ML20062B454
| ML20062B454 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 12/31/1989 |
| From: | NEW ENGLAND ELECTRIC SYSTEM |
| To: | |
| Shared Package | |
| ML20062A991 | List: |
| References | |
| NUDOCS 9010250070 | |
| Download: ML20062B454 (45) | |
Text
{{#Wiki_filter:w-,- n- -,
'Q-
,, ., . , e- . de - , - f.-
' l v ** q t
's'.
h Q' },
~j,
; f 2'" ,
~
,i, .
. , [ ^ ' ' ' ~ ~
;',; ~ ,
, Qi,f* ,,,~
. . ys - -
,. e
- g.
- . . J .
,. '1'. ,cp
- p , 26
. . , 2 g .c.
* =
. ' '+ .
.4
,4 . -
I
, . ' p' *-
,- ,'i.' ; .
5 n4 . 4
,,s 4
E' , _ ;i t , , __ . ;
. ~ < '
. , ~& l.
f d ] A M, h . ( . : u l<'- ; - W% k ;Mb1g y g g f % 8 h ] [+ x[7 gw .xx w ,eM ,'- . nn ANN
,UAL5 s
l _ .
&m <-t 8,-4 .
R_RE. u.
.m ~ - -
y +4 1, PORTM
- y ..
u
- s,.-
?.; 8
.' s !
.. A
+ 7 9 'v.*
; ', )
lj~ h4, ' ,._ , 4 -
*l :
; .L : ,; , y_,
< q y ?,9,: y .
.t .+*.
.j'j
[ l .. . _- . 'e
~
g..
, 'g .
. y-p' ... , _
s - _ . i'a. ,' '; 6
, p,.4 -. * , . .
4 .
, g.
;.,. j},
'. m .- . < .
I-4 Q .. ' q ;;' g . ,- , gy ., l l_ , . p' t
. ,, 3 E r ?. , , .
y ,
}
Aq _ y };;[yp4.y[g,yq}' l . . v c., ,
.v - 7( .
. .. g
;_v -
33, g . _ 7
.Y ; ;%+~. L.
. r. ,
- y. . . . . . . ,
L - v f,, -
'e p -)
' j .' a f . ;f ag '
w~ }l} Q. e v- @;&.}: p. f,l, . '. .. .
,' 7 m.
4 4 ;, ; 4,. ,, L , . yt c
; g e, a. .y . .: g. j y.;.c.gJ - ,. ; ..
7, . ~. . ,jg >
+ :a
;,m . , , ~__ .
zm..yll . y
k '
, , ( (l 4 ,
; .. ; ;( ,
. ;i ' ~
Y$ *
, . .6. - -
- a. ,. , J? Lug
/ .
j e z :.mw.pp. h n ,
~
[
; ,< ;; v.- . . . ? ;_,. ,~
r
.' . :n? p + " .
, - A .;- - ' :'; -
. p
., g.,,.
-g$; ' ,a
%' . _ ;L'&,,;. ,1.
_- ( ; _. y ; ,:
' Q' . _
4 , .. . ,% - l -
-K
- - '-' p
'. .~ . f. ',-
~
as -
; lg n.i ry. g_ j '
l
. . . C, , g , w "; -
l 3e - 4. .:r%.3 .; ; [,, .t c ,y.9 7 ,- m
~~
, _. <,.Lw,we.r';,t ..
m e v _'.
.u -
_ a . .ws
. .. p . .< : e .. s a .
* ).y . _ , ^: ._ q n.
{ '.Q ' 2"i z ..% 7
, J ' .y g , ,._. \ ' j,1 '- .. . .
. . , ' g, ' - 7' ,,#
- E 9 $ 1,f. e ]:*)
g.
- - . . ~ n i.l A- .; -
.ad a . x,
' ~ '..- .te ,,. ,;4 i
, i , . A!) y '
n't,,,
'. .- % . . . f.4 - j ,-
I 7 . l '. . n y a. a-g- , . . 1a. . .-~;
. ~ez,- v.y;,... ,,~; 7.:y ; y .v~ > ;.. .,n ;.
c.- v + W -];
- qs _ : .
a ?<
' "1v.. ; .;.<: .
,;_ y
- j - . .(
n,- _-- . , .
] '%y'Y,,'
..,4 y(y. 3,: t *[, 3 - f . ., s;. ,l '
, x;[4..' )
1, a - , . y ;;; g v,f ,.* .yO . ,.
.x
- u. , ,._..'. c
& re w .. , '
)
. y(. .
. " , 3.,
.,. /
, , . ,.5., ,. *; ;
i i s j ". ,. =
. m, . ,. _~ .
e ,l- +. j
,,,o,'.,* *
- 4g
.t
, s.: .-
it . u :-*l. '_ ,
,. '~ r. g__ e g a ,'A { % s N ~
M. , .. , ,. . >. ,, - \ n .
. r, . . . - ; '
_s;: .* . [: .: EI . ', ,'
- ; , , t,a'r .*4 .
[' . -.,...
- - .. . , . . , . - m . ..m . -s . . . ...- - - . - . - - ' -
- M 4
3 - ., . 9 *
's 9
F. _ s k .
> '- - v.
t . a- . y ., . i ?*** , , h M
.s.
.t' -
. ~3 ' '
~ , . .., 8;:.;. : ,
, , . n % J s
4
.4 f%%
v.,.. 7.>
+
) . . . . v :. s.j .
9(/..;:. g. 3
;f:.).; ;r
- q. . .
s_,. ,<; w. , ,..n p ;., e
+ .'A : . S. _ f f b ~
.' N f x m .m
,77 - .y '. tg .- s
. s -
3 , . .
- - - ,, % . , 'v 3.%y
\, . . . r -
. . - - -g ., 3 ..
A; - .p
,g..
.s. 3.. .
g
~ . ,, .+ ,. .: - ? '
Q ','1 ', ' - . _f 5 4. ,. 3 ' [ ' .' - -
. . , ..=.%j.[-. .. .
'.%. . 3. .
e
+
~ -
- f. .
'. , ;g. ... _
9' 'g ('
- .. ~. ?- a
- + 'i - i \ - L xn _
2 ' * -: ;, 3
.. , , ,. ~ , y, . .;' i s
- j. . - ' ,' 4.; ,
.l - '. * ',% . , '_ '; ; ; :
' ~
'.t f h ~
, . . y>
a-
~
*.~
. 91 ~ 4'r
_ . , % ' i.. c; 4 s 3,- .
...' '.x4scu' ..,4 s &.
.i.
..',s
+., , 'l; g . \ 7 a
- g. .- .- , ., .
,4 Q \. gi..I.'
.j - ,, - g ,
'-... . b . , '
. . :4 $ ' '
l, , n 7-y r 41
. , n. . ok N w 1- .,
^
, s .:, , . . g g 3
[' -
~ , ' ,
s -
., , [ . : -
7-..
,s
, % S '-- '
a f. 4 - w q . h, .' . . p ; _ .
,w
't L
, ^-'.- -~ 7 - -
1 .. % - "
'gp . .* , , ',.
. %:% g -; ' d , _
.. ~
+
x..j y : i ., f'y , c y .
. ; x _
s wi g .- ' '
~
44
y , L .e: - I l t a li. gya+mg
,A;d:bst "b
9jWs'd - ing$1 gg
' I Comerford Converter Terminal ',7
)
',~
, Moine Yankee a
p5ht
.9.
. sj I
- r. >
Ms ,
^jhf or Wyman d' w
1 g lu ( c. 1 Nkyj '
~A,-
v h(gEggt Seobrook I
- d5"tC&n % O Vermont Yankee g
a . gO O g
,? ^ j g" y l?.
yr e l
.a
\
Yankee
'l
';. , V y? '
,9 ;
9 -c q ngj/ W' J g ndy Pond nverter Ter
'3
.~
m&L
~' ~
I 13h orough -
~d s Manch jh Broyton P t
-n e Connecticut Yankee M i Millstone 3 0
+n
-; t4
, Al w My ,
.,c-,-
.cY ' sm M Y(%Af l
' s VN Nf, 5 ', .,t .( (
Q4e: .ti! adM
^ l W{, gg'r4ple,We e
t
'I
,fyjhRn - ? ",c:g}:g )np?;f
,~
aw 4g; e , f 3 . I
;Y py 0
dYh .; ,kt / l l s
, ', , -- - -. - - -- - - - -~ - -
l *, $ E . ' . .- -- T pch+rcemq , M.%T&MNOWiMUMi6diydi; [. , w
.h ::-[bl I . I g Q $ ' c y' h'&h@
-; l hhhhYh k q l 0 'kh o
o
@hpo '
u b .
- m, a~i Ek%
P y ni !
> t 19'99'
~u lm i 1988 j
L , l
, Earnings (loss) per owrage share $ . 2.36 L . Si(.94)l d +
Earnings per. overage shore excluding 1988. ]j rate settlement write-down (Note C) $ 2.20 i
' J h < Dividendsdeclaredpershare ' $ . 2.04 . S 2.04 '
j ' Return on overage common equity . 12.6% : 11.2%
- Book value per shore-year end $ 19.24 l $18.33 p ' Mcirket price per shore-year end $24'
$28%
Growthin kilowatthour (KWH) sales to ultimate customers 2.7% 5.9% . Li Cost per KWH to ultimate customers (cents) 7.28' 6.92 )
' l l
1
- Return on overage common equity in 1988 is colculated using the $2.20 earnings per overage .
shore.
~'
!i H
L a New England Electric System (NEES) is a public utility . holding company heade 1
, 1
~
l L quartered in Westborough, Mossochusetts! Subsidiaries include' three retail-operating companies -Massachusetts Electric Compony, which serves 906,000 -
.i customers in 146 Mossochusetts communities; The Narrogonsett Electric Com-j pony, which serves 314,000 customers in 27 Rhode Island communities; cnd! . 4 Granite State Electric Company, Which serves 34,000 customers in 21 New ;
L 3 Hampshire communities. Other subsidiaries include a wholesale generating j; company, New England Power Company, which operates 21 generating sta- . tions; on oil and gas exploration and fuels company, New England Energy ; J[ , incorporatedi' three transmission service.cr.mponies: New England Electric , y Transmission Corporation, New England Hfdro-Transmission Corporationi and, " l
.New England Hydro-Transmission Electric Company, Inc.; a wholesale electric .
generoflon company, Norragansett Energy Resources Company; a conservation - i and energy management services company, NEES Energy, Inc.; and a service .
.t company, New England Power Service Company.
.<1t
. . 1 Contents 2 Lenerto Shoreholders .37;.my Report oflyy:2' ..: Accountants ;
- 5i NEES A Step Ahead
.~ ~w r. .m y
*tV j38 W N 'h: 1i nformation '+
i [' ,
, l12e FinancialnQ '. '
' / 40 ~. Syseem Dimesors ' '.
19 : FinancialStatements 40 ; System Officers and Subsidiaries 25 - Notesto FinancialStatements Back c ShomholderInformation - c cover' 37 Report of Monogement 3 __.__i_i_.___E_______________. .
3 q. f D E A R S H A R E H O L D E R g During the turbulence of the post several decades, New England Electric System (N E ES) has often . monoged to be o steo chead of other electric utilities. We are com-
~
} mitted to staying that step ohead i- %
sti throughout the 1990s-roising g A 1 shareholder value, controlling cost per kilowatthour, maintaining a reliable supply of electricity, and improving customer service and environmental performance. This is no small challenge, os we will be compared to some very fine electric utilities and will increasingly face new kinds of competition. in 1989, our major achievement was to rebuild earnings to $2.36 per
- overage shore. This represents a 12.6 percent return on overage com-mon equity.
Among other key accomplish. ments, we:
- obtained a rate order in Rhode Island that will make our cutting-edge energy conservation programs in 1990 o profitable com-ponent of our business in that state, maintained our position as the second-lowest cost provider omong major electric utilities in New England, completed major construction of the U.S. portion of the Phase 2 1
&a >
~'
e -
,m-> ,
<pi transmission facilities connecting .- We ore pleased to report the -
I Hydro-Quebec and New England,- increasing likelihood that the
.an d began testing key equipment, Seabrook 1 nuclear unit will enter-i odded about 45 cents to the book . service,if this occursin 1990, and value of each of your common shores various other conditions are met,we through a sole in November of four willbe able to reverse o portion of million new shores at a substantial our 1988 rate settlement writeldown,
' market to book premium, which could increase 1990 earnings -
settled on orbitration case and con- by about $l15 million offer tax. ! cluded the sole of our shore of the In 1990, we will continue our. cool ship Energyindependence, ottention to the fundamentals of our removing a potentialliability and business: rebuilding earnings for providing a nonrecurring contribu- shareholders and providing reliable, tion to notincome of 16 cents per economical electrical service to cus- ! average shore, tomers. Returns on equity for utilities
. obtained opprovalof rateincreases have been on a downward trend, gN - at the wholesale and retaillevels, and andlood growthin New Englandis x ): .
welcomeJ o new director to the becoming more moderate. With our , NEES boord-John Kucharski, low rotes, responsive service and i chairman and chief executive officer sound regulatory reputoibn, we ' of EG&G,Inc., who has substantial believe we are well positionedic experience with the business, politi- meet these challenges. ! col and environmentalissues that The continuing commitment of f . 'offect our industry, our 5,600 employees toinnovation, During the year,we participated quality and customer satisfaction will '
; in the bidding for Public Service keep NEES o step ahead. ;
!. . Company of New Hampshire, but with-3 gg
~ drew when the purchase price, and Joan T. Bok
- rate levels required to justify that price, Chairman become too high.While we desired to make this acquisition, our with- />
drowol from this process exemplifies John W. Rowe our commitment to shareholder and President and Chief Executive Officer customer value. February 28,1990 l l 1-
mgo ,; . C O N S E R V A T 1 O N k
<3 35 t s-.
, . 1.4 +
m x E, '. .
,4 .
s . 2= 2;
..3 -'t
- . g y ,
-tg- . * .
y . 4 c . k, f 1.$.l1$ k
.t-* '"
c
-y f ;, s .. . . !
* ,t.
~L _ f, s.
\y '
rf . j ,' #
- .. ...s-bk
',% *4 oy
. .f)4 ' .9 , " l, 4
.a .
h,. *
'* x..s s. .. ';,~ y ' e
,7]' ' I, . . '
_ g.- y .s Y' ..$ ( a ;.- wz ',' f'..v
>.':7 ,
. N ' y]' cne.g-r
..p.
( L
; y a v w:;y .. ?:
nw m.sm w w
. ,,4,ma.eurew
.g . . Amnegpilgepk%88* M
*.g
_ ._ ; - . ~ _ . '. > -. . . , .'**
77 - T WA , afy 1 guv i :A ' e s " s
)
.: 4 't i
?"A step ahood" chorocterizes much ' improvementsin lighting, cooling, i
~
o
' f NEES' recent histo.ry. Guided b'y A_4 water heating, building design and .
F our long;ronge plan, NE ESPLAN, . other orcos. We invested $41 million 'l
' our employees have achieved many: in this effort in 1989 with on addi-L" firsts"in developing energy con- tional $65 million earmarked for i
servation and lood management 1990- .
, u (C&LM), contracting for otternate Among measures to strengt. hen.
~
]
- ene_rgy, improving existing generot. on already effective effort, we. 1
[ s - ing facilities and finding ways of developed new services for the
';. providing better service, commerciallindustrialnew building E.
market;placed Blue Ribbon togs at j Energy . retail stores to direct consumers t6 the I
;y conservotion .most energy-efficient oppliances;and Douglas Foy, executive director ' introduced a program that makes free. . :
. of the Conservation Low Foundation conservation improve'ments within in 1989, we expande'd
'im *- ' "5 "a $ ^
. of New England, describes the entire residential neighborhoods.
