exempt Projects that have a stated par value will be in an amount equal or greater to such value. The Applicants also request modification of the permissible terms of commitment and other fees that Charter Oak may pay in connection with Debt Financing such that they may not exceed 50 basis points per annum on the total amount of Debt Financing. At March 31, 1995, the NU system's consolidated total capitalization, stockholders' equity and retained earnings were $6,913,254,000, $2,346,980,000 and $978,001,000, respectively. The funding authorization sought herein is for up to $400 million over the two year period. This could result in the investment of up to $432 million in the aggregate by the Applicants through December 31, 1996, which as a percentage of the NU system's consolidated total capitalization, stockholders' equity and retained earnings at March 31, 1995 would be 6.2%, 18.3% and 43.9%, respectively. As previously noted, NU has already invested approximately $32 million in Charter Oak to date. Charter Oak currently has $2.3 million invested in one qualifying cogeneration facility in Texas, approximately $6.6 million invested in a foreign utility company in the United Kingdom and approximately $9 million in a FUCO project under construction in Argentina. The balance of NU's investment on Charter Oak ($14.1 million) is largely represented by capitalized or written down development costs. It should be noted that only investments in and financings related to Exempt Projects and Intermediate Companies would be made pursuant to the requested general authority and all other investments and financings would be submitted to the Commission for prior approval. C. Clarification of Existing Authority In order to clarify the extent and nature of their authority to make loans to unaffiliated developers of Exempt Projects, the Applicants hereby amend and restate the third paragraph of Section D of Item 1 of their Application and Declaration on Form U-1 as follows: Charter Oak also requests authority for itself and its subsidiaries to make loans (on either a recourse or non-recourse basis), to unaffiliated developers of Exempt Projects, or with specific authorization, of QFs and Qualified IPPs as part of its financing of the acquisition of interests in such projects. The developer of an Exempt Project or a QF or Qualified IPP frequently receives a right to purchase an interest at a reduced price in that project as part of its compensation. Charter Oak believes it will benefit from the opportunity to become involved in such projects through loans to such developers the proceeds of which are used to purchase the developer's interest in the project. These loans will enable Charter Oak and its subsidiaries to develop their business relationships with such developers and the other participants in the projects, to become involved with the project itself through the developer and, potentially, to acquire an equity interest in the project from the developer. The term of such loans shall not exceed 15 years nor shall such loans bear interest at a rate in excess of the quarterly interest rate equivalent to the prime rate at Citibank N.A. If Charter Oak (or its subsidiaries) makes any loan to such a developer, the full outstanding amount of such loans shall count against the overall two-year $400 million funding authorization for Charter Oak. The Applicants also wish to clarify that Intermediate Companies may be engaged, directly or indirectly, and exclusively in the business of acquiring interests in, holding the securities and financing the acquisition of Exempt Projects and in project development activities relating to the acquisition of such interests and securities in the underlying Exempt Projects. Intermediate Companies may issue guarantees and assume liabilities in connection with such activities subject to the terms and conditions specified above with respect to Intermediate Companies incurring recourse and non-recourse indebtedness. D. Retained Earnings Tests of Rule 53(a)(1) and 53(b)(2) As described above, this Application requests approval for up to $400 million in investments by the NU system in Intermediate Companies, Exempt Projects and certain other independent power projects for the two year period from January 1, 1995 through December 31, 1996. Pursuant to the request the maximum aggregate investment in EWGs, FUCOs and Intermediate Companies by the NU system, would be no more than $432 million, which is below fifty percent of the NU system's consolidated retained earnings as of March 31, 1995. This level of investment meets the criteria set forth in Sections 32 and 33 of the Act and Rule 53(a)(1). In addition, because the average consolidated retained earnings of the NU system have not decreased by 10 percent in the most recent four quarterly periods as compared to the four previous quarterly periods, the Applicants are not excluded under Rule 53(b)(2) from the safe harbor. E. Bankruptcy Exclusion of Rule 53(b)(1) Neither the Applicants nor any other members of the NU registered holding company system have been the subject of a bankruptcy or similar filing while a part of the NU system. Public Service Company of New Hampshire entered into bankruptcy proceedings before it was acquired by Northeast Utilities in June, 1992. Public Service Company of New Hampshire's plan of reorganization was confirmed by the bankruptcy court on April 20, 1990. F. Operating Loss Limitations of Rule 53(b)(3) Although the companies in the U.K. in which Charter Oak invested had losses attributable to operations in the fiscal year 1994, they did not exceed 5 percent of NU's consolidated retained earnings. The Applicants presently do not have investments in any other operational EWGs, FUCOs or Intermediate Companies. The Paris, Texas qualifying cogeneration facility, in which Charter Oak has an interest, did not report losses attributable to operations during 1994. Accordingly, the