BECO-94-123, Forwards Beco 1993 Annual Rept, Beco Form 10-Q for Quarter Ended 940930 as Filed W/Securities & Exchange Commission, Cash Flow Forecast for Yr 1995 & Narrative Summary of Curtailment of Capital Expenditures
| ML20078K610 | |
| Person / Time | |
|---|---|
| Site: | Pilgrim |
| Issue date: | 11/15/1994 |
| From: | Judge J BOSTON EDISON CO. |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| BECO-94-123, NUDOCS 9411230231 | |
| Download: ML20078K610 (21) | |
Text
BOSTON EDISON 800 Boylston Street Boston, Massachusetts 02199 November 15,1994 BECo 94-123 Director of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, DC 20555 License DPR-35
Dear Sir:
Docket 50-293 in accordance with 10CFR140.21 and the 1975 amendments to the Price Anderson Act (Public Law 94-197), Boston Edison is submitting the following:
- 1. Boston Edison Company Annual Report for 1993.
- 2. Boston Edison Company Form 10-Q for the quarter ended September 30,1994 as filed with the Securities and Exchange Commission.
- 3. Cash Flow Forecast for the year 1995.
- 4. Narrative Statement of curtailment of capital expenditures.
Sincerely,
(
Enclosures cc:
Mr. Darrel A. Nash U. S. Nuclear Regulatory Commission Policy Development and Region I Financial Evaluation Section 475 Allendale Road Office of Nuclear Reactor Regulation King of Prussia, PA 19406 U. S. Nuclear Regulatory Commission Washington, DC 20555 Mr. R. Eaton, Project Manager Senior NRC Resident inspector Division of Reactor Projects - 1/11 Pilgrim Nuclear Power Station Office of Nuclear Reactor Regulation Mail Stop: 14D1 U. S. Regulatory Commission 1 White Flint North 11555 Rockville Pike Rockville, MD 20852
2 01: '
y j'(np 9411230231 941115 ,
ITEM (4) NARRATIVE STATEMENTS OF CURTAILMENT OF CAPITAL EXPENDITURES:
The Boston Edison Company would be able to curtail $10 million of capital expenditures within any three month period of the next twelve months if it becomes necessary to pay retrospective premiums.
a t
?
i k
l Doc F)C2%3
~--s-
BOSTON EDISON COMPANY 1995 INTERNAL CASH FLOW PROJECTION FOR PILGRIM UNIT #1 NUCLEAR POWER STATION (DOLLARS IN THOUSANDS) i 12 Months Ended Projected Year r 9/30/94 1995 Net income After Taxes $123,898 S137,000 Less Dividends Paid 94.655 104.000 Retained Earnings 29,243 33,000 Adjustments: '
Depreciation and Amortization 194,151 192,000 Depreciation Nuclear Outage Costs 7,721 (9,000)
Deferred Taxes and ITC 14,851 27,000 AFUDC (6.483) (5.000) ,
Total Adjustments $210.240 S205.000 Intemal Cash Flow $239.483 $2ajLQQQ Average Quarterly Cash Flow $59.871 S59.500 Percentage Ownership in All Operating Nuclear Units Pilgrim Unit #1 74.27%
Maximum total Contingency Liability $10,000 Doc #0CO53
SECURITIES AND EXCHANGE COMMIS! ION Washington, D.C. 20549 FORM 10-Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1994 or
[] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 1-2301 BOSTON EDISON COMPANY (Exact name of registrant as specified in its charter)
Massachusetts 04-1278810 (State or other jurisdiction of incorporation (I . R. S. Employer Identification No.)
or organization) 800 Boylston Street, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-424-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or l for such shorter period that the registrant was required to file such reports), and (2) has been l subject to such filing requirements for the past 90 days. )
l Yes x No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class outstanding at September 30, 1994 Common Stock, $1 par value 45,421,127 shares
Part I - Financial Inf or:aation Item 1. Financial Statem2nts
- Boston Edison Company Consolidated Balance Sheets (Unaudited) ,
(in thousands)
September 30, December 31, 1994 1993 Assets
. Utility plant in service $3,985,354 $3,904,776 Less: accumulated depreciation 1,347,044 1,258,359 Utility plant, net 2,638,310 2,646,417 Nuclear fuel, net 45,504 53,390 Construction work in progress 189,286 144,835 Total property, plant and equipment 2,873,100 2,844,642 Investments in electric companies 24,497 24,292 Nuclear decorndssioning fund 77,810 66,060 Current assets:
Cash and cash equivalents 5,325 8,768 Accounts receivable 202,166 171,098 Accrued unbilled revenues 34,943 29,823 Fuel, materials and supplies 73,791 79,381 Prepaid expenses and other 11,445 9,738 Total current assets 327,670 298,808 Deferred debits:
Power contracts 30,916 36,275 Cancelled nuclear unit 4,767 19,067 Nuclear outage costs 19,734 25,524 Pension and postretirement costs 27,737 24,416 Redemption premiums 54,586 59,116 Regulatory asset - income taxes, net 42,857 26,916 Other 47,927 52,183 Total assets $3,531,601 S3,477,299 Capitalization and Liabilities Common stock equity:
Common stock $ 665,725 $ 657,782 Retained earnings 261,008 218,697 Total common stock equity 926,733 876,479 Cumulative preferred stock:
Non-mandatory redeemable series 123,000 123,000 Mandatory redeemable series 94,000 96,000 First mortgage bonds 21,400 40,000 Sewage facility revenue bonds, net 31,754 32,497 Debentures 1,205,000 1,200,000 Current liabilities:
Long-term. debt / preferred stock due within one year 2,400 2,000 Notes payable 181,914 204,151 Accounts payable 122,258 144,760 Interest accrued 12,051 25,467 Dividends payable 22,000 22,696 Other 65,874 27,336 Total current liabilities 407,297 426,410 Deferred credits:
Power contracts 30,916 36,275 Accumulated deferred income taxes 516,214 484,796 Accumulated deferred investment tax credits 68,085 71,140 Nuclear decommissioning reserve 87,419 73,744 Other 19,783 16,958 Commitments and contingencies - -
Total capitalization and liabilities $3.531,601 $3,477,299 The accompanying notes are an integral part of these financial statements.
2
~
Boston Edison Company '
Consolidated Statements of Income s (Unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Operating revenues $449,094 $436,024 $1,195,198 $1,136,850 Operating expenses:
Fuel 41,919 51,301 125,589 131,163 Purchased power 94,208 91,907 267,819 282,991 Other operations and maintenance 109,825 105,841 320,640 300,238 Depreciation and amortization 39,417 35,827 117,842 104,320 Amortization of deferred cost of cancelled nuclear unit 4,948 -
14,844 -
Demand side management programs 9,405 10,774 27,451 29,116 Taxes - property and other 25,038 22,981 76,370 69,947 Income taxes 27,735 21,074 51,854 31,753 Total operating expenses 352,495 339,705 1,002,409 949,528 Operating income 96,599 96,319 192,789 187,322
-Other income (expense), net 819 580 2,477 (577)
Operating and other income 97,418 96,899 195,266 186,745 Interest charges:
Long-term debt 25,560 25,763 77,346 76,727 other 3,934 2,244 9,182 6,940 Allowance for borrowed funds used during construction (2,258) (1,123) (5,238) (5,218)
Total interest charges 27,236 26,884 81,290 78,449 Net income 70,182 70,015 113,976 108,296 Preferred dividends provided 3,926 3,962 11,839 11,742 Balance available for common stock $ 66,256 $ 66,053 $102,137 S 96,554 Average common shares outstanding 45,382 45,005 45,286 44,913 Earnings per share of common stock fl.46 $1.47 $2.26 $2.15 Dividends declared per common share S0.440 $0.425 S1.320 (J.275 The accompanying notes are an integral part of these financial statements.
3
Boston Edison Company
- i Consolidated Statemsnts of Cash Flows (Unaudited) j (in thousands) ,
i Nine Months Ended September 30, t 1994 1993 i operating activities:
l Nat income $113,976 $108,296 Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 107,581 94,201 l Amortization of nuclear fuel 16,738 15,952 Amortization of deferred cost of cancelled nuclear unit, net 14,301 -
Other amortization 10,456 5,108 Allowance for borrowed funds used during construction (5,238) (5,218) i Deferred' income taxes 12,113 3,669 Investment tax credits (3,054) (3,225)
Amortization (deferral) of nuclear outage costs, net 5,791 (9,484)
Net changes in:
Accounts receivable and accrued unbilled revenues (36,188) (21,286)
Fuel, materials and supplies 2,044 B,500 Accounts payable (22,502) (18,655)
Other current assets and liabilities 23,519 15,340 i Other, net 20,026 837 Net cash provided by operating activities 259,563 194,035 Investing activities:
Plant and nuclear fuel expenditures (134,318) (165,660)
Capitalized demand side management expenditures (15,325) (20,214)
Investments (11,955) (10,213)
Net cash used by investing activities (161,598) (196,087)
Financing activities:
Issuance of long-term debt 15,000 815,000 Issuance of common stock 7,978 8,192 '
Issuance of preferred stock -
40,000 Retirement of long-term debt (28,600) (648,625)
Redemption of preferred stock (2,000) (40,000)
Change in notes payable (22,237) (101,000)
Dividends paid (71,549) (69,264)
Net cash provided (used) by financing activities (101,408) 4,303 Increase /(decrease) in cash and cash equivalents (3,443) 2,251 Cash and cash equivalents at beginning of year 8,768 3,947 Cash and cash equivalents at end of period S 5,325 $ 6,198 Cash paid during the period for:
Interest S 99,944 $ 92,777 Less: amounts capitalized 5,238 5,218 S 94,706 S 87.559 Income taxes $ 28,690 $ 23,724 1
The accompanying notes are an integral part of these financial statements. j 4
l
_ x__
~-
. l Notes to Consolidated Financial Statements A) Basis of Presentation The accompanying unaudited consolidated financial statements should be read in conjunction with the Boston Edison Company (the Company) 1993 Form 10-K Annual Report and Forms 10-0 for the periods ended March 31, 1994 and June 30, 1994. In the opinion of the Company, the accompanying unaudited consolidated financial statements reflect all adjustments (which are all of a normal recurring nature) necessary to present fairly the financial position as of September 30, 1994 and the results of operations for the three and nine months ended September 30, 1994 and 1993 and the cash flows for the nine months ended September 30, 1994 and 1993. Certain prior year balances have been reclassified to reflect current classifications.
The results of operations for the three and nine months ended September 30, 1994 are not I indicative of the results which may be expected for the entire year. The company's kWh sales and revenues are seasonal in nature, with both being lower in the spring and fall seasons. In addition, pursuant to retail rate orders of the Massachusetts Department of Public Utilities (DFU), base retail rates billed to commercial and industrial customers are higher in the billing months of June through September. Accordingly, a significant portion of the Company's annual earnings occurs in the third quarter.
B) Commitments and Contingencies In March 1991 the Company was named in a lawsuit alleging discriminatory employment practices under the Age Discrimination in Employment Act of 1967 concerning 46 employees affected by the Company's 1988 reduction in force. Legal counsel is vigorously defending this case. Based on the information presently available, the Company does not expect that this litigation or certain other legal matters in which the Company is currently involved will have a material impact on financial condition. However, an unfavorable decision I ordered against the Company could have a material impact on quarterly earnings.
State regulations revised in 1993 require that properties where releases of hazardous materials occurred in the past be further cleaned up according to a timetable developed by the Massachusetts Department of Environmental Protection The Company continues to evaluate the potential costs associated with the cleanup of sites where it has been identified as the owner or operator. There are uncertainties associated with these potential costs due to the complexities of cleanup technology, regulatory requirements and the particular characteristics of the different sites. The Company also continues to face possible liability as a potentially responsible party in the cleanup of certain other multi party hazardous waste sites in Massachusetts and other states. At the majority of these other sites the company is one of many notentially responsible parties and its alleged share of the responsibility is a small percentage. The Company does not expect any of its potential cleanup liabilities to have a material impact on its financial l condition or annual results of operations, although provisions for cleanup costs could have a material impact on quarterly earnings.
In September 1994 the Company received a favorable decision from the Norfolk Superior Court regarding its lawsuit against the Massachusetts Metropolitan District Conadssion )
(MDC). The Company filed suit in 1992 related to an eminent domain taking of certain l Company-owned property in 1989. The Court's decision is subject to appeal by the MDC. If I upheld, the decision would result in an additional award to the Company of $4.5 million {
plus interest. !
5 1
l 4
1 I
C) Income Taxes The annual estimated effective income tax rate for 1994 and the actual effective income j tax rate for 1993 and the reasons for their differences from the statutory federal income tax rate are explained below:
1994 1993 Statutory tax rate 35.0% 35.0%
State income tax, net of federal income tax benefit 4.3 4.2
- Investment tax credits (2.2) (2. 6) ;
Reversal of deferred taxes - ,
settlement agreement (5.5) (13.0)
Other (0.1) (0.2)
Effective tax rate 31.5% 23.4%
D) Long-Term Securities The Company will redeem the last series of first mortgage bonds, Series S, in November o- 1994. As a result, the First Mortgage Bond Indenture that had mortgaged all Company property since 1940 has been terminated.
Item 2. Management's Discussion and Analysis Results of Operations - Three Months ended Septenber 30, 1994 vs. Three Months ended September j 30, 1993 '
+
Earnings per common share for the three months ended September 30, 1994 amounted to $1.46 as l compared to $1.47 per common share for the three months ended September 30, 1993. The third quarter results reflect the elimination of certain purchased power expenses due to the October 1993 expiration of a long-term contract, a S29 million annual rate increase effective November '
1993 and a 2.4% increase in retall kWh sales. These were offset by lower wholesale and ;
performance revenues and higher depreciation and amortization, income tax and operations and ,
maintenance expenses. !
The results of operations for the quarter are not indicative of the results which may be i expected for the entire year due to the seasonality of the company's kWh sales and revenues.
See Note A to the consolidated finrncial statements.
Operating revenues I
Operating revenues increased 3.0% as follows:
(in thousands) I I
Retail electric revenues $31,279 Demand side management revenues (2,195)
Wholesale and other revenues (9,576) i Short-term sales revenues (6,438) l Increase in operating revenues $13,070 1
I Retail electric revenues increased $31 million. The November 1993 retail rate increase resulted in 512.5 million of the increased revenues and approximately S6 million was due to the 2.4%
increase in retail kWh sales. Performance revenues, which vary annually based on the operating ,
6 !
I
i performance of Pilgrim Nuclear Power Station, decreased $3.4 ndllion as a result of the current outage at the station which is discussed in the financial condition section. Fuel and purchased power revenues increased $16.2 million primarily due to the recovery of certain new purchased power expenses.
The decrease in wholesale and other revenues is primarily due to potential customer contract
-issues and the current outage at Pilgrim Station.
Decreased short-term sales revenues are the result of lower nuclear generating availability.
Revenues from short-term sales reduce fuel and purchased power billings to retail customers and therefore have no effect on earnings.
Operating expenses Total fuel and purchased power expenses decreased S7 ndllion. Fuel expense decreased due to a 20% decrease in Company generation and lower fossil fuel prices. Purchased power expense '
reflects both higher interchange purchases and lower costs associated with a long-tenn contract that expired in October 1993. The timing effect of fuel and purchased power cost collection
{
partially offset the decrease in total fuel and purchased power costs. '
other operations and maintenance expense increased primarily due to a $1.9 million increase in ,
pension expense and increases in other employee benefit expenses. In accordance with the 1992 !
settlement agreement the Company records pension expense based upon the estimated funding of the l pension plan for the year. i Depreciation and amortization expense increased primarily due to a higher depreciable plant ;
balance. In 1994 the company resumed amortization of the deferred costs of the cancelled )
Pilgrim 2 nuclear unit. In accordance with the 1992 settlement agreement the Company did not ,
expense any of these costs in 1993.
The Company's effective annual income tax rate for 1994 is currently estimated to be 31.5% vs.
en actual rate of 23.4% for 1993. The higher rate is the result of a $10 million decrease in r annual adjustments to deferred income taxes in accordance with the 1992 settlement agreement.
Results of Operations - Nine Months ended September 30, 1994 vs. Nine Months ended September 30,
- 1993 i Earnings per common share for the nine months ended September 30, 1994 amounted to $2.26 as compared to S2.15 per common share for the nine months ended September 30, 1993. The increase in earnings is primarily the result of the elimination of certain purchased power expenses due to the expiration of a long-term contract, a $29 million annual rate increase effective November ;
1993 and a 2.7% increase in retail kWh sales. These were partially offset by higher !
depreciation and amortization, operations and maintenance and income tax expenses and lower l wholesale revenues. ;
The results of operations for the nine months ended September 30, 1994 are not indicative of the ,
results which may be expected for the entire year due to the seasonality of the company's kWh !
sales and revenues. See Note A to the consolidated financial statements.
7 !
I Operating revenues operating revenues increased 5.1% as follows:
(in thousands)
Retail electric revenues $60,571 Demand side management revenues 1,877 Wholesale and other revenues (4,551) short-term sales revenues 451 i
Increase in operating revenues $58,348 '
Retail electric revenues increased $61 million. The November 1993 retail rate increase resulted I in $22.3 million of the increased revenues and approximately $11 million was due to the 2.7%
increase in retail kWh sales. Fuel and purchased power revenues increased $27.2 million primarily due to the recovery of certain new purchased power expenses.
The decrease in wholesale and other revenues is primarily due to potential customer contra:t i issues and the cutrent outage at Pilgrim Station.
Operating expenses Total fuel and purchased power expenses decreased $21 million. The decrease in purchased power expense is primarily due to lower costs resulting from the expiration of a long-term contract in October 1993. The decrease in fuel expense is primarily due to lower fossil fuel prices.
Other operations and maintenance expense increased primarily due to a $10.1 million increase in pension expense and increases in other employee benefit expenses.
Depreciation and amortization expense increased primarily due to a higher depreciable plant balance. In 1994 the Company resumed amortization of the deferred costs of the cancelled Pilgrim 2 nuclear unit. In accordance with the 1992 settlement agreement the Company did not expense any of these costs in 1993. l l
The Company's effective annual income tax rate for 1994 is currently estimated to be 31.5% vs.
an actual rate of 23.4% for 1993 as discussed in the results of operations for the third quarter. I Financial Condition The Company's 1992 settlement agreement with the DPU provides increased revenues from retail customers over the three-year period ending October 1995. Additionally, a long-term purchased power contract with annual charges of approximately $60 ndllion expired in October 1993 with no l related change in revenues. The settlement agreement also limits the annual rate of return on I equity during the three year period to 11,75%, excluding any penalties or rewards from performance incentives. {
The most significant impact that performance incentives can have on the Company's financial results is based on Pilgrim Station's annual capacity factor. Ef fective Noventer 1993 an annual capacity factor between 60% and 68% will provide approximately S45 million of revenues through the performance adjustment charge. For each percentage point increase in capacity factor above 68%, annual revenues will increase by approximately $650,000. For each percentage point decrease in capacity factor below 60% (to a ndnimum of 35%), annual revenues will decrease by 8
l approximately $750,000. The capacity factor for the recently concluded perfornance year (November 1993 through October 1994) was 72.3%.
On August 29, 1994, Pilgrim Station automatically shut down as a result of a non-nuclear problem with its electrical generator. The plant is expected to be shut down until mid-December in l order to complete necessary repairs. Some maintenance work originally scheduled for the 1995 refueling outage will also be completed during the current outage. The power needs usually met by the station are being covered by other Company facilities or purchased from other suppliers as necessary. The current recovery of the incremental purchased power costs through fuel and purchased power revenues will be subject to review by the DPU under its generating unit performance program.
Liquidity i The Company supplements internally generated funds with external financings, primarily the j issuance of short-term commercial paper and bank borrowings. A net decrease in the company's l
borrowing requirements in 1994 is primarily the result of higher cash from operations and lower plant expenditures. The Company has authority from the Federal Energy Regulatory Commission to issue up to $350 million of short-term debt. The Company has a S200 million revolving credit agreement and arrangements with several banks to provide additional short-term credit an a i
committed as well as on an uncommitted and as available basis. At September 30, 1994 zhe Company had S182 million of short-term debt outstanding, none of which was incurred under the revolving credit agreement.
Outlook for the Future A significant portion of the Company's electricity sales is made to commercial customers rather than industrial customers. As a result the Company's sales have been only moderately impacted by the decline in the local economy. Retail electricity sales increased 2.7% in the first nine months of 1994 due in part to several periods of extreme weather conditions in Massachusetts.
However, this growth rate is not expected to continue.
In September 1994 the DPU issued an order in response to a remand from the Massachusetts Supreme Judicial Court (SJC) regarding the Company's appeal of a previous DPU order requiring the purchase of 132 megawatts of power from Altresco Lynn, LP, an independent power producer. This DPU order requires the Company to negotiate for power with Altresco. The Company filed an appeal of this order with the SJC in October.
Other Matter.
In August 1994 Boston Energy Technology Group (BETG), the Company's unregulated subsidiary, acquired a substantial majority interest in Coneco Corporation. Coneco provides engineering and project management services to energy and water conservation project developers and contractors.
The Company's investment in BETG is not substantial and it does not anticipate BETG to significantly impact the results of operations in the next several years.
9
Part II - Other Information Item 5. Other Information The following additional information is furnished in connection with the Registration Statement on Form S-3 of the Registrant (File No. 33-57840), filed with the Securities and Exchange Commission on February 3, 1993.
Price and dividend information per share of common stock:
Price Dividend High Low Paid First quarter 1994 $29 7/8 $26 S0.44 Second quarter 1994 29 1/8 25 1/4 0.44 ;
Third quarter 1994 27 5/8 22 3/4 0.44 i
The last sales price of the Company's common stock on the New York Stock Exchange as reported in the Na ll Street Journal for November 9, 1994 was $22 3/4 per share.
Ratio of earnings to fixed charges and ratio of earnings to fixed charges and preferred stock dividend requirements:
Twelve months ended September 30, 1994:
Ratio of earnings to fixed charges 2.37X Ratio of earnings to fixed charges and preferred stock dividend requirements 2.03X ;
Item 6. Exhibits and Reports on Form 8-K a) Exhibits filed herewith:
Exhibit 12 - Computation of ratio of earnings to fixed charges 12.1 - Computation of ratio of earnings to fixed charges for the twelve months ended september 30, 1994 12.2 - Computation of ratio of earnings to fixed charges and preferred stock dividend requirements for'the twelve months ended September 30, 1994 Exhibit 15 - Letter re unaudited interim financial information l
15.1 - Report of Independent Accountants Exhibit 27 - Financial Data Schedule 27.1 - Schedule UT l
10 l
i Exhibit 99 - Additional Exhibits i
99.1 - Letter of Independent Accountants Re Form S-3 Registration Statements filed by the Company on September 14, 1990 (File No. 33-36824),
February 3, 1993 (File No. 33-57840); Form S-8 Registration Statements filed by the Company on Owtober 10, 1985 (File No. 33-00810), July 28, 1986 (File No. 33-7558), December 31, 1990 (File No. 33-38434),
June 5, 1992 (33-48424 and 33-48425) and March 17, 1993' (33-59662 and 33-59682) k 11
1 Signature I
1 1
1 Purguant to the requirements of the Securities Exchange Act of 1934, the registrant has duly ,
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
l 4
I l
l l
i 1
1 I
l BOSTON EDISON COMPANY 1 (Registrant) l Date: November 10, 1994 /s/ Robert J. Weafer, Jr.
Robert J. Weafer, Jr.
Vice President, Controller and Chief Accounting Officer i
12
t Exhibit 12.1 Boston Edison Company e outation of Ratio of Earnings to Fixed Charges Twelve Months Ended September 30, 1994 (in thousands) l l
Het income from continuing operations $123,898 ;
Income taxes 56,388 l l
Fixed charges 131,491 Total SJII,777 ;
Interest expense $117,012 l Interest component of rentals 14,479 !
Total $131,491 i
Ratio of earnings to fixed charges 2.37 )
I 1
13
9 i
i Exhibit-12.2 Boston Edison Company I Computation of Ratio of Earnings to Fixed Charges f and Preferred Stock Dividend Requirements !