1. special meter measures -
.y- NEES companies'C&LM effort as We also redesigned certain rates the customer i use of J. " currently the most ambitious to encourage greater energy electrici_ty during peak L l
l' energy efficiency programin this ' efficiency by both wholesale and . *"d ff Peak hoursi A l price difference encour-region, and one that,'when fully retail customers. -
,ges the shift of usagef j
~
implemented, will be the most Through 1989, our energy- to off. peak periods, i sophisticated and comprehensivein saving programs reduced the need .J A- , the notion." The Conservation Low for new generating capacity by 193 - L 3 Foundation is on energy conservo- megawatts. In the next 20 years, our
- i. tion and environmentaladvocate long range plan calls for the C&LM -
and has assisted in developing con- contribution to grow to approxi-s'ervation programs throughout New motely 1,400 megawatts-nearly i ' England. Since 1988,it has been a one-third of the new generating
- participant in developing C&lM pro , capacity we would otherwise grams forthe NEES componies..
require. At year-end 1989, o dozen in 1989, to make conservation
.' programs were in place, helping a viable business strategy, NEES' customers make energy-efficiency retail subsidiories in conjunction with L
~
u& si ' W' &< a+w . -
-% .+&
yp , '
, y; y, '
m :. S
' jf: -
I,L ,
+, ,,
the Conservation Law Foundation reducing sulfur dioxide and particu. T 1 f requested regulatory approvalto late emissions,
= earn a profit on successful energy. Among 1989 initiatives,we :
q v saving measures. In December, we - : began to explore w sys to consider: j
-o..
-- received precedent setting opprovalJ environmental costs of new projects ,fl of our 1090 program from the Rhode os port of theleast. cost planning a Island Public Utilities Commission. process required by our regulators;1 Our proposol is also under consider. - identified new sources oflow sulfur y "
'otion by the commissions in Massa. cool for our power plants;and. !
chusetts and New Hampshire.We signed a contract with a p.rivate firm . are excited about the potential of the - - that will accept cool ash produ,ced ot '- - j profit incentive for achieving energy our Salem Harbor generating sto. m - conservation andimproving your tion for commercial use in cement. i] 4 j earningsin the years ahood. . We also continued our phase.o'ut of i
. PCBs (polychlorinated biphenyls) in - )
~
. Environment electrical equipment, chead of Concerns about acid rain, requirements. >
oesthetics, globalwarming and the We are expanding our use in-health effects of electromagnetic power plants of naturalgas-a fuel - Si fields will continue to temper public that emits no sulfur dioxide and sub.
.O aa
< occeptance of electricity generation- stantiallyless carbon dioxide than ,
-and transmission. NEES' response other fossil fuels. In 1989, we filed - a o
- silos itare coal ash at i5 t c mP vl quickly_ond efficiently for permits to triple the generating ~ -
two of our generating with evolving environmental and capacity of our Manchester Street j stations. We hav. b..n energylegislation, and tolook for Station in Rhode Island, using natu. ! successful ot. finding new markets and vscs for this c st effective w ys f d ing even r Ig s sitsprimoryfuel. Brayton , >
. sy. product of coalcom. better than the requirements, in the Point Unit 4 in Massachusettsis -* i bustion, including as an , mid 1980s, we achieved both of targeted for conversion from oil l
- ineredient in cement.
these goalsin our highly successful to natural gas. Both projects are program to convert six oil-fired units
]
scheduled to be completed by the d' to cool, providing significant fuel mid-1990s. Although odequate cost savingsfor customers while pipeline capacity for naturalgas - [
}'i S
I ~ r 53 a s-; < t! L m.
- 7. h ., ,
' i 33 '* b N i> i 1
.i:g-
$4 '
E N y l R oN M E N T l t .-
,- _.' + , , . ;, , ,
~
'~
3 -[ .4
i .
'W' .
6 gy 4
- .a ' wy 4-
.4 ~ 9 '
x .l g, ,. J SP
', s.
J g Y f'.
'5 f -
* ,'?
e .- t
'e , .,
j' . ' e, ,.
.I g
.-s -. .i ( 3
- et . .
e
- ' , .. ^
) = _ .? - _
h. 9, 9 t.), _
l I(, r,
^ ~ - ,
4.
, g. y,. ,
~.
.a. ,,g - g g. h,:y .,
d.I ' , - ,.
. 4, ,
; i,.
y{ ],. -p g; g y . . gy 4 .m' .et...sy . <- ' . n home 4;;; -
.; ' pyg$.
- s s .,, w s ; .1 .. . .
7 , ;;
^ **d ==pe.= ,r 4 l k rae.,4 .
% ,,, ,****9orwnd-
' %81Wesamese .' .
s Ib ....
P t l' \ \?.
% t 0 g % C b ?~
s x
\
\
A v'- Il
\'
m J b " ' remains o concern for the entire? - generated ~ployedavitalrole'inS =" "
M '
jj ' ; region, we are hard at work'to - helping us meet peak demands for L y ^ossure that supplies of this fuel will electricity of relativelylow cost, o be available to meet our needs, in response to federaland state q laws, we are supplementing our own 0 / Diversity of generating resources through one of a l L . resources . the region's most aggressive and - " For decades, NEES has recog. successful utility programs to obtain g l nized theimportance of obtaining capacity from nonJutility sources. ' Y'
; energy from o variety of fuels and . Our 1988 Request for Power Supply- .
_N %w I
. sources, in 1989, our energy mix Proposals garnered o~highsr c j
,t 7 ,
' e s 3L
.;a *
.p.(
F t. was 27 percent oil,44 percehtcoolk response thosionyin the regionk , , 17 percent nuclear,11 percent hydro in 1989 we were able to select A generator at out. and olternotes, and one percent not ' ' and contract for 205 megawatts settows Fails stottonin .
,. Ural gas. Increased use of natural from more than 4,700' megawatts wrmont is one of.46 gas will enhance the bolonce of our conventional hydro ond '
of proposols.
. pumped storage genero-
- _ . mix, supplying opproximately 25 In total,302 megawatts of . tor,we eon coit upon percent by the year 2000. non. utility capacity a re in service; . during periods of high L
Our fossil fueled plantsin Mas- customer demand for l ' another 808 megawatts are under electr.ici.ty. . sachusetts and Rhode Island are the contract and targeted to come on .I backbone of our power supply sys. line by 1993. By the late 1990s, we !J tem. Since its inception two years are planning for opproximately; ,, ago, ou'r " Thermal Initiatives" 20 percent of the NEES companies' progrom has helped toimprove the generating capacity to be supplied ovoilability of our fossil. fueled by non. utility sources from throughout I generating units by more than six ' New England.To allow fulluse of such
. percent. The units' 1989 availability . resources,we are determined to
,, : record was their bestin more than ensure open'occess to the region's ?
n .. .a - .- l 15 years. transmission facilities and willc' on-; ' 4 w i r- , .. ~ . + 4 + y!. Our hydroelectric operations---- tinue to press that position withlregu : , e~ . , , ,. 2 < , . > ,
- a. - -
l ( ;thelorgestin New Engpndinterms , lotory k ' of copoc,ity and kilowbtthours( e . . - . 3 % .wx,# x,ogenems g[p M ond.neighborin
,7 .M m w w
~. - Utillfies/l mpp&;m Ndt > '
' WD
, g ,
.w .
+
l r j. y, e &.., .
-b' , ', 3 , a: ,
.t .
t 't" I ki I,' l
1
*$YJ#$h@MWN"PHp$**pW"ip&p(mbiggf$%M9fMR$y?A"8Mr@*s573iW**""*"7?MM@f7 )
;*4}N O vg;h h"; g> s'NM P [ N p' > - %? I f [igrb " $h [ M l:Me .
w&Y W $ k h h hth h jN
,mg *j f %q>g,% y; f % h>v , .. .
e*wj>e
, ;,q
- 4 i cwa.g ,-y en
' ~m '.,
1
' jN&W* ,
1 74 - mw-
'!i j
Value .the year were o portial hiring freeze,' ,
!l Our search for greater customer - internal cost cutting, and cops on 1 d;
, value extends beyond price to such soloryincreases and non emergency jj ochievements os our high level of reli- overtime. Other actions contributing )
.o a;
obility, the diversity of conservation to the rebuilding of earnings included h services we provide and our track the settlement of a pending arbitro-M' 1 record of quick responses to power tion cose and the sole of our 51 per. [ outages and customerinquiries, cent share of the cooltransport ship _ Among 1989 initiatives to EnergyIndependence (see pages ., improve service, we reduced the 12 and 31). Ml response time to customer phone NEES' constant commitment to - 4 _; calls by 18 percent, answering the earnings has helped build a solid, <d I Repowering our Man-
. chester sereet station, a ver go callbefore the third ring; ' long term record in value for shore- j i facility that dateiback installed equipment at ourlocal holders. With dividends reinvested, to the early 1900s, is a offices that allows immediate record- each dollorinvestedin NEES f_
cost effective way to 1 provido new capacity on ing f cust merbillpaymentsonour common shores 15 years ago was an existing site. Pictured above is a catwalk at mainfrome computerin Westborough, worth $16.97 on December 31,1989, [ Massachusetts; and expanded compared with o $12.24 overage of
. the plant's f uel storogo employee training in customer other New England /New York elec. ;
satisfaction skills. In satisfaction tric utilities. ; surveys, we have consistently been Enhanced financialperfor - l l a [ obove the 85 percentlevelduring - mance willbe o priorityin the 1990s. p j the post three years. To help us achieve this goal,we will - We willcontinue tolisten to cus-continue to directinvestments to f tomers and to design programs and basic electric utility services and proi- %y' , services to meet their needs, When ects where we have o competitive ylg ['
; oppropriate, we will seek permission edge, to keep risks commensurate i toimprove earnings based on value with returns and to develop new _ 4 of service to customers, ways of earning on our service.
\ We' seek th be progressivein - We ore striving to bethe best[
thinking, but conservative with money. _ _ electric utility investment in the - .
~
This opprooch helped nto rebuiid' ' Northeast, bosed on market volv@J., earnings during 1989. Among aus- of common shores and reinvested' ya terity measuresintroduced during earnings. wa j y M
5
!'O g'jfJ, Y A L U E m:.:r
/' ,, :O V [
)
N. i e i
~.- - .
n , 1 - . f ? I
^
. wn&P V *
.WM*~M"'Nd%" %;
,~-
d$8 %W . C ML ~ L -~V W @ M &_ &R 'W' -
? - Earnings were $2.36 per Everage shore in 1989 compared with a loss of $.94 in 1988 and oornings 9-, of <
g . f $3.09 in 1987. Earnings in 1988 were $2.20 excluding the 1988 rate settlement write-down discussed i below. The eorned return on owroge common equity in 1989 wo: 12.6 percent. The dividend rate 4 . 4 remained at $2.04 per share on on onnual basis. The market price of New England Electric System 1 y,p . (NEES) common shores'at year end 1989 was $28% o shore comp ~ored with $24 of the end of 1988, l 4 W Growth in kiloworthour sales to ultimate customers slowed to 2.7 percent in 1989, significontly lower K* . than_ the five percent overage annual rate experienced by the System oar the previous five years. TW reduced level of growth reflects a slowdown in the economy and a return to typical summer tempero. w ow ing t eh extreme ylh
-tures, fo ll ot summer of 1988. Current economic forecasts for our service area por -
tray continued economic slowdown for 1990, with a further reduction in kilowatthour sales growth. j_ During 1989, odditional purchases of power were necessary to maintain capacity reserve require. .;
. ments. During the early 1990s, we will continue to make short term purchases of copocity, to the extent .
[ available, and we exp_ect our expanded efforts in conservation and food management (C&LM) to make - [ o significant contribution. In 1989, we spent a total of $41 million on C&LM and expect to spend -
..1
. $65 million in 1990. We will share in the output of severol new projects. The first unit of the Ocean State l{
+
i
- F Power project is scheduled to go into service in 1990 and the second in 1991. The Seabrook 1 nuclear. -[ 'i unit (Seabrook 1) is also completed and awaits receipt of on operating license, in addition, the second ,
. m phase of the interconnection between the Hydro-Quebec system and the New England region is ~sched. l(
MW , uled 'o begin operation in late 1990. After the early 1990s,' increased demand is expected to be met by .- f9 our C&LM programs, our own generating projects, purchased power and non utility generation.; l in December, we sold our 51 percent interest in the joint venture, that owned and operated a N cooldorrying thip, to our partner, as part of a settlement of a pending arbitration of the ship's chorter _,
- p. hire rate. The ship will continue to carry cool to our generating stations under a new long-term contract. H l
- The settlement resulted in a nonrecurring gain in 1989 earnings of 16 cents per overage shore due to the
>l' ~ reversal of previously occrued litigation reserves and tax benefits. ,/ 1i, The decline in'eornings from 1987 to 1988 was principolly due to the ongoing impacts of the 1988 ,
rate settlement, including our wholesale subsidiary, New England Power Company (N E P), no longer. L , recording allowance for funds used during construction (AFDC) on Seabrook 1 and the amortization of
- our Seabrook.1 investment net of the write.down. Other factors contributing to the decrease were :
' increased maintenance, purchased power and C&LM costs. .
i
- In November, we withdrew our.$2 billion offer to acquire Pub _lic Service Company of New Hampshire a
' (PSN H). We concluded that the price being offered for PSNH by other bidders and the rate levels neces- '
qi sory to support the price would not be in the best Interest of our shareholders and would interfere with l our obility to p'rovide low rotes to our customers, l
~
In December, we reached a settlement of a rate cose in Rhode Island that includes on opportunity to ] F earn on incentive based on the results of our C&lM program in 1990, in February 1990, we reached o l jh s settlement, subject to Federal Energy Regulatory Commission (FE RC) opproval, on our 1989 wholesolA 7 rate case. We also have o rate cose pending in Massachusetts. During November, we sold four million new common shores. The proceeds from the sole are princi-polly being used to finance our subsidiaries' construction programs. Because we sold the shares at more than S7 per share above book value, the sole increased the book value of all our shores by approxi- i motely 45 cents per shore. ,
) Se: brook 1 NEP owns opproximately 10 percent of Seabrook 1. As part of NEP's 1988 rate settlement, allissues l puclear unit associated with N EP's investment in Seabrook I through December 31,1987 were resolved. I U Construction of Seabrook 1 was completed in 1986, but the unit connot enter commercial operation until on unconditional operating license is issued by the Nuclear Regulatory Commission (N RC).
Low. power testing of Seabrook I was conducted in May and June 1989. I l l
.Wm ' ~
W m
~
#dr*N?QMNWnead7hW:wme e9M2Wm6w g g f & r4 [ }
Mgy i hihh5[k@@hauspenseM%theSelseyM gi%A;rcr ,[j1hapsbeendhesaggb@lgeIselmuersyUgpW Mossociweens and New Hampshire.p numkr'of porties, indudng e emed federal, sleie'on , F A j j[
, 2 cioli, are opposed to operation of the plant and approval of emergency response plans. .,
- Althobgh there is still no assurance that Seabrook I will enter commercial operation, the likelihood C.
s has increased. The N RC is scheduled to decide in early March whether to issue o full power license for - D ' the plont. However, the Mossochusetts Attorney General has indicated that he will appeal any decision - - thotis favorable to the project. It is not clear whether such on oppeal would cause further delay in commercialoperation. 1988' Rate in the second quarter of 1988, N E P reached a rate settlement agreement which resulted in a f ; settlement S 179 million ofter tax write.down ($260 million before tax). The settlement resolved issues associated y, ;with the recovery of our pre 1988 Seabrook l Investment and our investment in oil and gas properties, it . -{ _ olso resolved all other rate issues outstonding ot that time. * % As discussed in Note C, the write-down related to Seabrook I and assumed that the unit would be concelled. Therefore, if the unit is ultimately concelled, no further write-down of our pre-1988 investment
, ' would be required. However, if Seabrook I enters commercial operation and N EP is satisfied that vari.
ous other conditions have been met, it will be able to reverse o portion of the write-down. The impact, ! assuming no power output level restrictions in the operating license, would be to increase nit income by ; , i opproximately $115 million offer tax. The settlement allows N E P to recover through its fuel clause its payments to its offiliate, New England v Energy incorporated (N eel), for costs resulting from N E El's oil and gas exploration and development activities undertaken from 1974 through 1983 (rote regulated program). ; e 3 Recovery of Seabrook 1 costs incurred offer January 1,1988 is subject to FERC approval. (See
~
- Note D 1.) The prudence of certain NEEl costs incurred subsequent to March 1,1988 could be subject to '
(
\.