present investments of the Applicants in EWGs, FUCOs and Intermediate Companies as well as other power projects do not present a risk of substantial adverse impact as described in Sections 32 and 33 of the Act and Rule 53. G. Compliance with Safe Harbor Provisions The Applicants will acquire an interest in, finance the acquisition and hold the securities of an EWG, FUCO or an Intermediate Company as authorized by an order pursuant to this request only if the following two conditions are met: (i) the investment is within the $400 million authorization for the two year period, and (ii) the investment satisfies the criteria in Rule 53(a)(1)-(4) and (b)(1)-(3) or any rules promulgated under Section 33 of the Act concerning the acquisition of interests in FUCOs. H. Maintenance of Books and Records Charter Oak will continue to comply with Rule 53(a)(2) and any future rules concerning the acquisition of interests in FUCOs with regard to the maintenance of books and records in connection with investments in EWGs, FUCOs or Intermediate Companies authorized by this Application. I. Reporting of Activities Charter Oak will continue to file a report with the Commission within sixty days of the end of each of the first three calendar quarters. Each report will include: (1) a description of the Exempt Project including, but not limited to, the type, location, size/capacity, amount of investment in, and percentage and form of ownership; (2) a balance sheet as of the relevant quarterly reporting date; (3) a quarterly income statement; (4) a breakdown of the amounts of recourse and non- recourse debt securities issued to third parties by Intermediate Companies; (5) a statement of the applicable regulatory status of any facility that is eligible for exemption as a public-utility under the Act; and (6) information on intercompany service transactions involving affiliated Intermediate Companies, EWGs and FUCOs, including (a) the name of each associate company providing services, (b) a listing of services provided, (c) the total dollar amount of services provided, broken down by associate company, and (d) the aggregate outstanding amount, as of the relevant quarterly reporting date, of all guarantees issued by or for the account of Charter Oak or any of its subsidiary companies formed pursuant to this application- declaration. Such report will also provide in reasonable detail (pursuant to a confidential exhibit, if so requested) terms (including interest rate and maturity and the basis for inflation adjustment in the case of non-recourse indebtedness denominated in any currency other than U.S. dollars) of securities issued by any Intermediate Company to third persons. Furthermore, Charter Oak Energy, Inc. hereby agrees to file with the Commission, on or before May 1 of each year, an annual report of its activities for the preceding calendar year using, where applicable, the Form U-13-60 reporting format as defined in Rule 94. Item 2. FEES, COMMISSIONS AND EXPENSES The fees, commissions and expenses of NU and Charter Oak expected to be paid or incurred, directly or indirectly, in connection with this Amendment are estimated as follows: Commission filing fee relating to Application on Form U-1 . . . . . . . . . . . . N/A Legal fees and expenses . . . . . . . $ 4,000 Miscellaneous related expenses (such as telephone, courier and travel) . . . . . . . . . . . . 1,000 Total . . . . . . . . . . . . $ 5,000 Item 3. APPLICABLE STATUTORY PROVISIONS Sections 6(a), 7, 9(a), 10, 12(b), 32 and 33 and Rules 45 and 53 are applicable to the Applicant's request for modification if their financing authorization. Item 4. REGULATORY APPROVAL No commission, other than this Commission, has jurisdiction over any of the proposed transactions described in this Application. Pursuant to Rule 53(a)(4), the Applicants will file this Application with the Connecticut Department of Public Utility Control, the Massachusetts Department of Public Utilities and the New Hampshire Public Utilities Commission. Item 5. PROCEDURE It is requested that the Commission issue and publish no later than June 9, 1995 the requisite notice under Rule 23 with respect to the filing of this Application, such notice to specify a date not later than July 3, 1995 as the date after which an order granting and permitting this Application to become effective may be entered by the Commission and that the Commission enter not later than July 7, 1995 an appropriate order granting and permitting this Amendment to become effective. Applicants respectfully request that appropriate and timely action be taken by the Commission in this matter. Applicants hereby waive any recommended decision by a hearing officer or by any other responsible officer of the Commission and waive the 30-day waiting period between issuance of the Commission's order and the date on which it is to become effective, since it is desired that the Commission's order, when issued, become effective forthwith. Applicants hereby consent that the Office of Public Utility Regulation within the Division of Investment Management may assist in the preparation of the Commission's decision and/or order unless the Office opposes the transactions covered by this Application. Item 6. EXHIBITS AND FINANCIAL STATEMENTS a) Exhibits F-1 Opinion of Counsel G-1 Proposed Form of Notice H-1 Charter Oak Energy, Inc. 1995-96 Estimated Expenditures b) Financial Statements 1.1 Balance Sheet Actual and Pro Forma - NU (parent only), as of March 31, 1995 1.2 Statement of Income Actual and Pro Forma - NU (parent only), as of March 31, 1995 2.1 Balance Sheet Actual and Pro Forma - Charter Oak consolidated, as of March 31, 1995 2.2 Statement of Income Actual and Pro Forma - Charter Oak consolidated, as of March 31, 1995 3.1 Balance Sheet Actual and Pro Forma - COE Development, as of March 31, 1995 3.2 Statement of Income Actual and Pro Forma - COE Development, as of March 31, 1995 4.1 Balance Sheet Actual and Pro Forma - NU consolidated, as of March 31, 1995 4.2 Statement of Income Actual and Pro Forma - NU consolidated, as of March 31, 1995 Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS None of the matters that are the subject of this Application involve a "major federal action" nor do they "significantly affect the quality of the human environment" as those terms are used in section 102(2)(C) of the National Environmental Policy Act. None of the transactions that are the subject of this Application will result in changes in the operation of the Applicants that will have an impact on the environment. The Applicants are not aware of any federal agency which has prepared or is preparing an environmental impact statement with respect to the transactions which are the subject of this Application. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Amendment to be signed on their behalf by the undersigned thereunto duly authorized. NORTHEAST UTILITIES CHARTER OAK ENERGY, INC. COE DEVELOPMENT CORPORATION By: /s/ ___________________________________ William S. Lamb LeBoeuf, Lamb, Greene & MacRae L.L.P. A Limited Liability Partnership Including Professional Corporations 125 W. 55th Street New York, NY 10019-4513 Attorney for Northeast Utilities, Charter Oak Energy, Inc. and COE Development Corporation Date: June 6, 1995 EX-5 2 OPINION Exhibit F-1 Jeffrey C. Miller Selden Street Berlin, Connecticut 06037 June 2, 1995 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 10549 Gentlemen: As Assistant General Counsel of Northeast Utilities' (NU) subsidiary, Northeast Utilities Service Company (NUSCO), I have acted as counsel to NU, and as counsel to its subsidiaries Charter Oak Energy, Inc. (Charter Oak) and COE Development Corporation (COE Development), with respect to the Application/ Declaration, as heretofore amended, and Post-Effective Amendment No. 1 thereto (collectively, the Application) on Form U-1 to the Securities and Exchange Commission in File No. 70-8507, seeking, among other things, an increase in the funding for, Charter Oak and COE Development. I am furnishing this opinion to you in connection with the Application. As counsel for NU, Charter Oak and COE Development in this matter, I am generally familiar with the nature and character of the businesses of Charter Oak and COE Development. I am a member of the bar of New York. I am not a member of the bar of the Commonwealth of Massachusetts, the state in which NU is organized, nor am I a member of the bar of the State of Connecticut, the state in which Charter Oak and COE Development are incorporated, and I do not hold myself out as an expert in the laws of such states, although I have made a study of such laws and am associated with and have consulted with other counsel to NUSCO who are expert in such laws. For purposes of this opinion, I have relied on advice from counsel employed by NUSCO, who are members of the bar of the Commonwealth of Massachusetts and of the State of Connecticut. In connection with this opinion, I have examined or caused to be examined the Commissions' orders dated May 17, 1989 (HCA Rel. No. 35-24893), January 28, 1992 (HCA Rel. No. 35- 25461), October 16, 1992 (HCA Rel. No. 35-25655), December 29, 1992 (HCA Rel. No. 35-25721), December 30, 1992 (HCA Rel. No. 35- 25726), September 24, 1993 (HCA Rel. No. 35-25891), January 24, 1994 (HCA Rel. No. 35-25977), September 2, 1994 (HCA Rel. No. 35- 26116), September 30, 1994 (HCA Rel. No. 35-26134) and December 30, 1994 (HCA Rel. No. 35-26213), the Application and the various exhibits thereto, the minutes of various meetings of the Board of Trustees of NU and the Boards of Directors of Charter Oak and COE Development, the laws of the Commonwealth of Massachusetts and the State of Connecticut, the certificates of incorporation and by-laws of COE Development and Charter Oak and such other documents as I deem necessary for the purpose of this opinion. I assume that the Board of Trustees of NU, the Boards of Directors of Charter Oak and COE Development and the officials and other representatives of NU, Charter Oak and COE Development will take all further corporate action necessary to authorize and implement certain of the transactions contemplated by the Application. I also assume that the Securities and Exchange Commission will issue an order under the Public Utility Holding Company Act of 1935 as requested in the Application, and that all actions taken thereafter will be in conformity with such order. Based on the foregoing, I am of the opinion that: A. All state laws applicable to the transactions described in the Application have been complied with; B. Charter Oak and COE Development are validly organized and duly existing; C. When issued and sold as described in the Application, any common stock of Charter Oak, of COE Development and of intermediate subsidiary companies of Charter Oak, ("Intermediate Companies") issued and sold in accordance with the Commission's authorization of the transactions contemplated by the Application, will be validly issued, fully paid, and non- assessable, and the holders thereof will be entitled to the rights and privileges appertaining thereto set forth in the corporate documents defining such rights and privileges; D. When acquired as described in the Application, NU will legally acquire any common stock and other security of Charter Oak issued and sold in accordance with the Commission's authorization of the transactions contemplated by the Application, and Charter Oak will legally acquire any common stock and other security of COE Development or of Intermediate Companies issued and sold in accordance with the Commission's authorization of transactions contemplated by the Application and Charter Oak, COE Development and Intermediate Companies will legally acquire any common stock and other security of unaffiliated developers of QFs, Exempt Projects or Qualified IPPs issued and sold in accordance