Twelve Months Ended September 30, 1994 +
(in thousands)
Net income from continuing operations $123,898 !
Income taxes 56,388 Fixed charges 131,491 Total $311,777 f Interest expense S117,012 Interest component of rentals 14,479 :
Subtotal 131,491 Preferred stock dividend requirements 22,456 Total 1]S3,947 l
Ratio of earnings to fixed charges and preferred v stock dividend requirements p.03 l
i L
i 14 I
i
4 4
Exhibit 15.1 Report of Independent Accountants To the Stockholders and Directors of Boston Edison Company We have reviewed the accompanying consolidated balance sheet of Boston Edison Company (the Company) and subsidiaries as of September 30, 1994 and the related statements of income and cash flows for the three and nine-month periods ended September 30, 1994 and 1993. These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modificr ticns that abould be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
October 27, 1994 15
Exhibit 27.1 Financial Data Schedule UT (in thousands, except per share amounts)
This schedule contains summary financial information extracted from the financial statements in Part I and is qualified in its entirety by reference to such financial statements.
r Period-End 9/30/94 Period-Type 9 months Book value per share Per-Book Total net utility plant $2,638,310 Other property and investments 337,097 Total current assets 327,670 Total deferred charges 228,524 Other assets -
Total assets 3,531,601 Common stock at $1 par 45,421 Capital surplus paid in 620,304 Retained earnings 261,008 Total common stockholders' equity 926,733 Preferred stock - mandatory 94,000 Preferred stock - non-mandatory 123,000 '
Long-term debt, net 1,258,154 Short-term notes payable 84,914 Long-term notes payable O Commercial paper obligations 97,000 Long-term debt - current portion 400 Preferred stock - current portion 2,000 j Capital lease obligations O Leases - current 0 Other items - capitalization and l liabilities 945,400 Total capitalization and liabilities 3,531,601 Gross operating revenues 1,195,198 16
_ __ __________.4_ _ _ - - . _ _ _ - - _ - _ _ - --- - ---- - - - - - - - - - - - - - - - - - - - - - - - - - - -
I i
Income tax expense 51,854 other operating expenses 950,555 l l
Total operating expenses 1,002,409 Operating income 192,789 other income, net 2,477 j
)
Income before interest expense 195,266 Total' interest expense 81,290 Net income 113,976 )
i Preferred stock dividends 11,839 Earnings available for common stock 102,137 Common stock dividends declared 59,826 i
Total-interest on bonds O Cash flow - operations 259,563
{
EPS primary $2.26 j EPS - diluted $2.26 I
i i
i i
17
4 I
Exhibit 99.1 Securities and Exchange Commission 450 Fif th Street, N.W.
Washington, D.C. 20549 Re: Boston Edison Company Registration on Form S-3 and Form S-8 We are aware that our report dated October 27, 1994 on our review of the interim financial information of Boston Edison Company for the period ended September 30, 1994 and included in this Form 10-Q is incorporated by reference in the Company's registration statements on Form S-3 (File Nos. 33-36824 and 33-57840) and on Form S-8 (File Nos. 33-00810, 33-7558, 33-38434, 33-48424, 33-48425, 33-59662 and 33-59682). Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act.
+
Boston, Massachusetts COOPERS & LYBRAND L.L.P. ,
October 27, 1994 '
4 4
l 18
OOO
@@G !
Boston Edison Company 1993 Annual Report I
i 4 " 'f I
. h '
j,f l
, < v - . ,
l u
_y '
r V
- n. -
Financial Highlights:
scars ended Drcember 31,
- ' - 1991 1992 N hange Operating resenues t000) $ 1,482,253 51,411,753 + 5.0%
8""#'
income available for conunon stock (000i $102,513 590,748 + 13.0%
L .
Common shares outstanding -
ucighted as erage (000) 44,959 43,144 + 4.2%
Common stock data:
Earnings per share $2.28 32.10 + 8.f "b gW Dividends dedared per share $1.715 s1.655 + 3.6%
. Payout ratio 75% 78% - 3.8%
Book value per share S19.42 518.77 + 3.5%
Return on aserage common equity 11.9 % 11.5% + 3.5%
Fixed charge cmerage (SLC) 2.27x 1.93x + 17.6%
cenain redawiruanons hn c been nu& m the dau uponal m the pnor 9, m umform m the nwthoa .4 Serviced by Boston Edison: F"*""" "'"I *
- 5 Northeast Area E Central Area E Southwest Area ED Wholesale customer Contents: l On'the Cover:
.4
- b. h. tonal .....
Our New Corporate Management's discussion and anah sis . .16 Identification Consolidated financial statements . . 21 Notes to consolidated financial statements . . 24 in recognitior, of our es er-increasing competitive enti. Selected statistics . 36 ronment, and the need to Officers & directors . .40 di3tinguish oursch es from Shacholder information .41 the competition, we recently updated our corporate identi-fication. This new identifica-tion esolves from our old signature, but changes About the Company:
chough to take us into the nm centurv. The circle rep ~
lloston Edison is a public utibty engaged principalh in the generation, pur-resents the carth and reflects chase, transmission, distribution and sale of electnc energv. It was incorporat-our commitment to the envi~
ed in 1886. We supplv electricity at retail to an area of apli roximatelv 590 ronment, and streamlined square miles uithin 3i) miles of iloston, encompassing the City of Ikiston and senice for customers. The 39 surroundine cities and ton ns. The population of the territory served at lines form to communicate retailis approdimatelv 1,500,000.
energy working in concert uith the emironment. You'll We aho supply electricity to other utilities and municipal (lectric depart-now see the new identifica. ments at u holesale for resale. About 86 percent of our resenues are derised tion in all our communica- from retail electric sales,12 percent from uholesale sales and 2 percent from tions with sou. other sources.
I We u ill also impros e revenue grow th hv activeh marketing new electric technohigies, products, and senices to our customers to imprme their operations and help the environment. Ih combining new dectric tec hnologies with demand-side management programs, we will ollier customers a total value package of energy options and services to run their I,omes and businesses, and create addi-tional revenues for Ikiston Edison.
1b help contnd costs, we will continue to seek out and imest in technologies that enable us to work more eRicientiv and elTectiselv. 'lo that end, we hase established a r u technoh>gy research and development function u hich w ill evaluate and integrate new technologies into our operations to lower costs and enhance customer sen ice.
Finally, we hase a strategy to pursue electriciterclated business opjuttunities through our first unregulated subsidiarv, the Ibston Energy lechnology Gn>up. We will imest up to $45 million over three 3 cars in new businesses, including an electric vehicle recharging distributorship. Our latest new business acquisition, Ill2-TEK International Corp , is a compam w hich has des eloped an innovative system that treats cooling water usetl in commercial and industrial air conditioning systems in an energy e0icient and environmentalh sound manner that climinate3 L hemical treatment.
None of u hat we bas e discussed is achievable without ibcusing on the human side of our enter-prise. Employees base been responsible ihr our success to date, and will be key to creating our future. They are responsible for continuing to improve internal operations and offering products and services to increase value to our customers.
Our 1993 performance is evidence of our strength and conviction to succeed. We are in con-trol of our business, and by continuousiv improving all aspects of our operations, u e are creating our future.
/ , w Ik rnard W. Itemicek & mas J. May Chairman and President and' Chief Executive Ollicer Chief Operating Officer February 17,1994 s
2
Dear Shareholder i Nineteen ninety-three was an excellent year for Ibston Edison sharehohlers. For the fifth consecu-ti e vear, our management team and empimees worked together to provide total r< turns that beat both market and industry averages. In fact, the total return on your imestment, including disidends paid, was 14.5 percent. Earnings were also good in 1993, rising 8.6 percent, to S2.28 per share.
And, the Board of Directors again increased vour dividend by 6 cents, or 3.5 percent.
Our positive performance was the result of our commitment to controlling costs and continbed operational excellence. lb control costs in 1993, we completed ses eral refinancings, u hich dramat-icallv ahered the make-up of our debt and some of our preferred stock, resuhing in annual savings of more than S 11 million in interest and dividend costs. We also continued to reduce the number of emplovces in our workforce resulting in a decrease from 4,540 in 1992 to 4,404 in 1993, a reduc-tion of 136 positions. Since 1991, our workforce has been reduced mainly through attrition bv close to 400 lmsitions, or nine percent.
Operationally in 1993, Pilgrim Nuclear Power Station completed itMortest refueling outage eser at 57 dass, and earned its best " report card" from the Nucar ' ' 3rv Commission. Three of our fossil units completed major oserhauls on time and within budget, preparing us for strong unit performance and reliable power for customers for many years to come.
Our focus on competition intensilled in 1993 as evidenced in our strategic plan. Its details emphasi/c reduced costs and impnned senice to both wholesale and retail customers, more eHi-cient and elktive technology and new energy-related businesses, w hile recognizing the need to continue prmiding imestors u ith steady financial growth that outperforms the industry.
Our financial condition will imprme from recent victories in the u holesale customer market. In 199 3, we signed agreements with tuo existing w holesale customers and added a new customer to our list: the lbu n of Braintree. We have now successfully negotiated contracts to supplv power to live u holesale customers until at least the year 2002.
lor our retail customers, we seek to provide price stability. Tn that end, ue have set an aggressive goal to not seek any additional base rate increases, beyond w hat is alreadv appnn ed, through the s car 2000. Our managers are therefore challenged to continue providing financial growth for share-hohlers, u hile hohling prices steadv for customers. This can only be accomplished hv simuhaneous-h increasing revenues and reducing the costs of doing business.
l Increasing sales is largeh dependent upon the strength of our local economv. Theref ore, we hase j assumed a leadership role in helping our cities and our state create jobs, and we are lending our material and human resources to build solid and safe communities. Recent reports indicate some success as local unemplovment figures fell below the national aserage, ollice vacancies decreased, consumer confidence imprmed, and home starts and sales base begun to rise. Gisen these positive indicators, we base resi3ed our forecasts for improved sales growth to 1.5 percent.
1
O
,p $
, Q: :a's u ,... .
, I . .
. .:. .i sg*gi *.
.y .
e, ,
k;: < ' t3
'e , 1 .
': y s <
3
-1, .
19 g-x\
h j
y" @
i'
@s e '
. i .x, ,
"'?
"^
! l3
[ ,.'.'e1,>
f v' '
p mes 8 em @
,_ ,, _ c__-..--,
3
o retain and espand our customer base, ne must deliver value in theprm ofenergy clpcient and environmentally benepcial products and quality services to help customers run iheir homes and businesses.
Customer Sales, Service and Marketing l
Customers demand excellent service, and look for s arietv of medical customers in our territory, electric one stop shopping. Th accomplish this, weie disinfection and volume reduction ss stems offer a cost-restrut tured and relocused our sales and service effectise, emironmentallv sound way to treat and dis-organi/ations, and cl crated standards for perfor- pose of ha/ardous medical wastes. We're also working mance. We're creating a u ith residential customers to of fer advanced heating customer-drisen, prollt- and cooling ustems for significant cost sasings.
... enhancing marketing plan, M,e,se reallocated our customer representatives'
'. huilding the skills and com-p m , time to help us accomplish our goal. The result:
petencies of our marketing 4~ 9 front-line sales and service emplmees will spend and sales forces, and, most more time in the fiehl, qg importanth, reengineering w orkm.g one-on-one with service delivert processes .
customers, with the full Wanda Vasquer for our customers.
support of.an in house is a customer service We're developing a het- technical and administra- f.
representative ter understanding of our tise team. These represen- %L who helps customers with customer market segments tatives u ill provide N
so that ne may become customers salue through a billing questions.
service issues, energy consultants for each saricts of services, includ-
, #. applications Tom Puddister is group. This understanding ing real time information ,,,,,,,,,,,,
for new electric .
service
"'II i*Pf"s e our ability to on customers' energy auto mechanics provide customers uith a usage and patterns accessed who maintains our fleet of sariety of demand side throuoho laIutoI)(omPuters electric cars management programs, as well as qualitv senices and and remote data hnks to and vans.
efficient electric tet hnologies w hich meet their needs (orporate headquarters.
and expectations.
A u stem called Some of the new, energs cilicient tn hnologies and CADIM AGE will provide em ironmentally henclicial products u c're offering us uith saluable computer graphics, database map-int lude electric chillers u hich pnuide efficient, reli- ping, and facilities management needed in our daily able cooling for large commercia! facilities. I or the field operations.
4
Our RETAltCUSTOMER MIX is stabilized by the commercial and residential sectors which help minimize effects of regional economic swings.
./.
ladustdal ,, f '
> . & Other in -<
Rest (ential Ceaunercial -
We are also athling sersices that 28 % 18% firms and more than S 1 million in alhm us to use our te(hnical knowl- annual base res enues for Hoston 1:di-edge to meet customers' internal . .
son, in athlition, we've been instru-operating needs, thus expanding our I' -
mental in developing and role to pnnide customer senices on ,
, implementing a program in u hi(h the other side of the meter. -
local CEOs promote Massachusetts While many of our elTorts are to CEOs around the country, in targeted to c\bling customers, uc'll continue to pursue new ones '
EARNINGS PER SHARE Finally, we'll continue to sui,Imrt aggressisely, especialh' in the u hole. FROM OPERATIONS the electric schicle and electric mass sale market. We are currentiv rose 8.6% in,1993 transit markets through infrastruc-preparing a number of active hids ture development, coordination with for new nholesale customers which --
Deet managers to encourage the par-include salue-asided programs and chase of electric schicles, support of senices that should help set us apart legi.slation, use of electric vehicles in from the competition. our fleet, demonstrations at area Customers expe(t Boston Edison schools, and loaning vehicles to to he a good corporate citizen, and meda and opinion leaErA bpan-to take our role in the community sion of the electric transportation serioush, in addition to corporate market is good news for the emiron-giving, education, and environmen_ ment, and for resenue growth, tal protection programs, we fulfill Our success will he measured hv our corporate responsibilits hv helP~
stronger customer relationships, ing to bring johs to Massac husetts, reater emplovce opportunities, a Our 1993 tilorts garnered solid larger customer hase, and increased results: our economic desclopment revenues and profits, rate, w hic h prosides 4-year rate die (ounts to eligible customers, helped attract sesen new manulacturing 5
.c. . . . .
L- i, a . g n S l: .
.'.l;',,' l. ' " l: f
. .:. . .*,a-
.....:.'.,j._.. ; :.. - ',. *'..:'_'. .. - ;: . . . ' -;. . ; &O.' ... ' ;; + : .; _: .a:
, :.. . : ;. i . ,'.
x-l". . s;:. ~ u'v. .. . :., ,3 . . ;. L. ._ . ' -
9 .1 ,.,...; ;- . ;;_ o. ; . . .; ,; * ,.
'. ..* ~ . . . .:$ . ,.,,;...G.-
_s,.,. \:q : . l " i,' . ' S ' jf .
~ ; . :y',? y _
. y L .. .l .' f ~ ? ; , , ,. G ;.: ? ? ,'. :7 _,.T _ , . .
I -: ) . ; :. ' '~.;. ,_.;_.,'.'l - }l ._ .;
_ .j}.. .. .\ .
f * ,,'. .T. ' s~ .' '
( . l% .
..-,Y 'ia * .,j 'T
.. .. - - ,..,,.;,*- . _ , ..,. . .. i.
.? : ::: , ...'.,".....,,m,;._.
L,.,.,.,L '] ;. . :
,f. ;. . n . ., -. ..y
.t
. ..-..,.n. :,5, ..
g ...,., . , .
, , . , ,e, _
. - s,
~ .,;., ,,. ;' ;. - ,( . . . ,.
g
,, . . . _ . . . , . . , . y:..
y
._;, .[.;e q . . . .-* , . ..tuy
- m,. . ' . ' ' , '- -_.P. ..,) .3-,
, . . 4 . _4
.s ..
- i. _ s e . -3.-o..,t, e .-.._;
~
. . , .:'. ._. 4 ;
t,s, ' ,4 ~ ': ' ' _ . ' .
y- , . ;;, - y, :. : ; . . . '. 1**
' l, :: .., , , ,. , },;f. .,q, ?.,:,.c,,.
.: . s ,.. , , .]. .j* f y ,,. ~ ; ' . . . :. , y . y~- . L~. ., : . _ ;_ . ...,.,_..:,. ..
. 7 :,' ,.:. , _ . , . . :. ,,: ',' ,; J.M.. A rr . .'. . ' . . . , . . . . . ,.. 3 ; 9. _3 :. - g 'm. . . j' ; .w! ; ' - [ ,, .. _:. ,,, - .
. .;. q, r'
- p. . l , \. . . - ;: *,.<s ( - , *
's i e. P ' ;' .. s - s; m
v- .:
u-:., : ., ' . , , .J ,..- .
-: 5,:, s,
.... s.;:., :, % (; M. @c*qis . ;; :-' f*.".:e %; *G N,_ E,.;;Q ;..; :.&, :, . . . i ;. .; p. e. , l. j :..b , . 4' ' . ;, ' ' . . . , ,
&: ..; .'. ; v<;.e:y* .'.:. ,~;. z.. , . ' s :$l,,w,,, lQl%;;. ., j;' ;.r ; .:!. .. . -? d'.; ~..:.,.".t.
G c.3...,:.
' . ... ,1Q" g ' .C.;
- Q'* w . ? lK;, . ,,, :t, . . y 'X _;,'
.s,. ;
- ..
- :.,;;;;p ;,, . ::e.' , -: :.,;
L'. ..%.
, ?_f.x i.; .:s - ,; .x. .:. ,w . ., g -:; . i : o . . A ~_, ; ,,Q.',__.....g.
,'..f,;...,..*.c';.+. ;; y;;
..l-r.; . .; , . .: .:..:
. . . .. . ;: e . ,; .
.; y ,., ; . g . . .,y, ., ; ,..g p . ,.
3;3 ,:- ...
, [ b .'
.' ' ?l* ,: . ,. ::
- y.
- 3:V y. +
- 9. .
lV: %. i ::! .. :.,, } ', '... . r:I : 4. ' . k : ., 4 i 9k.
- , . , , .~ .:s :,.:.,.- . : n ~.; ,., u y . ' ,:. . - ys. .,, .. 2 :- .,,....: t. ' !?:h:... .. . A_ m -Ja.,w , ;. ;
- Q):*.J ' t, :; x .,..;.s. , - s. -
~
-; ^ <..i. G ,
, . , . . . ., . . a . a,.,r.
- f.....'...~4...., . . . . ;;. a .pque
. .. .. c, ..:. .r:
,., o > . _ - . , . . ,. :: .,.l, ._Q,-7 r . s; :.: 3..'e.,
t w _a.
- I b !
- ,4. .
{
E-2
.Yg9y m
. ?:hf
.; ',;;':9 [: : .:.-'
' ?.: ..a:M v.
... Yb s.
f *L ';" 'q a';f
'^ ' [.Q s ,
Y : l. "' ' -%h '
' .: y i.:' ' '.
- p; ' '
';b. N
' .',f J.
L?i l;
'k . , h
' I .'.;.}l:l- h * '. r
. / . el; V .,_ ',. i
. ' ' . . Q . .e
- g. .
- . . .; w.
. . . : a]
- v:h : _p '.p l . .
- .'...
- A E- % {. '::[. . ,'l[. . 1 ...' 4 h , ..L[: ~. ..
i:J,tay ,[3+ ;.. . S .. ,. ., .l...u'? ,[,., .f5
'- . w. ; . .
,*n. . . -. : .. .. ' ;.
m r
'w:4..., 2 c.
- .q, ; ; ;,
?. .
...,i- , ., ..~[ ;t ::.~.v.;.;^...-":;, - .. ' ..:;f.~:; ,;:. . . .
s k
= ..
..u .,.: :...
...,; .y . : 5 'Y.
. .. ;_ m: _ :c
.. ;:e . . ; . ;_ ..,:
F.c 2- ..: . ..L ,_ ' : 3. '1:-
'~.. ~
'; c,'."'
e k.'-. ;. g, '? s. .,. ,j, ^. _ ,; ' ,l , . L l .
' ' I'
.' ' .. _ -' ;? . . , F
. *. . ; 'I : .; ' i .'
l:. -_
, I : '. ' ;
.7 p- .; : , , j. . ,,.t ,- . ,, ,...
4 ; .,r,, ..,
-., . . , . , .g . . , . ,
l: , , ..: :.....,,,
' ;. s , , . . .: ,.*
.- ... .- -.t.
' ., . . ' . ' , .: . * - ; ' . ' ' * , Q:(l, l':. y. "
- .. ,q ' .l " [ L,.4
?- . ' .. '. ;
."g ,
- C, .fru.
..; l,'. ' .: ' ; ,, - -.; ,. ,' :. ,
- ' . _j%' , _ .- . . ' - -' ' . .
_'.b. .. eeQ'kl46epiais ' - - -
f ',[ : ?,'l ,
- ( :,' {Q,:
,5, ,j'
- l. . T'l :,[
- l , t,.
- .h ','; l . , } ' . ; .l. }, .[ ? N ,i,. , ..
' .l'l(': , -:' '
J ;; ' f,, '
fl* 'j'*,' .;; -]l . 3,:
' '. .-),.' :
= . ; . ;. ' ' .l. ,: , '. , " _ ?.: -
,. ' ,,f','#* .:.,i_'.:q.c ; ,,_ s
, 'y . " . :-' .3..
- . -- - ' .: ,*t
. _ ; < ;, [s ,'. ~ , . . '. _
,t
, . - (. i ;,, : , .. .
' , - :l'?,' ' ' ': 'e 4
' .; r ' ; . .-. :.;, ' .e : . .;w :g V*
- .. . [.'. .s . -'.- ,;L .. .. M ,R .:. .;-. . :. . f; ',._.-),, ,...]:,'.'..' g. . .; . '. .;; ' ' ._#:n R . '4 y_,....
- r..j.. .
f... .,._. ., ': ':', -
vsn 3 ' '; .
e, .. :: .* . , ' d L. , <,'?' ,
g _ [; _ .. .,;.
.; ;., y:- l- 'J .'_ s. :, L;;,- [' f,_ u ,{
L s. .
'* ', - .r
..._s: .
- q. ; , - .
^ ,
- , '
- c. . . ' ' ,1G
. , . ) . .y.l * % "::,' > ;r 'l . u .
^
- ' y'
- ,_. . .,'. w' , l ;,. ', f , . _ _ ; . ' , , . . .
',n .,.;. [ '. '.., Yf', f i ' ' < '.';.';,,' ?. * - L:].::*
}.
J
'*c . [ . : [+,- . , .,,;#y . , l., ;.' ( i .. , C.' 'c ] ' r.. g , '.'(.[ 3 , 'i ., ," ,t f - {;: ',
,, .;,.._;....;. . , " , - u - . ..-Q, . ,
. , ;l,-
, ' . . .' I. '. ' , ' , , ; . , y' (. : { .( ') .. . l'. .,
.; p , - : ...?.' ;- ;*.; ,_
.[- - gf ()[/j 1:. . ;, . . ; _ , ;, j '
_c 4, _ __ , .
F .3 .,, .f. .? -s,, ' (.q . o *_,r., ,, ., . ,; ,.._ " ,%'a';l ( - ',.* . ,, .g . , ;, , ;;c , , , > ;.
'- . rf,
.; rl . . . ,,7_*' . . ,;,.g. < , ' $ , ,,{, J .[ '. .-'; ,;
>!(.b 4, W,.
.Y' L 'f}p , ..' ,;' l7,, ...;.'l'l_" i ;- _ ;;;, . , 3-.c ::. ' ' - c.
~ '
's . ,'s*,, ; ' '.;; ' . . . . . < .- .
- ; , . ' ' , l ;' , _: .
,_7 , ;;,
. ,- , : g; ; , . _ ; . . . -
m,
- . .]r._
- . c .
- * f
.), - .s. .';. -
..J,
- ,
- y[* f
._ , ,, ; , j 4,
. ...- .'.4- .
,' ; ,,,.. ". : f' ' _. , , g . , '.
c.,. f.'., < -
.. : ,. 1 .,,y -l-
.' . /; . . ' , ...._..,',.v.