, FERC review. (See Note A-6.)
Wholesale in August 1989, NEP filed its W 11 rate case with the FERC, which was composed of two parts. In - / rate activity . February 1990, N E P reached a settlement with various parties on the first part, which, if opproved by 1 the FERC, will allow N E P to' increase its rates by $39.4 million on on annual basis effective March 1,1990.
' H The settlement also provides that in the event actual 1990 sales vary from the estimated ievels reflected
,, in the filing, N EP will recover or refund the variance, up to $17.4 million. s Earnings Per Average Shore ($) Dividends Doctored Per Shore )
-Annual Rote ($) ~ d
- c 3.09 2.77 2.77 .. 2.00 2.04 2.04 135, ,
2.34
' %' '.'Jb @T j @2.34 f!h.f ~ -
1.4o '#'! 1 80 y' ., o J f
- p,4 . 1.4o 1 W't jqg . y; yJ 1.33 9 j h[)GjL- 'W hg@% ;lQ 39 1.se q #
.h
'& rs Q $ fg ((:((j -f 4
l U s m 2 80 81 82 83 84 85 86' 87 88 89 - so 81 82 ' 83 84: '85' 86 87 88 89
' !w
{ j '8 doreweten. Alonof $.94 ohrweien. g. p , n .i q,. +
, __-_ ~ _ - .. .
m , t >
.t iI 9' .
, ,. ..! = l1 4
[]: g;W'. > ~ ' Yin additio$ tim PERC olso oNoded NEP'iproposAd $5i ' 'CALMsddarge 1990 i ! {W3 expenditures to becorae eNective January 1,1990, subject to refund. However, to slidae:Mg l
. which regulate our reto'l subsidiories allow recowry of these costs, NEP will reduce oreheiinm _
)
N
. surcharge. (See Retail rok octivity section.) ' .
M.@ ( The FE RC opprowd a oortial settlement of N EP's W 10 wholesole m S40.2 million on on annu al basis effective May 1,1989. In addi h3 italize and recowr with e return, owr two years,1989 C&LM costs of $30 million. The oh issue relates to opproxirr,otely $9 million of purchased power costs resulting from the New England ' if l d Power Pool's Performance incentive Program. InFERC October issued on initial decision allowing full recomry obbese costs. The AlJ decision is subject to final opprovo!. Jp); , in August 1989, N EP implemented a new seasonal rote design under which it bills cuWomers m L 7 i , higher rates during high-demand months and lower rates in low demand monthE The new rate desi l was not intended to have a significant impact on total rewn
~
morily due to high peak demand levels, this new rom design increased NEP's billings in 1! companies in Massachusetts and Rhode Island recoind regulosory permission.in December 198914$6 H i recowr the increased NEP biilings from their customers, which increased consolidated revenues by ' C 1 l
$6 million. These new seasonal rotes could have either a positive or negative effect on 1990 reenues M@
2I depending on octualcustomer usage. . .
,h'
.The W- 10 settement also appromd N EP's request, effectiw May 1,1989, for a modification to thel T
Oil Conservation Adjustment (OCA) _ charge, a rate through which NEP is ruomring its Salem Hdrbor - ,4 Station cool conversion costs. Due to o reduction in the coal oil price differentials used in calculating the 7 OCA charge, NE P requested that a minimum role be established.
$p{
[ l L (* Effective January 1,1988, N EP reduced its rates by $21.5 million. The decrease included the effect of 7 the lower federat income tax rate. ' in December 1987, N E P provided for and has since mode refunds to customers to reflect the FERC's - g , decision that N E P's follinvestment in the concelled Seabrook 2 unit should be recowred owr 10 yeari, . . without a return on the unomortized bolonce, rather than the shorter period requested by NEP. 4 Retoit rate ' In December 1989, the Rhode Island Public Utilities Commission (RIPUC) approwd on agreement that - . octivity allows our subsidiary, Narrogansett Electric (Norrogansett), to recover currently its 1990 C&LM pro. ~. gram expenditures of opproximately $ 11 million and provides on opportunity to earn on incentive' i . p LH based on the~results of the 1990 program. We have similar proposals pending in Massachusetts and < j New Hampshire. .
, 4 l The RIPUC also'opproved a settlemint of Narrogansetti general rate increase request whichincreased . 3 ri rates by $5.8 million effative January 1,1990. In addition, certain discoun,ts offered by Norragonsett, ; #
omounting to approximately $4.5 million on on annual basis, terminated on January 1, .1990. 3, in February 1989, Norrogansett reduced its rates by $3.3 million as part of a rate settlement agree- . a ment negotiated deficit of $2.5 in 1988. As Contingency part of the Fund.*settlement, Narrogansett a occumulated_ . . million in its Storm . t in September'19,89, Massachusetts Electric filed a petition for a $51.8 million moeilacreassith thet Mossochusets Department of Public Utilities (MDPU). If opproved by the MDPU, neiw roms would e 1 WP
,.}$ Q pglN y d '
become effectivein April 1990.M , f t' . t LThe S seem's teoil electric subsidiories reduced their rotes in July 1987, primorily.to allect tlw impact a 3 ' 4 pl 4 h' of the new tax los and sovings in'other costs /Mossachusetts Electric $duced its rosas by,$ 16.8 millionn M V M Narrogonsett by $3.6 million and Granite State Electric by $500,000. In addition, Gronite Stok Elec-tric agreed to a further rate reddction of $500,000 effective January 1,1988. 4 ('.'
- 1 - , - . . ,- - . .. . - - - - --
g
-i l
%.,d,N55E[
- - $$dN.~ [h[hhh 3
N/N! k k hque h 4 WM ggggjMg }[ [ b Mifsykedond New'EngloN
' % Although NEES owns only 50 A percent of the outssonding c6mmon stock of the Hydro-Tr6nsmission companies, they have been fully consolidated in the financial neotements. Interest apense on long term11 ' y< g debt of these companies hos no impact on not incomeIsince allinterest expense is capitelized as debt :
W "' AF DC. The consolidated income statement for 1989 included $ 12.8 million of debt AFDC and
. g ,
. $ 10.5 million of equity AFDC related to the Hydrd-Transmission companies. The " Minority interests, prin.
1 . cipolly AFDC"line represents the minorityinterests' portion of the not earnings of the Hydro-Transmission . componies. See Note A 1 for o further discussion of the minority interests' portion of the project. , ,t . Operating Operating revenue increased by $ 124 million in 1989 compared with 1988 due to o 2.7 percent -- revenue increase in kilowatthour sales to ultimate customers and the effects of a May 1989 NEP rote incre6se. In 1988, operating revenue increased by S71 million over 1987 due principolly to a 5.9 percent" ^
' increase in kilowotthour soles to ultimote customers.
'[3 Operating - Total operating expenses increased by S 103 million in 1989. The non-fuel component of purchased elec. M 1l1 7 expenses : tric energy increased by $45 million due to increased copocity purchases to meet the continued high -
" 4 -
peak. demand levels; The System has aperienced peak loodslover the post low years which were highsr ( than spected. Increased purchased power apense and C&LM costs comprised the two major compo. t l nonts of NEP's May 1989 rate increase.'Other operation'and;mointenance apense increased by. Ep S 11 million due to increased transmission cost associated with odditional purchoses of power,
.[ increased unc611ectible accounts apense and generalinflationary increases in other oreos. Partially - i j offsetting these increases is a reduction in C&lM costs resulting from N E P capitalizing and recovering the
' 1989 C&lM costs, over a two-year period with a return, as' port of a rate cose settlement. Depreciation . <
ond amortization apense increased in 1989, reflecting increased OCA omortization, new construction 1
, expenditures, and the amortization of a portion of Seabrook I costs os part of the 1988 rate settlement.'
j y . In 1988, notal operating expenses increased by $78 million. The non.fvel component of purchased . electric energy increased by S 19 million due to additional purchases of capacity required to meet the - high peak. demand levels. Other operation and maintenance cost increases include increased C&LM .
]
3 T-_
~
Regu' lation-Percent of 1989 Electric Revenue 7 NER$ Energy Mix (%) h h '
/d pedo, isne,,y Regulotory Commission 8 i- 3 O*8 yo y i
& Mossochusetts Yi hk7w;I' yff ~ Hydroand 5y
'U iN4?q fth Rhode Islonci Alternotes
;F g q ,.
. New Hompshire -!
t -M y - 4 'F. . . . - ~, . l. m . Nuclear c
~.. /F -: d
$ i . 8' y5 ; tM Ut-=>
i
.n - L CI . Oll "
4 _# '.. I L [ , hMy ;
.$ @ , a Coel '
T- M ,M m + , t k,t. r
, tMY ,~,3, ** ,b ' s - i- d,
;1[
A > + f > (Q*:,
- Q' ,
- a q t 3
n-Q.N 2 -
=
'b 79 83 89
.i.
4 i 4 j' p
;m.y, y g ,
T ~ >
- - ~^ -
- - ~
~ty . 7;j g * & yl :: y =$ppw.awppMw " ..
~ y%._c; e . - .e; . .. . x;m,w.r. o .r.ewp . : ~ . . . L l2
,,ggemailfg{w ' . +, o " ~"W MWe'Y"
. A V) ., n g% ' O ' :* ' h e .. 1? ,
9 ggyK qi g.,9Mrollecta FERCdecisionwhichchangeddroeoveryperiodlertheSeebsek2
~~
g, , 4 5 to 10 pors. Amortization of oil and gas properties was also increased due to greater production'.' L j :i '1 3* , . NEES and its utility subsidiaries have been contacted by federal and see w environmental agencies . % b= ' regarding the cleonup of sites designated os contoining hozordous waste . While Ib cost to'cleon up 4
'j these sites connot be estimated, it is believed of this time that such costs wl,l not be material to the i l'D'. System's financial position. (See Note D-10.) - .. . . !
Currently, N E E S records post-retirement benefit costs other than pensions, principally health core costs, when paid. New accounting rules are currently being proposed for such costs which would ] require emploprs such as NEES to establish a liability for the expected cott of providing post _ __ , retirement benefits to employees, during the working pars of the employee s. This proposal,if adopted ~ q
> in its present form, is expected to result in a significant increase in annual expense which the System com . ,
( l
~
w ' ponies would seek to recover through rate increases. 1 M L T;;mes' - . The Tox Reform Act of 1986 reduced the corporate federalincome tax rote from 46 percent to on l N l; $ overage rote of 40 percent in' 1987 and 34 percent thereafter. This reduction in tM tax rate contributed : ~ j L .W to the decrease in federalincome tax expense between 1987 and 1988. The benents of th new' tax' low j H ore being passed on to customers through rate reductions and therefore have no significant impact 1 on not income. c ;New occounting rules issued by th Financial Accounting Standards Board, which are expected to , , ,
@ < become effective in 1992, will require all deferred tax balances to be restated at the 34 percent rate ori i
! the rate in effect at that time, if different, and will require any ex' ess c to be reclassified from a defer ~ red tax . .
' liability account to a customer.related liobility account. It is expected that, through the regulatory pro-' ,
,3 g . cess, excess reserves for deferred taxes will be possed back to rotopoprs with no significant impact on ,
<4 not income. The poss back of such excess deferred tax reserves commenced in 1987, which also contrib. .
]
. uted to the decrease in federalincome tax expense in 1989 and 1988.
For o discussion of tax issues in dispute see Notes D 6 and D 7. g
.1
, o l l O 1 q ['! t Cost Per KWH to Ultimate Customers (4) Kilowattheve Sales Growth - %> to Ultimate Customers (%) E ActuelDellers E 1989Dellers 5. . . 3# '
+
io,y,, , 1 3.2 ! i 'l 9.40s i- < 9.s94
.744 i I ' 2.71 'j
- ' .884 -
2.6 j m 7.484 1 i.,;- 7.2s4 7.ste - s'
'M J
c} l y'. I l.s l,e F., ( l., i.t - i1.2 {1.s [. , . l.. .e !.s l.. l..
. .e .
i g 1 m q 1 r ,
I (
- , W Mu$My n'
+; ~ h%N&%%gf$Me*7Q'T"NFM*W*"WTWWWFWNOMTWpMMW@y
%Q%%%@t;&" W +' > ~
l . f f Q%f% y E d AFDCinaeosed in 1999 due to increased conserucelon' work in progress principolly casocioned 1 j
%Mk'f 5% Phase 2"pM~(See H-M; MM Phose 2 section.) <~
" ' - i
[The significant decrease in AFDC in 1988 was principolly the' result of NEP no longer recording ; [_[; M dudng 7 Nonstruction AFDC on the pre 1988 Seabrook 1 investment, due to the 1988 rote settlement. In addition, in the [ j 1 o second quarter of 1987,' N EP recorded additional AFDC of $8 million, retrooctive to April 1984, ons
.; certain costs reallocated from the concelled Seabrook 2 to Seabrook I ' '
t 1 Oiland gas N E El porticipates in domestic oil and gas exploration, development and production,in beh c rate regu. .; 7 ; operations i lated and a non-rote regulated program. l N E El has incurred operating losses since 1986 on the rate regulated program, due to precipitote I declines in oil and gas prices. These losses are passed on to N E P under en intercompany pricing policy . opproved by the Securities and Exchange Commission. NEP's ability to pass such losses on to its custom -
- 4. ers was favorably resolved in its 1988 rate settlement. Certain rate regulated program costs incurred j subsequent to March 1,1988 could be subject to o prudence review. (See Note A 6.) ~
g Profits or losses on prospects entered into since December 31,1983 (non rote regulated program): R ' are borne by shareholders. During the year 1989, the System recorded on ofter tox loss from NEEl's - y
- non rate regulated program of $3.6 million. In 1988, the System recorded on after-tox profit of -
$0.1 million and in 1987 on offer-taxloss of $0.8 million. .U 1 L , y, Although N E El will continue to incur costs in connection with activities related to existing prospects, it i j L -
stopped ocquirmg new oil or gas prospects offer December 31l 1986. l 1989 Capitol- Cash construction expenditures for N E P and the retail electric subsidiaries totaled $277 million. These q expenditures and expenditures included approximately $65 million associated with improvements, completed in 1989, to q [ , financing : N E P's tron'smission facilities in connection with the Hydro-Quebec Phase 2 project. Internally generated t L funds, and issues of long-term debt and N E ES common shares provided the funds necessary for con-F
; struction expenditures during the period. q Cash construction expenditures by the Hydro-Transmission companies totaled $254 million, including .
$ 176 million for reimbursement plus interest to participating utilities, including N E P, of preliminary - -)
project costs incurred prior to 1989. These expenditures were financed by long term borrowmgs y (60 percent) and common equity contributions (40 percent). 1 1
=
Where Each Deller of 1989 Revenue Went (%) System hximum Demand ;i and Copobility (Wgowatts) 5 Fuel System Maximum 54 0 Tl Purchased Power 8 Demend. $26: 4921 (excl. fuel) ' 30 % 7 4542 28%. 4ac7 1 3 Other O & M 2m M 4124
,4 3 Deprocletionand S 3794
~
' Amoetization gggg ji t Temos- , ,
J
! 7 inseeeetendPr,(ened h n 6 1 Dividende o , 4
[--
. ' U k. , Commen$0eefoe L f -g m y b 1 i
, e '
-J ins too !s7 !se fo9 l
l _ . - _ _ - . _ = _ _ . - - - - , _ _ _ . . . ..
s , , . . , 'N', .