with the Commission's authorization of the transactions contemplated by the Application; E. When issued as described in the Application, any evidence of indebtedness issued by Charter Oak or by Intermediate Companies to non-affiliates, and any NU guarantee in respect thereof, will be valid and binding obligations of Charter Oak, or the Intermediate Company and NU, respectively, in accordance with their terms, subject to laws of general application with respect to rights and remedies of creditors and subject to equitable principles; F. When NU shall have received any necessary consents of certain lenders as to certain transactions described in the Application, the consummation of the proposed transactions as described in the Application will not violate the legal rights of any holders of securities issued by NU, Charter Oak, COE Development, or any other existing NU subsidiary company. I hereby consent to the use of this opinion in connection with the filing of the Application. Very truly yours, /s/ Jeffrey C. Miller EX-99.1 3 NOTICE SECURITIES AND EXCHANGE COMMISSION (Release No. 35- ) Filing Under the Public Utility Holding Company Act of 1935 ______________, 1995 Northeast Utilities, Charter Oak Energy, Inc. and COE Development Corporation (70-8507) Northeast Utilities ("NU"), 174 Brush Hill Avenue, West Springfield, Massachusetts 01089, a registered holding company, and its wholly owned subsidiaries, Charter Oak Energy, Inc. ("Charter Oak") and COE Development Corporation ("COE Development"), both located at 107 Seldon Street, Berlin, Connecticut 06037, (collectively, the "Applicants") have filed a Post-Effective Amendment to their Application and Declaration on Form U-1 under Sections 6(a), 7, 9(a), 10, 12(b), 32 and 33 of the Public Utility Holding Company Act of 1935 (the "Act") and Rules 45 and 53 thereunder, for the purpose of obtaining a modification of the authority previously granted to the Applicants in the Securities and Exchange Commission's (the "Commission") order dated December 30, 1994 (HCAR. 26213; File No. 70-8507) (the "December 1994 Order"). The Applicants are seeking to modify this authority to set the aggregate amount that NU is authorized to invest in Charter Oak, Charter Oak is authorized to invest in COE Development and Charter Oak and COE Development are authorized to spend on authorized power development activities, at $400 million for the period from January 1, 1995 through December 31, 1996. Pursuant to the December 1994 Order, Charter Oak and COE Development are presently authorized to pursue preliminary development activities with regard to investment and participation in QFs throughout the United States and independent power production facilities that would constitute a part of NU's "integrated public utility system" within the meaning of Section 2(a)(29)(A) of the Act ("Qualified IPPs") and to provide consulting services to such projects. Charter Oak and COE Development may invest in QFs and Qualified IPPs after obtaining Commission approval and may invest in, and finance the acquisition of, EWGs and FUCOs subject to certain limitations ("Exempt Projects"). In addition, the Applicants have authority to issue guarantees and assume the liabilities of subsidiary companies for pre-development activities, and for both pre- development and contingent liabilities subsequent to operation with regard to Exempt Projects, subject to certain restrictions. The Applicants also have been authorized to acquire interests in, finance the acquisition, and hold the securities, of one or more companies ("Intermediate Companies") engaged directly or indirectly and exclusively in the business of holding the securities of one or more EWGs and/or FUCOs and in project development activities relating to the acquisition of such interests and securities in the underlying projects, without filing specific project applications with the Commission, and to issue guarantees and assume liabilities subsequent to operation with regard to those projects. Intermediate Companies may effect adjustments in their ownership interests in Exempt Projects. Intermediate Companies as well as the Applicants are also authorized to participate in joint ventures that are in the business of owning and developing Exempt Projects. The Applicants may liquidate, dissolve or sell any Intermediate Company within 45 days after the Applicants determine that the purpose for owning such Intermediate Company no longer exists. In addition, Intermediate Companies are authorized to acquire interests in Exempt Projects through the issuance of equity securities and debt securities, with or without recourse to the Applicants, to third parties, subject to certain limitations and to issue guarantees and assume the liabilities in connection with such activities, subject to certain terms and conditions. Charter Oak has also been granted authority for itself and its subsidiaries to make loans (on either a recourse or non- recourse basis) to unaffiliated developers of Authorized Power Projects as part of its financing of the acquisition of interests in such projects. Such loans shall count against the overall funding authorization of the Applicants. Finally, authority has been given for Charter Oak employees (who are employees of Northeast Utilities Service Company) or other NU Service Company employees (collectively, "Service Company Employees") to provide a de minimis amount of services to affiliated Intermediate Companies, EWGs (both foreign and domestic) and FUCOs, subject to certain limitations. The current authorization permits NU to invest, and Charter Oak to spend, up to an aggregate amount of $200 million from January 1, 1995 through December 31, 1996 to finance these activities, subject to certain restrictions. Prior to January 1, 1995, the Applicants had invested $32 million is authorized activities, leading to an existing funding authorization of $232 million in the aggregate. The