." , ,
- j.,- , .i,',',,-', .
9, ., . . , , , . , 3-
- ' l,
,.. p.
- _._, ,,_ ....
- n , . . . . . ' , ; , l', * *'_.g, .l'. . ..,_,\,,..,,.
.; ; f ,
. . , . ,.o :; ,,3.,., , % . ;, .. ..;,, :: ,>. ..
=__ *. . -, g,
.^':-',:-
. . . .- . . , .r. ; . . .g
. . . ..,,: , ,. . .':,*!:, y- .,
, .,s,,
a ..s: , ,: p :
, s.
, *: ;,.s; }. . -; , ', j.V....., ..):T l. - .
E . :. '- ~_.u.,.,. .: ,j , :e /. ', :*
.. f. , ,;a,
. s . ' _ ,
. , , _ , ' , - , ' 3. _ _;...'.-[-. ~' .'
f l. , '; ,'l ,;.,,,.,,',_...,,.:',*,-
..,9,..-
y ' ,'_'i_
, , ' *' -<3. .,' ., ': ,y<:,3.t ls : .:', t, ' e!' ,. '. ; , f. f. ' ?
7,(
+ ., ' .
q'."4, . ,, .i .
g a t :.. e. . -- ,- . .,.. , , . . . ' "y.M i .*
. ,, pp.;, .: , ' [_ . ., , ,, ,. . 3. .E */. g, .- ^ " . ' c.
.: 2 g. ; y,
,... , " . , . - , q" 'p,
-.c,. .
.,s..
'n g .. , .. . . ..-. ., .. . . ., l : : .. [ . ,' ' . ~ ; , _. . ' ; ;' , y*:,, . '.* l'
, .. ' \ [,:', , ' : ' !'. . ?l k l. . , .
- f'.'
~.,%,'_ _';u l,, . f. :. ,; .- "^ ':. :- _ ' .'t...,) :. _ ' ;.',. ' ',c i;. .1l, 8' . . , ' ..,.,; . . ,.,.s,'. .- 'py..
'+.
', ..'.w*', .-, , . .. . ;..';...
^. .' '- . - - . .- ',. -
~ .
- t.,
,a r 4
.,l..
s.
. . . , . , . ' ,.. .. q5.
.,' ;. .'"=; w .
.. f
'l
- 2-
. :. .c - . , - ' , . . , ;.... .:. .../., . . . . . - .
{g *
....,J.
- ,. . a
.c .- . . . .: , 1i ,; ;.. : ; , ,, ';-
'l,i . .. . C, . ,;
e > . .. ,
. . " . .' ,,I,,. '.;;- J 'E f ,.~l , ,,, j ; .. , : [I . . ,
.'f:S. / ( ' '. " 'l. .,! ';,...'-
', '. : ,d.1 S
.- ' :" :'. ':'( ' '.'n.:, : .,
' . '[
- .: .: ,'.,.s ..
' ?. : .J.V -
, ' -. . . . ' . . , :. ' [ .i . '[ , . ,' ..
. . :: .+.
. ., * .'. * .4'.'/, '. : i ;.l'~h ..; . ,.f1. .; "; .. ' .; l ,,
.r. . . . ,
$, M:4
'L'
~ .
- . . ;;' . .i -
, ' , ' ' 9 ' ': ' : .
j :'
'O
.'.f ., (;],
y
,...,,:, ,. , . . . . .. .. .. : .. ~ . . . , , ., . . . .V,(//<....*......n,
, .- ...;.,,.- c- ,, c ;. l
' " . * . , . ;:l; . ..;3.
- p. ,. ..
.4, : ., . _, . . ,, , $, ,
^
,' , %, i ( 3 , ,,, :. , . , .- ' , . ' -
k * '. ( ' . :,. ! .., ;.'.,. t. y, .> l
,,._.._.,,.,'..,<*;l,,',},.',.
,r t . ,,.
- .. '<. .?'; f"
- '.g ],. , { ; ; 7, . . , g , , _ g . ' ?; -
,'o ,M^ 7
,.' , . 6 ' ;' , [ .y , . ,,.C,, 3 ,.(./.;;.*,
, 3 ; , . , . . . . . ,. , . " ..,.,.g ,..}. g..s d
. y :;, , . -.: .p.c (, ,*- ; .
- ,...(,., ,) ; , i .'; . J, p t.,
- ....,...' , - . .-, ,. . .' ' . , , . . 4 .y . . , ,. . :. . , .
-.,:._...,.o
. v.; . .-
, >%.,.. )6. . . . . , , . . .-.* a.. ,
.,,s. .g' p y .y;( .. r;. , 3 ys .
-,. . . ..lc. ..;,... c..1,_3' (:
- y y_.. ;.
- .. .;.. g ., -* .w C
g<. ;~,g._.,..; , , ., 9 , .1 ;'n . ' . . . , . . . . . , ._..,'..:qa,_~,,.;,1.f,..y qj .,, ;,: ,: ?- _".,v,,.
?
,.,a _
- $ * ^., L .s ; ; .l., 3:,. .'z ,.7l%
- . q. ' , . .
.f.p'. r 3:
- . q jf . ;._, , ,' ' ? ,f;f f y'[,i {'. p. .ll.' .b.,'l',
_ l, ' ' '_ . ', v h.. . ':.(,l[ '. }.3 ; ). '[.,U ,f t, . il:' . " . ' ' ' ' l .! ' , . .
'.r ,. .' .l. ll,[. . g f.a *U '
a- : o ,: .' . f. , .wu. 3,L.::".y . gl4. :~
- ,.a
- .v;. c.
- a ,c .w , ..e
.' ';- ... r~ ..9 f . :
.a.~.
w . ,. 2+ c : ;1.. .- _e.sy i: ; .u.a%. ;
t.
- -l,.r... s .m. ~ . o. . ' ,r. 2d . .. . . .;.,. . :
, s ..: ,~ : : n s .~. g.. . g.1. .n[.'.::
J.:. M w' .; :.y : . n.. g; e
, .. L . ' . y (..'m
..j..y ;y u . . . .y ;i . ;. i qT .: s .. : y.
- .: . . . > ' ..: ... . ::: : .. . z -
s.. '. :. i ; - ; .. . : .; . , ~
- q%.,,;y ,s :
e b : :. ..y;; .. : . .. y :n- Q ., :?;2. 2.s:/i,n. *j: . ;[ .
w: z ,.yy x. . . ., ;; ,_ jf. . .;.p.g Q..9.,' y.J.Q,y ;.T..
yep (:;;.J.w%n. u. y :,v.m, g' y/.m.\.
- ; w;;, m;. ~ .; ., ..:;. }f.y ..c.
Y %,.,r.. . - . c w...:. i f....,.n.;:; ,. .. .. .: .q q:.:, ; . g, :.
, , . . s .. p ; q .. : . , . p. e,..... p. 7 -
- y. .. \ _9 .
. ..;.. . 3:: a .__.: .q,_.....
t_
g,..
c
- c. .,. .[...:,. .:. .. . . .[... K ./ ,.,mw :
- '; s. . ;
- , ..f.w. ;.,; l. :..), :
_. . . yfj . , y ;r._ z}.. .3... 3..j3 n : ., q Q.3 y.g. :y ,.;Q _ } ;pqjy:j. p:.,: :y:. ..,:.L.;p~ . q '
. .c .
- . ....~n ~ ~ . .. ...w . . . . . .
.:m' *, ' , . '. .
m'.
- *- , . ~ ' - * )
. . . , , _ . , e * . ,- , .
m
, y . -..c.. m ., ~.. . ., .nx.< . 4w.n ,. .m.,;a:: .-
s.:. ._n, . . v~,..c m. :. n J". ~. v x. 4 .. .
1 n:- . vr ; .; : . w w . . . . . .~ . ; ~ , . . .p v . .: .
w~ .:
. w .,
. ~ :. , .:+ ... ?y.,
> ., & . e a . n. . s: ' .
..'h*... g ' , . - . ." * *
,,a '- ',
,~ .!'
'",I ;*
- m c:
.. ~-
y ' : > ;. ..' l.
.,,.G
,,< . ..; ..- , ' . :c . . . . .
f, f' ,
. %9,9 &'
. :. .. ;. f .;~ . m.. ,. ;:.;o.,
..,..,,,m.e..c :.,....s' . . 'h .
.~ .
- " ..' ,...,s.7 . , .;. .. , ., w- e g . ,, . s.4.......,,.y,.,,.,..,p;, ._ a
,$.'.j s . ; p.,, f ,. M . ..*.. u.;.. . ~. , .
"': ' S .'.:. b: , Y; ' [. l (' }.l
~
{ ^ ., b [ ^ . , l ' ': ', . ~ . - , f - ". f...
t.
. . . g l.y . .v :,. , .: .: . . . : . . :. . . . . . .. ..l 'l '. w . '. v . .- : :
1_ :.
m- ;- , ..:~,.... , _
n . .. .
.:2-
- ., ' " ;, . = * .. 'a*- * '
- r-- ', i , . - , . . . ; , , ,_ ., ,, .
' . . .' :[?l ,' ,_1 ,. ;' . ;.
- ypepegg c 7.(.w33.j;((f9'0 . .; .. ~ :.."'<. : * < . "'
.l..,
ty' l.-y'* A [ w g "7 3 - *.- ' J .. ; .
- y p e* : [ ll,
.s.
- a. , ., ;L ' . . y . , . C-. /;- ..: '.. v'; w.... .'::$y
. ;, ;, ~ 'l.".;.4:. . . .
' ; r _,9' ~t_:....'.','.':. .
h ~ . . . _ . .- , . *
~. . . ,, , ,.; ; . r.
[ '. N , [ ' '- * - ..[,_ '. ,' ::';1 .-
, ' , . , . ' ' . - *; . s. .d'/,.
- . . . . . . . .. '.'. .-'. .".. ', .:\. ' . ,', '. '..*'i. -;". _, .;"':. ' .:. '. . .% .,;
- ;.. . ; .t . .;, ,.....: ., . g:' . . . .:..
'n. 4.
. v ;"
,e' ;.,",w... .- %
Es q.: -
M
. J .; ;... .'_ ,f .. .. 7 , , . , .i :.' 'l
,a. .'.-
- %, . -'s7 (_.[ ._;.-.'
e ' - . . ' ~ . . . . , .. .;' :' _. ,. . .:- L' : .' ',~ ': ? ;. ,, , '
W ?. '
% . k',I ,;' '_ ' , . , .t:-
'4. .;$ h .' "' . h. .' ;(( . ' ' '
~ '
, [ 5.[' . . . . . g/
['. , . ' ,) ' Y r[
. h(~ . . .;. . , . '. ..'Q.7
.,,. ; f, .,
. . . u ..:m :.... ,.. ...r.. . .. ... .,
,, .c . '- .,
,'.5, M g& .[ 8* ',y . . . '
' ,' [
- m
'. O, .'.,-[8
[.
-. , , g "6
"[ i 8' .Y. ,'-[* ,.,'.,*
/.'s.'.'I., -'*'.',.'['
, . , , - ,, , , . , , ,,
- 5*
.g,. '[ s 'f.,, ',,.;y f ,'
- l. ,, g
- .,,..[* . . . . f- ' '* 1Fs'$',.
^
'.[.,...,','r *,E g . D 'r e. ' . [ -
q E j k s*/ f. 0. y [ ,* ' . . ..
- O ' 5 I .' ', ; -l ), *
'I . ) . ,'.,!
Aa*. l 'i[, O. . '..
' ' , , q*
y._ .2, ;:.:: :.
L pFgE#
{ J ,,.l'y,
!'-r* .l k.j ?
M
=
0,,,
VALUE-ADDED SERVICES CADIMAGE is a computer
- 9. aphic and database app.ication technology that replaces manual paper maps and diagrams of the facilities, lines and stations throughout our service territory with on-line, computerized files.
CADIMAGE's original purpose was as an internal tool for improving employee efficiency through better information.We are also exploring a partnership with the Town of Arlington to investigate how CADIMAGE may provide communities with value-added services. CADIMAGE may have applications in servicing e municipal needs such as planning, assessing, engineering, and public safety.
Left to right are Arlington Town Manager, Don Marquis:
CADIMAGE Development Coordinator, Dick Cohane; and Executive Vice President, George Davis.
I gp E R /4 ts1gms ARLINGTH ,
ustomer satisfaction depends, in large part, on the price and reliability of our product. To procide a reliable, competitively priceJ C product nc must control costs technoh{qics that improve c]fciencies and reduce costs.
Cost Control & Operational Excellence stable, predic table prices are important to cus- specific senice job e
tomers. So, ucie tcenth announced a goal to avoid descriptions into just four .
f requesting base priec increases, bevond w hat is classifications. These alreads apprmed, through the vcar 2000. emplovces are now being . .
trained, and will be -
To at complish the goal, ne must (ontinue our .
A responsible lbr handling a ! g efforts to control costs. We must continue to make .
wider variety of field work ,
/
full use of empimees' skills and available .
1or improved customer Al Abramson is a tet hnohigy. Thanks to imprm ed emploue scnice at a lower cost. sphcer in our efh,ciency and better use of. technology, we,ve been ,,,,,,,c,,,,,,,,
able to reduc e our Punuing technological service area who norkforce, primarih adsances in metering can maintains and also help us save moner repairs the through attrition. We'jj s underground d, continue to reduce our through faster payment of total numbcr O[ customer bills, low er labor prowhde power to costs per meter read, and our customers.
employees based on asoidance of safett and further technolocical advances and access problems for our restrutturings for meter readers. In 1994, we'llinvest nearly 57 million imprmed efficieno. in equipment that reads, disc onnects, and reconnects meters remotely.
Management and union control msts by better managing our leaders ha e worked ucll imentories. In 1993, ur reduced imentort by s13 together to improve mdhon, an< lie 1994, uc'll work with our sendors to j perfornunce and reduce incorporate a "just-in-time"imenton philosophy for costs. f or example, in 1993, ne worked with further sasings and efficiencies.
our union represented Effectise maint(nance of our plants and svstems is emplosecs and their necessary for success. In 1994 and bevond, we'll leadership to combine 14 benefit fnan 1993\ presenthe maintenance m erbauk 8
TOTAL NUMBER OF EMPLOYEES decreased 3%in 1993 through attrition, 'i n hne with our plans to pare down by
'about 100 employees annually through the year 2000 E,000 5,000
/////
4,000 _ _ -._L___
of half our fossil units. In fact, tlus 3,000 - . - .
service, and environmental increased fiscus on maintenance has ,
performance, the company will permitted us to e\ tend our fossil unit 7oo, _ _ _ _ _ : _ _
use benchmarking tools. l merhaul cu les from the to six 3 cars' l I noking outside the (ompant, and rt fueling inter \als at l'ilgrim ' 1,000 - ----- . .- ,
we continue our work uith Station to evert tuo scars. This will . state olh,clals and regulators on help us to c\cced the on-line capacitv ' 0- - - _ _ . _ rules u hich affect the methods range of 60 - 69 h sct hv our state 1989 1990 1951 1992 1993 ue use and the costs we incur to regulators for Pilgrim Station. . , meet customers power
'Io control maintenance and demands. Our state regulators equipment costs, we'll use hat e created an integrated RETURN ON EQUITY in 1993 com I mteri/cd models and available resource management (IllM) increased for the second year, tet hnologies su( h as ;ihration coming in close to 12%. process in w hich elec tric utilities m, nitoring to identify problems forecast future energy needs and before they bn ome sewrc. The propose how thev will meet in result: minimum unit dou n time, them by halancing conscriation 4, fff and reductions in rush orders and 33 __f A t_ [ s programs and all other available high cost replacement equipment. <
supply options. We're working g f - t . ing - r _. L :_ J closelv with regulators to ensure (,r m, . cal to our'goals of cost > 1 ~ the litM process resuhs in t ontrol and continuous improg e-a ~ s% ; - : - r -- : - - - meeting customer demand for ment uill be the on[(ling
- - = ]
0 power at the lowest possible cost. unohement of our managers. .I.hese : 6% "_ _.;.,_ y _ emplmees uill run their ; ( ;' departments as small business units. a_ E help our managers monitor l ; - performance against the n : _ ;_ !_ j_ :_ competition in areas such as f*; rmplos ce ph ductis itt, custorner 0%u' L L-!_ - 1989* ISM 1991 1992 1993 Aseemed eer see-uses wne...a 9 1
. , , ' ,, .i..,..a s. ... . ., . ,, ;; * . f., ,, 3,.;,, .,.;, ,, .,n. . .,,f , , . ,,. ,.j .y. . ,. , . . . , , , . . . . . . . , , , , . . , , , , . , , , ,
w;. y 3 -
.5 1.-
J ,.#'-. -
*3.**'
g .-+ p
,'r
.~ . ' .
...a. v' ',_.;,p.'.q ,wl .
g _ ;,. . O v<<.
- g ,'
', " ' Tyl t.$
. ;.. r, .;e A . ..[. p ' c. :..:f t : ,,u..
s -.
,u>
,s v
,**., r/*',,.,
g ' ;i * ,s y R. y.l' '. .. ,.md . , s - .
,e_.,,.p3., . ,. p" '= ; '.*3. p:r:g? Q;,.,.,,~..'3{,.,_, g "s 9 . ;.;; , . h1. < - q * ..,-4,,'. 9 ; _ ',,, .n. , e. .!,,,.
2:
. . .., .a.". .. f g ;- *
' :. . s,; .f. ~ , ,\ ;p , , .. s. ,. ., , i; .f,g._.,,;,.. ,l. ,n.*_,:1 ;r ,
e .. . r 'f ;(*,'.,,,.y.,.?,;. .I
..*-;,p.,
g.]".- .l. . , - , , '~ . p . ., .e t-
*.,}*
. , . *.; ' ad Sp.. f, . t,!
f,',...,} - i.f j r ,
'/-
l., g ; / , . F ! , j, ; . ,, j.. . .,.f ' .,
.' .'. ... ', -,' , ' . .. . ~,.,. ,. .**.;*.,
,,,p;+.,O7.-(.;,.'
'*,q ., *'.. ,.,'f'. . .., t. s
', * .y*, i-' . , -
. . y..
*t
.f .
. , . ., * , . Y' - - '.,- . , ..- ,s.3,,...., ;! . P. *
- t. I* y,.,.*',..4.,(,i,. 9.-s
,t,, 1
.,i..,.',sf,..,;..
s,..,
, ~ ; , 'c .'.
.. 4,,,,,., , , . , . ..
"j '_ , ?
^
- h. . . . . , .. . .
?' ;
- l l.' ' -' ' j' , , l, ,,' ; , y , '..: ' ' " *' * -'.: , . Q' ,b ' ': 'e ;.A;' j' _l
,~ '._N,'.' ','ll~-'. ' ,;-' ,"- [_ *l . ? - "* -
Q }.': : l~ __u'_','[. . ., ; a- 'i l .') .; , . . . ,
.. , , ,. , ... .. , .' , , 3 ,. , , . .- . .
. <' -' .._s',
s ; .:.
. _+, ,, * -
+..,,~,/g'*. ,.c,':; . ' r.s; .-;
;,.,.,,,7 .. . ',
.j . . - ,~.o ,,
,...e....c.,,',.g'_,.
c.* ., ..1 .,.-. .
, ? . , . _ j. . . ; , ;/. ,, , . j ., , l__.,.*g.',,,,
. ,. . . , ~. . . ,
r ,-.,.
. ,;; d,
. 7 .",3, . ' . - {. ,'...'4.,,
. . . . . ; .,.: :,', n:= .
.._y_
- ,. , '; ,fl.y ... . . ..';'...
, . . ; , ay . ,' ',j.'.'.s }5 (7.: .. l'.. *
- l; ' r, 1i,6 f {. '*; , . , .,4 ,....,. .. f
,,/; . f. _.., * (.-;c '., .w.
'f, ' ,~ g, f,,, 4 .
.): . . . . . ,_,,_,.,..,:n,.
; .'...',.;..>:.';.n
? ;; *:.-
, ': : :. y.1 .- ; *. . .<.*7,,.
' ,., * ;.;, y.;..; ';,, ..; .. ,., '. .v - . .,,..,..5 y:
- " * ,- ,,:..'= , s;,, . ,
.* , 's. _
}.. . .'. ,.'e g.f.'."..
, . i .t
.s- L,.,- .4.
,/
5...
- s. . , ., .. . - - . ,
,o :,'*h,,'.'3,-
l;F.; %.; . . . . . . . . :- ._.._,.;.. .j ..' ' , ' - : .+ ...,..'.,'.3}.c..,.
. l . :, , ' . - _ , -)__J,.,'.s.* . '
' lv:.,: .ye . : :< ?
i 'c,
. *', a.q ;. _, ;_ _. . . . ,, ' , , ,,q . . . , -.:<-.
L.--* __. . .,.* ., ,,. ..:,. . .',.'+,',';.
.,.. ,. ,:7 .,, . . .*. .....:'
L
.' . 2.'. .,..? ..u.. . . ' ..p.- :
._. ,. ..s
,, ; ,r t.,,,.,,e., , ' , .9.,~f..';,,'...,,.;u
.* s-
, . . . . a
- . .. .p',. ,.
'.'s*- ,.
;... . . .y ;;..,..,.,.,..r..
r.
,. '.is : .:;,J.;.._,;.:;,.....,...,;..,i...
. . .,;.. ~ . . ,m._ , .
.,.;.,m+..
_ . . . _ _ . . . . . , . . . ,: .. . . , ,u..s .: .
.t.*....
. . a. . . ; ' ?-
.....,-..,t.f._,, '
.g .,,
..a. ,
' .i.
,...?. . .
s.
>: ~
; , 7 , g. , s - ., ,- :. .
. : .. ? ; . . ..,7,.._..;_..<..;:. ;; - 7
- ' y:f. y . ,
- i , . , , , f, . ._ - , , .
,7,.:
*: y:b . . ; ,b ,. , :. .,'.:._
p 7- ... e.. ;...~...'.if,,,,;'.;.... ,
._g..,.3.,.,
; 7.._.-
_.. . . ,., : .s.
,,;" ' ... .~,g.;
g ;, . . :. -
.w. .,.
- - , _ , . , .;,t% y. .;;g (.
,1' ,: <' . .:
. ;, .-3..,.~, _
- v. . .. 1 . : s.ese - p, /.. ...,;:':. ... -
r
, _ , - .'*;/,.,..,.,
_ '....~;<'.:, ...c
'.':.,-o-
.y' .. ,._ ; f ; - , _ . _-_ .." ,'- , -, '; . , , . .
-s ':9 ; *:.1 3 y : } '[ l * -, .N :. .
t
' .; ; . . . ~ - _; _ .- , . . ..s, ,
s .
.,_,;. [., . . _:;.' . ; .;*
,.* " . - '?. . g ' . . '. * ;' 'l ' *(';.....
.,[ *; . . .. '.,:. . . .. ..
. . [ .],* '.4'., ..' . . .. .. .' ',-
p,,,,l4,,% .
. > .: , .. - . .+ .*
-- *...%g.-
.,a. .-
4 .'4,....- '. 1"
' ' ,;* 9 C 4 ..,f 4 r.
.,',,',.;..', -.,. 'g. ., )
*.-.*; . .... ,*;. :-f '.. .* ' ,.; _
;,'..'t,
,?.'
, . . . ,'.,'../...:'... . ;..
g1y; L,
, ..,.9.',.'. ~ . . - .*. ..- ,_, ,,,. . . . .... . , . j- ,.
.'t i
.'7.j-.,...
- J 4, ., .;
..,c ...,e
. , - ,..,,. .. ; :: .. .;- .... . . . J..;.
.> ;-- .et , .'-. '. '.'s, - - . . .;;{.*s'.., ;. . .
c,...,s.. ,.
. , , , . .~ . . .:_ . .
..,}...
.g.,
. a
' . w... ..,u .,. :;. - .. - 0 .:...
. . ',( -. : ., 9 . y :: . . ,;, , ,
, , _ 7' .
i- - ;n ..[.:-. 3_ ,. 4 .
; .y
,,4,...,. . ; .
, ,; ..a ,. . __ _ . . , . ::: . .