?
khf*?fh5ff bW WAf* f WWV7 m fTpWyy[ua 3 !
>.,.y.. 3 _
f$9dhhNb8enalfosHM$eM n.eds, tssesn.a hEbbSMMhhkTrb
,'JQ*f"D? $ '7% ren%eei-fn [?@f's 4%$4-% l h?lONl[YWwa. ;
' 'w % p &h ' "
' in May 1989, N E El refinanced its outstanding borrowings dwough einew credit'ogreement which 2
t , prwides for borrowings of up to $400 million and NEP issued $ 17 million of pollution control . d revenue bonds. In addition, Massachusetts Electric issued $50 million of first mortgage bond + during ', t, < U L ' August 1989. 1
*' . N E E S sold foui million new common shares in Nowmber 1989. The proceeds from the sole (approxi<
. motely S 105 million) are principolly being used to finance a portion of the construction programs ofi ,
3 . NEES subsidiary companies. In addition, NEES raised $34 million of equity during 1989 through the': ,
~
, is'suance of new common shares under the System's dividend reinvestment and common shore purchase - q plan and employee share plans.
4 l
- 1990 Capital .
Cash construction expenditures for N EP and the retail electric subsidiories are estimated to be 3 ~
/ f expenditures and - $235 million in 1990. Internally generated funds are estimated to meet opproximatelp80 percent of;
- financing construction expendituresin 1990.
p^ ;
- The mortgage indentures and note agreements of the etail electric subsidiaries contain restrictions on - (4
, the issuance of long. term debt that require earnings before interest and taxes for 12 consecutive calen." f 1 dar months ~within the proceding 15 to be'ot least twice the annual interest charges on all iong.teim debt ' [ p ' outstanding. During the first port of 1990,' operation of this restrichon will prevent one or 'more of these ;
; subsidiaries from issuing new long-term debtiAs discussed in the Retail rote activity section, the retail - ,
L L = ~ electric subsid:ories in Massachusetts and Rhode Island have either received or have pending rate - rd P * ' increases which o~ re expectedt ' o allwiate this situation. Subject to the obos restrictions, the retail electric subsidiaries plan to issue $80 million of long. term debt in 1990 or early 1991.
- X Cash construction expenditures by the Hydro-Transmission companies are estimated to be $55 million .
t
'in 1990. The Hydro-Quebec Phase 2 transmission interconnection is schedul@o begin operation in late 1990. Long term borrowingi are e.xpected to finance 60 percent of these expenditures. -
e . in 1990, expenditures for oil and gas activities are estimated to be $50 million, including capitalized interest costs of $30 million. Internal funds are estimated to provide all of these needs in 1990. 'H N E E S, expects to raise about $35 million Ef equity during 1990 through the issuance of new common ;
~s hores under the System's dividend reinastment and common shore purchase plan and employee share plans.- ,
i Merliet Price Per Shore -Year End ($) Number of Customers (Thousands) a 5 l '! 1253 I i 23 1175 4h l ' O. ! 25 ' l' 24 1102
- 22% 1055 s i
{ = 1012 '. - i r W
\
V c y: s;,- ty i ,
&< +
j p;q I ! ,! i ! l fi89
- f. 85 !86 I87 88 I89 77 !80 183 186 f .
.j 4
t %_ ,
1
,; g&~WMa Y~" Wh %%!dW e& .
~.a a g .;.. ..
if 11989 W -%198SXhA19879 den 1996;Me 4985 l, L "g; '~ Operating revence:
'WW gy ' '
l l Electric soles (exciuding fuel cost recovery) $1,084
^ '
*$ 996
~
$ 942 "*"d!@@$j@y$ $'940 T ~J p "#
9l l'
, Fuelcost recovery 458: % -428 432 f 407,by^g <462
; Other utility revenue 42 37 28 29 25 Oiland gas sales $9 59 46 56 49 l Total operating revenue $1,643 $1,520 $1,448 $1,432 $ 1,444
. l Notincome (loss) $ta D 189[w := S (54); $ 171 $ 175 $ 167 3
.-u ._ .. .-
Averagecommon shores 58,836,946 %,739355,377,967PS3,794,323 ie 252,083,490 m , M
- c. p J 3 f o: +
iu.,r htya% W @ ' <
' ' .s .
- C
,4(4 n
- f. 4 W pW;.WQpch g eM f,T"= yN. . ^
m, t, u" n gy J s : g 7,wAy3, ' Resumonoverag. .o O w e h* swv W 9MiW - W , yg %:A'(g i J 4 9: s < W %:p g R.$q; ..
$ hh gd;f.r;;~y eygegunopQ}g ingcggypf 4f3 q u% - 'hl c4a aWh[ d(Ihlh Uh r dAff h
# Rm PQ ysdUiD. bome(los(hfdhne L ._._ L !8l41.83 1W N Q wup,Wy p %s wp;iMdeindsdeclomd aa + pnp F:IM scW g&
i
$,ND< ~ g6 M ,ME
- Te01 ann N# U $p:0 ,%c. . ._ ,
d$h..e -
.jA...
Wi$ M liO4 m s ( qpgdq%n iMy$yp$N q
,$3 0 l
..,,g .
- g. r 1
N[d COPI tOll109lOn: .. ~ ' ! df t. ' /g gbM&.. .e.yg;p. , I Commonshoreequityand . ,yt$$A688 gsX % ;minorityinterestst- $1,090 $ 979 vetWRMComulative preferred stock % D i$$$ff),,$1,056v @ l62@ * * '"I'62k $1s19thWg;*MX187 l 205 l l Long tea 6bt 1,639F > 1,387 1,401 1,364 Total capitalization $3,0672 M. ' 1,434$2,740 1s
$2,678 $2,548 l
l en$^y. _ 2R $2,652
.ge '
Totalelectric sales (millions of kilowatthours) 21,394g420,7g .y,741, , ,19,574 18,338 j Cost per KWH to ultimate 1, gg .tm " " customers (cents) . 7 ,10; 7 u System monim0m'desb~ indp ~@ h %7.38M $ MyhhMhi iM6.92% Am 7.045 @k,hf#@Qh E (megowattsf Mi %*k238/ h '124%W3,799bM3l52W%$ 3,555 I Electric copobility(MV@ WkM *
- M O P "h " Y l net)-year end ,5,480 V $ e5,268 4,921 4,542: 4,307 Number of employees - :M S,580 ;T5,478 % - 5,256; Wij5jl_3h% 5,004 Number of customers 1,253,425"N"1;233;519
- 1,204,189
'1,175,307" ~ 1;147,399 s1 i
- Includes the effe et of a rate settlement write-down recordednI' the second quarter of 1988.The write-down omounted to $ 179 million after tax or $3.14 per'shoie. (See Note C.)
_ ' Return.on overoge common equity in 1988 is * "isningthW$2 20oorningsperaussageshose
. , which g 4@
excludes the 1988 role settlement wrisG,wa$.
", k wt'aciudem6th
~
ma%$W%@ hd%9M !3 gM;gh y$ n qW W"Em ly; "~ jg A ',gpig^sx#%%g MigKgg! j%ggyissoiesseinMSM~ 1 - gq , w
.- ~
,-4q -v "r ;gy ;;;,aggygg g-
.g 4GlQQ g 4l,,_
+
, y
!e " cg. :i k $% Qf h$$
n_ n, nhym?5
-w, ,,u. , .hw,.n&g.;g? w f sh. % Y@@a .
]i
. .;a,c ': , . . , ,
~
- i. 4
..;V.x .. .. , -.
l . i
% a 2 - . uQ %%
.$LWbAaN oy%PO'W+'hGyf#Gnk b ;hY&nlidf w w %w %?%Q . A&jN4tS -NMEM63 Phi.M934908 &
M%y ~: w.$
> e <% d:liiss=Np677 1
, . ,, -9, tw .
y e ~. ,_ . . ~ , , , . a . Operating expenses: G " j! Fuel for generation 295,132 286,649 316,775 i'
} Purchased electric energy: >
'I !
j Fossit andinterchange 200,503 157,132 104,711 > Nuclear entitlements 104,989 100,305 100,258 j Other operation 289,532 279,890 246,660 ' Maintenance 121,582 120,497 101,250 Depreciation and amortization 256,881 229,060 178,918 Taxes, o*5er than federat income 97,714 93,615 91,316 Federatincome toxes ' 34,728 30,945 80,227 1, @ ,061 1,298,093 1,220,115 m
.8 E h e-- a '
a228 M8g 2213584 i MIk.kih iji
"" M%"Shh'"Mk$4g dh $$ W 4W$,076"$h' I
YM) d@MMOMe '# g wa h N ~ 1,969 25,31gJ/fP
$%S784!h%A%legip%
- 99TwDeciey Eb T $i eg g kh.p$il6769 T616p$ w m;
.Otherincome
~ ' ' '
.:; ne s ~ MkA d
+kj g (260,213) ; 4,9693GF
. y
,",851 RotesettlementWWM g g ;' 4 Fedorolandseag g ef ,g M(:g@ ', 2:
b@ Operat ng and otherincoene j h 't h* e ' akh igp 254;632-081,217 J'N'-
" N 51,177 m.4 # s 264,981 " g!'
gg I Interest: , y-l' interest oniong.termdebt - "* !g" ,W .W# 9 0,535_ 88,988 87,273 ?!
- t. * #
Otherinterest
!95'ruction ( 7 46 ) ( ), . (I ,5 5) 94,425+ 481,461W 4108,410' c MgWpm w;mp .a ,- u a m
. PreferreddMelesifg Income (i ) g gMhkNki$I@M Nh q:.149,222,p j (43,248) $[188,690h j
- $ I2'3I4N Notincomeh)gMMk 49NUk $. 138,650 $ (53,820) $7171,206 ' i Average commodMW67{~ g "y*
, _b, .
' j i 58;836,246 "57,026;739 !/55,377,967 " J i
Per shore dota: T' 1 Notincome (lon) .We $ 2.36 S (,94) S 3.09 ' M' Dividends declared s 2.04 s 2.04 s 2.0i 3 Mi s gp m%%pp%i,,e,,N men,, mggOikh.jky h i ? W: dhN? W i pqg glgyn "?]h&GWfTb[98l p
, , n ,
'4 g,j hfgA;d4 9 f
VWsu')"'s,a?4M
$dY
Sh T i % a, d @+ - MW ww ain Eg g "n~
ggg 2; < l
.w. x c.~w .3 p
- T udm. , ,t a f my
~
D aQ*mQjhhf Nyltta.
. ;; " fl. -. ,
,'t- --
' N. ?- Nd@Endtond.seNSynomcmdSu@sidi$I MI?NlkTNhI Qpd%%iW%
t *G y ( d 4 $ = T p ea 5 % ,M @jy @ Q$ $ d
" e%%4UQXE, %Wh#BM..ii J; $ a Q Q M M M W M .
. . . . ., ~o w- '
. i ,,, w u 3,883
, Assets Utility plant, at originalcost $3,651,430 $3,427,675' l Less occumulated provisions for depreciation and amortization 1,149,032 1,072,015 l
} 2,502,398 2,355,630 lI Construction work in progress (Note D) 376,426 4 77,549 l Net investment in Seabrook I under rote settlement (Notes C and D) 194,303 228,133 Net utility plant 3,073,127 2,661,312 Oiland gas properties, of fullcost 1,157,848 1,103,756 Less occumulated pro ision for amortization 591,309 497,610 1
Not oiland gas properties 566,539 606,146 i investments: l
. , Nuclearpower.-r-f Kot equity . . A m :.. .... '46'091
, 745,3772 l s
ym.
<g n e,m a
.e c ~~
Fuel,moiEriolicndsupplissiat' Othercurrentossets;w gyyg numm gmpmgy 7; . s%"costMJJ@g j f ' " " *73;390[~ [66;755 4
*jip 26,628 !6,888 i m xy. w,4 mm 4 .
95 a .c - 3 6[h$fhYMMhgha 5 4,h~ 9@/NeJn%hhhk* O[Mh h 4 Unomortized property losses ' f (Note F)hjp
' ' ' ' qf ~ '
, 32,874 ' ' ~ 42,150 Deferred charges and other assets- , 64,837 42,307-
.ag 4. gy-y -s, , # .e. $4,116,359 $3,7.17,972 ,
m I Capitalization if .R h. ism , andliabilities ' Common shorejictoityj!M.$" .R ig^Ce "-" 'Moesbisiponyingstot 7$1,211,688 451,055,879 embeidioriesTE ;1g#y$
^
4:JMinorit 4;. p n g. p.q_ . y q:{1 yy %g n84p3804Qg jagg d9,fgog.jggt.3.,yh
'*M$NibNNk.
Total,< =mid W 2 m 'E Mgg+ WM63e,49sMiM336e01 3,066,891 2,652,087 Corsent ffffffffj h n)fh @dkjN ' .. Ny'l'@@@ TAccounts'poyable f gg 135,992 156,083 a
/ Accrued tonesli - m ' mW
' g#&g&jp ;; e ,
0,357 >
. 900f4 lAccruedliiteedst 4 29,224 22,471j
. [ N. gc -
Dividendsdesloredh.j;h . 33,864, Q30,618%
y y;Qlher ' ~ ' & S$f e"ft' ~' W444831@yMWA9N(
%@.f h$M @, i " *"r '
iW! RW
$6% [ n 0 ' '
jjN$$$- p-.. : lp 1284M ' ilk g qQpt%%Aa f .$E m n,m m m. # 1 ( . m -. eng . k 1
\ { b
1 l l s .. . .. ; . : ,. . . . . 7 1 .
~
.~ ' .<3 .
' - 4 ,,il,.
I l b.y@h/Nh$NiN8Mhh M$dWWAdiMMkk MI$IP"r, Ww
, @ earnings at beginn *f'0,oJ'*,"'4hym WMif* ~ u.$ 443,798 '
$ 614,06.64+ f$ 556 IL
. ' ' Dividends eRet income (loss) ggp declared on common shoreak @p$y '
138,650 (53,820) yN171,2066,p& A 0 21,406) (116,448) :(111,390)M Premium on reacquisition of preferred afackMQh . ; ' (2,445)$5 j } " Resoined earningsatendof ysor%$O@M@VE m $ 461,042 $ 443,798 $ 614,066 ij 1 g8 M
, 6 At December 31 (thousands of dollars) ' a
.e t., o Coenmonshore equity A WM% . 1989 1988 i
; QCoinesenaboass,porvalue$1petshesgf" ^ " $p4 gi )ifg :
y w ,j # 0^
,,vnngggs m%--". 1MaOM W, * : .N . 4' 12-FMM g ,A - / +'
kLMIph$/gM.u%69,9N gN n ,
$!M@df!NkIfifhy~(['N[M
.d* @ @p:( h i W --- '$ig ",M $e hgg yh ~ . Og Q ;687l618? _ 554,485,. i
, ,,g , . y . ij r . M1,042F 1443,798 ' j
- M :MN#Taisalcommonshoesequiryph
.m# ~' < u,,, *' (. f M@@ " '$1L211,638 $1,055,8798.l
, pj'l fiK q .l
)f l
- m. l Cumulative preferred stock ohnhalebeleOT 1989 1988 EM.p$ks;#
4m Shoresoutstonding Company Por value ' 1989 1988 Mossochusetts Electric Company 4,44% Series 100 " a75,000 75,000 $ 7,500 $ 7,500 ; 4.76% Series 100 75,000 75,000 7,500 7,500 7.80% Series 100 ppg 180,000 150,000 15,000 15,000 7.84% Series M 100s $ # - 200,000 20,000 20,000
*P G MQ$6) Q, The Narrogansett ElectricCompany;dg fRg; I
4 W % W '! C # $ 2 8 W _ . . g 180,000 9,000 9,000 4.64% Series c50i 150,000" 150,000 7,500 7,500 8.00% Series g 200,000 10,000 10,000 50 y g D00
~
New England Power Company - -
,{
6.00 % 100 80,140 80,140 8,014 8,014 4.56% Series 100~ 100,000 100,000 10,000 10,000 4.60% Series 1100jm.wdA00,140 80,140 8,014 8,014- 4. N.'64% Series ., :100}MD00,000V 100,000 10,000 410,000c rg Qi@; ClQ 100,000? ' ' 100,000* 10,000 * - $10,000$lm[ Y 36 MSA0% (7.24%'Seriefh@m~ Series . ;p $
? Od " ll84400N M900b 6.064 ' 150,000Series?$ 15,000 15,000 4 315,000!/ @
A35,000%
"(A@p8E8.60% Series MMNRd W!%y 150,000 E100,000 10,000N.w:10,000 W i y .n 7"wp/hd?/s m, Vs hiopeeformed I fg JiW%f g' Mp'" 'Wubsidiori@mmol$)g{lgg:y$myM (. .