Applicants are requesting authorization to increase the limitation on NU's investment in Charter Oak and Charter Oak's authorized investment in COE Development, and Charter Oak's and COE Developments expenditures to $400 million over the two- year period from January 1, 1995 through December 31, 1996, for an aggregate funding authorization of $432 million. By utilizing up to $400 million in funding over the next two years, the Applicants state that they will be able to maintain their present level of involvement in preliminary development, development and administrative activities and make the necessary equity investments. The Applicants are seeking to increase the investment and spending limit to $400 million for the two year period based on Charter Oak's revised projection that its 1995-96 administrative, pre-development and development expenses alone (excluding guarantees) will be approximately $283 million. Both the debt financing and the guarantee by NU of such debt financing authorized by an order pursuant to this request will not exceed a term of 15 years or bear an interest rate in excess of 6.5% over the then applicable prime rate at a U.S. money center bank designated by NU. The Applicants are also requesting modification of the permissible terms of commitment and other fees payable by Charter Oak in connection with Debt Financing such that they may not exceed 50 basis points per annum on the total amount of the Debt Financing instead of the 25 basis points currently authorized. For the Commission, by the Division of Investment Management, pursuant to delegated authority. EX-99.2 4 ESTIMATED EXPENDITURES Exhibit H-1 Estimate of Expenditures for Charter Oak Energy and Subsidiaries for 1995 and 1996 in ($000) Development Cost Equity Total ________________ ______ _____ 1995 17,000 160,000 177,000 1996 16,000 90,000 106,000 ______ _______ _______ TOTAL $33,000 $250,000 $283,000 Amount Available for Guarantees = $117,000 EX-99.3 5 BALANCE SHEET (NU) NORTHEAST UTILITIES (PARENT) BALANCE SHEET AS OF MARCH 31, 1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION ASSETS OTHER PROPERTY AND INVESTMENTS: INVESTMENTS IN SUBSIDIARY COMPANIES, AT EQUITY $2,666,887 $2,666,887 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 25,996 25,996 OTHER, AT COST 257 257 ---------- ---------- ---------- TOTAL OTHER PROPERTY & INVESTMENTS 2,693,140 0 2,693,140 CURRENT ASSETS: CASH AND SPECIAL DEPOSITS 41 400,000(a) 400,041 NOTES RECEIVABLE FROM AFFILIATED CO'S 2,225 2,225 NOTES AND ACCOUNTS RECEIVABLES 0 0 ACCOUNTS RECEIVABLE FROM AFFILIATED CO'S 907 907 PREPAYMENTS 187 187 ---------- ---------- ---------- TOTAL CURRENT ASSETS 3,360 400,000 403,360 ---------- ---------- ---------- DEFERRED CHARGES: ACCUMULATED DEFERRED INCOME TAXES 8,008 8,008 UNAMORTIZED DEBT EXPENSE 25 25 OTHER 22 22 ---------- ---------- ---------- TOTAL DEFERRED CHARGES 8,055 0 8,055 ---------- ---------- ---------- TOTAL ASSETS $2,704,555 $400,000 $3,104,555 ---------- ---------- ---------- CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $671,052 $671,052 CAPITAL SURPLUS, PAID IN 907,165 907,165 DEFERRED BENEFIT PLAN - ESOP (209,238) (209,238) RETAINED EARNINGS 978,001 (23,400) 954,601 ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER'S EQUITY 2,346,980 (23,400) 2,323,580 LONG-TERM DEBT, NET 218,000 218,000 ---------- ---------- ---------- TOTAL CAPITALIZATION 2,564,980 (23,400) 2,541,580 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 95,000 400,000 (a) 495,000 ACCOUNTS PAYABLE 10,198 10,198 ACCOUNTS PAYABLE TO AFFILIATED COMPANIES 1,485 1,485 CURRENT PORTION OF LONG-TERM DEBT 12,000 12,000 ACCRUED TAXES 5,128 (12,600)(c) (7,472) ACCRUED INTEREST 5,880 36,000 (b) 41,880 OTHER 9,443 9,443 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 139,134 423,400 562,534 DEFERRED CREDITS: OTHER 441 441 ---------- ---------- ---------- TOTAL DEFERRED CREDITS 441 0 441 ---------- ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $2,704,555 $400,000 $3,104,555 ---------- ---------- ---------- DEBIT CREDIT (a) CASH $400,000 NOTES PAYABLE $400,000 To record the additional proposed borrowing up to the full $400 million requested. This is illustative only since short term debt authoritation would not allow borowing of this amount. (b) OTHER INTEREST EXPENSE 36,000 ACCRUED INTEREST 36,000 To record the interest expense on the additional proposed borrowing at Prime: $400,000 x 9.00% = 36,000 (c) ACCRUED TAXES 12,600 FEDERAL AND STATE INCOME TAX EXPENSE 12,600 To record the reduction in Federal and State income taxes due to the higher interest and fee expenses: $36,000 x 35.00% = 12,600 EX-99.4 6 STATEMENT OF INCOME (NU) NORTHEAST UTILITIES (PARENT) INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION OPERATING REVENUE $0 $0 $0 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION EXPENSE 12,327 12,327 FEDERAL AND STATE INCOME TAXES (11,017) (12,600)(b) (23,617) TAXES OTHER THAN INCOME TAXES 33 33 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 1,343 (12,600) (11,257) ---------- ---------- ---------- OPERATING INCOME (1,343) 12,600 11,257 ---------- ---------- ---------- OTHER INCOME: EQUITY IN EARNINGS OF SUBSIDIARIES 300,218 300,218 EQUITY IN EARNINGS OF TRANSMISSION COMPANIES 3,360 3,360 OTHER, NET 326 326 ---------- ---------- ---------- OTHER INCOME, NET 303,904 0 303,904 ---------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 302,561 12,600 315,161 ---------- ---------- ---------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 20,279 20,279 OTHER INTEREST 5,012 36,000 (a) 41,012 ---------- ---------- ---------- TOTAL INTEREST CHARGES 25,291 36,000 61,291 ---------- ---------- ---------- NET INCOME 277,270 (23,400) 253,870 ---------- ---------- ---------- EARNINGS FOR COMMON SHARES 277,270 (23,400) 253,870 EARNINGS PER COMMON SHARE 2.22 2.03 COMMON SHARES OUTSTANDING (AVERAGE) 124,864,613 124,864,613 NORTHEAST UTILITIES (PARENT) CAPITAL STRUCTURE AS OF MARCH 31, 1995 (THOUSANDS OF DOLLARS)