. . . -'. .::;;. . .. . . y; :,. , '; , .l :.
. ' :' ..,' ":J..", ;,..~.i.; .:. ; J.: ,; l 7.. [ [ : e.- l " j ,, ' . ' : ' _' s y.e ,. . _. *: ~;';.. . _ , . ymenuimonin
.i . . :qt 4 b . , . y .;
- . . ' n.'
*,~.....p
,. y ., g c.'- t
,: .: ': , . .'. _ ,Q ': ( ,
,. . . :p .) - 24
, e .- .'Q; ,.. ',;, . . '.,( , ,f; -* ,; ; .
2-
,-( -
. .;=' ;.N'.i.:'u.:
.r;., . , .
,.,,; rz ,,,
y . . s .,
.., ... ,, , %. .-j,,,.,...y..,,.;. 3. . : . * .;,,,,:.
- . ..';...' . :W s.;r .
;, ~ .
. ; . .".. . . . _ . . 3,...L.......".
_ _. .'. ,, "_ . . .:~ . : ,_...n,...,
- 3. .. .. s -
.c, W-
, . .. ..Q: [, . .v. ._ -. y y (,o ; y *;; . . , ...:
.s. ?.
.s,.. . -. .. .. v.,.... - ,+ .- ;-,,
,...n,..- :._...- < :. .; :- . . '.u :. .y:,y .. : . _ , _:. ;; .
..,...,.a.i.,'.,.%,.,>,. v.
,: . . , . .... :.. .- . .sv.:: - ..;. , a.
..,; ..' . . . . . ., . . . . . ... ..- 1,..c.. ... . s,.. -
...:. :..- ..-- .;.-c. ; ,. .. y., . , ,, . ., , . y ,.....," '. . a
. . , . ~ ,... ..,
ma.m. pa , z. ;. : ,. c. .t ,. . . .' . . .,s.,._ ::. ,' . - .*
. ; ^. . :. -*. ':;. .c.,
.y,
.. ;~...<.,.,,. _. ....,,,. ;,
1.;. -
< ,p ,; , ..-, ,. . , . ,.
,.y:
,y,...- h :. . . . ..,. .; . . , . . .
- ... ;., .: . ~ r. .,:. -
. , ' _ . . ; , . ;_ ,.A;
. . ., t . . . , .
_.z,.._.,. s... o c.,.. - ..
; ;... ,,y-_
s,.
- ;. ; q: . . y-. ...' . , . *. . , .v., ,. . - :2..* .>
.3
- p. : . . :. . _ _, .'..; ., . , + m _,_.s
,,.,r . : h..-:.? . :
. 4
-o s..
e
., i :p . o . ... .,. ,. ,.j..,. , . . . ,f. .. ; , ,, .g. .- .gp g4 . .e .s..
'f :. l . y k' ., '^ l. ' . '
I' . ( .f .l:" : S. l_
[ .
'l C -
.' .. . .Q..
*' ' :y - . _ , _, < (L..- '..~..v . ;Q. ' N.; %; ' ;, ,, . .: ...i. ; y ( , ' . .v l'.a f:p .;..;y ; ,
;+'. _
;: '\;g:7 -
'5 ?' "' '. -
( : j 'I. l. : ' ; ,
. ll '.
\ . ,. :.. . - l- .c l ._
- - .p-t...
- ' . . ,,,
- ~.+ . ' . l,$ >
..n. g; ,
.v. ,. : . .v; , h; _ . ;, , ,
-. a; -,;,
..;i; r ,. . .,
~,
... s 1'V .y us.. ,; o,
.x
.w .;:- . . . .
c :,..
.... . x, t; w. 6.j . r .s .L: .Q:V . ]" ! 'q;, - . ; :
D.N. , '. ;h S '
' '. ; ' s * ^ . t .1
.[ - b;h h;.
- fQ "
- [ .;. . '. ,M-' , O -) , )I' . .[
,. '. (
j,f; (N;) I' ' '
'.;' } .:. '.;.4.[-;:Of. / _ . ) ' _l l .o; ?l . . 'f- .
h.. D. . . . v.
. . , ' '. .f.. ,.~;l . . . , 'l. . ': .' , ...:., ^
,..., ',Q h.:; .'y ,
Q'_[ } c' i .,'
'+ .:; _f; } ) ., ., . -_l,_
, } d : "1,.[:f 7 ,, J,' .* :, ,/ /; 'y %. l. . (. ._ ll . ;.' ,: :.' l.'.
- i' T. ;.;.,, . . . , . '.;y.-
Y :
- ',L,.,.+ 4. . . . ...
c . . ~ .g.. 4 r
>~ ,.....c.ic :.. .,< . .
.- .h. ,
. .[: .. ;*, .., . c.:g. .:.,n,. . .
N;...gY^ ~ . N,Y.g._ . . ,' . n.s.g . . . , . . p. :. .r.. .g &< z, L :..- l,, .: s. ',gjf ; - g, 4 >
. ..p ll:' :.-.;;_ :.l:s ;* ; ',, 'e.i.Q<.;&'N s
& ;, k . . - '.p...- a ' ] ' ' Y.S 0', .Y -. I ' 'A: .4 * :'. 'j:',m \
L
.' "k " ' :i'.,~,'.
.t
- Kf .':uly.: .,, . if ,: ,;' ,' Q.;}l.:y;.; ;G h, s .'.
. . . . . -':v_y' . .,: p .. :g ;<,.,o yy .
..: s; '.Mc.. ' . - . .
G. "
.%.Rp'M ;;:nq
'[
y .. V.,..[.',,. .qL c.:: 8s . .J..':- ;" ,. .l.p.g; o.,tf. _:; -:- 5. :? ,. N. '. . ?
'- !!,g, .y Q e , .v 1
_ n. . . e -. : .! ..m -
- s
=f ,
..u.+. -' ?. .; :
i
.o : ' d, . ' :.
...,m ,
. : .. ';. i;%d,. ;% f' l[.:.i'..",. .
- ; n
.,.,,1 Q ..p;,:,.' , '%.4 ., .. [p . , ' ':l Z ' . ' .
r- "- y.. .,",,4' jd ' ,l. j ' ,.5. '. i,-
,.' ' .g
.,- ..{
...?.
' ,;...f
'f , , .,6
.( 4 .,'yb '.j!/'. *. . A .G n. )*5 ' f", .
- J. ( N * '. , . ! ' * ;
'y 3 ' . '
d, *),f ,,..,'",y.
'I' <.
- r. .
- *,.'.q
.i
'b o' ". ? .. $.l:' , ,'* l #' I, . , Cht.N h'.k: " :
dC..h ,,;. ;.6'.; h 3' : '- . :l, . '.
.V . '
%' ?. . ' ", c.: :.
s.. _ . - -:.. . j: ; t !. p' C : .)',,.
, .a -",'
- s. 'y _r.,,
'.1.
., p "i Q -e. _ . j =, , ; .,L , g . ,.f r; . ' g.:} .;. ,. .;. _ .,;*' ,*
?..
~
- I- ..E.. '. ,d l [.. . g;l ^ . '. ' '; . (:". [,( ,
,,, j' '.'.t-
M,,[y. ('sk.s
.(
.(',,,
'-i, , . i '(. .' . .
, ,. , a f,[k ' g:/ . N/ - ,'- :,j. . l ' E ", '[;
c ,' . [I'I."'.-',<',,!
.: f .
*; *';e, . *; C
- 4 5 s '/:.'.,l 4",. , g j,)y ,, *.9,'. $; il q [., s. .'.,l'6 $; .if' ,..'
/
n,.'..
'f,'....i*[..,..
, ' [',' , o ; ( .,4.I
' ,'['1,QSy "
- glk. * '".d, $ ' / *, ;).' ,,5. 'I'f.
..,k'
.'..a8
.;h.
.'l
.-. ..,')'
} .'.'i.. #..8, .;f}.' , .l, n
. . ' .'. y. 3 y f , t ;,. , . ,*. h
.,t
.c..
, , s.'
5
; jf;r,
.c -
.O . ' . . , , . - % .'t.e4 %.
-' ,. .vi..c,,.',,' .gt
;-,3.
*j ' l 5l ',.; ' .3.
. .' d'.}, (;5.
- l. , ,>. i.. , - *(+' . (9 ', .
. b, ; . , . . t
,f,f', . . . ..' (.. .: , ]. .,,, /,
.f ..[., - .
., . , .e,"1 ,; ).;
[f' : D.[; {,' ) 4 . . . . . t, f. .' h.
. .'
- j*'( ',s'.c
."' - ; '.'v.
* * ' 4:i g k., ~.y,,
^
.' _..r r ' -
s.-, , . ..:^
...( . .' ?4:e l &/. &,$','e P. . ;*. r' ;'r : 1 ;dd., . . l'.*- . . y *f .,; . . o # , J .. i . * . . , , . , ,' ...' ' -'. ..6
. 'Mg
.'3-l y . , -*hi '*t.,. ' . . .
'-'....!s*.,4 '
.' :5 -- o i
. . . ;l; o;' ( U , ,; ,,
'.,- '.',.e;
%;;d, [:c"'n;.h ' + . . p. h.; ,. , [" :r ,5.:.%" -:e. \P7
*.,- ,p..-
4 ,; $ ,, , f', iy t..' .. .;. . , ,
/
[,.'. ::,' 4. r,
.". '.c. :j . L, .',3c : e,L , ' ' '6 s6' :. y
' *((.o,, '. ..",',..c' . ~ n . . ;f.,*1 p . ~ 3.
f' 3' .1 ,g
. (:.w.:
. . '. '? v *v .l'v'
- f.g, - # ,. y'3.>a
',..c.....',v........
3,.9w* 2., - Y g Jf~ ,,*,',o,e,..,. s**. . . . 1,., 1 .e.
. , ' . .'& ;,..,("".
" r; ; 9,. .; . j *- s. . q . . ,
- e. .8.' *{ .
- r. ;(a-#
.-., f . :,j . * *
,m
... .-*l
's ,* ~*L s . V s ,i Q', 'h,% l'- .:4.) . . **;.,,e
". ' . . .;. ,;*. %'),e '.- +,.-- b .'
.'.z*,*
.u. ( ' j:.' . ' i 4 l ' . 'v'.';. ,
9- > r . . e' .,j
,{,,
' E(.,! ,'4
; ,,' '.n8
- s. (.r ._'ds.4. ./ , . , n. -l
; ,;,y .j , ,a. c, i'a
, k :.'. .l,t;. ... . . , , . .
.j [ ]'. t. g*,.-.[ i,'<f, ;s' U, ..,z' .. y..";
- ,..:. s. f.r v .' -, *. f.' ..,s. 3"; : . .: .
it .,,-
.. v': ; L'
*"'..b'I.-,y i : .? :.
' [:9 "i*" y './.(*,.-
.s y' ~ $Y ._ ;; . I, . . 'Y
~
'4' E ,' E.; ' "
h' .*..,7 /. ! ,k fd./ V.
.it... ,... dt. -q- . ", e,. ' ..
, .; ' .. 4 5 ..g. . ]l) i.,'. . ' . : -
- r . . , <fs: .,.a' *, [i. .: .Q:.l. .k. 5 , 6[8 ):,
. . , . ,..: 5+
,. ' ' , - T..
- r. p4 s u..
1 +. g .? 9 . . . 'it . g. y, . . '
, ; :.. '.??{,. , g<,.y.t j<'.". . : ..j. .p. ;,g (,j.'.6.4,,.j , :. ;y 5. , .'l : 7g ;,i if., Q* l.,.f.. .'. L, co {f/; t, . ,.1
'O '. . 'f .,g e.. gJ.". :; ,.] .I< '- -g'.. 7; * . , ' . . . ,
;1
.-< .';. - ,< . lg. ..n
- , ,, . ..+ .....s. t - *
'v * < ; < h. *
'.s* *
,'\-
., f g' . .. .
,'s',,l ' (, ?.0 - Q
'9,' . , , . .
.f( [p, ' '
. .' h y . .p... 7,; , ,),; . ,- -
'f'c. c ;.4 . '. ..,,y,.,f 6a. ,,a , . ..,..s qg . ;. , 3
.1,C' ){;. l ;.,. 'J;.,
,a !._ . ,, :2,.., , '. . , &. . , ',
i .Y
' . u. ..',,.:-* .; O. . _ . ; .'< - lla : ,'l s < . . : .
"" h, 3 ;Q ' :~p ,, . ; ,),.
t . 8. l.p.',;K...l
-'.Nr..v' ] ,{ ' .% ;;
.l..I; ~,:{ .
s' h;
+ /. .1 s ;.;;lQ .
, W' .Q. T;. .ll,,c ,
- m
' '.Q 4..:j
., . . . .g :. ,N. .
,,'l .
y h ,; ., yfl, ..4. ...;'.'.M...o v. .
- 6. : . '. i . . ' ? .:! .1.1 ..l
.. '_ ,'f ' .--
' Y>l si.' .'; Ll* . ,.' ?L ; i ,:1 - . J . 's l " ~ . <
- L4.. L'*
.h Yq .
; ..' - ' : C l[, Y. ,k},' ? f *:, " : . ; y..
N::liv -:: '. : , 29 Yp '. .~ T ';. '(;f.'.}.."i.
' y .e.( m , ,,y . k Q T. . v, . ;v .},. :., . &f:.J.';.3,y.f .. p yiG.7 a y' l[&Ln .Ql . ~.'y'. i.;e. p.g; y+e.' s.:c.;.q?;f.[: ':.;g' w(' }
>g
.3.3.y m . . , e. . .' ~. : . y .Wyz : . ;
.y......,.. . , , . . ..yd,... s. a." ,
.. :.g ,. ,: . . ;.
- e. ,c. .. , o v ,Y
. . v , .:. .. ., . ~ , .
....~.-...a..~...v..
. : ~ r' > .~ . , .. ..,p .1,s.9 ~ . . -. >. .-
. ~ <. . .. .. , - :- . ' - -
':pi .
,. x .
z..:..:r : n*. %.: : ~. : u.t .. a. - t .. . .
7, , :, . . t <. f' I'
~
,':I ( '; -[ . .;;2 [ , w . .. a,. p'p. , . .'[{ :,,. .k '/, .1,'. ,[-[,,
'I'
.,, ;;l. 7.+y ha- ./h.
. , . , [ ' . .. [ . . . f,,. *: :
. h!.
5
. . . m: _ ... . '. .;.s: .',-[.
,j3 ).1. . . . gI, .a , ,. .h ; ' gt..
f ;
. . . . .. 5 . ,.
. - 4,
~.. . . . -: . . ,. .; .. . ,
.. ; ,. - :.,. .y:.. . ;;. .. u;.. ..; a*. ... o... -
.a.',~...',_..,...s..v,
- ,.9..-. .,.,.r,. a :.>..o- . y . : . 3. : .
...;,,....,,.a '
':
- T, v,. ;. <. w.! .. :",. . . : n. : , .
. . . . . '...,, ,.<.. c, f . ' t ,; p" .c..t.,".',,".,9. 4 - ' ' rt.* ; .. ~ f. :; <,. p>.'
.t.. .
. ,. ;;w -,n.. . Q p ' 4.: , , , .. . :
;,,'.:' . . ' . .3. ; s< ;
,. . *, . . -. :':' .n_
% * , ..'.;, * . 1 s -
- n. ,. '
' :. '9: '..;,'
g 1
.. ' . '<,...i,. , ,.- *..g y,,,f.,,=.'..d",s ,',...-
~
.. + . _ _,, .. '.-
g - ;. '.2.,-g . . . . ,
, 7 .;, _ .. : f.
, ., . .q r.. , .,y . .g;:. t. .
p(4.,. ! 'i - 1 . .g . . , . . , . . , ,., ; p.L , .q
..-. ,. ,. .; ,.- s ., .. -
..,,y
,,3,..
w, s..
~
- a. .a.._ . ~. +,.,e,,, . . ~ , . .. .n w; .; ,.. < .. . . , . . .,c.,
. . , l ' - '. .. **
. : 1
*. o ., ,
m ng
) .
s .., wn@y@m((aw@w@ Q{.j j w@@Q $g@m;@ m maw 2/M3Mg$
. . n . .; . ,a 3. c
's' ..
', ; Y
.l j '
's
'.l.,'.,'s.4 4 4 J p'
- T. ' fi,#V
,2'. l ...'.qi. . ... p
FIELD-BASED ENERGYCONSULTING LOADMAP is a software application developed by our employees to help customers manage their energy usage and costs. LOADMAP provides computerized spreadsheets of monthly energy, demand, and efficiency statistics. s .! LOADMAP and other software programs are offered by our customer sales representatives to nearly 200 commercial and industrial customers as important field-based energy consulting tools. For instance, The Gillette Company's South Boston manufacturing center uses LOADMAP to help them 4 4 analyze their power
% consumption and the impact e:3 .
y, their production operations ec-f4, q t
.g( have on energy usage and
[ O '- ] costs.
; ' t;p T
- k. }j j f l y'/ Left to right are Major Account
' 7, , } ), 3, Representative, Tom Horan;Vice f s;1
."g9 m
- s. I s, President of Sales and Service, Alison Alden; and The Gillette FK... i 1. , fla/
[ ! Company's Manager of Power [ sl[f '[Kj} and Utilities, Bill Bushey. J 8)g # e, , L" R a p :,
+
f
$y71 r (
s W Y 5e '
l mploy ec involvement is crucialfor Boston Edison's success in a competitive environment. Our employees serve customers, implement corporate E strategics, run our business, and employees understand the competitire nature ofour business, the importance ofcost control, and the need to provide excellent service and value to our customers. lye must continue to provide employces with the tools, information, involvement, and management necessary]or success. l Employee Effectiveness and involvement 1 As the largest single shareholder group, hohling near- shouhl be eliminated, process improvements for lv 2 million shares, Boston Edison emplovees are per- greater elliciencies, and appropriate staffing lesels for sonalk and professionalh imested in our company's these new functions. sun ess. In addition, more than 40% of our emplov-ees are also our customers, since ther lise within our And long after the design teams base done their senice territon, job, uMI continue to keep employees imolved in making it east for customers to do business uith us. Empimees have been one employee team, called the Kev Account Group, instrumental in all aspects is curn ntly defining hou ne'll work with our major M- of our evolution to a strong customers. Another team, called the Customer Sup-competitis e compant. port Group, is reengineer-Design teams of empimees ing the services ne provide L. have shaped reorganizations to medium and large sized of our uorkforce to ensure customers. Rosa Menard is a career ne base the right prmess. - Another team is identi-
}
development es, promium, organiza-h ing process and technolo-A specialist who tions and people to meet (3. j, manages our job customers' demands. I ""E ""*" ' " rotation program streamline new customer j,,,.Dickson is a for employees. These teams hase ana- work orders. These facilitator who Ivyed the work ue do, the improsements will reduce leads employee teams in re-value of the work to the the wst of prmiding new designing work customer, the processes intohed, and the existing services, u hile olkring processes and stalling lesels. Thev identitled low value work that hetter customer service. organizational structure. 12
1 mphnees are committed to 1 ooking ahead, our managers fulh unch rstanding our neu are better able to see into the business environment, so that future and plan strategically, thev may respond to it effectise- thanks to a new tool called the
- h. A series of competitise busi- workforce planning nmdel. This ness issue sideos anil fact sheets computeriecd technique will help hase been produced, a . standing- managers forecast staffing room-oniv serie.s of utihts requirements In anahving vari-finant c (lasses were introduced, ables such as attrition rates and l 1
and our popular lunc htime let- productivity figures. ture series has been refocmed to emphasize the new challenges u e fate in trying to keep and attrac t customers. lilliplosces are also learniny saluable new perspectives through a new wmpant initia. tisc. Ih participating in job rotations in 19H, sescral entplosecs niosed to neu areas, managed neu projects and peo-plc, anillearned new skills important to our success. 13 __ i
l' ( ,g1 (! ,. . _ ' . ,.E
- y.;';:;n,m .
'.x .9
. ' ' ,' * . . , y,
. . , . ,' l *
*P
[ . , *
- 3;. ;. , g , .. ;; y.' ',
g ; . . .: 9y.g . ; g .;y_.. ;.. ' . , : ., . .;.u.. ,,..,.,,.. .
.. 7_ ...
- ,4.. 9 3. ,
, y.l.y ' * ' . : .;;.: %:;,.; :.c .' \ m; . . . -
. ., . ,o ; .pb , ap . ? :.: ,,:3. : ;. L y . .: . . n. m.:. ; 9 -
. .. 7 .: : ~
Yl = ._'}; ., :' ,C' , !,;%'.l. ; c .c. . ...n. ': :'. .l l l L. . .:l t' '; ~,. T..4, . , . . , . . iL' ll;. .![. _' .. ' . ': .; . ; llU : .l:li ..'.;l'.'...,... <
,,.V.
5*. .;?. . .l.;f, .; l .' .!:! l
,,..._.c . .
. , I" . ~ a
' . i., . 7 ..
%. -' ;! c . . . . :, . . :. . ;l;.: ;* :- - '
* ;.' ;
- c ;, : .: 3 . l[ [. ' , ,'. . ._ . ; __ ':, } Ll . . } , ' .. . . y . ::. . ;; . l .3 ' . y . ' ' t -- - '_', .;' . y _ ~ ,. .,[ ; i 1_ .' ^: . . . .
..q._ l' 7;9 .. ; .. ' .;;; ; - ;;r 1 . -
.v /,7 :
. . . .3 ; v . r . y g; . -
. J . ; '. 3 ; . ' .;; w. .. O.>. 3: . a ;:- : .'.:. . ; . . . g. ; i: L t.
- a. .
. . . . ,__., ~ . ..;..,.. , , f.. . . ._;......,..;.,..,,__n.. ~_ ; .
, ;; .. . a. .. .v..- :.. t ...,
.c .
......5
,_;( .;,. ~ ;;, - .
;. .. . . ? . . ,
b
.:, . . v
' . e. .f
'_. ; ..). ; : ,"'. . . ..',...L.C.'.'s-. ' ,
f . ,... .
;l 1. ; i'-
- ' . . , - . y .4.. .. .. '.. :,rn ;. .
'.e - ' ' ' ... .: '., , _. n....
;,e.
., ., , ') . ... , . ,.
nm m ;s. g ..n m ::. ~ .- ;n mwm nn= ,+
,w.
~
~
L :; , . .
; MetaC%% 4 W ?? _M _% W " '
W~~ ( . jkhW_(. xl..j$.,c
.. . a
. .a #. -
jLflQ.
- .. . l.[
3 I_ ., J. e 8
/ , :' i: ' -
- s4 .g 9,e
.. .:. ..' '.,.:. .,' , , . .' y' y <0 ?- ". . . .' .:
.4 % 7 .'. ... .'
'3
,;,;: .k...:),, : 4g,g: . ,. . . '. ,' ... : .' '
.~.
.'.e .- .': . .. :
. ; yQ. ,. ~ .., .
1: a. .
'g;
-? :.
f- ~. L.z; ' '
- . ' K :;' 3 c;; . . ; " . , , &; " . ..
l :..'.b .' ,
~
.. Y h . .; . ?l ~ '. I. . _
an R se .%.x .; ., . ;x. .. 7
- m. .. e2. .:~ ,.
. v, m, m.. ,. _ c . 7 7::. mm.a.g 37 F
c..
. . . - ,_.: , ' ~ _ .x 3, W;,.}~.'
.c a
..; .}..!,
+.....). :;;,.> .v zO lG 1 ; .' .,, . _.,*:,
. c,
~ ::., u. :
!,, a sw .
v .,fC:
..y.l;; J.. > ;j. :;. : ?' '. ? . .;;
L l. . ;f c: : . i.] ; .; .J .
+. ... _ . > , g , . y. l:r,., jlf, ;;.n ' , .? : - p ' . ... ;' ',,, ,.. 's
.. >' .:.y:, .; ;'.
= :* .. : .c
; Y. y..
* ::' !,'.y, . Q; ., ; ,. , . . , 1-[ -.'o ?:
.g e s; :7. j; . . y;......m....,..,.,..:..:. ..
. . . .3, : : ge, c.g; . . , , . .