! M- requiremeniof $10,5 E%wgMdPqi s*e for 1989'sand 1988)M@72,%
%1
);pQ.g;896,280' 1,890,280 $162,528 $162,528 '
1
'I.
f} Q y j* l, , y;((Q lj . i. f .:e we w c m:1 ;; v ww; p yea i~ f WNM-Qp % ~.1.jpg . A p [,Q.4Ggtgg g; MEM pn Ot4Mr
%:p"?@[yg%gW NeVe England EnglandHydro-TronomissionMQ@jfM Energy'lws! j %MwerlathyQTh%g)kh8N9.00@
?
e Mi$fbd#% gggy tkyt%
< - % Corporation y p % R;^ooriable p:! %1990y%gggggi,ggpWpy@3h4 New England Hydro-Tronomission : "
.yg *l" f QQ &p# $.*
Electric Company,Inc. * . ik variable, 1998 W f$ghpr[f,tpf 3L.ps,341 F,7Q- .N3 4
, pie,, ,,gege Massachusetts ' Series FN N ESS%: 1991 M N4'y
- 17,490F ""*T17,490 f bonds Electric Series G 4%% 1992 60,000 60,000 Company Series H 4%% 1993 10,000 10,000 Series i 5%% 1996 10,000 10,000 SeriesJ 7%% 1998 15,000 15,000 Series K 7%% 1999 15,000 15,000 2002 9 20,000 20,000?.
Series 7a SasseCd M gs%".c7%%,% 2W% ~ , vs2012yh@y sd89 t1,379!
- 2. [ af 'ONM M*g ' , M yk5eries c (20 W jk h '(i25.000$(jjf 25,000?
jygg
- v L
+
r gAu
% s h[. M 93 4. .hsyd '. ~M-~ y . . wy $100'MM W,500~' !
gg - .
&geg pgsof MN3'4 . g gj $r$;g 7
p; Q %%ggg g yy, f. 4-gg p e(;gq) DAW .
.y .%
/
p .: m g ". _ g, 1
^dy..
SeriesPf:M #10%%Y J M2016aMD 40,000 040,000 Myg ;NewEngland'. Seriesl c 20,000 C. 4 SeriesIP erleggj@g g " g'4 % %/;jghg4MK}
, 3199%) g$gy;20,000 N a y Power 7 3 y , 41993 13,000 l12,000 Company "7 1993 10,000 10,000 Series L 6%% 1996 10,000 10,000 Series M 6%% 1097 15,000 15,000 Series N M ' , 7%% 1998 20,000 20,000 Series O 7%% 1998 20,000 20,000 l SeriesPa; ye;c 8%% 1999 15,000 15,000 i
; SeriesRigg 17%% 2002' '4m 25,000- 25,000 i Ys88ps%., 2003 y e % 40,000 40,000 ;
' J2%#$d, -@ASerise8W
. 8Deries'T$ff Me%% & & 2000h0NN 40,000h NMW40,000-General and @.
New EnglandpAMg$eriesSeriesM *21993 $" @P Nf F40,000 j MQll40,000 M[$@%8%$". reWing Power SMi 2007 80,000 C50,000 mortgage bonds . Company SenesS w p .. 9%% . 2008 50,000 50,000 e 16%%V y4 2012f @ p~ y p % : a 746491 V%' %,SeriesDC'SirlesF,g#g' 9W 2013 90,000 ' 90,000 Serie5GNk .19%% 2013g 81 , 16,150 16,150 yam %
, ' Series t 9%f10%%s ; 2013 #N(16,600 - 16,600 s SeriesJ ? e. _; 79,250 79,250 SeriesKf,., " L i il0%%
n38
.2013,!5
' ' W38,8001 n
.tx . " ' ' %%"wD.3 kNN 5
D.. $$~,6"II
' ~ ~
. m. M Y -20}M 201 g[ . NlN gify r gy 4e " '
s 4,u
? .
^
- L y
4
@ww , _ .m h a x a $ d o ,a .4
_ _%J l ' % Q ,y, f~ f
- g. _% P 2 % g % % f- ; f.a%a%%s n
, ; y. - , , . . . , . .._ (: l r 1
> ; a .
s 0 . 4 1 Nk JoDng$N i.r&vfIW. # M +$$ p ..jj![4MNMM6m 5f.hkNNkii9 Nbn3.,. D:N 4 1
@hil' ;; -
Notincome (loss) .
,,, L ,188,)$03.$$j(5,3;,'820)Q 171,206h j W os9Meles g@f Adiostments to reconcile not income (lon) to ned cash - .
.g ~
provided by operating activities: 4 s ?1 Depreciation and amortization 258,767 230,357 ~ 180,198 , l
! Investment tax credits-net (4,854) (6,414) (2,619) l ]~ Deferred federal and trate income taxes (16,067) (90,438) 21,701 Rote settlement write down 260,213 Allowance for funds used during construction (29,746) (4,115) (40,893)
Minorityinterests, principally AFDC 5,491 ;, Decrease (increase) in accounts receivable, Il less reserves m. 1 12 (17,673) (34,968) l d(p ,289) x Decrease (4,712) 15,763
.N
.incM (increase)infuel,materialsandsupplies ~
.1) MEk (6,635)hd18, 22
~
% ,457 p y T *' ME"
#8W Y@N@,- & @h@@&n{demoose)inaccoun W' ' ""~ ' kh Q,la%nngn g g g M a @ @ s M L ,yj q@,p.ag,IgQ
- g. we _ ._r. .. y mp 7 ,
. WoctMeles fundsusedduring'constructionikgm@,_@T@ p hMih Ms, ' . w I i
- j. Hydro-Quebec Phase 2 project Nl . J$$(319l197)L ,
i & Otherpeoject,
. Oiiandgos'emplorationanil(gj h hf!@$Gr $$" $gdlN. $$$%710)7
$(165,217) . p
$(192,35 Q
l i.,(84,099)W ;(59,849) -(54,734) l' Sole ofinterestin cool ship (Note D-3) * * "18,263 Increase in ofher investments (1,558) (2,200) (13,150) ? Net cash provided by (used in) investing activitigsg .g $(569,294) S(254,408) S(233,101) Financing Proceeds from NEES common :hores issued g$,'138,515 $ 35,807 S 43,891 octivities Contributions to subsidiaries by minority interests ' 4 :gf g;f.M48,739 - . , . . DividendspaidonNEEScommonsisse 115,646) . Mhd jf MSWR18,660)6"
.S$@$fd (%QfIM(110,016)
'PreferredsEseliMi$iC. Q;gh$ (27lll45)h 82,900$ 125;000l l
Long-termdeb$isueR Long term debt-istirem$$ ents gg* "g ' ' " ' a Cf4M100%' (38h241);~(50,400): (35,250) ; Changes in short term d.ebt . % -(28,750)3
..ag.
.y ,
r mr . ugwn < Notc$shpreidedby(usedin)kjkyny%_Meleby,i$!273l483%+$s( financhh,; ast q MS(120,120)' " y i Not increase (decrease) in cash and S casQ ,i:meny" M112662 g$g(23,932)l;S u, n 4 e-L 4 d b .,. Cash and cash isquivalent's_at INgi_nning_bryis,,ed Coshondcashequivolendofend ~ " *,? 14 p' 4910,7249;rF134,656%~@W C Q1s990$$410,724h
$M34,656%.
y n ww h m ~ n c.
~
-~ %v:ngy4 3
a ff9 ,n g y~ k, m, w gn g.g e___ m_ w s
&Na QM m ,
g hhkML M Ef3 s . . a p g _p w _ a._.
, x
@ Q@g.mn
. lrY , A
@ h f. p{Qt)If _ 4M p
.W y yM9p# .
d y. i en_,N'l mm d
.g
,m ~ .
w g~uy~ m go
, %,m w w g.i M W , g = g. /WM,m a
c _ n-M,":TWQ @(y %)P?@ W# C 4V
- 5 9'$gpM4P f pyVM*P3m7;gpy@t;y;fggattyjy ;i ,
pi, , 94 A _ hh
.w-
... noe -
f kk , MWwM4m J
- 1. Boole of The consolidated hnencial seelemens include tite,occounts of N=w England flamplith %gM censolidae6en ollaubsidiaries oncept NEE $ Energy, lac.(anslNew England . We c TrenomissiseCesposaskampegETk
) , and oysteen which are recorded at equity. Presentation of these two subsidiories on b equity basis is nei meterial of occounts to the consolidated financial statements. In addition, four regional nuclear generating componies (Yonkees) in which New Engbnd Pow r Company (NE P) has o minority ownership interest are volved 1 of equity. NEES owns SOA percent of b outstanding common stock of both New England H ydro Transmission Electric Company, Inc. and New England Hydro Transmission Corporation (Hydro Tronunission componies) The censolidated financial statements include I.00 percent of the I seems, liebEhies *~ anal earnings ed lite Hyde Tienemission -: : W'15ince NEES1schemoierleyseech. 4, WW beiderin nos nm ,w
, ' M i"n" "'penedherhierNsere@M,inessasinI v c
,w i:p4 W*
, ~ -n ~ ,-
M
~
, @uf .)
t
$&g&pMe
%;k N6MM
~baf bywm g
n %g ~_ 4 .-
%ARE j 3 yJ p* O 2. a m,e W 4Seq mane reveniseiseneRiedkW:N
; a%Y y Qfgm : wm xy s > ap x y +- -
m, ; wwsyg,, m , w , ,, V I '
- a. AbenwooseMC,n..veilityiibald,lestes.
) 4 g,,gy ,g,ee+*w-, % "5
~ 4 #-
oftdelUNyse00sd " m n_ ",M'perfien m'>.mAPDC,
. 3 . um m"sephanees96desa.
0lcondrUcilon costs hof N% for, ' pe ,) i veed during inclusion in rote base. in 1989, on overefe4835 million of construction work in progress (CWIP) was constrvetion included in rote base. AFDC is capi 6olized in " Utility Plant" with offsetting credits to "Other income" I (AFDC) and " Interest." This meshed is in eteerdenseiwillMinesemblished roto moking practice under which a utility is permitted a reurn on, and this recovery of, prudently incurred capital costs through their ultimate inclusion in sees beesiend&4 " boy 7"Q^ 'l :r.. The compoebe APDC esses, misluding'the?
}
5m. W. . Hydro-Transmiedon .m x ' ,.. ' nek - n10.9percesdnal1.1.,3.pequ.
,, m nedin a M,e' av988 w lN 7 h l#+' g
) W ${4% M[g -}* -
y a y mm pp g%ggp;
's an.# w:.kygm. ;.m
% Ju1i "c# w;e
,.n e~ 1:
d w* w .in %' the " ompoemdMPDCbpre.g"
) c sented groMIsolated dalersediederallegspisNones. '
AFDCin 1988 ond 1987,weepseelevely pro-
>)
I J$%dnotof g
% 1989pr.esen8eelen';_MW %bw, ,W + ,*WavebeMF n ..
.n. f. 'h ~
2 aa- I 3 [m '"' ^ W.x O t PH ' i i
@@@ M mM3tW.M% % h t W . v.WW&
- 4. Depreciation Tho' depreciation and on$ortisation Shhkee"hpituded in the " Statements of ConSolldoleel Inkome (loss)"
l .
.nd noreio.ei ywr
- a'p 46epined.f the_
, , y, ,-
- - MW -
AWpwc eV " W 4 ~w M r i , i. 4 -
&m. _w .B pU 1 i hi g h
f f'W I i j - 8 0 i A '
). ,
cjl ch g i
. h@k Lf e 4
c s s xy a i MaSw$$';@; 4 ;{ p .. f g r u m pg, l M w w gweg w' ap @g 3_ p 4g ;g %p % w %ggQg- . g w% M WN mm;ww p4jTeesi.f MAS Mo,,,,en;,,,w 2 m'
~
%a
-- i ~ ~#aq#
~4"w Ma@8
#g$286,881j$229460trM$178 i
MP7;" ' At December 31,1989, unamM dulieliimeWorsten cases % ~T
- n Rag.mm ;;TP@t,i;.5M79 Nhh QW J%;& : m g 4 Noeleerfeel The Nuclear Wosto Policy Act of 3962 establubes'that,the feeleselgcimistigegWIs
_ "'&sr4bediaM',h disposalend posal of spent nucleor fuel. The leilevol governmeM requires NEP to k is fee b$ sed cm its sh$ of the k i nuclear plant generotion from the Millstone 3 nuclear unit. N E P is recovering this 8ee through its fuel clause. Similar decommissioning costs are incurred by the Yonkee nuclear componies which are billed to NEP and recovered from custom-ers through N E P's fuel clouse {~ Also, N E P is recovering through depreciation expense its shore of estimated decommissioning costs for Millstone 3 omounting to $ 24 million in 1987 dollars. NE P's decomminioning cost occruols are - recorded on its books consistent with les sete recovery, in addihon, NE(Is poying through purchased - powerexpenseitsportionof dec: " " ": # -tests "" for theleerlanli$ss$uckeests refleet assimosos of d
%,% g. ; Q fL@ -
.1. u'y# totel u#s,7'mas" - -
' " ~ ~ ' ~*
L i -3M y ' W T& Thorois-RA$a AUW"i wm
- ork u% - l Msik " Nh)
.M IMN' if ~ ' N[$Musene3G$as^ Q ig54$dlEY pMqNghp+w'jge Ag' ~Commission g3,go;wie" m
aw -
"~m" (NII rf - , . . +
e
. m.vRepGinn M ienE * .M [$ ]
WJ shipinterest willmeet or resqu -
- .j q . hr %-
, wqygg:m m,;w.e. yr + ' 9+
- 6. Oil. sed gas exploration, develop-New England Energy locorporoled @VeMdMMBoesd W * 'PWnindo .)
apanwamme omsW end ?r 4 ,through e Yeid +- -b 27,1999M.a m' NEEl,also owned and operated, r . wn.mnw-m santure,e n s ir a
, chartered to NEP. ',,, e 3 (See Note D-3.) .
N E E l follows the full cost method of occounting for its oil and gas operations, under which capitalized y costs (including interest pold to banks) releting to 6 ells and looses determhed to be either commercial or i non-commerciol are amortized using the unit of ppduction method, sy y NEEl operates under on' ^Z'yMgiolicy lPrkl%M bythe $4d,tries - W[ ond ExchangeCommission($84 IJtility
' ' of1935.Pursuanttog'
,i q.s. , s n_o
,% , . oo, .m . .
'""jgedessel.M !
'k,..
.s ,
~ '
s ,
.% i 3
l $7
+
M eregule0SdpeCglems. g. - .
. s. m
- g. v -
motely to recoil customers. The non espo%elategi peogram is W $btainedsince,dM - January IIl98dMdapeshle9
$ eMif6kh fl@R [ j pects offer December 31;m1986 due =c tomatid cone.llitens med ~ w m, ilmfelv
.n e.- a m.g :{
_ y q ,,gg epF---ng 4p, m,N willcontinue toincurcosislaeormection , ..a estivnlos estatingh i gg"ofe The 1988 NEPuarate settleME,nt/desdelbedin , e m .n NE n Nees,Cl1sniovably .*w~ w ,w ever
-n
., *w: /mmI
, .:m 4:p m, NEPlorecoser ~ godfutuse .
m- -s-~e
'z'y s u p -- ,.,pgg r 1
1 -- 1 +WO,~;A.o 5
?