PER BOOK ADJUSTED TO PRO FORMA REFLECT % PER BOOK ADJUSTMENT PRO FORMA % DEBT: LONG-TERM DEBT, NET $230,000 $230,000 ---------- ---------- ---------- TOTAL DEBT 8.9% 230,000 0 230,000 9.0% COMMON EQUITY: COMMON SHARES 671,052 671,052 CAPITAL SURPLUS, PAID IN 907,165 907,165 DEFERRED BENEFIT PLAN - ESOP (209,238) (209,238) RETAINED EARNINGS 978,001 (23,400) 954,601 ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER'S EQUITY 91.1% 2,346,980 (23,400) 2,323,580 91.0% ---------- ---------- ---------- TOTAL CAPITAL 100.0% $2,576,980 (23,400) $2,553,580 100.0%
DEBITS CREDITS (a) OTHER INTEREST EXPENSE 36,000 ACCRUED INTEREST 36,000 To record the interest expense on the additional proposed borrowing at Prime: $400,000 x 9.00% = 36,000 (b) ACCRUED TAXES 12,600 FEDERAL AND STATE INCOME TAX EXPENSE 12,600 To record the reduction in Federal and State income taxes due to the higher interest and fee expenses: $36,000 x 35.00% = 12,600 EX-99.5 7 BALANCE SHEET (COE) CHARTER OAK ENERGY, INC AND SUBSIDIARIES BALANCE SHEET AS OF MARCH 31, 1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 2.1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION ASSETS UTILITY PLANT, AT ORIGINAL COST: ELECTRIC $52 $52 OTHER 0 0 ---------- ---------- ---------- 52 0 52 LESS: ACCUMULATED PROVISION FOR DEPRECIATION 46 46 ---------- ---------- ---------- 6 0 6 CONSTRUCTION WORK IN PROGRESS 0 0 ---------- ---------- ---------- TOTAL NET UTILITY PLANT 6 0 6 OTHER INVESTMENTS, AT COST 15,419 15,419 CURRENT ASSETS: CASH 479 400,000 (a) 400,479 TAX RECEIVABLES 0 0 RECEIVABLES FROM AFFILIATES 0 0 MATERIALS & SUPPLIES, AT AVERAGE COST 0 0 PREPAYMENTS AND OTHER 0 0 ---------- ---------- ---------- TOTAL CURRENT ASSETS 479 400,000 400,479 ---------- ---------- ---------- DEFERRED CHARGES 4,126 4,126 ---------- ---------- ---------- TOTAL ASSETS $20,030 $400,000 $420,030 ---------- ---------- ---------- CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMMON SHARES $0 $0 CAPITAL SURPLUS, PAID IN 31,367 400,000 (a) 431,367 RETAINED EARNINGS (12,859) (12,859) ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER'S EQUITY 18,508 400,000 418,508 DEBT, NET 0 0 ---------- ---------- ---------- TOTAL CAPITALIZATION 18,508 400,000 418,508 MINORITY INTEREST IN COMMON EQUITY OF SUBSIDIARIES 60 60 CURRENT LIABILITIES: NOTES PAYABLE TO AFFILIATED COMPANY 0 0 0 ACCOUNTS PAYABLE 555 555 ACCOUNTS PAYABLE TO AFFILIATES 374 374 ACCRUED TAXES 375 375 ACCRUED INTEREST 0 0 OTHER 158 158 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 1,462 0 1,462 ---------- ---------- ---------- ACCUMULATED DEFERRED INCOME TAXES 0 0 ---------- ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $20,030 $400,000 $420,030 DEBITS CREDITS (a) CASH $400,000 CAPITAL SURPLUS, PAID IN $400,000 To reflect a $400 million investment by NU (parent) in Charter Oak Energy in 1995 and 1996. EX-99.6 8 STATEMENT OF INCOME (COE) CHARTER OAK ENERGY, INC AND SUBSIDIARIES INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 2.2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION OPERATING REVENUE $0 $0 $0 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION AND MAINTENANCE 8,082 8,082 DEPRECIATION 668 668 FEDERAL AND STATE INCOME TAXES (3,045) (3,045) TAXES OTHER THAN INCOME TAXES 24 24 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 5,729 0 5,729 ---------- ---------- ---------- OPERATING INCOME: (5,729) 0 (5,729) ---------- ---------- ---------- OTHER INCOME: INVESTMENT INCOME 1,605 1,605 OTHER INCOME, NET 52 52 INCOME TAXES - CREDIT 0 0 ---------- ---------- ---------- OTHER INCOME, NET 1,657 0 1,657 ---------- ---------- ---------- INCOME BEFORE INTEREST CHARGES (4,072) 0 (4,072) ---------- ---------- ---------- INTEREST CHARGES: OTHER INTEREST, NET 7 7 ---------- ---------- ---------- TOTAL INTEREST CHARGES 7 0 7 ---------- ---------- ---------- MINORITY INTEREST IN EARNINGS IN SUBSIDIARIES 0 0 NET INCOME (4,079) 0 (4,079) CHARTER OAK ENERGY, INC AND SUBSIDIARIES CAPITAL STRUCTURE ON MARCH 31, 1995 (THOUSANDS OF DOLLARS)
PER BOOK ADJUSTED TO PRO FORMA REFLECT % PER BOOK ADJUSTMENT PRO FORMA % LONG-TERM DEBT 0.0% $0 $0 0.0% COMMON SHARES 0 0 CAPITAL SURPLUS, PAID IN 31,367 400,000 431,367 RETAINED EARNINGS (12,859) 0 (12,859) ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER EQUITY 100.0% 18,508 400,000 418,508 100.0% ---------- ---------- ---------- TOTAL CAPITAL 100.0% 18,508 400,000 418,508 100.0%
EX-99.7 9 BALANCE SHEET (DEVELOPMENT) COE DEVELOPMENT CORPORATION BALANCE SHEET AS OF MARCH 31, 1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 3.1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION ASSETS UTILITY PLANT, AT ORIGINAL COST: ELECTRIC $11 $11 OTHER 0 0 ---------- ---------- ---------- 11 0 11 LESS: ACCUMULATED PROVISION FOR DEPRECIATION 5 5 ---------- ---------- ---------- 6 0 6 CONSTRUCTION WORK IN PROGRESS 0 0 ---------- ---------- ---------- TOTAL NET UTILITY PLANT 6 0 6 OTHER INVESTMENTS, AT COST 9,000 9,000 CURRENT ASSETS: CASH 0 400,000 (a) 400,000 TAX RECEIVABLES 355 355 RECEIVABLES FROM AFFILIATES 1,172 1,172 MATERIALS & SUPPLIES, AT AVERAGE COST 0 0 PREPAYMENTS AND OTHER 0 0 ---------- ---------- ---------- TOTAL CURRENT ASSETS 1,527 400,000 401,527 ---------- ---------- ---------- DEFERRED CHARGES 1,366 1,366 ---------- ---------- ---------- TOTAL ASSETS $11,899 $400,000 $411,899 CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMMON SHARES $0 $0 CAPITAL SURPLUS, PAID IN 19,260 400,000 (a) 419,260 RETAINED EARNINGS (8,215) (8,215) ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER'S EQUITY 11,045 400,000 411,045 DEBT, NET 0 0 ---------- ---------- ---------- TOTAL CAPITALIZATION 11,045 400,000 411,045 MINORITY INTEREST IN COMMON EQUITY OF SUBSIDIARIES 0 0 CURRENT LIABILITIES: NOTES PAYABLE TO AFFILIATED COMPANY 0 0 0 ACCOUNTS PAYABLE 463 463 ACCOUNTS PAYABLE TO AFFILIATES 246 246 ACCRUED TAXES 16 16 ACCRUED INTEREST 0 0 OTHER 129 129 