-_ ..:. 3,
. . . . . . - <: - .t.
;3 .
;[
[; ; '. . 32 .
- e. ; ,
. j..,,,, g
. ..; a.;; ; , ' d. . .i,. _ . ' ,A- ,; . . . . ..< -;, /:. ...,; f. h. .. % '.' '.. ; 7.f ;'
+..a , ... . ,;' .;
. ,}',. #, . .4 ': . ;; , . , _ j .' ,'._ ', :
/, : /,
3, .' T " ' 7, . q yl;_'.
;g
..;. , _ 'n .
c.. .. '.:y. : n. ; y . .; ^ , .r,...l ;}' 7- , ; ~'..,;
..s; ..
,. c3.:... . . ' :. g ' 7. , .. .
;,... .. ~ . ,.' p, [ ;/(,4 j ; j,
. .' '* '...; .. t. , ...i, - ,,.;.m, g: n
'. ,.,,, q . V, t y . 4,", ; ..;;. {:; ;
5 ll ;'. ; :. L
'V j. y _ . ., e ', 'A :.;;;;.g i
- 1, :, ..- '. , _ _ ; : 'f' ' :.; ~;', l.3 * . . ,
" , ~ " ' ' U'" :: ' ;# "
;, j .'. $ ' ;
' ~ - '
.w.. w y. . .,e- ,we e : . i . o mo . .. .O. .v.; .,;
..... .. ..,. . 3 .y '. , .. . s, e. .... . m. .i.g.
.. ~
-.....s
. ou
.< :,c.;. .
- 4. .t. . . .'...e.,. , - ' i.c t. . . .:. . -
g_
= , ~_ __ _ - ,
f . N- _ k, . ..... M... , .. %.. ..,,.,. @ _ $ g__,t_d,T.;,.,
,j% ,;..,- ......b. ,,..; ,
.., , . .,y
..g.
.., ,IM.., -
~ . . . . _ ..
f hhhhkikhhhkhh Ihh .s, hh _
."*g'N s,
a er
' ^
Managing with intorniation Lagging - Leading .
~
0.M - ServiceNet is an inteo,atee. computerized technology Q QQ featuring two-way radio 251.87~- .
~
U.VV communications that allows for remote reading, connecting and 3 disconnecting of meters, and the ability to gather real-time intelligence on the operation of 7 our power distribution systems.
~
ServiceNet is one of several new f,f, " (.
" f technologies we've incorporated to help our meter reading em-Qg gg . . ,9 "JC C Qe) playees work efficiently, manage Jf .IU - . LJJ.JL with information, reduce customer complaints, and lower
~
h, meter reading, billing, and collect,on i costs.
. y' 23 \ >
By using another technology called ENSCAN, employees can jjk '{ } , read meters from a van as it drives down customers' streets. d ENSCAN is particularly helpful in situations where there are
.. . meter access or employee r
7 safety concerns.
~
1 % left to right are meter reader s og YN Carol Ciampa; Vice President of b" k y ..h'Ach. Technology Research and
.yj-g,;.g '
Development, Dick Hahn; and
, ( .], meter reader Mike Joyce.
IA
, \n g4n ,
ww +7[ .hb gw- g ,a ; W 4a_%g mu
.jkyi$ Die ? .-
b, _=,,1., W aper;h re: N 8! d d tes Q u Ju12913:13:% 199 -- 15
Managemenfs Discussion and Analysis roenues increawd s29.5 million over 1992, partly due in hmer rocnues reccised from s'iort-term p<mer sales as diwussed behm. R;gulatory Proceed.mgs We began ret overy of certain dematul side management Refdil sciflcment ugreemenf 5 program costs, lost hese rnenues aml incentises in August , I 1:llectiw Nmember 1992 our state regu'ators, the Mast 1992. Our 1993 revenues provided 545 9 milhon related to at huwtis l >cpartment of Puhlic utilitics, apprmed a three. 1991,1991 and 1993 DO1 programs. Our 1992 rocnues of year wt(lement agreement. This agreement pnnides us with 512.3 million related primarily to 1991 programs. retail rate increases, allow s for the reemery of demaml side The decrease in ulv>lcsale and other rnenues rennis an management (I)SW < onsen ation program expcialitures, estinnied pnnision for refunds to customers of apprmimately specifics irrtain ac counting adjustmt nts and clarifics the tim- s8 million as a result of orders f rom our state regulators on ing arul renignition of(crtdn expecscs. T he agreement also our generating unit performante program. I , sets a limit on our rate of return on uimmon njuity of 11.75%, inwcr sinertacrm p<mtr sales rnenues were a resuh of for :99 3 through 1995, excluding any penaltics or reu anh t hangn in our generation asailahdity and the needs of short-f rom performance im entis cs. term iumer pun basers. All rnenun from short-term sales The retail rate increaws consist of a new annual pcrfor- sene to reduce fuel and purchased lxmcr hilhngs to retail cus. mance adjustment < harge effectise Nmember 1992 and tuo tomers and have no effcct on carnings, aihhtional rate int reaws of $29 mdlion ef fectise Nmember j 1993 aml Nmember 1994. The performance adjustment Operating capenses iharge saries annually hawd upon the performance of our 1 ucl exjn nw dcocased s19.5 million primarily due to a Pdgrim Not icar Pimer station. This (harge is f urther 213% dei rcaw in generation, resulting from plannni m er-devrihed in our discussion of linancial comhtion. hauls of our foss.il plants. Inten hange pun haws increased due
< >ur 199 3 results of operations ucre alfn ted by the to the hmer generation, resulting in a s7.5 million net l rconery of IM1 program expenditures, acn>unting adjust- increase in pun based jumer expense. The net increase aho ;
! ments aml timing and recognition of certain expenses as fur. reflects sasings of apprmimately s10 million from a long term ther desenhal in the 6 lkming Results of Operations sn tion. pun based p<mer contract that npired in October 199 3. Both Our state segulators appnned a prnious threc-ycar wt. our fui 1 and purchased pcms r expenws are substantiall3 f ully j ticment agin ment cH'cctise Nmember 1989. That agreement rn mcrable through fuel and pun hawd p<mer rnenues. i also pnnided us w ith retail rate increases and spn ified artain other operations and maintenance expenw increased accounting adjustments. The 1989 agreement primarilv 7.1N primarily due to increases in employee benellts and aflu ted our rnuhs of operainins through 1992. nuc lear production experwes. Postrctirement henclits npenw increawd hs s7 million primarily as a result of the adoption of Results of Operations a neu ac counting standant and pension expenw increased by , 5 5 million; hoth are prosided for in our 1992 wttlement 1993 Versus 1992 aercement
" and further explained m. N.ote I to the consolidated 1 arnings per wnunon share urre s2.28 in 1993 and 32.10 in linancial statements. A ref ueling outage at Pdgrim htation in 1992. The .m reaw in carnings is primarily the result of an .
19i)3 resulted in higher nutlear production expenses, d annual f ate im rcaw cllectiw Nowmher 1992, hmer !sur-liepreciation and amorti/ation expense increawd m. chawd pimt r expenw due to a loniterm contract npiration, 1419 3 primarily due to a higher annual decommissioning c harge no amor ti/ation of def. erred (an(elled nut lear umt t mts and .' for Pilgrim Station (lledne N.osember 1992 prmided by the louer intt rot npenw. Thne positise t hanges urre partially lc792 settlement agreement. T.he new i harge .is hawd on a ollwt h) higher operations and maintenam e npenw and 14NI ntimate of duommissioning costs as I.urther discussed m. lugher im ome tax and propt rty tax npenws. '. N.ote !) to the consolidated hxaanaal staternents, in addition, ,
, the offect of hmer depreciation rates implemented in accor-Operallny res enues
. dance with the settlement agreement was ofl. set In the ef f.ect
()ln ratmg n wnun increawd 5"n mer 1992 as folhm s-nn tl ousan,I 6 of a higher drprn .lahle plant halance, In accordance uith our 1992 settlcinent aorectnent ne did 470,837 6 Retad cles trit r ewnues not npenw any of. he t $ 19 million ol. remaining deferred costs Demand sn. ic management rnenues 33,601 - - M,holesale and other rnenon asso(iated with the cancelled Pilcrun o 2 nuclear unit in 199 3. We
< ~7
' 79 %
u dl npense the remaining costs in 1994 and/or 1995. short tam sales rewnues t31,144i Amorti/ation of dch rred nuticar outaqr costs includes incicaw in operatine rnt nues %70300 E atuounts clated to the 199 3 and 1991 tel.ucling outages at Retad c!cciric rnenun increased $703, milh.on. .I.he Pdgrim station. In 1993 ue delet red approximatch 514 mih hon of ref neling outac'c cmts. We he"aan to amorti/c thew Nan cinho 1992 and 199 3 rate increases resulted in 540.6 mil- ' ' cmts in June 199 3 mer isne years as appnned in the 1992 set . loin of. adthn.onal rt wnues in 199l. I.ucl and pun hased [u m er llef acnt agrecim nt. 16 l
The increase in demand side management programs Operating revenun expense is mnsistent uith the im rease in DsM resenues. Operating revenues increased 4.2% mer 1991 as follows: DsM expense indudes some msts recmered mer a tut he on 0,ousanN month period ami other costs ict mered over six year <. We itetail electric res enues $ 27,672 liegan to recmcr presiously th ferred Doi expenses in August 1)emand side management resenues 12,343 1992. In 199 3 ue expensed aml c ollected from (ustomers Wholesale and other revenues 1,881 approximately s 30 million of defern d 1991,1992 and 1993 short term sales revenues 15,356 pn. gram costs. (her six years we are expensing and < ollecting increase in operatine revenues $ 57,2 52 from our customers s11 million of costs capitaliecd in 1992 and s 37 mdlion of costs capitali/ed in 199 L The 1993 Retail electric resenues increased $27.7 million. We expense related to these capitali/ed cmts was 57 mdlion. received a $25 million rate increase effectise Nmember 1991 as Municipal propertv and other taes increased in 1993 part of the 1989 settlement agreement. We also earned 58.2 mib due to the absem e of tax abatements. In 1992 property taxes lion in incentne revenues in 1992 as a result of Pilgrim Station's were reduced by s 10.4 million of tax abatt ments in accor- capacity factor exceeding its target set in the agreement. Fuel and dance uith our 1959 settiement agreement. purchased p(mer revenues decreased approximately 5 5 million duc Our ellectise annual mcome tax rate for 1993 u as to higher purchased pimer msts more than offset by higher rev-2 L4% s s. 8.7% fi,r 1992. Itoth rates were significantl) enues receis ed from short-term p mer sales as discussed below. reduced in adjustments to th ferred income taxes of $20 mil. In 1992 we began to receise resenues for the recoscry of lion in 1993 and $23 million in 1992 made in accordance uith certain 1)sM prograrn costs, lost base resenues and incentises. the 1992 and 1989 settlement agreements. The 1992 rate was The 1992 resenues relate primarily to 1991 DSM programs. aho reduced due to tax benefits of approximately $7 million Our short-term pmer sales increased in 1992 as a resuh resulting f rom mandated payments made in at contame with of our high generating unit asailability and the greater pmver the 1989 agreement. t )ur aihoption of a new acc ounting sta"- needs of other New England utdities. All revenues from dard li>r im ome taxes in 199 3,hd not significantly affect short-term sales sersed to redui e fuel and purchased power carnings. We espet t our cifectise tax rate to be dme to the billings to retail customers and had no effect on earnings. statutory rate in 1994. Operating enpenses Interest c harges and preferred and prefercme disidends Pur based power expense increased s IS million in 1992 due
'betal interest i harges decreased 5 3.S million in 199 L Interest to new long-term purchased power contracts. Both our fuel on long term debt decreased primarily due to the refinaming and purchased power expenses are substantially fully reemer-of substantiallt all our first mortgage bonds in 1993 at lower able through fuel and pun based power revenues.
( interest 1ates, partially ollset bs higher amortintion of Other operations and maintenance expense increased redemption premiums. Other interest ( harges decreased duc 25 c, due primarily to mcreases in employee benefit expenses to a hmer short. term debt icsel and lower short term interest and bad debts. rates. Allowance for f unds used during mnstruction Anmrtintion of deferred nudcar outage costs in 1992 ( Af tlDC), u his h represents the financing < osts of construc~ and 1991 includes amounts primarily related to the 1991 tion, decreased as a roult of a lower AlllDC rate related t" refuel %g outage at Pilgrim Station. In 1991 ne deferred lower short-term interest rates. appnaimately $2 3 million of refueling outage msts. We Preferred and preferenc( disidends decreased W due t" began to expense these cmts mer live years in September the replat ement of a preferred and a preferem e sim k iwue 1991 as appnaed by our state regulators. u ith h ss mstiv iwucs of preferred stm L Municipal property and other taxes increased 21% pri-marih due to a reduction in residential and commercial real 1992 Versus 1991 cstate ulues caused bv the depressed economy. This resulted 1 arnings per common share ucre s2.10 in 1992 and 51.96 in in higher tax rates applied to our personal property values. In 1991. The int reax m carnings is prnnarih the result of a rate uconlance with our 1989 settlement agreement, municipal incn ase ellectise Nmember 1991, incentise resenues carned property tax expenses were reduced by tax abatements of from the performance ni Pdgrim station and hmer income tax s 10.4 imllion in 1992 and s13.6 million in 1991. and interest expenses. These increases were partially offset b) Our ell'cctise annualincome tax rate for 1992 was 8.7% higher operations and mamtenance and property tax expenses. vs. 16Ph for 1991. .lloth rates were significanth reduced by We also had a one-time charge in 1992 for costs int urred for a adi ustmt nts to deferred income taxe of 52 3 miilion in 1992~ deferred generating plant projet t. and $13 million in 1991 made in acconlance with the 1989 set tlement agreement. We also received tax benefits in both
, _ _~ pax _ _ _m, m, ~_.
1 17
Other inwme and cy ense Liquidity in 1992 we expensed $8 milhon of costs prniously invested in j the proposed Edgar I:ncrgy Park generation project. This pro. We meet our plant expenditure cash requirements primarily ject was deferred indefinitch as aIlditional generating capacity uith internally generatal funds. These funds (excluding pav- l is not expected to he needc[l for sewral scars. ments made related to settlement agreements) pnnided for 74"b,90"6 and 89% of our plant expenditures in 1993,1992 Interest charges and prc[ctred and prc[ creme dividends and 1991, respectinly. Our current estimate of plant expen-Etal inter est c harges decreased 4.6% prin.arily due to hm er ditures for 1994 is $2 33 million, including $20 milhon of interest rates on our average short-term hornmings. Al UDC nuclear fuel additions. These expenditures will he used pri-dern ased 12.7% due to a hmer AillDC rate related to hmer marily to maintain and imprme existing transmission, distrihu-short-term interest rates, tion and generation facilities. We also estimate capitali/ahle Preferred and preferem e dis idends decreased approxi_ lXM expenditures to be 5 38 million in 1994, which nill bc l mately $1 nillion primarily due to the replacement of two pref. collected from customers over six years. We do not expect crence stra k series uith less costly issues of preferred stock. plant expenditures, euluding nuclear fuel and DSM, to vary significantly f rom the 1994 amount in the four scars thereafter. Tarnings per sharc We have long-term debt and prel' erred stock payment require-Net inosme increased 13A lloneser, earnings per common ments of 52 million in 1994, s 102.6 million in 1995, and t.har e f or 1992 ino cased only 7%, rellecting an increase in the $ 103.6 million per year in 1996 through 1998. urighted aserage numher of common shares outstanding pri. hternal Onancings continue to be nuessary to sapple-marih a result of our 1991 and 1992 comnmn stm k issuaares. ment our internalh generated funds, primarily the issuance of short-term commert ial paper and bank hornm ings. We cur-Financial Condition renth hwe authority from our federal regulators to issue up to S 3 50 million of short-term dcht. We hase a s200 million Our 1992 settlement agreement prosides us with increased revohing credit agreement and arrangements with several n wnues f. rom retail customers mer the threcarar I>crimi eml- hanks to prmide athh. .uonal short term credit on a committed ing October 1995. Additionally, a long-term put chased power
- - as ucll as on an unconunitted and as available basis. At contract with annual (hargc3 of approximately 560 million Damd>n R 1993 we hed s204.1 million of short-term debt exIiin d in October 199 3 with no related (hanLse in revenues. outstanding, none of which was incurred under the revohing We are limited to an annual rate of return on equity during the credit agreement. In 1991 our state regulators appnned a three-ycar period of 11.75%, excluding any penalties or financing plan alkming us to issue up to s1. I billion in reuardsf. rom Ix ri.ormance incentiws. securitics ihrough 1994 and to use the proceeds to rennance Our continued ahihty to achicsc or exceed the 11.75%
long-term securities and short-term debt. At Deu mber 31, rate of return on eqmtv u 11 he primarily dependent upon our . 1993 ue had $245 nullion remaining authorized to he issued ability to control costs and to earn perf. -ormance incentius under the plan u hit h can he used to issue conunon stock, pre-
- f. rom generation performance mn hani ms specined in both ferred stock and long.tcrm debt. As a result of. our rennanc-the 1cm (+ and 1992 settlement agreements. .I he most semh,.
cant impaii that inwntiws (an haw on our financial resElts is I"S I' III"* I" I 9" 3 " " "
- P"'* I" '"^Ii'" """" II'"d *^' I"E' "I hased on Pilgrim station's annual t apacity factor. Effectiw "PP""xinutdy s 113 Inillion. Refer to Note F to the consoli-Nowinher l'9H an annual capacits Iactor hitween 60% and dated Gnancial statenwna for sperinc inibrmation relating to 6% uill pnnide us with approximately 545 million of res. our rnent Onancing at tisities.
enues through the performanw adjustment charge. I or each percentage point increase in rapacity factor ahow 68%, annual Outlook for the Future rewnues uill increase hv 5670,000. f or each percentage I lertricity sales I>oint decrease in caIiacits factor helou 60"e 00 a mininnun of A signincant port. ion of our clntricity sales is made to com-35%) annual rnenues n dl decrease by s770,000. Pil endingmercial customers rather thanm. dustrial customers. Asa capacity fat tor for the perf ormam e war er 1994 (.)ctob' grim s . result our sales haw heen only moderately impacted by the is t spa ted to he approximatch 81"o (assuming normal oper-
. decline .m the local Manathusetts economy. Our retail sales ating ( onditions), an increase en er the 66" u capat it s fat f or increased 1.2*o in 1993 and uc antic ipate only slight grou th in athir w d m. the perthrmance year ended ( h toher 199 3, as no rcIuchng ou'agt is wheduled for 1994. We carned approxi-I"'P k "*"'*II"n of Dut programs, w hich are designed match s40 million in performanw charge rnenues in the per-
'" d"I't customers in reducing electricity use, will result in formance year endul October 1991 louer grow th in electricity sales. The 1992 settlemen! igree-Our fowil generation unit performance can pnnide an - -
incrcase or decrease of.up to s4 million in reunues in eat h ment established annual 1501 sIwndinbi lewh mer s 50 million through 1994. The agreement prmides for collection f.rom pi rformance war, houewr, ut do not expect any rewnne customers of certain costs primarih m. the war incurred and adjustments trom this mn hanism. others mer a siucar period. W. -e are aho pnnided with inwntius and reonery of lost rnenues based on the acmal reduction in cu tomei rIn tricits usage from these programs and a return on the costs that ne reoner mer six vears. ~ 18
Competition Other Matters As we are operating in a time ofincreasing competition from ~ Emironmental other electric utihties and non. utility generators to sell cler-W,e are subject to numerous federal, state and local standards with tricity for resale, we ha\e secured long-term jumer suppl) mM - Wi diywl el Wmnmim a"reements 6 uith our four wholesale cueomers. Throug'h . mental considerations. .Ihese stanilards can require that we ilmse agreements our rates are set principally through the ycar mo&ly our existing l. ac d. itics or incur increased operating costs. 2002. We also obtainol a new u holesale customer in 199 3 for In 1<E,1 ne entered into a o>nsent order with th'e . u hich we will prmi<le up to 30 meganatts of. contract demand Massachusetts 1)cpartment of Environnwntal Protection (Di I,) p mer for ten years heginning Nmember 1994. and other .mterested parties to undertale tortain imprmements ()ur state regulators require utilitbs to pur(hase lHmor . . . In the emission control systems at N.eu lhhton Station, lhese froin qualifying non-utility generators at prites set through a improu mcnts imluded the replacement of four existing ( him-bidding prot ess. in June 199 3 our state regulators ordered us ncy stac ks with tuo taller stat ks m. order to imprme the air to punbase 132 megan atts of pimer from an independcut quality in the sicinity of the station, and the installation of hm Iumcr Iiroduccr, startino6as carh as 1995. We oppose this nitrogen mides burners. ~1.he capitaliost of these nunlifha-order sim e uc do not belicw we need any new poner Ihr sev-tions along u ith other associated impro\ ements has been cral y ears. In julv 19H uc asked the Massat husetts Supreme approximatch 578 million throug'h 199 3 with an ad<h. .uonal s 3 luditial Court to reserse the order. We are currently awaiting' million espet ted to (omplt te these projects in 1994. a decision from the court. In addition, our state regulators ' h.eu lloston Stat. ion has the ability to burn natural gas, oil ha\e createtl an inttT< rated resource managetncnt (IRM) - or hoth. As part of the I)I P consent order ue aho agreed to pron ss in w hit h elet tric utilitics h>rn ast their f.uture energy operate the station using natural gas as fuel for a minimum of.nme . nccils and propose how the\ will meet th<re needs by balanc. . . . . . nmnths per \ car hegmning m April 1992. Ik' ginning m April ing ionsenation progrann with all other supplies of. energy. J ' ' 19%_ ue \ullim required to operate the .tation fueled exclusiwly We will submit an IRM filino 6 in Manh 1994. by natural gas, except in n rtain emergency < ircumstances. M.e 1)irect i om >ctition with other electric utihties for retail ha\e made arrangements for a nine month supply of. natural gas to cln tricity sales is still suhjn t to suhstantial limitations, but ' the station until ' April 199_3 and are currenth in the process of. these limitations may he reduced in the future. In 109-3 ue negotiating u ith natural gas suppliers and transporters concerning announced our goal of.not sccking' addihonal rate mercases, " the cronomics and availabilitV of. natural gas to h.cw lhoton on a otlicr than tliose pro)ided in the 1992 settlement agreement, year-round hasis alter Ibal time. Year-round gas Supplies are Cur- l l_or our residential, t omincrcial and industrial customers until ' s rentiv tu nt a\ailahlc to the station and, as a rea. ult, the outcome of I at least the yedr 2000. We plan to anoinplish this hv control- '
. our tuy' otiations u ith natural gas suppliers anti t rangw arters and hng carts and increasilig operating ell,icient les u ithout sacril,c-i the impatt on the operation of N.cu lloston Station are uncertain.
ing qualitt til.scriit r or prolttahility. The announcement ,
.t.he 1990 L,ican Air Act Arnendments u di require a sig-rellects our strono 6 connnitment to he a (ompetiti\ch priced nih, cant reduction in nationwide emiwions of. sulf.urth.owle '
reliable pro \ ider of energy. 6, 64 fucl-lired generating units. The reduction will be h.on ~ utih.t v busincu accomplished bv restricting sulfur dioxide emissions through a market-based u stem ol.a llouances. We believe that we will in 1991 ne created an unregulated subsidiary known as the ha\ c allow ances iwoed to us that are in excess ol.our needs and lloston i.nerg\ let hnolog'\ b,roup (llE.I h l.)o
llow .ing appro)al u hit h inav be inarketable. An\ gain from the sale ol hese t may troin our state regulators. We ha\e authority to m\cht up to he subjcct to f.uture regulatory treatment. Other prou. iona, s of. $4) ind. lion m this u holly-ou ned subsidiary over the next -
i the 1990 Clean Air Act Amendments imohe limitations on i three years. Bl .1. .L u di engage in demand s.de i management . . . . j acti\ ities (brough .its u lHdh' tiu ned stibsidiar\ buclN(i- \,isit en, ciniwi(#ns of liilrogen absides IrtHu existing generaluig linits. 1
. Combustion M sicin modif.,ications niade to .\,cu lloston and r Inc. anal liusilie%cN lin(ab ing t lectlic tran (#rtatioS and Ibe related mirastru, tun e through its w holh-ou ned subs.a lian Mystic stations, induding the installation of the low nitrogen oxides burners at N.eu lloston, will allow the units to meet the .h..u l lectric %r it es Corporation. N. do not currenth ha\e pro \isions (>Ilbe 1995 standartb. Ikpending upran ibe out-a substantial imestment in HEl.G, and do not anticipate it come of certain air quality modeling studies, additi4>nal emis-sigml.. icanth impacting our resuhs of. operations in the next sion reductions may aho be required bv 1999. The extent of.
sc)eralycars.