Q ydgS** ' ~* l N
- m m ~m7~w_m _ww%p_w,.
M por ,
. a ,y ,
~
w+"- ', A,a+ymyymR3 4
,m .w.n r
tv-e- wgg 4 q; ? , {_ . y fp \ l
l Ihd, n , tt ~~ W' jfg l .
' 'dadladpMeisendesaswillbesendled Wf i 4,qUg %g@MP?ineweedleaseswouldidW"ggdurrent '
WM2 MyS'MT* modstMl54$udisk VMY
., . ,N ew . N " ~ MhlEEl'scostsincurredand%pEMMMa$dgE[WeF.
m.u. u A-m oCt. . ties are os follOWst a p n
- nkJ wi w .- m m
& JwC .<a , ivi hwM%Ve + - yt. '
- t. qZ'
}[ % j @ cdN;n@$' Mdh$%Wl@03'4 ,
L ' -gd W NM Year ended December 31 (thovsonds of dellors) 1989 1988 1987 Leoses $ 1,471 S 4,675 $ 1,395 Exploration 20,646 14,630 9,152 Development (3,938) 7,493 11,920 Copitalized interest costs 33,362 30,817 28,660 Other AWA NQjAv. p W F R;0 h 2,551 2,228 3,607 w em . m Tessi g;fh gi, , j th$% : w#m6$84,991 $59,849 $54,734
,h g[;p[w@E
- e. - rypyn/q ;g w%;WNg/ ; c ~_
asasof $564,
,* ' . Via 9 g.4g . '
i b M48,M$1 f f {!;N . Cash 'g$$$$Q%$M"n% 36 sed & M0,MDgh
~ * '
*J:k 7 NEEt anditisubsidleries '
oindwelt/ifM0dayorlesiSscoKCdr8 b I' rent banking arrangements'de# MElse funded until actually presented for h* d f payment. Outstanding checks ina,Wdd5sididleleccounts payable until such time os the banks Y' presentthemfor poymentgh wq sp - s ,e.,.s g,ggg;4['
%:q , ~,.
Note B Federalincome taxes Y Jf$tffhk " u * " f Toeol federal income tomes in tid 6 income (Loss)" a re os follows: l
? $. ,
G ,=n # k[ % &$fW W W $ f'?;f ='jh:$p%a " " w,*r,
\ y i;oMg:g;%n %r v"*i;,,,g,,m c use N
g,Wheeshek$ 30,945W $80327
. dy. '
, ,gg'm' 'Ae gglfg g g g .e gyy 33p l
_ . m me o. . . - intesteloxenfase %" roy$@7g/LM% %s.(68,428)
# h+M'*,*,
% g $_ gg@$N00k M i
^
\
+ r Toeoi federat income t6 sci.M.6&aQWeNo.newias'codiponea's:
, pe w va sa *CCN 4W;MMen't3 x m y gEwiup?'fqh5xNp '
~
b WM, <1989 s l ly Mp; .$y.%Q47 Derendeel
. , s 1988 <c.id1987 1 j ~
'i W ??$ R 804 A "
qad $gg e-1
, i
- n, . ,n g ig 1
,n#
1 . g .- . I-[ 7 .
.- a>g5
' hi ~
a k fh gs 4 ..
.h +
- l. j *
- 3>
m '_$,$s.y.gp+id-_&w i6 a &C m ~ _ ,3 - a%m Y m maMe % J , dh - t _
i M ' ww% pm * -m+& M subsidiariafwe C^q WM odopwd = - "' - W w M o s
,;,,, . ,, g g g,,p ,g gg-thew subsidiarin:
2 j Year ended December 31 (thousands of dollars) 1989 1988 1987 :; i - Allowance for borrowed funds und during construction $ (769) S 318 $ 5,968 Other construction costs capitalized for book purposes and deducted for tax purposes 2,057 3,533 7,818 Costs associated with utility plant retirements deducwd for tax purposes 4,538 4,985 3,591
; Excus tax depreciation .
p 11,694 13,361 17,814 ; 7'
. Rose settlement write downlNeesC) , . j .
(60,428), H elweek 1 ==e9 (NeiCpOh p.g$887L , M,889)[ , 3, j h w}"Q,a g_ r!@f*ypmportyleesemordnedenlhmjg%jy%a(, Mjs c Q s
@gp%877)y y, -
;7 %877)$"
11,269: K"()( v Unbilled rewnue 7g ~ ).3h $ , (8,138)' (3,338)' , (3,113) s {Contributionsin oldofeenstruselon 4 % , , ,,"' " @ { (1,952) - (3,421) ] (3,674) j Conwrvation and load management costs capitalized 7,247 / 1 Coolship settlement (Note D-3) (7,538) OiIand gas program - (7,434) (16,042) (1,454) Accrued rewnue for NEEllosses 485 9 Other Deferred federalincome taxes (4,501) (3,478) (9,925) 11,158 655
$(19,720) S(82,392) $19,270 The Tax Reform Act of 1986 reduced the corporate tax rate from 46 percent to on overage rate of 40 percent in 1987 and 34 percent thereafter. New accounting rules issued by the Financial Accounting Standords Boord (FASB), which are expected to become effective in 1992, will require all deferred l
t tax bolonces to be restated of the 34 percent rate or the rote in effect of that time,if different Using the ~ i
.g 34 percent tax rate, tho'5ydam wouldhsioencess reserves for cielected income tomes of opproximately.
$56 million at C=d i 31,1989.'Approximately $39 milhon of this oncess relates to NEEl, it is expected that through the regulatory process, excess reserves for deferred income taxes will be poswd back to rotopoyers with no significant impact on not income Accordingly, any excess will be reclassified from o deferred tax liability occount to o customer related liability account. As con be' seen in the table below, such possSock commenced in 1987.
- In addition, the new FAS8 ruin will require utilities to establish new deferred tax reserves, including deferred taxes on the equity dmponent of AFDC and N EP's OCA omortization, which have not provi.
i,$ , WW;a&. ; ously been conddered subject to determd.tox
;-theesseblishment
- m ',.
a-a -d':occounting.
, fro m roesp o yers.; This'addisona
~ . - -- ,
_ ' l $ E TihjsW % d.erijpg A ' @
.,f up@
R13fd ec nj s, . g g - W ed ahn. oypAr e W @"tQMW49&WM@QT v4 . m,, i 9M mg&q ,f &h? kY'
^
{l
.y ;.
Q&. M%wesp$WWW N yq h,
+.3 '3 3 my n
,h :y: m; am y g; gymn Qwy
.. y;g gggyjga yn y . a.g}qp;m;m pg.
wwe
,wm;k wr #w gy , v.o n ,.: w n 1, m : a W & m w, ~ w
,,. xw v '
M
,.L + .
i%.} f ha' 's
- s. ',1
.Ql (? f
't :
'-'.p f .}.
p.,, p ' qq)
._ . i , m n , y Jt. J Q [ D, y% * * -[ ;Q' p g g Q6 sy ,g; +
y' )%,
- a. - + \
, , 3. 4 g- g ag u 3, l m
f p @%"%@gisessamWeMe[M"Tb U N M hh N N
. Compundtaxof natutoryrate . ,,
$ 68 000g $(28,30s)( $105,907 -
~
Increaws (reductions) in tax resulting from: , , , ,. , Allowance for equity funds used during construction. (4,176) (670) (10,115)- Rote wetlement write-down (Note C) 15,696 Rewrsol of deferred tomes recorded at a higher row (12,343). (14,481) ;5,1775 i OCA tax benefits (2,190) (5,618) (4,023) ,
, Book wous tax depreciation not normolized 1,606 2,638 3,140 Amortiz 5ofinnstmenttaxcredits (8,510) '7,(AD) (6,978)
All othe, & rences (2,528) (2,172) (1,170) 1 Totallederalincome toxes 5(40,002) $ 81,579
$_35,749 ;
Effectiw federalincome tax rate' = 19.3% . (48.1)% 30.8 %
- The effective federal income ton vom excluding NEEl was 27 9%, (32.2rE and 33.2% for the years 0>. M v W $P MpAA-4
- i, e 1989,1988 ond 1987;g# ;
, p.
lb , ~ fFedersh , Inwrnal Revenus Service (IRS) thee6gh 1985. See Nees D 8&rfurtherialermation regording the henh
! recently cospissed eneminaHen,'eFebe m . .,
1984 ond1988unpasses. ggp gg . #,
,, , ,u. .y , ; ,
t Note C 1988 Rete settlemoed # . , ,
, in the wcond quarter of 1988, NEP settled three wholesale row cases and two petitions filed by on !
! interwnor. The settlement, which was approod by the FERC in Sepkmber 1988: (1) resolwd allissues
.I associated with N E P's pre 1988 inessment in the Seabrook Nuclear Generating Station Unit I a (Seabrook 1); (2) allows N E P to recoer, through its fuel clouw, its payments to its offiliate, N E El, for costs
-l- resulting from NEEI's oil and gas emploration and deelopment activities undertaken from 1974 through
! 1983 (rote regulated program); and (3) settled allissues ossociated with NEP's cost of providing service
-under its prior rules and rosesinmiloct of ties tism of the"sellissent wilhout further refunds; The prudeAoM eertain NEEl eueS NguleAnd psegem'eaus ineuNed %r to Mor$ 1,19881 couldbesubjectioFERCreview.(8ssNose AA)? WP Whf .
The settlement limits NEP's recoery of its pre 1988 innstment in Seabrook 1 to $61 million per year for won years and the months.'ll Seabrook 11 coneeBed, tem settlement also requires NEP to reduce ( the onnvolleel of itiron by $12 million for o period of the years.' However, if the unit enters commer-j cial operation, N E P is allowed to collect on additional $ 16.8 million 'per year for fin years, subject to
,, reductions if the NRC's operating license for the unit contains any power output level restrictions. If, ofter g enwring commercial operation, the uvilt is subsequently concelled or obondoned within defined time j periods,N_EPwouldberequiseeltoiseasecellsiingondlor.selundeleadditionotrevenue, depending _ &y 3 3' .
open,heeiwatheenisesano deb massim.EAsasapp1.onsincurredstor el (See N ies 0 1 Q g 5 6 k g
$;k. Janvory,1D988jesubiesneMKT [ tmandnesegissemapet,NE , , ,
M Ea
, ~
P %;eAsamsaltd a 4 bW P 1 im.a nir$179 Jw recordedla"
' '~
digeq.%ise.d n &
'lGneseadatedRatkene;;e Q*QQ TUm N&rdedM " "
' g23&GissQ h J w pp * ; a p,eviousi, e,cobiis6ed ,ef,,d.,*,me wege,,emod soob,,ou i wouid be conceiiod 3
'g .
. spqqgtmy , g s . "
s _' y e_-ed iA ; .. - - [Mp.h.(( y ;w,xmy@?[4 p /D . . ,
,] ~U '
.+
,' p.
.g n c y m- y!a r. e y M._'N w
' MLA M 4%* %?j .
.. ... r .
.1
~
34 - - - -
,g
'i , [' , % w;-' beeW'nist, 3 it will be oble to mobe : ;; 4 *n assounting odlmeneses6seRestMisodesmatprovisions,
.. including h odditional reenum that win be toolized under h seulement and tom h inipoces'ef '
having'anumed concellation in h initial wrim-down.N impoci of duseM " 1, oesuming no power output leel restrictions in the operating license, would be to increose not income by oppromii motely $115 million ohr tox. , As a result of the wetlement, in h second quarter of 1988, NEP oiso stopped recording AFDC on its pre 1988 Senbrook I innstment and begon amortizing the portion of such innstment being recovered under the settlement oor won years and fin months. The pre 1988 Seabrook 1 innstment, ohr the settlement write-down,is shown on a separate line on h balance sheet net of amortization. Innstments in Ssobrook I since January 1,1988 or, included in the " Construction work in progrus"line on the balance sheet and amount to $48 million, including AFDC, as of December 31,1989. (See discussion in Now D 1 for twerws recorded for costs incurred since Jonvory 1,1988.)
. ... , w .m m . O,
,, ;;: sm%,#- w:
.'NoteD ; a; ,
aw. 34 ; pqwy &,~
,,;w 4 g j jn <
-g y ggg +!< , s, 1 g ,J
.1. Seoleroek 1 - ; NEP owns approximately 10 percent of the 1,150 MW ammheek 1 madeer,ania, located in Seabrook, 1 nuclear unit New Hampshire. 'W ~ "? * '
- h b Uncertainties regording the recovery through rows of NEP's investment in Seabrook 1 through December 31,1987, were resolad through the 1988 NEP rom settlement. (See Note C for additional information rogording h settlement.) Recovery through roses of NEP'sinveehnent in Soobrook l '
ohr Janvory 1,1988 is subject to FE RC approval, and the prudence'of such investment could be l challenged in future FERC rate proceedings. Nse expenditures how omounkd to $48 million through December 31,1989. Under current FERC policies, if Seabrook i enters commercial operation, NEP will be permitted to recover all post-December 31,1987 expenditures found by the FERC to have been pru-dently incurred. If the unit is concelled, under b FERC's policy, N EP will be allowed to collect only 50 percent of prudently incurred g ? -iS 31,1997 costs, but will be allowed to earn a return on b omount being recoered from customers. NEP hos otroody written off, os o port of h $ 179 million - roes asedement .wries.down,50 persentlof all Seabrook I asshMdugwaseessimseed to be incurred 7;;; , , during'1900 onal 1989,in oddition, sense 1998 NEPIses wrenen e880perenneef au Seebrook 1 APDC/ : l 1 Construction'of Seabrook I was completed in 1996, but b unit connet sneer'ceaunercial operation 4 ^ . until on uncondniomol operating license is issueel by b NRC. Chiefly due to financial _ obligations resuh. l ing from its 35.6'p$tesatownership shose of Seelwook, Public ServiseCampany'ehitew' Mampshire yQ (PSNH) declared bankiuptcy in Jonvory 1998;ondit now appears that Norths 6st Utilitim will acquire ; i PSNH, including its Seebrook interess. - . Q2,y,JC@g . ; Qi [ggp Low-power testing of Seabrook I was conducsodisi May'cadJune,-1999. During on odditional test 3 offer .wi sseling , won complete, operoser ener led teo asseralminutes'lasbussingdown j gg (the'plentinsosposmeios "
"4, i, 4 .
xg 1; S. $, N.M6;p:, m npasosNehsee,meni .
$N
@yN Q %,M Wi % 9- - ' , " - ' ~ - kNg4E$$MNhk ' ' ~ f W- ~ %n L e.
- w. : m m ugm,,,m umm' m m . .w py;d;$S,. p, w.4w. w99pg m@w@:ms y h
gm,p a i ' .v,;m; p,8 l%w- .' ym eg-m m) : w;cw, ,w , q;Q~. L,g l :, f Q [,,4 G; njQTp qy byQ .
. .- s w%wwwg;dy;Typy_Gj,@fl-.
.m.
mpgr - n.pmm,n.. .m
' 2p; p%s@@7 desenlaiokNesemberl'3,TB89 ' ' thei o ,,.