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 854 0 854 ---------- ---------- ---------- ACCUMULATED DEFERRED INCOME TAXES 0 0 ---------- ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $11,899 $400,000 $411,899 ---------- ---------- ---------- DEBITS CREDITS (a) CASH $400,000 CAPITAL SURPLUS, PAID IN $400,000 To reflect a $400 million investment by Charter Oak Energy in COE Development Corporation in 1995 and 1996. EX-99.8 10 STATEMENT OF INCOME (DEVELOPMENT) COE DEVELOPMENT CORPORATION INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31,1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 3.2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION OPERATING REVENUE $0 $0 $0 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION AND MAINTENANCE 7,128 7,128 DEPRECIATION 3 3 FEDERAL AND STATE INCOME TAXES (3,036) (3,036) TAXES OTHER THAN INCOME TAXES 0 0 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 4,095 0 4,095 ---------- ---------- ---------- OPERATING INCOME: (4,095) 0 (4,095) ---------- ---------- ---------- OTHER INCOME: INVESTMENT INCOME 0 0 OTHER INCOME, NET 0 0 INCOME TAXES - CREDIT 0 0 ---------- ---------- ---------- OTHER INCOME, NET 0 0 0 ---------- ---------- ---------- INCOME BEFORE INTEREST CHARGES (4,095) 0 (4,095) ---------- ---------- ---------- INTEREST CHARGES: OTHER INTEREST, NET 0 0 ---------- ---------- ---------- TOTAL INTEREST CHARGES 0 0 0 ---------- ---------- ---------- MINORITY INTEREST IN EARNINGS IN SUBSIDIARIES 0 0 NET INCOME (4,095) 0 (4,095) COE DEVELOPMENT CORPORATION CAPITAL STRUCTURE ON MARCH 31,1995 (THOUSANDS OF DOLLARS)
PER BOOK ADJUSTED TO PRO FORMA REFLECT % PER BOOK ADJUSTMENT PRO FORMA % LONG-TERM DEBT 0.0% $0 $0 0.0% COMMON SHARES 0 0 CAPITAL SURPLUS, PAID IN 19,260 400,000 419,260 RETAINED EARNINGS (8,215) 0 (8,215) ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER EQUITY 100.0% 11,045 400,000 411,045 100.0% ---------- ---------- ---------- TOTAL CAPITAL 100.0% 11,045 400,000 411,045 100.0%
EX-99.9 11 BALANCE SHEET (CONSOLIDATED) NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31,1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 4.1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION ASSETS UTILITY PLANT, AT ORIGINAL COST: ELECTRIC & OTHER $9,514,563 $9,514,563 LESS: ACCUMULATED PROVISION FOR DEPRECIATION 3,383,124 3,383,124 ---------- ---------- ---------- 6,131,439 0 6,131,439 CONSTRUCTION WORK IN PROGRESS 194,959 194,959 NUCLEAR FUEL, NET 212,972 212,972 ---------- ---------- ---------- TOTAL NET UTILITY PLANT 6,539,370 0 6,539,370 ---------- ---------- ---------- OTHER PROPERTY AND INVESTMENTS: NUCLEAR DECOMMISSIONING TRUST, AT MARKET 261,919 261,919 INVESTMENTS IN REGIONAL NUCLEAR GENERATING COMPANIES, AT EQUITY 81,478 81,478 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 25,996 25,996 OTHER, AT COST 48,836 48,836 ---------- ---------- ---------- 418,229 0 418,229 ---------- ---------- ---------- CURRENT ASSETS: CASH AND SPECIAL DEPOSITS 24,718 400,000 (a) 424,718 RECEIVABLES, NET 360,605 360,605 RECEIVABLES FROM AFFILIATED COMPANIES 0 0 ACCRUED UTILITY REVENUES 131,038 131,038 FUEL, MATERIAL AND SUPPLIES, AT AVERAGE COST 195,905 195,905 RECOVERABLE ENERGY COSTS, NET-CURRENT POSITION 0 0 PREPAYMENTS AND OTHER 53,125 53,125 ---------- ---------- ---------- TOTAL CURRENT ASSETS 765,391 400,000 1,165,391 ---------- ---------- ---------- DEFERRED CHARGES: REGULATORY ASSET-INCOME TAXES, NET 1,135,945 1,135,945 REGULATORY ASSET-PSNH 656,458 656,458 UNAMORTIZED DEBT EXPENSE 37,524 37,524 RECOVERABLE ENERGY COSTS, NET 293,583 293,583 DEFERRED CONSERVATION AND LOAD- MANAGEMENT COSTS 112,014 112,014 DEFERRED COSTS - NUCLEAR PLANTS 218,700 218,700 UNRECOVERED CONTRACT OBLIGATION-YAEC 152,593 152,593 OTHER 214,217 214,217 ---------- ---------- ---------- TOTAL DEFERRED CHARGES 2,821,034 0 2,821,034 ---------- ---------- ---------- TOTAL ASSETS $10,544,024 $400,000 $10,944,024 ---------- ---------- ---------- CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $671,052 $671,052 CAPITAL SURPLUS, PAID IN 907,165 907,165 DEFERRED BENEFIT PLAN-EMPLOYEE STOCK OWNERSHIP PLAN (209,238) (209,238) RETAINED EARNINGS 978,001 (23,400) 954,601 ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER'S EQUITY 2,346,980 (23,400) 2,323,580 PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION 169,700 169,700 PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION 306,250 306,250 LONG-TERM DEBT, NET 3,914,499 3,914,499 ---------- ---------- ---------- TOTAL CAPITALIZATION 6,737,429 (23,400) 6,714,029 MINORITY INTEREST IN CONSOLIDATED SUBSIDARY 100,060 100,060 OBLIGATIONS UNDER CAPITAL LEASES 175,433 175,433 CURRENT LIABILITIES: NOTES PAYABLE TO BANKS 123,000 400,000 (a) 523,000 COMMERCIAL PAPER 0 0 LONG-TERM DEBT AND PREFERRED STOCK - CURRENT PORTION 175,825 175,825 OBLIGATIONS UNDER CAPITAL LEASES - CURRENT PORTION 68,388 68,388 ACCOUNTS PAYABLE 218,840 218,840 ACCOUNTS PAYABLE TO AFFILIATED COMPANIES 0 0 ACCRUED TAXES 84,779 (12,600)(c) 72,179 ACCRUED INTEREST 85,010 36,000 (b) 121,010 ACCRUED PENSION BENEFITS 90,221 90,221 OTHER 88,063 88,063 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 934,126 423,400 1,357,526 DEFERRED CREDITS: ACCUMULATED DEFERRED INCOME TAXES 2,006,133 2,006,133 ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 185,328 185,328 DEFERRED CONTRACT OBLIGATION-YAEC 152,593 152,593 OTHER 252,922 252,922 ---------- ---------- ---------- TOTAL DEFERRED CREDITS 2,596,976 0 2,596,976 ---------- ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $10,544,024 $400,000 $10,944,024 ---------- ---------- ---------- DEBITS CREDITS (a) CASH $400,000 NOTES PAYABLE $400,000 To record the additional proposed borrowing up to the full $200 million requested (b) OTHER INTEREST EXPENSE 36,000 ACCRUED INTEREST 36,000 To record the interest expense on the additional proposed borrowing at Prime: $400,000 x 9.00% = 36,000 (c) ACCRUED TAXES 12,600 FEDERAL AND STATE