. . am additional redut tions and the costs of am further modif.ica-ln januar) l9% NI[ll.s acquire (l J SulmtJntial inap)Til\
tions Is uncertain at 1}iis time, interest in the awets of. Kl Z II K International, Int ., a manu-fat turcr ut o/one w ater treatment u stems. ,I.he neu entit\, State regulations re\ised in 1991 require that properties o .Tl K International L,orp., will w here releases of ha/ardous tnatcrials occurred in the past be w hith will be know n as Ri.,
!.nrther deaned up au ording to a timetahle dcu loped lu the continue the husiness sil producing a M
- tem that treats (osd.in#o I)hP. We are currenth c)aluating the potential costs aworial-water used in conimercial and mdustnal air conditioning s3 s-ed with the ileanup of sites w here uc h ne been identified as icms in an Uncrgy cilicient and emironmentafh sound manner.
the ou ncr or operator. .I.h re are um crtainties ae.ociated w.it h 19
these potential costs due to the complexities of cleanup tech- ' Litigation nology, regulatory requirements and the particular characteris- In March 1991 we were named in a lawsuit alleging discrimi-tics of the different sites. We also continue to face possible lia- natory employment practices under the Age Discrimination in bility as a potentially responsible party in the cleanup of cer- Employment Act of 1967 concerning 46 employees affected by tain other multi-party hazardous waste sites in Massachusetts our 1988 reduction in force. Legal counsel is vigorously and other states. At the majority of these other sites we are defending this case. Based on the information presently avail-one of many potentially responsible parties and our alleged able we do not expect that this litigation or certain other legal share of the responsibility is a small percentage. We do not matters in which we are currently involved will have a material expect any of our potential cleanup liabilities to hase a material impact on our financial condition, lloweser, an unfavorable impact on financial condition, although provisions for cleanup decision ordered against us could have a material impact on costs could have a material impact on quarterly earnings. quarterly carnings. We presently dispose oflow-lesel radioactive waste (LLW) generated at Pilgrim Statior, at licensed disposal facili. Labor negotiations ties in Barnwell, South Carolina. As a result of developments We began negotiations involving our labor contracts in early which have occurred pursuant to the Low-Level Radioactive February 1994. These contracts expire on May 15,1994. We Waste Policy Amendments Act of 1985, our continued access anticipate favorable resolution of these negotiations prior to to such disposal facilities has become severely limited and sig- that date. nificantly increased in cost. Refer to Note D to the consolidat-ed financial statements for further discussion regarding i LW New accounting pronouncements disposal. We will adopt Statement of Financial Accounting Standards in recent years a number of published reports have dis- (SFAS) No. I12, Employers' Accounting for Postemployment cussed the possibility that adverse health efTects may be caused Benefits, and SFAS No. I15, Accounting for Certain by electromagnetic fields (EMF) associated with electric trans- Investments in Debt and Equity Securities, in the Grst quarter mission and distribution facilities and appliances and wiring in of 1994. Refer to Notes I and j to the comolMated financial buildings and homes. Some scientific reviews conduded to statements for further discussion of these pronouncements, date by several state and federal agencies have suggested associ-ations between EMF and such health effects, while other stud-les have not substantiated such associations. We support fur-ther rese:rch into the subject and are participating in the fund-ing ofindustry sponsored studies. We are aware that public concern regarding EMF in some cases has resulted in litigation, in opposition to existing or proposed facilities before regula-tors, or in requests for legislation or regulatory standards concerning EMF levels. We base not been significantly affect-ed to date by these developments and cannot predict their potential impact on us, however, we continue to closely moni-tor all aspects of the EMF issue. I t
. _ _ . - = _ - _ _ _ - _ _ _ _ _ _ _ _ _ _ _ - - _ _ _ _ _ _ - _ - _ _ _ - - _ _ - _ _
Consolidated Statements af IRcome i years ended December 31, 6n thousand , except canung per share) 1993 1992 1991 Operating screnues S 1,482,253 $ 1,411,753 s 1,354,501 Operating expenses: Furi 176,366 1 % ,873 200,912 Purt hased [xm er 164,482 356,931 338,994 Other operations and maintenance 406,271 379,350 370,758 Depreciation and amortiration 137,722 129,045 126,151 Amortiration of deferred cost of cancelled nuclear unit 0 24,381 " 181 Amortization of deferred nuclear outage costs 6,546 4,901 'T Demand side management programs 37,504 8,221 1 Taxes - property and other 91,102 80,426 66,216 income taxes 34,94I i1,725 17,111 Total operating expenses 1,256,934 1,190,853 1,148,640 Operating inmme 225,319 220,900 205,861 ; Other income (expense), net 589 (2,074) 5,684 l Operating ar.d of her income 225,908 218,826 211,545 I Interest charges: I ong term debt 104,375 106,850 108,912 Other 9,778 12,525 16,947 All<mance for borr<med funds used during construction (6,461) (7,847) (8,984) Total interest charges 107,690 111,528 116,875 Nct income i18,218 107,298 94,670 Preferred and preference dividends provided 15,705 16,550 17,611 Italancr available for mmmon stock S 102,511 s 90,748 s 77,059 ; Conunon shares outstanding (weighted aserage) 44,959 43,144 39,348 Iarnings per share of'mmmon stock 5 1.28 5 2.10 s 1.96 Consolid$ted Statements of Retained Earnings , years ended December 31, on thouundo 1993 1992 1991 It. dance at beginning of year S 192,948 s 174,477 s 161,143 Net income 118,218 107,298 94,670 Subtotal 311,166 281,775 255,813 Cash dividends dedared: Preferred stm L 15,705 14,923 9,476 Preference stm k 0 1,953 8,135 Common stock 77,169 71,951 63,725 Subtotal 92,874 88,827 81,336 Italance at end of scar .S, 218,292 s 192,948 s 174,477 The accompaming notes are an integral part of the consolidaicd financial statements. 21
=
Consolidated Balance Sheets I l 1)ni mber ll, on ih.,u,.a..i > 1991 1992
,4 net s Properts, plant anil equipmt nt, at origmal (ost; litility plant m $. nice $ 1,904.776 s 1,629,727 l less: an umulatol ileprn iation 1,258,159 5 2,646,417 1,177,294 $ 2,452,411 1
Nui li ar lurI 271,867 270,420 I ns: au umulatol amortization 220,477 51,190 201,978 68,442 Construction work in progros 144,815 182,458
'liital 2,844,642 2,701, I i 1 Imestments in cleriria iumpanin, at njuit) 24,292 25,198 Nut Icar iln onuni sioning funil, at cost 66,060 50,871 Current assi tv Cash anil t ash njuis alents H,768 1,947 An ounts rn cis able 171,098 I85,561 -
At cru il nnlulloI reu nues 29,821 28,564 I ui 1, mattnah an.l supplin, at ascrage cost 79,181 91,911 l'repaiil expenses amt other 9,7 18 298,808 6,644 11 N ,649 1)clei e al ih hit s: Pouer niniracts 16,275 41,717 Cam ellol nuiIcar urut 19,067 19,067 N ut h ar out age i ost- 25,524 17,970 Pension anil postrrtiirnn nt costs 24,416 10,449 Rnirmption pionnums 59,116 40,506 Regulaton assi t ini ome taxes, net 26,916 0 ()tlu i 52,181 241,497 64,274 195,981
'lotal esets S 1,477,299 s 1,294,2 H Capitalisation anil Iiabilitics Conunon stot L i quit y 5 876,479 > 840,112 Cumulatisc prelcrrol stoi L:
Non manilaton roh rmalile series 121,(MM) 123,000 Mamlaton rnihrmahlc scrics 96,(M)0 98,000 lir .t mortgage bonik 40,(NN) 611,825
\cu ae lat ihts rnonue bomb, not 12,497 24,24S lhbiniures 1,200,(MM) 155,000
!!mermol un thum ti r m notn 0 50,000 Cutirnt lialnhtin:
I ong tri m ih ht /ptriro ni stoi k ilne uitlun one u ar 5 2,(M M) s 6,X00 Notn pasable 204,151 275,500 Ai t ounts pas able 144,760 154,251 Intrint an runi 25,467 21,497 I)n nt nik p.n ahlt 22,696 22,192 ()thri 27,116 426,410 12,482 492,722 I)th unii rnhtm Pow er i ont rat ts 16,275 41,717
\n umulatiilih irrrnt in, ome taxes 484,796 448,720 As cuinulatal alefa rol unntinent tax i rohts 71,140 75,211 N m Irar iln ununisuoning itu r sc 73,744 57,165
()ther 16,958 682,911 , 24,112 649,127 Conunionent s ami n,ntmeeniin - liital rapitaheation amt liabihtirs $ 1,477,299 s 1,294,214
'I he an ompaming noti s are an integral part of the consolnlatol financial statenu ntt 22 L. _ . . _ _ _ -. . _ - . . . __ ___________ _ ______ ____
Consolidated Statements of Cash Flows years ended I)cccmher 31, (m ti,omamis> 1993 1992 199i Cash llem s from operating artis itics: Net income $ 118,218 s 107,298 s 94,670 Adjustments to recontile net income to net cash prosided by operating artisities: 1)c pr( ciation 130,074 123,243 121,572 Amortization of nudcar fuel 21,816 25,473 19,869 Amorti/ation of defcrred cost of canc elled nut lear unit, net 0 22,340 21,112 ( )ther amortization 9.433 2,1 32 1,696 Alhm anc e for f unds used during (onstrut tion (6,463) (7,847) (8,984) Deferr ed im ome taxes 10.303 17,165 24,476 Imestment tax credits (4,073) (4,273) (4,290) (Deferral) amortintion of nudcar outage costs, net (7,554) 4,901 (22,062) l Net t hanges m: Act ounts rec cisable and accrued unhilled reu nues 13,206 (18,I88) (3,519) l'ucl, materials and supplies 9,722 (2,330) 12,716 Accounts pay hle (9,491) 41,899 (19,510) Itate and contract scttlements (175) (31,363) (44,546) ()ther current assets and liabilitics 16,408 (2,565) 3,079 ()ther, net (4,958) (13,777) (24,588) Net cash procided Izy operating a< tis itics 196,466 264,108 171.691 Cash 114m s prmided (used) by im esting actisities: Plant and nu(Icar lucl tenluding Al tlDC) (253,885) (231,025) (214,213) Capitali/cd demand side management costs (37,156) (11,469) 0 Deconuni sioning fund (15,189) (7,210) (5,896) Imestments in electric < ompanics 1,106 1,836 (1,515) Net cash uscJ tl v im csting at tiiitics (305.124) (247,868) (221,624) Ca h flim s prmided (used) hv linancing artisities: Issuances: Conunon stot k 10,823 68,345 68,800 Preft rred stot L 40,000 40,000 50,000 Inng term debt 815,000 60,000 146,120 lledemption , Dcht retirements (648,6.f 5) (123,600) (118,600) Prcler red /prcicrtnt e stot k (40,000) (40,333) (50,000) Net i hange in short term debt (71,349) 65,200 35,770 Disidcruls paid (92,370) (86,I84) (79,545) Net cash prosided (u,rJ) bsjinaming actisitics 13,479 (16,572) 52,545 Nt t increase (dectcase) in cash and ca h e<{uis alents 4,821 (132) 2,612 Cash and t ash ergisalents at the beginning of the scar 3,947 4,279 1,667 Cash and cash cituisalents at the end of the scar 5 8,768 s 1,947 s 4,279 Cash paid during the scar for: Interest, net of amounts capitalized S 103,720 s 1I3,076 s 115,488 inc ome tases S 30,305 s 10,095 s 18,979 The aciomparning notes are an integral part of the consolidatett financial statt ments. l 4 l 23 i
Notes to Consolidated Financial Statements Note A.Significant Accounting Policies I. Ilasis ofConsolidation and Acwunting The < onsolidated financial statements include the activities of our wholly-owned subsidiaries, liarbor Electric Energy Company and th>ston Energy L hnology Group. All signihcant intercompany transactions base been eliminated. We follow acmunting policies prescribed by our federal and state regulators. We are also subject to the accounting and report-ing requirements of the Securities and Exchange Conunission. The financial statements comply w ith generally accepted acmunting principles. Certain prior perimi amounts on the financial statements were reclassified to confi>rm with current presentation.
- 2. Iterenue Itewynition We record resenues fi>r electricity used by our customers, but not yet billed, in order to more closely mat (h resenues u ith expenses.
- 3. forecasted Iucl and Purchased Power Itates The ra'e charged to retail customers fbr fuel and purt based power alkm s fbr all fuel costs, the capacity portion of some pur( hased power costs and some transmission cmts to be billed to customers monthly using a forecasted rate. The dilference between actual j and estimated costs is included in accounts receivable on our consolidated ba'ance shes until subsequent rates are adjusted. State ;
regulators base the right to reduce our subsequent fuel rates if they find that we base been unreasonable or imprudent in the opera- ; tion of our generating units or in purchasing fuel. .t. Depucciation and Nuclear iuci Amortiration Our phy sical property was depreciated on a straight-line basis in 1991,1992 and 1991 at wmposite rates of approximately 3.09"o, 3.36% and 3 A1% per Scar, respectisely, based on estimated useful lives of the sarious classes of property. The cost of decommis-sioning Pilgrim Station, our nuclear unit, is excluded from the depreciation rates. When property units are retired, their cost, nct of salvage salue, is charged to accumulated depreciation. The cost of nudcar fuel is amortiecd based on the amount of energy Pilgrim Station produces. Nuclear fuel expense also includes an amount Ihr the estimated costs of ultimately disposing of the spent nuclear fuel and Ibr the decontamination and decommissioning of the LJnited States enrichment facdities used in the production of nuclear fuel. These costs are recmcred from our ( ustomers through fuel charges.
- 5. Alhmancefor Iunds (Jsed During Construction (Al'UDC)
Allli)C represents the estimated costs to finance plant expenditures. In accordance with regulatory accounting, AI(JDC is included as a cost of utility plant. AflJDC is not an item of current cash income, but payment is reccised for these costs from cus-tomers mer the scrsice hfe of the plant in the form of increased revenues wilected as a result of higher depreciation expense. Our Art 1DC rates in 199 3,1992 and 1991 were 3.62%,4 A8%, and 6.85%, respectisely, and represented only the cost of debt.
- 6. Cash and Cash 1:quivalents Cash and cash equisalents are comprised oflughit liquid securities uith maturities of three months or less.
- 7. Allouamejor Doubljul Acwunts our accounts reccisable are substantially all recmcrable. This recovery occurs both from customer payments and from the portion of customer e harges that prmides for the recovery of bad debt expense. Accorchngly, we do not maintain a signilicant allowance for doubtful accounts balanw.
- 8. Dejerred Debits Deferred debits consist primarih of costs incurred w hic h will be collected from customers through future ( harges in accordance with agreements with our state regulators. Ihese costs uill be expensed when the corresponding revenues are received in order to appropriately match resenues and expenses. A portion of these costs is currently being charged to and collected from customers.
- 9. Amortisation of Diswunts, Premiums and itedemption Premiums on Set urities We expense din ounts, premiums, redemption premiums and related expenses associated with issuances of securities or refinancing of existing securitics in equal annual installments mer the hfe of the replacement securitics subject to regulatory approval.
24
Nrte B. Ritail S:tti:m:nt Agrsements . In 1992 and 1989 our state regulators, the Massachusetts Department of Public utilities, appr ned three-year settlement agree-ments relating to our rate case prm eedings. These agreements provided fi>r retail rate increases, accounting adjustments and demand side management program expenditures; clarified the timing and recognition of certain expenses and set limits on our rate of return on common equity. Itefer to Management's Discussion and Analysis for further infbrmation related to these settlement agreements.
]
The settlement agreements did not affect our contract or w holesale power rates charged to other utilities, w hi(h are regulat.
]
cd by our federal regulators, the lederal Energy llegulatory Commission. ' Note C. Income Taxes in the first quarter of 199 3 we prospectisely adopted Statement of Financial Ac counting Standards No.109, Accounting ihr . income Taxes (Si AS 109). This rc<piired us to change our methodology of accounting fbr income taxes from the deferred methml to an asset and liability approach. The defitred methml of accounting was based on the tax clTects of timing ditTerences between , income Ibr financial reporting purposes and taxable income. The asset and liabihty approach requires the recognition of deferred tax liabilities and assets for the future tax cuicts of temporary dilTerences between the carrying amounts and the tax basis of assets and liabilitics. In ac cordance with SFAS 109 we recorded a net regulatory asset of $26.9 million and a corresponding net increase in accumulated deli rred income taxes as of December 31,1993. The regulatory asset represents the additional future resenues to ; he collected from customer 3 for deferred income taxes. 1 Accumulated defi rred income taxes on our consolidated balance sheet at December 31,1P93 indudes 5587.8 million of , gross deferred income tax liabilities net of $ 103.0 million of gross deferred income tax assets. We have approximately 519 million of alternatise minimum tax carryforwards available at December 31,1993. The major components of accumulated deferred income taxes are a result of differences hetween book and tax expenses relating to property, plant and equipment. ! Deferred income tax expense reilected in our consolidated income statements is incurre I w hen certain income and expenses are reported on the tax return in different years than reported in the financial statements. Investment tax credits are induded in - income mer the estimated useful lives of the related property. - Components ofincome tax expense are as lhilows: on buundo 1993 1992 1991 l Excess tax depreciation mer book depreciation $ 12,382 5 9,765 5 10,802 Defi rred fuel expense ( 3,h 2) 2,587 56 ! Debt portion of allowance for funds used during construction 2,114 2,495 2,856 Massat husetts corporate franchise tax 5,089 6,134 7,140 { Deferred nudcar outage expense 2,472 (1,558) 7,014 Cost of removal 3,272 6,904 4,277 { Ratt and contract settlements 0 10,013 10,196 Municipal property taxes (489) 3,351 3,745 Demand side manigement programs 3,775 2,978 2,256 , Cancelled nuclear unit 0 (4,621) (8,998) Rescrsal-of deferred taxes - settlement agreement, net (19,231) (23,000) (13,000) [ Adjustment of prior year inuime tax accrual (2,154) 4,134 2,563 l Call premiums on refunded bond issues 5,821 1,029 (288) Trust contributions - postretirement benclits 3,451 0 0 Other (3,057) (3,828) (5,395) Subtotal deferred income taxes 10,303 16,383 23,224 Current income tax expense 28,711 (385) (1,823) Imestment tax credits (4,073) (4,273) (4,290) j i rovision for income taxes 34,941 11,725 17,111 ! Thcs on other income: Current 1,205 (2,348) 405 Deferred 0 782 1,252 l Subtotal 1,205 (1,566) 1,657 Totalincome tax expense $ 36,146 5 10,159 5 18,768 25 : I
I I l
'Ihc effecthe income tax rates reflected in the consolidated financial statements and the reasons for their dilTerences fn>m the statutory fideralinunne tax rate are explained below:
1993 1992 1991 Statutory tax rate 35.0 % 34.0 % 34.0 % State income tax, net of federal income tax benefit 4.2 3.9 4.1 Investment tax credits (2.6) ( 3.6) ( 3.8) i Municipal property tax adjustment (0.6) (1.6) (1.6) ! Adjustment of dcferred taxes on cancelled nuclear unit - 2.7 - . Iteversal of deli rred taxes - settlement agreement (13.0) ( 19.6) (11.5) Federal tax benefit of mamlated payments from settlement agreements - (6.2) ( 3. 3) l Other 0.4 (0.9) (1.4) idlertise tax rate 23.4 % 8.7% 16.5 % N:te D. Estimated Future Costs of Disposing of Spent Nuclear Fuel and Retiring Nuclear Generating Plants 1 The existing fuel storage facility at Pilgrim Station includes suuicient room for spent nuclear fuel generated through early 1995. We base a rajuest for a hcense amendment pending before the Nuclear Regulatory Conunission (NRC) to allow modification of the storage facility to prmide sullkient room for spent nuclear fuel generated through the end of Pilgrim's operating license in 2012. The NRC is resicuing our re<jucst and we expect approval in 1994. At that time ne willinitially modify the facility to pro-side spent fuel storage capatity through approximatch 2003. It is the uhimate responsibility of the United States Department of I nergy (IX)E) to permanently dispose of spent nuclear fuel as rn]uired by the Nuclear Waste Policy Act of 1982. We currently t pay a fee of s 1.00 per net megawatthour sohl from Pilgrim Station generation under a nutlear fuel disposal contract with the Dol:. The fee is c ollected from customers through fuel charges. i when Pilgrim Station's operating license expires in 2012 we uill be rajuired to dnununiwion the plant. During rate pro- , I (cedings ne pnnided our regulators a 1991 study documenting a cost of s 328 million to decommission the plant. The study is based on the " green ticid" method of deconunissioning, whith pnnides for the plant site to be completely restored to its original state. We are expensing these mimated deconunissioning costs mer Pilgrim's expected sersice life. The 1993 expense of approx-imately s13 million h in luded in depreciation expense on the consolidated income statements. We receive recovery of this expense from charges to our retail customers and from other utility companies and municipalities who purchase a contracted , amount of Pilgrim's electric generation. The funds ne collect from decommhsioning charges are deposited in an external trust and are restricted so that ther may only be used for dnommissioning and related expenses. The net earnings on the trust funds, l u hich are also restricted, increase the nuclear decommissioning fund balance and nudcar decommissioning rescrs e, thus reducing the amount to be collected from customers. The 1991 decommissioning study has been partially updated for internal planning purposes to naluate the potential financial impact oflong-term spent fuel storage options resulting from delays in DOE spent fuel renun al on the estimated decommissioning cost. The partial update indicates an estimated decommissioning cost of approximatelv
$400 million in 1991 dollars based upon a rnised spent fuel removal schnlule and utilintion of dry spent fuel storage technology.