@ " --tonssuea 4 license for operation of the unit atluN power. Appeals of this and seeny~esherlicensing decisions are pending within the NRC and in A courts; On El:: 16,1999,k NRC commissionees issued on order indicating that they, rather then h NRC's appeal boord,'would consider oil opplications to sooy the effectivenen of b licensing boord's authorization of a full-power license. N comminioners held a .
l meeting on full-power license inves on January 18,1990. In Febroory 1990, the choirman of b NRC l I indicated that the three comminioners who will rule on h inconce of a full-power license are satisfied q
; with the safety of the plant and with the odoqm. < of emergency response plans. A vote by the NRC is j Scheduled for early March. Although there is sth o ouvrance that Seabrook I will achieve commercial ;
operation, hre is increased likelihood that it will operate. N .Monochusetts Attorney General hos j indicated that he will appeal any decision that is favorable to the project. ii i. ..e door whether such on l oppeal would cause further delay in commercial operation, in 1989, PSNH ogreed, with the opproval of the bonluuptcy court, to fund, for a period of time, b
. shore of ongoing propset 7in no longer being paid by the Mossochusetts Municipal Wholesolo
., y c. Electric C : 7 : ; PAMWEQ. Neo P8NH peyseases,might beexhausted prior to commercial opero-
[y[I M$[.y$ tien and it is unearteln vdessbar MQ aehlaghssageled paym
# $ , % ( wheeleroehererrengemenesweeldbemedaymentMMW9C%sheeeofproksetexpenses.'
tlOdandses For a discuulon relating to the recovery S the Syalam of its imosoments in all and gas properties, see
,2::: Note A-6. ,
3.Coolship Two N E ES subsidiories, NEEl and NEP, consu- " on agreement in December 1989 with ! 4r: " Keystone Shipping Co. (Keystone) pertaining to o joint vontare between NE El and Keystone. N E El was a 51 percent owner in the joint venture, which owned a cool-corrying ship that was chartered to N EP
-l through 2008. :
; As a result of the ogreement, the ship was sold to on offiliate of Keystone, the joint venture was termi- ;
!' noted and N E P entered into a new long-term charte'r of the ship to continue transportation of cool to two of N E P's generating stations. N.ogreement also resolved orbitrations that were pending concerning the oppropriateness of b chotter hire rate that had been paid by NEP during 1983 through 1989.
Implementation of the oi,-- r: ' reembeslin o nonrocurring goin in N'4ES 1989 earnings of opproxi-sseubed infport from ton benelho from b sole and motely $,16'per overego alwro. flu %'eerved litigallon reserves. [ C/V in part from the'rowersalof M, ,'Qe ay.7 w
- 4. Broyten Point N System's lorgoet generating unit, Broyton Point Unit 3, experienced a six month outage in 1985, eutege due to o major cool allo failuie.The incremontal cool of replacement power for that outage, which
~
amounted to S 16 million, wos included in N E P's fuel clause billings.
' N E P sought to recover demoges for the silo failure from Stone & Webster Engineering Corporation (S&W) and others in Monochusetts Superior Court. In November 1986, N E P executed on ogreement with the Rhode Island Attorney General whereby b Attorney General ogreed not to initiate any regu-lotory proceeriing concerning the sulegobatil N EP's dispute with S&W is resolved. In December 1989, y, h court gran ed a motion for summhy)sdganentinlovoi of S&W. Similar motions filed by other defen-4y dents are penjing. % q' N l:;2W%. p W > nM W v -
%b; J - MWh i ,' ,
q
. iS.Conserveelen cN utility subsoliories' can'serisselon g Gaeididng AfDC, ese~ estimated to be $290 million in f}: {,'* W' [' V1990,lauludedNthisassimetels$58ti$oniseletedtesho86ppelma;
~
Phase 2 project.Thaioiland gas subsidiary's e. oendbases, inclueling costs of capitol, forits empipropion ond development programs 4 ,
'yi in 1990 ore estimated to be $50 million; (See NoekA-6.) At December 31,1989, substantial commit-
"*nts had been mode relative to future planned ospenditurobf.
+
u$p-s,A$t : " e a $
-4x s wm w7 +' ,$
g , a<
.i a
3 w . 3;; 4g g4 -i uo< > s i
WW9qprwgtv <*W _ M M Mp K W "cW W n% N m e %
- W"?*"** W @
l y gm ,i %;f ~ 3 ,
' 4. Podsenham in connession wish a recendy complesed enemination of the System's 1984 ond 1985 tax returns, the IR$
. essessments l
hos taken the position that no obondonment of the Seabrook Unia 2 took place in either 1984 or 1985. . Accordingly, the IRS disollowed the abandonment loss and related tax deductions claimed in the 1984 ! l7 ond 1985 returns, which hos resulted in substantial proposed tax deficiencies. The System is appealing
. these disallowances. If the IRS' position is ultimately upheld, the System would be required to pay the :
tax deficiencies (opproximately S 19.4 million which includes related state deficiencies) plus interest. As of December 31,1989, interest on the propowd deficiencies would be opproximately $ 13.7 million. ! N E P hos provided opproximately $6.8 million of interest ocervals relating to this matter. This interest will be tax deductible. NE P has recorded the tax benefit of the Seabrook 2 deduction in a deferred tax reserve and hos been ; , possing on such benefit to customers. Should the tax benefit of the obondonment loss deduction ulti-L - motely realized be of a rote less than the 46 percent rate opplicable in 1984, N EP would wek to have its L Seabrook 2 rate reconry modified to reflect such lower benefit. !
- 7. Frenchise tax . In Nowmber 1987 and June 1989, NEP paid assessments of odditional Mossochusetts franchise taxes l
ossessments totaling opproximately $8 million (including interest) for the years 1982 through 1987. The ossessments relate to the method of calculating the portion of N E P's income that is toxoble in Mossochusetts. in April 1989, the Mossochusetts Department of Remnue (DOR) obated and refunded to the Company ! approximately $3 million, including $.5 million of interest, related to 1982. This abatement, however, has no bearing on the DOR's position on this disputed isive with respect to later years. N E P disagrees with the Commonwealth's position on this issue. Accordingly, thew amounts have not , been chargod to expense. N E P hos filed petitions with the Massachusetts Appellote Tax Board seeking refunds of the 1983 and 1984 assessments and a hearing was held before the Board on this matter on September 19,1989. N Board has not yet is:ved iti decision. N E P has opplied for obotement of the - l , 1985 through 1987 assessments. N exposure foi the unossesud years (1988 and 1989) is estimated to be opproximately $1 million.
- 8. Noturalses in connection with N EP's efforts to reduce sulfur dioxide emissions and repower generating units, NEP pipeline has signed conditional agreements that could lead to firm contracts fo+ natural gas pipeline capacity.
copocity Thm agreements, when oli the conditions are approved and occepted by N E P and the other porties, j- will require minimum fixed payments, beginning as early as 1991. Such minimum paymente have not l been firmly established of this time but are expected to be significont.
- 9. Ocean State in conjunction with a new wholly-owned subsidiary's 20 percent interest in partnerships constrccting the i ,
- i. Power equity Ocean State Power project, NEES has committed to make up to opproximately $45 million of eqaity c ntributions contributions os each of the two units in the project achiew: commercial operation.
11
- 10. Ho:ordous N E E S and its utility subsidiaries have been contacted by federal and state environmental agencies w este regording potential loint and severolliability for cleanup of sites at which they either have, or are elleged ic have, disposed of material designoted as hozordous waste.
Approximately 16 porties, including N E E S, had been notified by the Environmental Protection Agency (E PA) that they were potentially responsible for cleonup of the Pine Street Canal Superfund site in Burlington, Wrmont, which is contaminated by cooltar and other materials, On December 5,1988, l l- the U.S. Department of Justice filed suit in federal district court in Wrmont against N EES and two other I porties to recover all post and future response costs incurred by the E PA for removal of cochor wastes at f the Pine Street Canal site. On January 9,1990, the United States settled in principle with all the porties
, in the litigation, including N E ES. Under the terms of the settlement, the EPA will recost its post removal
!.( costs. N E E S recorded its shore of these costs in 1989. Howowr, the settlement does not cowr any of the E PA's ongoing and future response costs at the Pine Street Canal site. l
On March 24,1989, o complaint was filed agains N E E S and its subsidiary, Mossochusetts Electric, os well os other non offiliated entities, by private porties seeking domoges for the alleged disposal of hozordous waste from o cool gosification plant previously operated in Lynn, Mossochusetts. Lynn Gas f~w and Electric Company, o former subsidiary of N E E S, owned and operated this facility, in 1973, N E E S d sold the gas portion of this business. The electric portion of this business had been previously token over by Massachusetts Electric, which still owns porcels of land at this location. While N E E S and its utility subsidiories connot estimate the costs which may result from these matters, they do not believe at this time that such costs would be material to its financial position.
- 11. Price. The Price. Anderson Act provides nuclear liability indemnification that limits public liability from o single Anderson Act incident at a nuclear plant to $7.6 billion. The primary financial protection is provided by purchasing the maximum amount of available insurance of $200 million. Additionalprotection of $7.4 billion would be provided by on assessment of up to $66.2 million per incident levied on each of the nuclear unin in the United States, subject to o maximum assessment of $ 10 million per incident per nuclear unit in any year.
NEP's current interest in the Yankee componies, Millstone 3 and Seabrook I would subject N EP to e
$68.2 million moximum assessment which it would be liable to pay with respect to on incident at a nuclear plant. N EP's payment of this assessment would be limited to a maximum of $ 10.3 million per
- incident per year. .
NoteE l' Retirement plans The System's plans are noncontributory defined benefit plans covering substantially all employees. The plans provide pension benefits based on the employee's compensation during the five years before
.p retirement. The System's funding policy is to contribute each year the net periodic pension cost for that 1 year. H owever, the contribution for any year will not be less then the minimum required contribution under federollow or greater than the maximum tax deductible omount.
Total pension cost was S 10.5 million in 1989, $6.9 million in 1968 and $4.8 million in 1987. The l increase in pension cost in 1989 reflects plan improvements made during the year. The 1988 increase E includes additional service credits granted to employees. The increase in both 1989 and 1988 also reflects additional costs recognized on certain formal supplemental plans. Total pension cost for 1989,1988 and 1987 included the following components: Year ended December 31 (thousands of dollars) 1989 1988 1987 Service cost-benefits earned during the period $ 9,360 $ 8,381 S 7,808 Plus (less): Interest cost on projected benefit obligation 38,479 34,769 32,476~ Expected return on pian assets (37,408) (35,999) (34,576) Amortization 108 (202) (878)
- ! Totalpension cost $10,539 S 6,949 5 4,830 l Assumptions used to determine pension cost were: _
Discount rote 8.5% 8.5% 8.5% f Average rote of increase in future compensation levels 6.7% 6.7% 6.7% i Expected long term rate of return on ossets 9.0% 9.0% 9.0% 1-Actualreturn on plan assets $52,646 S39,328 $28,523 (/
m.,
. ,+ . . - -w, .
p
;n ; y ;, ;
N following table seti forth the plans' funded status: [
) ;
December 31,1989 December 31,1988 . ; q i
,!d':
Retirement Plans (In thousands) . 1 Regular Supplemental Regular Supplemental Plans Plons Plans Plans Benefits eorned Actuorialpresent value of occumulated benefitliability: : Vested $393,413 S26,235 S354,864 S14,082 ' Non vested 19,554 157 14,609 108 Total $412,967 $26,392 $369,473 S14,190 Reconciliation of funded status Actuariolpresent value of , projected benefitliability $478,268 $29,244 $442,960 $16,850 . Unrecognized prior service costs (9,389) (4,272) (556) :(222) ,! FAS 87 transitionliability not yet recognized (amortized) -
- (7,805) -
(8,456) . , Net gain (loss) not yet recognized (amortized) 1,394 1,815 (13,260) 2,160 ' i 470,273 18,982 429,144 10,332 , i Pension fund assets at fair value 487,716 - 447,318 - FAS 87 transition osset not yet r recognized (amortized) (18,918) - (20,360) -- 468,798 - 426,958 , Accrued pension payments ! recorded on books S 1,475 $18,982 S 2,186 S10,332 Plan ossets are composed primarily of guaranteed investment crotracts and corporate equity and debt ( securities. [ j Certain health core and life insurance benefits are provided to substantially all retired emp!oyees.
. Such benefits are not funded by the System. The cost of these benefits is chargod to expense when paid and was estimated to be $10.1 million in 1989, S8.4 millionin 1988 on 67.6 million in 1987, , ,o Not> F ;
Propertylosses included in the " Consolidated Bolonce Sheets" under "Unomortized property losses" are the unomortized portions of the costs of two concelled nuclear generating projects at a discounted value. In 1981, o non-offiliated company announced concellation of plans to build the Pilgrim 2 nuclear generating unit in Plymouth, Massachusetts. As a part owner, NEP had expended approximately
'A
*WQ b
- $50 million ($29 million oher ton) on the unit in 1982, NE P begon to amortira and recowr thew costs through roses oor on eight-year period.
N E P Is o joint owner of the concelled Seabrook 2 nuclear generating unit. At December 31,1987, j p[,
.Q' N E P had expended approximately $69 million ($39 million offer tox) on the unit. In March 1986, N EP .
. commenced recomry of this loss omr a five year period, subject to refund. In a January 1988 decision, -
-t the FE RC permitted N E P to recomr all of iti Seabrook 2 costs but modified the recovery period to - +
10 years. Accordingly,in December 1987, NEP rmrsed a portion of its Seabrook 2 omortization and established refund provisions, which reduced rmnues, in order to reflect the 10-year recovery . period. This adjustment had no impu,:t on net income, N E P has been allowed to recover through rates over time, costs incurred in connection with a number of property losses, including Seabrook 2 ond Pilgrim 2. Howear,it has not been allowed to include any of these omounts in rate base and has, therefore, not earned a return on the unomortized balonce during ! the recovery period. Under FASB occounting rules, N E P was required to record the unomortized bol-once of these property losses at a discounted value. This requirement resulted in a restatement of prior : years' income equal to the effect of such discounting.The ofter tox effect of the discounting write down - i on retained earnings for the Seabrook 2 and Pilgrim 2 property losses os of December 31,1987 was
$9.2 million.
Note G Short term borr*o wing l N E E S and its consolidated subsidiaries have lines of credit with banks totaling S220 million, none of . I which was being used at December 31,1989. There ore no compensating balance arrangements. Fees ; are pc id in lieu of compensating botonces on most lines of credit. , Note H , Shore capitol of New England Electric System t N E ES lisued additional comman shores, S I por value, as follows:
': 4
. Year ended December 31 1989 1988 1987 :
Pold-in Poid-in Poid in ~ [ (thousands of dollars) Por - capitol Nr capital Por capital 1 Public common shore -, issuance $4,000 $100,580 - Diddend reinvestment
,- and common shore
{ purchase plan 806 19,061 S 943 S20,395 S1,165 S29,816 Employee shore plans _ 576 13,492 631 13,838 464 12,446 - Premium on reocquired preferred stock (17) .f
$5,382 $133,133 $ 1,574 $34,233 S1,629 $42,245 t
?