INCOME TAX EXPENSE 12,600 To record the reduction in Federal and State income taxes due to the higher interest and fee expenses: $36,000 x 35.00% = 12,600 NOTE: The prime rate and tax rate reflected above represent the current rates in effect as of the filing date. EX-99.10 12 STATEMENT OF INCOME (CONSOLIDATED) NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1995 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 4.2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS TRANSACTION OPERATING REVENUE $3,621,272 $0 $3,621,272 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION - FUEL PURCHASED AND INTERCHANGE POWER 844,489 844,489 OTHER 925,424 925,424 MAINTENANCE 297,937 297,937 DEPRECIATION 339,366 339,366 AMORTIZATION/DEFERRALS OF REGULATORY ASSETS, NET 140,080 140,080 FEDERAL AND STATE INCOME TAXES 273,909 (12,600)(b) 261,309 TAXES OTHER THAN INCOME TAXES 245,707 245,707 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 3,066,912 (12,600) 3,054,312 ---------- ---------- ---------- OPERATING INCOME: 554,360 12,600 566,960 ---------- ---------- ---------- OTHER INCOME: DEFERRED NUCLEAR PLANTS RETURN-OTHER FUNDS 24,703 24,703 EQUITY IN EARNINGS OF REGIONAL NUCLEAR GENERATING COMPANIES 13,399 13,399 WRITE OFF OF PLANT COSTS 0 0 OTHER, NET 412 412 INCOME TAXES - CREDIT 17,594 17,594 ---------- ---------- ---------- OTHER INCOME, NET 56,108 0 56,108 ---------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 610,468 12,600 623,068 ---------- ---------- ---------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 315,340 315,340 OTHER INTEREST 8,976 36,000 (a) 44,976 DEFERRED NUCLEAR PLANTS RETURN - BORROWED FUNDS, NET OF INCOME TAX (37,630) (37,630) ---------- ---------- ---------- TOTAL INTEREST CHARGES 286,686 36,000 322,686 ---------- ---------- ---------- INCOME BEFORE PREFERRED DIVIDENDS 323,782 (23,400) 300,382 PREFERRED DIVIDENDS OF SUBSIDIARIES 46,512 46,512 ---------- ---------- ---------- NET INCOME 277,270 (23,400) 253,870 EARNINGS FOR COMMON SHARE 277,270 (23,400) 253,870 EARNINGS PER COMMON SHARE 2.22 2.03 COMMON SHARES OUTSTANDING (AVERAGE) 124,864,613 124,864,613 NORTHEAST UTILITIES AND SUBSIDIARIES CAPITAL STRUCTURE AS OF MARCH 31,1995 (THOUSANDS OF DOLLARS)
PER BOOK ADJUSTED TO PRO FORMA REFLECT % PER BOOK ADJUSTMENT PRO FORMA % DEBT: LONG-TERM DEBT, NET 59.1% $4,088,824 0 $4,088,824 59.3% PREFERRED STOCK: NOT SUBJECT TO REDEMPTION 171,200 171,200 SUBJECT TO REDEMPTION 306,250 306,250 ---------- ---------- ---------- TOTAL PREFERRED STOCK 6.9% 477,450 0 477,450 6.9% COMMON EQUITY: COMMON SHARES 671,052 671,052 CAPITAL SURPLUS, PAID IN 907,165 907,165 DEFERRED BENEFIT PLAN-EMPLOYEE STOCK OWNERSHIP PLAN (209,238) (209,238) RETAINED EARNINGS 978,001 (23,400) 954,601 ---------- ---------- ---------- TOTAL COMMON STOCKHOLDER'S EQUITY 34.0% 2,346,980 (23,400) 2,323,580 33.7% ---------- ---------- ---------- TOTAL CAPITAL 100.0% $6,913,254 (23,400) $6,889,854 100.0%
DEBITS CREDITS (a) OTHER INTEREST EXPENSE 36,000 ACCRUED INTEREST 36,000 To record the interest expense on the additional proposed borrowing at Prime: $400,000 x 9.00% = 36,000 (b) ACCRUED TAXES 12,600 FEDERAL AND STATE INCOME TAX EXPENSE 12,600 To record the reduction in Federal and State income taxes due to the higher interest and fee expenses: $36,000 x 35.00% = 12,600 NOTE: The prime rate and tax rate reflected above represent the current rates in effect as of the filing date. EX-27.1 13 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000072741 NORTHEAST UTILITIES (PARENT) 1,000 3-MOS 3-MOS DEC-31-1995 DEC-31-1995 MAR-31-1995 MAR-31-1995 PER-BOOK PRO-FORMA 0 0 2,693,140 2,693,140 3,360 403,360 8,055 8,055 0 0 2,704,555 3,104,555 671,052 671,052 907,165 907,165 978,001 954,601 2,346,980 2,323,580 0 0 0 0 218,000 218,000 95,000 495,000 0 0 0 0 12,000 12,000 0 0 0 0 0 0 32,575 55,975 2,704,555 3,104,555 0 0 (11,017) (23,617) 12,360 12,360 1,343 (11,257) (1,343) 11,257 303,904 303,904 302,561 315,161 25,291 61,291 277,270 253,870 0 0 277,270 253,870 220,062 220,062 20,279 20,279 0 0 2.22 2.03 2.22 2.03
EX-27.2 14 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000888707 CHARTER OAK ENERGY, INC. 1,000 3-MOS 3-MOS DEC-31-1995 DEC-31-1995 MAR-31-1995 MAR-31-1995 PER-BOOK PRO-FORMA 6 6 15,419 15,419 479 400,479 4,126 4,126 0 0 20,030 420,030 0 0 31,367 431,367 (12,859) (12,859) 18,508 418,508 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,522 1,522 20,030 420,030 0 0 (3,045) (3,045) 8,774 8,774 5,729 5,729 (5,729) (5,729) 1,657 1,657 (4,072) (4,072) 7 7 (4,079) (4,079) 0 0 (4,079) (4,079) 0 0 0 0 0 0 0.00 0.00 0.00 0.00
EX-27.3 15 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000906614 CHARTER OAK DEVELOPMENT CORPORATION 1,000 3-MOS 3-MOS DEC-31-1995 DEC-31-1995 MAR-31-1995 MAR-31-1995 PER-BOOK PRO-FORMA 6 6 9,000 9,000 1,527 401,527 1,366 1,366 0 0 11,899 411,899 0 0 19,260 419,260 (8,215) (8,215) 11,045 411,045 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 854 854 11,899 411,899 0 0 (3,036) (3,036) 7,131 7,131 4,095 4,095 (4,095) (4,095) 0 0 (4,095) (4,095) 0 0 (4,095) (4,095) 0 0 (4,095) (4,095) 0 0 0 0 0 0 0.00 0.00 0.00 0.00
EX-27.4 16 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000072741 NORTHEAST UTILITIES AND SUBSIDIARIES 1,000 3-MOS 3-MOS DEC-31-1995 DEC-31-1995 MAR-31-1995 MAR-31-1995 PER-BOOK PRO-FORMA 6,539,370 6,539,370 418,229 418,229 765,391 1,165,391 2,821,034 2,821,034 0 0 10,544,024 10,944,024 671,052 671,052 (209,238) (209,238) 978,001 954,601 2,346,980 2,323,580 169,700 169,700 306,250 306,250 3,914,499 3,914,499 123,000 523,000 0 0 0 0 174,325 174,325 1,500 1,500 175,825 175,825 68,388 68,388 3,263,557 3,286,957 10,544,024 10,944,024 3,621,272 3,621,272 273,909 261,309 2,793,003 2,793,003 3,066,912 3,054,312 554,360 566,960 56,108 56,108 610,468 623,068 286,686 322,686 323,782 300,382 46,512 46,512 277,270 253,870 220,062 220,062 315,340 315,340 0 0 2.22 2.03 2.22 2.03
-----END PRIVACY-ENHANCED MESSAGE-----