We will c ontinue to monitor DOE spent fuel remmal sc hedules and developments in spent fuel storage tu hnology along with their impact on the decommissioning estimate. l We are also an im estor in tuo other domestic nudcar units. Both of these units receive through the rates charged to their customers an amount to cmer the estirnated (ost to dispose of their spent nuclear fuel and to retire the units at the end of their useful lis es. We presently dhpose oflow -lesel radioactis e w aste (I IW) generated at Pilgrim Station at licensed disposal facilities in Harnuell, South Carolina. As a result of deselopments which base occurred pursuant to the I ow-t esel Radioactive Waste Policy , Amendmi nts Act of 1985, our continued access to such disposal facilities has become sescrely limited and significantiv increased in cost . We base access to the south Carolina site through July 1994, but do not presently behnc that disposal site access will be pro- ; sided alter that date. Although legislation has been enactol in Massathusetts establishing a regulatory method for managing the state's 11 W including the pmsible siting, hcensing and construction of a 11W dispmal facility within the state, it appears unlikely i that su< h a larility uill be constructed in a timely manner. Pending the construction of a disposal facility within the state or the adoption by the state of some other 1 I W management method, ne continue to monitor the situation and are imestigating other as ailable options, induding the lmsibility of on4ite storage. Note E. Cancelled Nuclear Unit l In May 1982 ue began to expense the cost of our cann lied Pilgrim 2 nudcar unit mer approximately cinen and one-half years in i anordance with an order rn eived from state regulators. We did not expense an3 of these cmts in 1993 Instead, the remaining ;
~
balance of approximatdy 519 million at December 31,1993 and 1992 uill be expensed in ? 994 and/or 1995 as apprmed by our state regulators m our 1992 settlement agreement. ; 1 26 i e -
Nste F. Capital St:ck and indebtsdnsss Capital Stock December 31, 61 lle m thomanit*, txi ept ;wr i, hare anmunty 1993 1992 199l ; Common stoc k equity Common itnok, par salue sI per share, 100,000,(XX) shares authorized; 4 5,129,227, 44,76 3,055 and 42,047,356 shares issued and outstanding S 45,129 s 44,763 s 42.047 Premium on common stot k 612,653 602,196 536,567 Retained carnings 218,292 192,948 174,477 Surplus imested in plant 405 405 405 i
~1btal common stock equity 5 876,479 s 840,312 5 753,496 i r
Cumulative preferred stock: , Par salue s100 per share, 2,410,000 shares currently authoriicd; issued and outstanding: , Non. mandatory redeemahle series: ; Current Shares Redemption . Series Outstanding Price / Share 4.25"o 180,000 5103.625 S 18,(XX) s 18,000 s 18,000 4.78 % 2 50,(XX) $ 102.800 25,000 25,000 25,000 7.7 5a 6 400,000 - 40,(XX) 0 0 8.25"s 400,000 40,(XX) 40,000 0 { 8.88 % 0 - 0 40,000 40,000 l
'Iotal non-mandatory redeemable series S 12 3,(XX) 5 12 3.0(K) 5 83,000 Mandatory redeemalile series: ;
Current Shares ! Series Outstanding [ l 7.27 % 480,0(K) S 48,(XX) s 48,000 s 50,000 l 8.00" n 500,000 50,(XX) 50,000 50,000 Tbtal mandatory redeemable series 98,(XX) 98,000 100,0(K) ! Iess: due within one year 2,(XX) 0 0 i
'lbtal mandatory redeemable series, net S 96,(XX) $ 9S,000 $ 100,000 ;
Cumulatis e preference stot k' l'ar value 51 per share,8,(KK),000 shares authoriicd; none currently issued and outstanding - I Non-mandatory redeemable series: s l .46 series 5 0 s O s 2,673
- l'remium on s1.46 series 0 0 35,658 l l
'Ibtal preference stot k S 0 5 0 s 38,333 i
Dis idends Declared per Share Common stock S 1.715 5 1.655 s 1.595 Preferred stock: 4.2 5% series S 4.253 5 4.250 $ 4.250 4.78% series 4.785 4.780 4.780 7.27% serics 7.270 7.270 7.270 7.75% series 5.707 0 0 8.00% series 8.(XX) 8.000 1.337 8.2 5% series 8.250 5.278 0 8.88% series 2.220 8.880 8.880 l Preference stock:
$ 1.4 6 seric$ S O 5 0.365 5 1.460 i
$tated rate auction preference sto(k 0 0 6.900 27 l
t
-n , , . . - - - .. . . . . . - . . . . . --
a Indebtedness December 31,- (dollan in dxean<ls) 1493 1992 tong-term debt: 1:irst mortgage bonds: Interest Series Itate Maturity 1- 4.750 % 1995 5 0 $ 25,000 ' J . 6.125 % 1997 0' 40,000' K- 6.875 % 1998 0 50,000 , L 9.000 % 1999 0' 50,000 M 9.375 % 2000 0 -60,000 - N- 8.125 % 2001 0 75,000 :f S Wriable 2002 25,000 25,000 Q 9.750 % 2003 0 59,375 11 'l0.950 % 2004 0 44,250 P 9.250 % 2007 0 60,000 LJ 10.250 % 2014 15,000 15,000 , W . 9.500 % 2016 0 135,000 JIbtal first mortgage bonds 40,000 638,625.. !
- 1. css: due within one year 0 6,800 >
lbtal first mortgage bonds, net S 40,000 5 631,825 Sewage facility revenue bonds S 36,300 5 36,300 ; Less: funds held by trustec 3,803 12,052 Tbtal sewage f acility revenue Imnds, net S 32,497 s 24,248 Debentures: 8.875%, duc 1995 $ 100,000 s 100,000 5.125%, duc 1996 100,000 - O' 5.700%, due 1997 -100,000 0 .l 5.950%, duc 1998 100,000 0 ! 6.800%, due 2000 65,000 0' .i 6.050%, duc 2000 100,000 0 6.800%, due 20M 150,000 0' ; 9.875%, duc 2020 100,000 100,000 ! 9,375%, due 2021 125,000 125,000 8.2 50%, duc 2022 60,000 60,000 t 7,800%, duc 2023 200,000 0 I
'Ibral debentures 5 1,200,000 s 385,000 i
linsecured medium-term notes S 0 $ 50,000 Short-term debt: . f Notes payable: llank loans S 106,501 5 162,500 [ Commercial paper 97,650 113,000 ! lbtal notes pasable 5 204,151 5 275,500 { i i
I. Common Stock Since December 31, 1990, we issued the following shares of common stock: Number 'Ibtal Premium on (in thousando of Shares Par Value Common Stock llalance December 31,1999 38,998 $ 194,993 5 314,822 Disidend reimestment plan 449 .2,181 6,844 Change in par vah,e of common stock (a) 0 (l57,727) 157,727 New issue 09 2,600 2,600 57,174 Italance December 31,1991 42,047 42,047 536,567 Dividend reinvestment plan 416 416 9,658 New issue k) 2,300 2,300 55,971 Italance December 31,1992 44,763 44,763 602,196 Dividend reimestment plan Ub 366 366 10,457 Italance December 31,1993 45,129 $ 45.129 5 612,653 (a) In Nosember 1991 our Articles of Orgaruution were amended to ira rcase authorized wmnwn simk from 50 milhon to 10u milhon shares and reduce the par salue f rorn 65 to si per common share. (b; We used the net prm ecd 3 of the 1991 tummon st<n k issuance to ret rc 5 5 5 million of N ries X, i 1% first mortgage bonds. (c) We used the net pnweeds of the 1992 comnmn utm k issuante to reduce short term debt. (d) At ()cetmber 3I,19H. the remaming autlmrved comm<m shares rescrsed for f uture issuaine uruler the Dividena Reuisestmerit arxl Common stm k Purt base 1%n were 815,170 shares.
- 2. Cumulative Non-Mandatory Redeemable Preferred and Preference Stock In June 1992 we issued 400,000 shares of 8.2596 cumulatise non-mandatory redeemable preferred stock at par. The stock is redeemable at $ 100 per share plus accrued dividends beginning in June 1997. These shares were sold in the form of 1.6 million depositary shares, each representing a one-fourth interest in a share of the preferred stock. We used the proceeds of this issue to fully retire the $ 1.46 series cumulatise non-mandatory redeemable preference stock.
In May 199 3 we issued 400,000 shares of 7.75% cumulative non-mandatory redeemable preferred stock at par. The stock is redeemahle a' 5100 per sh re plus accrued dividends beginning in May 1998. These shares were sold in the form of 1.6 million depositary shares, each representing a one-fourth interest in a share of the preferred stock. We used the proceeds of this issue to fully retire the 8.8896 series cumulative non-mandatory redeemable preferred stock.
- 3. Cumulative Mandatory Redeemable Preferred Stotk The 480,000 shares of our 7.279 6 sinking fund series cumulatise preferred stoc k are currently redeemable at our option at 1
5104.36. The redemption price declines annually each May to par value in May 2002. In May 1993 the stock became subject to sinking fund requirements to retire 20,000 shares at s100 per share plus accrued disidends each year through May 2002. In 1992 ue purchased 20,000 shares at a discount on the open market which satisfied the mandatory sinking fund requirement for May 199 3. lleginning in 1993, we have the non-cumulative option each May to redeem additional shares, not to exceed 20,000, for the sinking fund at $100 per share plus accrued dividends. We are not able to redeem am part of our 500,000 shares of $ 100 par value 896 series cmnulatise preferred stock prior to December 2001. The entire series is subjed to mandatory redemption in December 2001 at $ 100 per share, plus accrued disidends
- 4. long-krm Debt Substantially all our property, plant, equipment, materials and supplies are subject to lien under the terms of our Indenture of Trust and First Mortgage dated December 1,1940, and its supplements. Currently only the outstanding Series S and U first mort-gage bonds are subject to the terms of the indenture.
The aggregate principal amounts of our first mortgage bonds, debentures, and sewage facility revenue bonds (induding sinking fund requirements) due in 1994 and 1995 are 50 and $ 100.6 million, respectively, and $101.6 million per year in 1996 through 1998. Our first mortgage bonds, Series S, adjustable rate duc 2002, paid interest at 9.29b per year for the period January 15,1993 through January 14,1994. The rate is adjusted annually and is based upon the ten year constant maturity Treasury rate as published by the federal Reserse Board. The interest rate for the period January 15,1994 through January 14,1995is 8.2 %. In September 1992 we issued 560 million of 8.25*b debentures which mature in September 2022. The debentures are redeemable at prices decreasing from 103.78% of par beginning in September 2002, to 100% of par beginning in September 2012. We used the net proceeds from the sale to reduce short-term debt. In October 1992 we redeemed the remaining balance of 545 million Series X first mortgage bonds. In Ichruary 1993 we issued $65 million of 6.8% debentures due in 2000. We used the proceeds of this issue to reduce short. term debt. These debentures are not redeemable prior to maturity. 29
In Atart h 1993 we issued $650 million of debentures and used the proceeds to retire ten of twehe outstanding series of first mortgage bonds and reduce short-term debt. The debentures were issued in live separate series with interest rates ranging from 5.12 5% in 7.8% and maturing hetween 1996 and 202 3. The 51/8% debentures due 1996, 5.70% due 1997, 5.95% due 1998 and 6.80% duc 200 3 are not redeemable prior to maturity. The 7.80% debentures due 2023 are first redeemable in Atarch 2003 at a redemption price of 10 3.7 3% The redemption price de< reases annually each Alarch to par value in Atarch 2013. There is no I sinking fund requirement for any series of the debentures. j in August 1993 we issued $100 million of 6.05% debentures due in 2000. We used the proceeds fn>m this sale to reduce short-term debt. These debentures are not redeemable prior to maturity and have no sinking fund requirements. i We redeemed 5 50 million of 9.65% m"dium-term notes in September 1992 and 5 50 million of 9.75% medium-term notes in Septembcr 199 L L Sewage liuility Revenue Bonds In December 1991, liarbor Electric Energy Company (111 l C), a w holly.ow ned subsidiary, issued s 36. 3 million oflong-term sewage facility revenue bonds. The bonds are tax-exempt, subject to annual mandatory sinking fund redemption requirements and mature in the years 1995-2015. The weighted aserage interest rate of the bonds is 7.3% A portion of the proceeds from the bonds was used to retire 521 million of short-term seuage facility resenue bonds at maturity. The remainder of the proceeds, w hic h is on deposit uith the trustec, is being used to finance the construction of HELC's permanent substation located on Deer Island iin lloston liarbor) and to fund an amount w hich must remain in reserve with the trustee. Ifill EC should have insufficient f unds to pay certain costs on a timely basis or be unable to meet certain net uorth requirements, we would be required to make addinonal(apital contributions or loans to the subsidiarv up to a maximum of 57 million.
- 6. Simrt-lcrm Debt We base arrangements with certain banks to proside short-term credit on both a committed and an uncommitted and as available basis. We currently h.we authority to issue up to 5 350 million of short-term debt.
We base a $200 million resohing credit agreement uith a group of banks. This agreement is intended to prmide a standby source of short term borrowings. Under the terms of this agreement we are required to maintain a common equity ratio of not less than 30% at all times. Conunitment fees must be paid on the unused portion of the total agreement amount. Information regarding our short term borrow ings, comprised of bank loans and commercial paper is as follow s: , obousan,ls of dollam 1993 1992 1991 Alasimum short term borrowings S 320,000 5 314,998 5 324,400 Weighted aserage amount outstanding S 220,149 s 233,286 5 221,481 Weighted average interest rates, enludine commitment fees 3.4% 4.1 % 6.4 % Note G. Fcir Value of Securities The foll< wing methods and assumptions were used to estimate the fair salue of cat h class of securities for w hich it is practicable to estimati the salue: Nur' ear Jccomminioningfund 'ne fair salue of S70.1 million is based on quoted market pris es of securities held. Cash and cash equivalents The carrying amount of s8.8 million approximates fair value due to the short-term nature of these securities. .tlandatory rcJeemable c umulatis e preferred stock,first mortgage bonds, sewagefluility revenue bonds and debentures The fair salues of these securities are based upon the quoted market prites of similar issues. Carrying amounts and fair values as of December 31,1993 are as follow s: Carry ing Fair on ihousanito Amount Value Alandatory redeemable cumulative preferred stot k 5 98,000 S 105,435 I:irst mortgage bonds 40,000 44,132 Sewage facility resenue bonds 36,300 40,528 Debent ures 1,200,000 1,237,924 30
Nota H, C:mmitments and Contingencies L Capital Commitments At December 31,1993, we had estimated contractual obligations for plant and equipmt nt of apprmimatelv s71 million.
- 2. Lease Commitments We base leases for certain facilities and equi;mient. Our estimated minimum rental conunitments under both noncancelahle leases and transmission agreements Ihr the years af ter 199 3 are as follow s:
On thousan.N 27,375 I 1994 S 1995 23,878 1996 21,299 1997 l 9,217 1998 17,969 Years thereafter 139,474 Total s 249,212 We will capitali/c a portion of these lease rentals as part of plant expenditures in the future. Our total expense for both lease rentals and transmission agreements Ihr 1993,1992 and 1991 u as s 30 million, s 30 million and S 3 3.5 million, respectiselv, net of capitaheed expemes of s 5 million, $ 5 million, ami s4.8 million, respectiselv.
- 3. Ilydro-Quebec We base an approximately 11% etjuity (m nership interest in tuo companies w hich <m n and operate transmission facilities to import electricitv from the Hydro-Quchec system in Canada, w hich is included in our consolidated financial statements. As an equity participant ne are required to guarantee, in athhtion to our ow n share, the total obligations of those participants w ho do not meet certain credit criteria and are c ompensated accordingly. At Decemher ll,199 3, our portion of these guarantees was apprmimately s22 million.
- 4. knkee Atomic IIcctric Company in Ichruary 1992 the lloard of Directors of Yankee Atomic Electric Company (Yankee Atomic) decided to permanently discontin-ue power operation of the Yankee Atomic nutlear generating station and, in time, decommission that facility. We relied on Yankee Atomic for less than one percent of our system capacity. We hue a 9.5% stock imestment of apprmimatelv s2 million in Yankee Atomic.
In 199 3 Yankee Atomic reccised apprmal from federal regulators to continue to collect its imestment and decommissioning costs through julv 2(K)0, the period of the plant's operating license. The estimate of our share of Yankee Atomic's investment and costs of detommissioning is apprmimately s 3 3 million as of December 31, 1993. This estimate is recorded on our consolidated halance sheet as a power contract liahilits in deferred credits. An offsetting power contract regulatory asset is included in deferred debits as ue continue to (ollect these costs from our t ustomers in accordance uith our 1992 settlement agreement.
- 5. Nudcar Insurame The federal Price-Anderson Act currently prmides s9.4 hillion of financial protection for public liability claims and legal costs arising from a single nuclear-related accident. The first $200 million of nuclear liability is cmered by commertial insurance.
Additional nuclear liabihty insurance up to apprmimately 58.8 hillion is prmided by a retrospectine assessment of up to $75.5 million per incident lesied on eat b of the 116 units licemed to operate in the llnited States, uith a maximum assessment of s 10 mi!! ion per teactor per accident in am } car. The a&htional nutlear liability insurance amount may change as new commercial nuclear units are licemed and existing units give up their licenses. In addition to the nuclear liahility retrospectu e assessments, if the sum of all public liability t laims and legal costs arising from aru nuclear accident exceeds the maximum amount of financial protection, eat h licen ec t an he awessed an additional lite percent of the maximum retrospectise awessment. We hate purt hased imurance from Nuclear lih ctric Insurance 1imited (NLIL) to cover some of the costs to pur( hase replacemt nt poner during a prolonged accidental outage at Pilgrim Station and the cost of repair, replat ement, decontamination or deconunissioning of our utility property restdting from emered incidents at Pilgrim Station. Our maximum potential total assessment for lowes which occur during current poliev vears is approximately s14,6 million under hoth the re;lacement p<mer , and excess propcrty damage, de(ontamination and decommissioning policies. All companies insured uith NE11 are subject to j retroactise assessments il losses are in excess of the total funds asailable to NI il . While awessments may also he made for losses in l certain prior policy scars, we are not an are of ant losses in those years w hich we heliese are likely to resuh m an assessment. j { i 31 i i
i i
- 6. Litigjation in Mar h 1991 we were named in a law suit alleging discriminatory employment practices under the Age Discrimination in Employ ment Act of 1967 concerning 46 emp!oyt es affected by our 1988 reduc tion in force. I egal counsel is sigorously defcnding this case. liased on the information presently asailable we do not expect that this litigation or certain other legal matters in u hich we are currendy inudml will base a material impact on our financial condition. Iloweser, an unfavorable decision ordered against us could hase a rnaterial impact on quarterly earnings.
- 7. Hasardom Ilhste State regulatiom resised in 1993 require that properties w here releases of hazardous materials occurred in the past be further (leaned up according to a timetable developed by the Massat husetts Department of Emironmental Protection. We are currently evaluating the potential costs associated with the ileanup of sites u here we base been identified as the ou ner or operator. Thea are uncertainties associated with these potential costs due to the complexitics of cleanup technology, regulatory requirements and the particular c haracteristics of the dillerent sites. We also continue to face possible liability as a potentially responsible party in the cicanup of certain other multi. party hazardous waste sites in Massachusetts aml other states. At the majority of these other sites we aie one of many potentially responsible parties and our alleged share of the responsibility is a small percentage. We do not expect any of our potential cleanup liabilities to base a material impact on financial condition, ahhough prmisions for cleanup costs muhl base a material impact on quarterly carnings.
Note 1. Pensions, Other Postretirement and Postemployment Benefits
- 1. Pemions We base a nom ontributory funded retirement plan, w ith certan features that alkm voluntary contributions. lienefits are based upon an cmployce's years of scrsice and compensation during the last years of employment. Our funding policy is to contribute ca< h ) car an amount that is not less than the minimum required contribution under federal law or greater than the maximurn tax deductible amount. Plan assets are primarily equities, bonds, insurance contracts and real estate.
Net pcmion mst included the following components: On thousando 1993 1992 1991 Current service cmt - benclits carned S 11,734 s 10,683 s 8,567 Interest cost on projected benefit obligation 33,181 12,287 29,817 Actual return on plan assets (44,470) (23,281) (60,873)
% t amortization and deferral 8,528 (13,549) 26,81i Nct pension cost W S 8,973 s 6,140 5 4,322 (4) in au onlance u nh an agreement with our state regulaton, u c deferrol our net pension costs m curss of the annual funihng amounts aml u di nuner 6 w o mt., from i ustomen mer time % t jwn ion o sts reoinleil as npense ucre approxunately 5 5 milhon in 199; and $0 m 1992 and t991.
We used the folkming assumptions for calculating pension cost: 1993 1992 1991 Discount rate 8.25% 8.25% 9.00 % lipected long term rate of return on assets 10.00 % 10.00" b 10.00 % Compemation im rease rate 4.50 % 4.50 % 4.50 % We (hanged our diwount rate assumption to 7.0"i, for calculating pension cost effectisc January 1994. The plan's funded status at December 31,199 3 and 1992 u as as follows: on thousandu 1993 1992 Actuarial prev nt value of benefit obligatiom: Accmnulated benefit oblication, int ludmg vested benefits of s 184,150 and s 322,8 36 S 400,895 5 339,035 Plan assets at f air salue $ 394,233 5 392,407 l'rojected obligation for sersice rendered to date (509,661) (418,312) Projecicd benellt obligation m excess of plan assets (I15,428) (25.905) linrecognized prior sers it e cost 8,139 8,817 linrecogni/cd net (gain) Ims 75,352 (6,810) linrecogni/ed net obhgation 9,912 10,866 Net pension liabihtv 5 (22,005) 5 (13,032) We used the folhming assumptions for calculating the plan's year-end fumled status 1993 1992 Dim ount ratc 7.00 % 8.25 % Conynsation int rease rate 4.50 % 4.50 % 32
L Other heretirement fler efin in addition to pension benefits, we aho t urrently prmide health care and other benefits to our retired employees u ho meet certain age and years of sersice eligibility requirements.1.flectisc January 1993 we adopted Statement ofi:inancial Accounting Standards No.106, Employer's Actounting lbr Postretirement Ilenc0ts Other Than Pensions (SFAS 106). This requires us to reconi a liabili-ty during the working years of employees for the expected costs of pnwiding their postretirement benefits other than pensions (P110Ps). Prior to 1991 our policy was to record the cost of P110Ps w hen paid. Our transition obligation on January 1,1993 was approximately s181 million, which we elected to recogniec mer 20 years as perm. d by SI AS 106. Our total cost of PilOPs under Si AS 106 in 199 3 was appn>ximately 528 million, an increase of approximatt il8 million mcr emts incurred under our
. prior nwNd of act nunting for PitOPs Our 1992 settlement agreement pnnides us uith a phase-in of a portion of the increased costs ami albm s us to defer the adihtional costs in excess of the phase-in anmunts to the extent that we fund an external trust. In December 1993 we degmsited s18 million on a tax deductible basis into external trusts for the payment of PilOPs. Accordingly, m 1993 we reconled an expense of approximately 516 million, refleding the amount of cost recovery from customers, and deferred approximately $12 million for future reemery. We capitali<cd approximately 19% of these costs.
Postretirement benellts cost consisted of the following in 1993: On thouundo ! Current servit e cost - benefits carned 5 4,351 d interest cost on transition obligation 14,286 Amorti/ation of tramilion obligation 9,151 Net postrctirement benefits cost 5 27.788 We used an 8.0% weighted average discount rate and 4.5% rate of compensation increase assumption for calculating the tran-sition obligation and the 1991 postretirement benefits cost. Our expected long-term rate of return on assets is 9.0%. We also assumed a 12.5% health (are cost trend rate. Effecthe January 1,1994 we changed the discount and health care cost trend rates to 7.0"o and 9.0%, respedively, in order to more accurately estimate our future bencht payments. The health care cost trend rate is assumed to decrease by one percent each year to 5% in 1998 and years thereafter. Changes in the health care cmt trend rate nill alTet t our cost and obligation amounts. f or example, a one percent increase in the rate would increase the total service and interest , cmts in 1991 by approximately 16% and wouhl int rease the accumulated obligation at December 11,1993 by approximately 13%. l The postrctirement benefits program's funded status at December ll,199 3 was as follon s: i nn thouunda , Trust assets at fair salue 5 18,016 Accumulated obligation for sersice rendered to date from: Retirees s (75,216) Artisc employees eligible to retire (64,880) Actise empimees not cligible to retire (73,285) (213,38I) Accumulated benefit obligation in excess of trust assets (195,365) linrc< ognired loss 21,497 linrecogniecd net obligation 173,868 Net postretirement benehts liahilitt $ 0 The trmt assets consist of money nurket funds at December 31,1993.
- 3. Mtemployment flenefits Statement of1:inancial Accounting Standards No.112, Employers' Accounting for Postemployment llenc0ts, will be effectise for the first quarter of 1994. This statement uill require us to reconi a liability mmputed on an actuarial basis for the estimated cost of pnniding pmtemployment benchts. Postemploy ment benefits provided to former or inactive employees, their beneficiaries and emered dependents include salary continuation, sescrance benents, disabihty-related benefits (induding workers' compensation),
job training and munseling and continuation of health care and life insurance cmerage. We currently recognire the cost of these benefits primarily as daims are paid. We do not anticipate a material ellect on net income from adopting this statement. Note J.New Accounting Pronouncement We will adopt Statement of Financial Accounting Standards No. I15, Atcounting for Certain lmestments in Debt and Equity Securities, in the first quarter of 1994. This statement may require us to dassify the imestments in our nudcar decommissioning fund on our conmlidated balance sheet based on how long ue intend to hold the indisidual securities. These imestments may be dassified acasadable for sale" and we may also be required to report any unrealized gains and hisses on the imestments as a separate component of sharehohlers' equity. We do not expect the a loption of this statement to hase a material ellwt on shareholders' equ ty. 33
Note K. Long Term Power Contracts . I, long-lerm Cimtractsjbr the l'unhasc of Dectricity We purc hase electric jumer under several long-term contracts for w hic h we pay a share of the generating unit's capital and fixed operating costs through the contract expiration date. The total cost of these contracts is included in purt hased jumer expense in our consolidated income statementL Information relating to these contracts as of December 31,1993 is as follou s: proportionate share (in thousands) 1993 199 3 Interest Debt : Contract linits of. Minimum Portion of Outstanding ispiration Capacity Pun hased . Debt Minunum Through Cont. Contract Date "o MW Senice Debt Ser ice lixp. Date ! I Canal unit I- 2001 25.0 142 5 781 $ 314 s 2,118 Mass. Ilay Transportation Authority 2005 100.0 35 do thi d9 Conne(ticut Yankee Atomic 2007 9.5 56 2,579 1,670 15,898 Ocean State Power - Unit i 2010 23.5 65 5,323 3,948 22,747 Ocean State Pouer i Unit 2 2011 23.5 65 4,422 3,376 19,401 Northeast linergy Awociates M a) 219 (o (c) M LTnergia- 2013 73.0 64 nh oh ol) ,
'lotal 646 5 13.105 5 9,308 5 60,164 !
I W nc wtheast I nergy hmiates o,ntract reprewnts 6.4% of our totabptem generauon e apibihty. The remainns umts hsted alu n e represent i M u in total. thi We are required to pay the greater of $22.00 per Ldowatt-year or 9tr% of the w I ngl.ind Pimer Pooliapaluhty responsihihty adjustment c harge up to % 100 gw r Ldow att-year times the quahfa d a apaaty u urretitly rated at 3 hMW) } lus inircinentali perating, mainienaru c and fuel t osts. He intal l t harges for this t ontract in 1991 w cre approsimately s 2 milhon. a) We puribase appionnately 75.5N, of the energy output of this unit under tu o eontracts. One contract represents 13 5MW and npires in the ycar ', 201 L 'Ihe other contras t h for 84MW ami npires in 2010. We pay for thh energy based on a pric e per LWh actually retencd. We do not pay a pro-pos uonaic share of the umth apaal and hsed operating s outs. I he total i harges for these contracts in 1991 w cre apprmunatdy s 116 nulhon. (h ne i!! nergia contratt started in Atar<h 19% We purchase 7 h.of the encrp output of ihn umt. We pay for this energy based on a price per LWh ai tually rcrencd ne total iharges un&r ilus 4 ontrart lor 1991 we re approumaicly 5 Ii milhon. Our total fixed and variable costs for these contracts in 1993,1992 and 1991 were approximately 5225 million,5217 mil-lion and 5154 milhon, respectisely. Our minimum fixed pay ments under these contracts for the ) cars after 1993 are as follou s: On thousands, I994 5 69,432 1995 72,418 1996 75,376 1997 71,147 199S 72,429 Years thereafter 725,236
'Ibtal 5 1,086,038 lotal pre ent calue s H 8,600 2 long- term I\mer Sales i ln aildition to our power sales to four u holesale customers, ne sell a petcentage of Pilgrim Station's output to other utilities under ;
long-term contra (tt Informtlion relating to these contracts is as follou 8: Contract lixpiration Units of Capacitv Sold . Contract Customer Date % MW Conunonucalth 1.lectric Company 2012 11.0 73.7 ! Montaup L~lectric Company 2012 11.0 73.7 Various municipalities 2000M 3.7 25.0 lotal 25.7 172.4 (a) Sulycet to certain adjusunento I Under these contracts, the utilities pay their proportional share of the costs of operating Pilgrim Station and awociated trans- I miwinn facilitiet These wsts indude operation and maintenance expenses, insurance, local taxes, depreciation, decommiwioning l and a leturn on (apital. i 34 9 r - v
To the Stockh.y and Directors of Boston Edison Company We have audited the accompanying consolidated balance sheets of Itoston Edison Company and subsidiaries (the comjuny) as of I)erember 31,199 3 and 1992 aml the related consolidated statements ofincome, retained earnings and cash llows for eat h of the three years in the period ended 1)ccember 31,1993. These finantial statements are the responsibility of the Company's manage-ment. Our responubility is to express an opinion on these financial statements based on our audits. We (onducted our ambts in accordance with generally accepted auditing stamlards. Those stamlards require that we plan and perform the amlit to obtain reasonable assuram e about u hether the financial statement
- are free of material misstatement. An ambt includes esamining, on a test lusis, esidence supporting the amounts and distlosures in the financial statements. An audit also incimles assessing the at counting principles used ami significant estimates made by management, as ucll as esaluating the over-all financial statement presentation. We beliese that our audits proside a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of I)cccmher 31,1993 and 1992, and the consolidated results of its operations and its cash flow s for eat h of the three years in the period ended I)cci mher 31,1993, in conformity with generally accepted accounting principles. 4o l$ostisn, .\lassat husetts January 23,1994 1 4 1 l 1 35
Selected Consolidated Financial Statistics (Unaudited) Quarterly Financial Data On iluinsamL, eu r;>t < ariunp p r ,,lwe) llalanc( As ailable Earnings i Ops rating Operating Net for Common Per Share of 1 Res enues Int ome Income Stoc k Connnon Stot k I 1993 1:irst quarter 5 354,752 5 3 41,721 s 15,452 $ 11,377 5 0.25 Second quarter 346,074 49,282 22,829 19,125 0.43 Third quarter 4 36,024 96,319 70,015 66,052 1.47 luntth quarter 345,403 37,997 9,922 5,959 0. ] 3 1992 I'irst quarter $ 34 3,50s S 41,930 5 13,816 5 9,553 5 0.23 hecond quarter 300,566 32,629 4,953 852 0.02 Third quarter 408,255 100,890 73,698 69,593 1.60 l ourth quarter 159,427 45,451 14,8 31 10,750 0.24 m hot up,n ihe ueWani ncrage numi cr of o,nnnon share outuan.img duong the quart <r. Our ch (tricity sales and rewnues are seasonal in nature, uith both bring lower in the spring and fall seasons. Quarterly carnings for 199 3 rcIlect a < hange in the months for w hich certain customers ut re billeil at higher rates as mandated liy our state regulators. These (ustomers ucre hilled at these higher rates in July through Ot toher in 1992 and in June through September in 1993. The < hange in hilling increasnl sec and oaarter earnings and reduted lourth quarter carnings hs approximately 50.2 3 per share in 199 3. Quarterly Stock Data lullow ing are the reported high and lou sales prit es of our conuni.n sto(L on the New York Sto(L 1:u hange as relmrteil daily in the IIallkrat fournal for eat h of the quarters in 199 3 and 1992 and the dnidends detlared per share during cat b of those quarters: 1993 1992 liigh lou I)isidends liigh Lou I)is idends f irst quarter 5 30 1/2 5 26 3/8 s 0.425 5 24 5/8 $ 22 1/8 5 0.410 Sn ond quarter 10 7/8 27 7/8 0.425 26 22 1/8 0.410 Thini quarter 32 5/8 29 3/4 0.425 26 7/8 24 7/8 0.410 l ourth quarter 32 1/4 27 7/8 0.440 28 1/4 24 1/4 0.425 s 36
e Selected Consolidated Sales Statistics (Unaudited) 1993 1992 1991 1990 1989 Hectric energy: (k Wh in thousands) Sources (s) stem output): Generated 9,787,092 11.679,824 10,602.110 12,744,238 11,679,060 Purt he.ed 5,326,224 5,449,225 4,651,101 3,305,491 4,177,079 New I.nglaml l'oner Pool 1,575,110 932,121 1,274,522 1,065,731 1,170,847
'lotal 16,688,626 18,061,170 16,527,733 17.115,460 17,026,986 IEposition:
lletail sales: Conuncr eial 7,292,681 7,202,580 7,132,179 7,183,347 7,095,297 llesidential 3,487,370 3,424,275 3,382,306 3,430,720 3,413,801 Industrial 1,590,669 1,678,242 1,6S4,864 1,750,325 1,845,441 Other 4) 145,242 292,510 279,540 275,213 259,762
~Iotal retail billed 12,515,962 12,597,607 12,478,889 12,639,605 12,614,301 Wholesale and < ontract sales 4) 2,272,669 2,517.247 1,660,082 1,674,114 1,138,682 New I ngland Power Pool 877,978 1,898,059 1,2s2,797 1,885,165 2,090,238
'lotal system 15,666,609 17,012,913 15,391,768 16,198,884 15,84 3,22 l Miscellaneous usage 1,020,017 1,048,257 1,135,965 916,576 1,183,765
' Intal 16,686,626 18,061,170 16,527,733 17,115,460 17,026,986 Kilowatthours . annual grow th percent:
lletail sales: Commercial 1. 3% l.0"6 (0.7fh 1.2% 1. 3 % llesidential 1.8 1.2 (l.4) 0.5 (0,5) Industrial ( 5.2) (0.4) ( 3.7) ( 5. 2) O.3 Other (50.3) 4.6 1.6 6.0 16.9
'Ibtal retail billed ") (0.6) 1.0 (l.3) 0.2 0.9 Wholesale and contract sales (9.7) 51.6 (0.S) 47.0 85.2 New Englanti Power Pool (53.7) 51.5 ( 3 3.5) (9.8) 149.0
~lbtal sutem (7.9)% 10,5"o ( 5.0)" o 2.2% 13.6 %
~lbtal electric operating revenues by (lass:
Commercial 49% 47% 47% 46 % 45 % llesidential 27 % 26 % 26 % 27 % 26 % Industrial 10 % 10"6 10 % 10 % 10 % Wholesale and contract 12 % 13% 12 % 13% 15 % ()ther 2% 4% 5% 4% 4% l-.lectric sales statistics: llesidential as erages: Annual LWh use 6,160 6,101 6,053 6,150 6,160 Ilesenue per kWh I I.49c 10.84r 10.60c 10.09c 10.15c Annual bill S 709.75 5 657.4I s 641.62 5 620.54 5 625.24 Customers: Average number 651,141 646,215 642,967 642,041 637,871 m I tiet tn e I ci,ruary 1941 a former rctail customer hetame a wluilesalc < ustomer as allim ed umler hsachusetu staic law . 1 uludmg the effect of this iussomer ,ihange m status, total retail 3. ales hilled iricreased 1.2". in 1491. Certain re(lassifications and recalculations were made to the data reported in prior years to conform with the method of presentation used in 199 3. 38
Selected Consolidated Operating Statistics (Unaudited) 1993 1992 199] 1990 1989 Capacity - MW: New iloston station 760 76t? 760 760 760 Pilgrirn Station 670 670 670 670 670 My stic $tation 1,006 1,005 1,015 1,014 1,018 W.l . Wy rnan linit 4 36 36 36 36 36 lct turbines 283 2S1 281 281 273 Total 2,755 2,752 2,762 2,761 2,757 Contract pun bases 938 1,157 1,293 924 1,102 Contract sales (283) (303) (293) (173) (171) Net (apabihts at scar-end 1,410 3,606 3,762 3,512 3,688 4 Net upabilits at peak-MW 3,663 3,587 3,695 3,505 3,483 Capability responsibility to Ni POUI. at peak-MW 3,190 3,396 3,311 3,343 3,443 1,lison territors : llourly peak-MW 2,662 2,545 2,652 2,548 2,626 I nail fai. tor 60.5 % 62.5"o 60.0"o 62. 2" b 61.4% (icncrating stalitin c(onont): illlll/ net kWh> 10,345 10,214 10,331 10,403 10,309 As crage (ost of f uel (Company ) - r per million H1 U: l ossil 250.42 246.69 240.18 255.;l 254.56 N ut lear 50.67 52.IS 56.IS 59.05 56.79 Composit e 162.02 166.93 180.49 191.48 223.86 Capabihtv (net kW): lussil 84 % Slo o Sl% 81"o S2 o Nut h at 16 % 19 % 19 % 19 % 18"o Gi neration ontem kWh cu lutling inten hange): I ossil 68 % 64"o 70% 72oh 87oo Nut Icar 32 % 31 % 30"o 28 % 13% litility plani (N in O(K)'sl: lipcmhtures 247,394 213.621 202,589 240,902 234,253 Retirements 34,147 34,0 36 30,333 27,180 14,042 A cumulated depreciation 1,258,359 1,177,294 1,097,991 1,015,171 950,29S l >cpret iabic plant 3,841,752 3,567,160 3,4 S S,269 3,277,616 3,130,031 Number ol emplo3ces at scar end 4,404 4,54 0 4,637 4,7 38 4,686 37
Selected Consolidated Financial Statistics (unaudited) 1993 1992 1991 1990 1989 ()perating resenues (OOO) S 1,482,253 s 1,411,753 5 1,354,501 5 1,314,440 s 1,339,956 Italance for cummon t000) S 102,513 s 90,748 s 77,059 s 77,788 s (33,788) Per umunon hare: I I.arnings (loss) S 2.28 3 2.10 s 1.96 s 2.01'd) s (0.88 / " l)isi<lemls iledarcil 5 1.715 s 1.655 s 1.595 s 1.535 s 1.745
!)isidemls pairl 5 1.70 s 1.64 5 1.58 5 1.52 5 1.82 Ilook salue S 19.42 5 18.77 5 17.92 s 17.22 s 16.73 Operating rash ilow k) S 6.60 s 6.85 s 5.50 5 5.68 5 6.39 75% 78" 81 % e6"o - "I '
Payout ratio Iteturn on as erage common erjuity 11.9 % 1 I . 5% i 1. 3" o i 1.8% (4.6) % Year-end ilisi, lend yichl 5.9% 6. 2" o 6.6on 7.9% 7.6 % lhed charge anerage (SI:C) 2.27x 1.93x 1.86x 2.13 x 0.52x Capitali/ation:
%talilcht 57 % 56 % 58"6 59 % 579o I refer. d and preferentc equits 9% 9% 10 % 10% i1%
Conunon equity 14 % 35"s 32"o 31 % 32 % 1 ong term debt d 00) S 1,272,497 5 1,091,073 s 1,136,765 s 1,074,025 s 948,839 Mamlatory redce nable preferreil/ preference tod3 (000) S 98,000 s 98,000 s 100,000 s 100,000 s 100,000 haal aocts (000) 5 3,477,299 s 3,294,234 5 3,119,285 s 3,012,589 5 2,876,691 Internal generation af ter ih s idends (000)M S 186,938 s 207,348 s 191,016 s 187,954 s I47,449 Plant and nudcar f uel ex p( ndit ures (000) 5 253,885 s 231,025 s 214,213 5 255,784 s 235,946 Internal generation N 74 % 90"o 89% 73% 62 % Conunon stot khohlers at year-end 42,392 44,063 44,687 45,826 49,149 Conunon shares outstanding: Wrighted ascrage 44,959,050 43,143,953 39,347,824 38,778,901 38,245,648 Year -end 45,129,227 44,763,055 42,047,356 38,998,531 38,526,085 5 tot k price - l iigh 32 5/8 28 1/4 24 7/8 20 I/4 22 1/8
-Inw 26 3/8 22 1/8 18 1/4 16 1/2 15 3/8
. Year.cnd 29 3/4 27 1/2 24 3/4 20 20 Year-end market salue (000) 5 1,342,595 s 1,2 30,9S4 5 1,040,672 s 779,971 5 764,913 Trading s olume (shares) 18,729,400 26,460,900 17,464,300 19,652,300 29,938,900 t i
Market / book Ocar-emb 1.53x 1.47x 1.38x 1.16x 1. 20 x Price /carnings ratio ocar emb 13.0 13.I 12.6 10.0 -"I ' I tai inaudn soAi p r ommon aan. in m an am.unnng i hange. elo im luiln CM pri mnunon share low apphrabic to rair an.1 t ontrai t si stirments. o) I w ludn i nnt of rate and < ontract setdements. nlj bt iab utarol ba rd ujmn a low per o,mmon 4 ire. A payout ratio ol ;nd a pnre 4 arninp ratio of 10.5 urre (alculated bawd upon H .9n l
,_m _,n #.n.m u,amy o,e as l_,mmam , m ,.1, ana o,n,,act so, arm.
Certain reclasiifications and recalculations ucre made to the data reported in prior scars to conform with the method of presentation used in 199 3. 39 l
Officers Directors l llernanl W, Reiniu L, Chairrnan of the lloani arnl a,.I Williain 1. Connell, Chairrnan aml Chief I xecuthe Chirl l xcrutive Ollh or ()llh cr, Connell I imited Par tnership (metals recy. t hnp' and pnu cwing' aiol imhntilal pr odut tion) Thornas J. May, President anni Chirl ( >perating ( >llit er
,l.t Gary 1., Countr y man, Chainnan of tin lloani and Chirl i 2
Gnirge W.1).nis,1:xn utne Vii e Presiilent , I m uthe ()ll,n er, I dw ty Mutual Insuraiwe ' I . Tinnnas ik>ulctic, Senior Vic e President > Nm icar Con' pan) Camenen 11, l)alev, hetiior Vic c President Power Supply George W.1)at h, i xet othe Vice President, Hoston , 1,dison Compain ' l John J. licsmonil,111, senior Vn e President . I egal a,c,f Thomas G. liignan, Jr., Partner, Ropes & Grav 1.. Carl Gustin, Senior Vii c President . Mar keting & dau fit m) Corporate Relations b y,il Charles K. Gillonl, President, llank of lhiston John J, liiggins, Jr., Senior Vit c President lluinan llesonn c' Corpoiatii>n dank lu,hhg conpg ami The i n ,t Nd'i""dl Ud"k "I U""" Ronahl A. I. edge it, Senior Vit e President - Power 1)cIncry Charles I . Priers, Jr., Senior Vice President . I mance 1,,1 Nelson S. Gdfonl, lurmer Vice Chairman, Awry I). muson Corporation (pressure.sensithe adheshc3 Alhon Ahico, Vic c President - Sales & Nersit c and m,ocrials, olfiic products, produ(t identincation and control micms and speciaky i hemicals) Marc S Alpert, \..n e President and .I.rcasurer
. a.e Kenneth I. Gnw ott, General Partner, lung Has "
(,, Hrm e 1)amroll, \,a.v Pican ..8 nt ~ 1 ngmi enng, - - Management (,ompany Ocal estate deu lopment) ()perations & Nm sit es - a ,h,. Matina S. llornet, INerutisc Vice President, 'li at hers t Ric hant s liahn, \ u e Pres.u lent .lia hnoloey" Rescan h &
- insurance aml Annmty Asso< iation aml Colle c lin clopment R-tiicment I <piitics 1 und .
i 1)ouelas " N. lloran, General Counw I as l homas J_ May, President and Chit f Operatmg Ulliccr, Joel Y. Kanna, Viic President Pn ului tion ( )perations Hoston i dhon Company a Martin 5. Karl, Vice Presiilent . Mar keting 1,.I Sherry 11. Penney, Chanrcllor, unhorsity of l~du anl S. Kialt, Vice Penident NuiIcar ()perations ain! station Director as Hernant W. Remirck, Chairn:an and Chief I xecuthe OHircr Boston i dison Company ' Anhur P. Philhps, Jr., Vic e President ' Corporate Inlormation ser i< es c.I llo hr t Roth, Jr., lurmer Chairman of the Hoani anil Chief INeruthe OHh er,111. Corporation Robert J. Weafer, Jr., Vit c President, Contioller arol Chirf . ( t ralb.r and industnal pna ess i ontrol syi tenn) Arrounting Oll.ii er r.r st< phen J. Suecocy, fonner Chainnan of the Board and Theodora s. Comisser, Clo k of the Corporation gg g g,g g , g pg Donahl Anastasia, Asshtant Treason r j b a .il PaulI. .I.songas, Partner, I oley, lloag & I liot James J. Judge, Auistant frcasurcr and Dnn f or (lan IInn) Cmporate Planning d Chn s A hM Tmtm 'Un MIIRL Uqicion Way ne R. I ngan!, Auhtant Clo L of the forporatnio (not lor-piolit sy stem rescan h and engineer ing lir no L a en d'( ( si i Ukl% r fl]IlNj!!(3- [ , h Alemhi r of Au.ht, I main t ami itid Atanapen,ent Comnutte r i Alcml,rr of I'm mg ('onunntre ; il Airmbri of I m uthe Pra vaun l Comnnurr e Ali min r of Nm lrar i herght Cornunner i % n,her of Capaal Imnnorne Comnnnee
- u ill o in e on Api rl >>, I W L i
Dividend Reinvestment Plan Our 1)isidend Reimestment and Conunon Stm k Purchase Plan (the plan) is available to our comnmn and preferred stoc khohlers. Linder the plan, comnmn and preferred stockhohlers may base their disidends reimested in our comnmn stock at current market prices. All participants may invest optmnal cash contributions, up to a maximum of s 5,000 per quarte r, u hic h n ill be invested at the current market pri(c. Participants do not pay fees or commissions. All recordhohlers of shares of comnmn and preferred stock are eligible to participate directly in the plan llencheial ou ncrs of our stoc k whose shares are registered in names other than their own (e.g., a broker or bank nomince) must arrange participatmn l with the recordhohler. If for any reason a benc0cial ow ner is unable to arrange participation with their broker or bank nominee, they must herome a recordholder by basing the shares transferred to their ou n name. I All corr espondence concerning ( hanges in plan ownership hould be directed to the plan agent: The f irst National llank ofiloston Dividend Itcirnestment Unit Mail Stop: 45-01-06 It O. Ilox 1681 lloston, Massachusetts 02105-1681 Important Stockholder Information Annual Meeting SI C l orm 10-K Our Annual Meeting of Stm kholders will be behl on April 22, Stot khohlers may obtain a copy of our annual report to the 1994, at I1:00 a.m. If you wish to ret cise a copy of flernie Securities and lin hange Commission on Iorm 10-K by mak-Rc/nicek's remarks, please w rite to our Investor Relations ing a u ritten request to our Investor Relations Department. Department at the General Ollices adihess listed below. Quarterly Report to Shareholders Company Contact Benc0cial ou ners of our stocks w hose shares are registered in Theodora Comisser names other than their own (e.g., a broker or bank nomince) Clcik of the Corporition may obtain copics of our Quarterly Reports to Sharehohlers
. on an on-going basis by making a written request to our imestor Relations Contact Imestor Relations Department to be placed on thu.r mad. ing Dan Desjndins list. Note that the Annual Report will continue to be mailed Director, Imestor Relations to benc0cial owners directly by their bank or broker. I General OfL es Intjuiries Concerning Stock 800 Hoyhton Street, Boston, Massat husetts 02199 4003 Ryou aw questions mncerning your disidend pay ments, divi-dend direct (leposit, disidend reimestment plan status, trans-(617)424 2000 fer procedures or other stock account matters, please contact Stm k I.istings our Stm k Transfer Agent at the folkming address:
New h k and Boston stoc k cu banges The Iirst National llank ofIloston Stm k Symbol Sharehohler Scru.ces D. . .ivision NE Mail Stop: 45-02-09 Disidemi Pay ment Dates it O. Box 644 Boston, Massa ( husetts 02102-0644 Common and Preferred: Ist of Ichruary, Mas, August, Nmember 6 you are submitting documents requesting a trander, address i Tax Status of 1991 Dividends c hange or account mnsohdation, please use this sarne address with Generally, unless mu are subject to (criain exemptions, all MaH Stop: 4MI-05. Ryou would hke to contact the bank by disidends on our conunon or preferred stoc k are to be consid. tekphone cau 617-575-2900 or toll free 1-800-442-2001. cred 100"o tasable. Stm k Transfer Agent, llegistrar of Stoc k and Disidend Itcimestment Plan Agent The Iirst National Bank of Boston 41
c, ) Boston Edison InvestorRelations P356 800Boylston Street Boston, Massachusetts 02199-8003 I { l 1 l
)
i t i l @ w.~a->,nraa nn.,
- _ _ _ _ _ _ _ _ _ _ _ _}}