4 q ' g a..w
, ,7 , W :x T. debt
( [ - The indentures relating to mortgage bonds of N E P and NE ES' retail subsidiaries require sinking fund instollments totaling $7,845,000 in 1990, $8,170,000 in 1991, $7,970,000 in 1992, S6,650,000 in ; 1993 s,nd $6,400,000 in 1994. The issuers of the mortgage bonds may elect to satisfy these install. < ments in cash, in bonds, or by evidencing to the trustees additional property in amounts as provided therein. Substantially all the properties of N E P and N E E S' retail subsidiaries are subject to the lien of mortgage indentures under which first mortgage bonds and general and refunding mortgoge bonds have been issued. The aggregate cash payments to retire moturing mortgage bonds and for cash sinking fund require-ments on long term notes of NE P and NEES' retail subsidiories for the years ended December 31,1990 : through 1994 ore os iollows: $37,890,000 in 1991, S93,400,000 in 1992, $61,400,000 in 1993 and
$6,000,000 in 1994. There are no requirements for 1990. Holders of pollution control revenue bonds l
secured by N E P's Series 0, P and Q general and refunding mortgage bonds con require N E P to repur. chose the bonds periodically. In such event, N E P would expect to remarket such bonds at prevailing interest rates. l The annuolinterest requirement on the ouhtonding long term debt of NEP and the retail subsidiaries ' of December 31,1989 is $97,853,000. In May 1989, N E El refinanced its existing $500 million revolving credit and term loon agreements. The new revolving credit agreement provides for borrowings of up to $400 million in two portions. The - first portion is acured by a pledge of N E EI's rights with respect to N E P under the l' ricing Policy covering , the rate regulated progrom while the other portion, which opplies to the non rote regulated program, Is supported by a CapitolMaintenance Agreement between NEES and N eel. (See Note A-6.) The j 3
$319 million outstonding of December 31,1989 was all wcured under the first portion with interest rates ranging from 8.6 percent to 9.4 percent. N E El is also required to maintain a minimum net worth of
$40 million, including subordinated notes payable to N E E S. The maximum borrowing allowed under ,
the credit agreement decreases by $25 million each year in 1991,1992 and 1993, in 1994, the maxi-mum borrowing decreases by $50 million with final maturity on December 31,1998, in February 1989, o $300 million revolving credit agreement was arranged to provide financing for the H ydro Transmission companies. The credit agreement will decrease in equal semiannual amount: .l beginning January 1,1994 with final moturity on June 30,1998. As security for borrowings under the
- credit agreement, thew companies have assigned to the banks their rights under certain transmission support agreements and equity funding agreements and have granted the banks a mortgage on sub- l~
stantially all of their oswt The $ 165 million outstanding at December 31,1989 bore interest rates ranging from 8.4 percent to 9.1 percent.
- t Note J Redeemoble preferred stock i During 1987, all of NEP's 13.48% Series of cumulatin preferred stock was redeemed. The redemption resulted in a charge to retained earnings of $2,445,000.
, -,,m.. . . _ _ , . . -
g * ' pv& _m .. & . m .
-n y .ny .~ .. ~. . 3 ..pg - .mm.4
.e t
(( N x:q c- of New England Electric System is c: ; :a t for ok integrity of the consolidated yA' 1 financial stamments included in this annvol report. N financial somments were propored in occord-once with generolly accepted accounting principles using monogement's informed best estimates and j F
'( pJ '
ludgments where appropriate to lairly present the financial condition of the Syswm and its ruults of operations. N information included elsewhere in this report is consisant with the financial statements. I J N System maintains on accounting system and system of internal controls which is designed to pro-i vide reasonable assurance os to the reliobility of tb financial records, the protection of assets, and the - preention of any motorial misstatement of the financial staternents. N System's accounting controls
- l. O have been dnigned to provide reasonoble ossurance that errors or irregularities which could be mote.
[ rial to the financial stotoments are prevented o/ detected by employees within a timely period os they perform their assigned functions. N System's internal ouditing staff independently assesses the effoc. .I H- tiveness of internal controls and recommends impronments when oppropriate. Coopers & Lybrand, the System's independent accountants,is engaged to audit and express their j li - opinion on our financiol statements. Nir oudit includM o review of internal controls to the extent required by generally accepted auditing standords. L N Board of Directors corries out its rnponsibility for the financial statements and the related finon. l ciol dato theough its Audit Committee, which is composed solely of outside directors. N Audit Commit. .l' tee meets periodically with monogement, the internal ouditor and the independent accountants to ensure that each is carrying out its responsibilities and to discuss ouditing, internal occounting control and financial reporting matters. Both the internal ouditor and the independent accountants have free ! occess to the Audit Committee, without management present, to discuss the results of their oudit work. y m-John W. Rowe Alfred D. Houston President and Senior Vice President. Finance J' Chief Executive Officer and Chief FinancialOfficer , h To the Board of Directors and Shoreholders of New England Electric System-E We have audited the accompanying consolidated bolonce sheets and consolidated statements of copi. L . tolization of New England Electric System and subsidiaries (the Company) as of December 31,1989 and 1988 and the related consolidated statements ofincome (loss), retaine 3 earnings and cash flows f' for each of the three years in the period ended December 31,1989. Nsr financial statements are the responsibility of the Company's management. Our responsibility is to express on opinion on these finon. ciol statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Nse standards / require that we plan and perform the oudit to obtain reasonoble assurance obout whether the financial statements are free of motorial misstatement. An audit includes examining, on a test basis, evidence i supporting the amounts and disclosures in the finoncial statements. An audit also includes assessing the occounting principles used and significant estimates mode by monogement, os well as evoluoting the
' 7 l
omroll financial statement prnentation. We believe that our audits provide o reusonable basis for our opinion. j in our opinion, the financial statements referred to obow present fairly, in all material respects, the
- 6 consolidated financial position of the Company as of December 31,1989 and 1988, and the con. 1 solidated rnuits of its operations and its cash flows for each of the three years in the period ended December 31,1989, in conformity with generally accepted accounting principles, l l --
i3 l
; Boston, Massachusetts
_, v February 28,1990
}
L .n- .n n+ p. .g myymqmpwg.moyym mnvgymymwmngy ' o .. .c >
,gh [h@ V [
J (uneudiled) )
.O_
The consolidated group operates in two principal domestic industry segments. (thousands of dollars) Electric Oiland gas Consolidated , Yeerended Operating reanue $ 1,583,641 S 59,558 $ 1,643,199 r
> December 31,1989 Depreciation and amortization 163,182 93,699 256,881 >
Other operating expenas 1,101,697 7,755 1,109,452 Federalincome taxes 58,049 (23,321) 34,728 Operating income (loss) 260,713 (18,575) 242,138 , intereit expense 104,229 1,181 105,410 income from equityinvestments 8,444 8,444 Other income (expense)-net (6,523) 1 (6,522) - Netincome (loss) $ 158,405 $ (19,755) $ 138,650 j Totalossets $3,549,363 $566,996 S4,116,359' Investments at equity S 64,478 $ 64,478 Capitolexpenditures S 531,907 $ 54,092 S 585,999
.Yeerended Operating rewnue S1,461,124 $ 58,553 $ 1,519,677 December 31,1988 Depreciation and amortization 135,247 93,813 229,060 t
- l. Other operating expenws 1,031,950 - 6,138 1,038,088 l
' Federalincome taxes 57,742 (26,797) 30,945
[ Operatingincome(loss) 236,185 (14,601) 221,584 Interest expenu 93,914 511 94,425 g Income from equityinnstments 7,841 7,841
't i Other income (expense)-net (188,834) 14 (188,820)
V Netincome(loss) $ (38,722) $ (15,098) $ (53,820) . Totalasat: $3,111,363 $606,609 ' $3,717,972 Investments at equity S 70,733 $ 70,733 Capitalexpenditures S 192,359 $ 59,849 S 252,208 Yar ended Operating revenue $1,401,726 $ 46,467 $ 1,448,193 December 31,1987 Depreciation and amortization 102,028 76,890 178,918 ,
. Other operating expenses ~ 953,869 7,101 960,970 -l Federalincome taxes 101,113 (20,886) 80,227 Operatingincome (loss) 244,716 (16,638) 228,078 Interest expense 80,321 1,140 81,461 income from equityinvestments 8,723 8,723 ,
Ofher income-net 15,860 6 15,866 Netincome (loss) S 188,978 $ (17,772) S 171,206' Totalassets $3,329,577 S640,485 $3,970,062 investments at equity S 72,078 $ 72,078 Capito! axpenditures - S 165,217 $ 54,734 $ 219,951 In 1985, the S EC granted opproval to divide NEEl's oil and gas explorntion and development activities into two programs: a rote regulated progrom and a non rate regulated program. The not loss for 1989 c,f $ 19.8 million m includes (o) o $3.6 million loss from operations on the non rote regulated program and (b) o $ 16.2 million
? loss from the rate regulated program which will be possed on to customers in 1990. The not loss for 1988 el
$ 15.1 million includes (a) o $0.1 million gain from operations on the non rote regulated program and (b) o
$ 15.2 million losi from the rote regulated program which was passed on to customers in 1989. The net loss for 1987 of $ 17.8 million includes (o) o $0.8 million loss from operations on the non rote regulated program and (b) o $ 17.0 million loss from the rate regulated program, which was possed on to customers in 1988. See Note A 6 for a more complete discussion of oil and gas operations.
y gqpsmyprmd s,
@wp p myemmtawpc mwecw n.e e s e <
.f +
j ,
, : ,p ,
(unoudited) The estimates of NEEl's prood reserves and proved desloped reserves of oil and gos, alllocated 1 (Q": / - within the United States, and changes to the estimated proved reserws for 1987,1988 and 1989 are as follows: l
. 1 Crude oiland condensate Naturalgas i (thovsonds of Bbl) (thousands of MCF)
Prowd reserws as of Decemoer 31,1986 3,137 158,568 Rwisions of prwious estim,tes 2,087 17,380 Extensions, discomries and other additions 119 13,808 i Production (461) (21,839) Prowd reserws os of December 31,1987 4,882 167,917 j Rwisions of prwious estimates 130 (3,177) L Extensions, discoeries and other odditions 372 17,271 Production - (420) (27,775) 1[ Prood reserws os of December 31,1988 4,964 154,236' l Rwistons of previous estimates (2,634) 2,657 Extensions, disco = ries and other additions 219 11,250 l Production (436) (23,620) i Prcwed reserves os of December 31,1989 2,113 144,523 i i 7-- Awroge selling price Prowd dwetoped reseras ' I
.!, year ended December 31, at December 31, q Crude oiland Crude oiland condensate Naturolgos condensate Naturolgos ,
(per Bbi) (per MCF) (thousands of Bbl) - (thousands of MCF) ; I 1 1986 S12.95 $ 1.68 2,121 141,257 1
' 1987 $16.45 $ 1.81 1,752 149,385 l 1988 $15.44 $ 1.89 1,787 143,335
.y 1989 $ 16.85 $1.84 2,015 130,792 '
f i-4 Proved reserws are estimated quantities of crude oil, condensate and natural gas which geological and engl. I neering dato demonstrate with reasonable certainty to be recowroble in future years from known oil and gas reservoirs under existing economic and operating conditions. Prowd developed reserves are those prowd I i reserves reasonobly expected to be recovered through existing wells with existing equipment and operating ' 3 methods. Included in the proved reserws and proved denlooed rewrves at December 31,1989,1988 and I 1987 are opproximately 147,000 Bbts,153,000 Bbli and 137,000 Bbls, respectively, of crude oil and conden-sote and 10,443,000 MCF,13,068,000 MCF and 13,228,000 MCF, respectinly, of natural gas which relate to the non rate regulated program. ; g The following independent petroleum engineering consultants prepared estimates of NEEl's proved and 1 prowd dowloped rewrws, and such estimates are included in reliance upon such consultants os experts: Paul M. Bennett and Associates of Dallos, Texas prepared the estimates for the majority of the 1989 rewrves; Bennett & Westerman, Inc. of Dollos, Texas prepared the estimates for 1988 and 1987, and ( K & A Energy Consultants, Inc. of Houston, Texas prepared the estimates for 1986. The reserves are estimates only and should not be construed as exact quantities. Future conditions may offect the recovery of estimated rewrves. . 1. 1
O. m y s m s=,ry. e-
' Asof December 31,1999 As of December 31,1989 g C. Develos Bell. Joshwo A.McCivre Joon T. tok Moseechveetts Electrice--;a ,
i Former Chairman and Former President Chairman 25 Reworch Drive I
\ , Chief Executin Officer American Custom Kitchens, Inc. Westborough, Mossochuwet:01582 !
State Mutual Life Assurance Co. Providence, Rhode Island John W. Rowe Edward E.Mulliaan, President cf Americo Prnident and Audit Committee Worcester, Mossochusetti Chief ExecutiveOfficer The Norrogensett Electric Company Cutw Smia Cmim 280 Melrm Strwt Executiw Committee - j John F. Keelow Providence, Rhode Island 02901 g,gg g,g l
""'I " " '"' Robert L.McCabe, President l Jeon T. tok Orr & Reno, P.A., Attorney:
nd Chief Operating Off.icer Chairman Concord, New Hampshire
'*" ' $' "" **P'"Y '
New England Electric System Audit Committu Frederic E. Greenmon 33 West Lebonon Road i Wutborough, Monochusetts Senior Vice President, Lebanon, New Hampshire 03766 l Executive Committee Felix A. Mironde, Jr. General Counal and Russell A. Holden, Prnident J Privote inastor Secretary J:mn H. Hunter New York, New York Nm England Power Company Fermer Prnident Alfred D. Hevoton 25 Rmorch Drin ., Compensation Committee
' Jrmes Hunter Machine Co., Inc. Seni rVice President. Westborough, Mossochuutts 01582 North Adams, Monochusetts Ct Sern Cminee Finance and Chief
-l b"*"'I*
. Compensation Committee John W. Rowe I"b"N""8Y I "*P"*'* l Prnident and se P. So n rug , u chmus01582 Poul L.Joskow Chief Executin Officer Seni r Vice President Professor of Economics New England Electric System ,
" "9 * " '" *" '" ""'*'" "
Mossochuwets Institute of Westborough, Monochuwets l Corporation
5 <*~ c -i"~ ~ 5'r~'
'4'"n"b,'idge, Mo. chuw,,s *9 *'. i- i Vice President Concord, New Hampshire 03301 l t., Audit Committee George M. 5ege .
Customer Service Committee Prnident Glenn R. Schleede New England Hydre-Teonomission Bonanzo Bus Lines,Inc. Vice Prnident Corporation
. John F. Koslew Providence, Rhode Island 4 Park Street Executive Vice President ; ;, Robert C. Smith Concord, New Hampshire 03301 end Chief Operating Officer Vice President New England Electric System New England Hydre Tronomiulen
! Wntborough, Massachusetts John H. Dickson Electric Company, Inc. Ch n Wexler, R nolds, Harrison Customer Service Committee ,'bor h isochusetts 01582 l John M. Kucherski Management consultants Narrogensett Energy Resevrees . Choirman and Washington, D. C. i
' Chief ExecutiveOfficer Compensation Committee 80 M i ou Street e e $ey,5tonochusetts Jomu Q. Wilson Audit Committee Professor of Monogement NEES Energy, Inc.
The University of California 82 Florence Street . Edward H. Lodd at Los Angeln Marlborough, Massachusetts 01752 - Chairman g;, ;, George P. Sokollaris, President Standish, Ayer & Wooc',Inc.
. Inwitment counnlors New England Pown Service Boston, Massachuwets Company 25 Rnearch Drin Executiw Commlnw Westborough, Mossochuwets 01582 -
t
, ,r.., ---- r , . - . . , - . . , - - - . ..-y--..-.....,. . . , ~ , . - - , . - . .
O f assine ' N o'k A3 .
, k . . ;
e<* W.., [. gM,~YY. NVbNh'$ ' y4
'$dA* First quarter
$24% W FM W$38%
Q
%y M S.81 MA s.
9 p'@; YfM second quarter Third quarter $26%E @yp ig
; Fourth quarter $27%%$,.
$29%f MS3d%$39%"%.y4 8.8%k%'4 . .
. _% ,. _8Al . $, . d. . ,41.... ._
. . . . c The tir MW w ;
/ wr of shareholders of December 31,1999was68,647WMMG. w + ~ W4,upt w$ '
First Seemed . Third ? w Pourthe (thovsonds of dollars) quorter equarter* ' quetter quarter" 1989 #m . t 0 ' Operating revenue - s . $427,887Qk ,$.473 I $414,407,% $429/188@ Operatingincome Notincome ; _ j;gjy gp g8583,084%g 148,968g C
;"8d !?q),@N8J60,6dRf I
.: qA$GIR 8RF7 y%$
gg Nellneomopercuss,ageabdg dy ' : 3;% . 'h QEf M i % $ g& Q ifee~'~"f~2 jum jp) i l %Md $@dm $e mMopecemolemee4 e o ==ne===%T'W e yn WW wp Agss;
+!
3p nd g d J h P ' Net
,m'.$vl w. '
seo m g '
.h ' * $ee Note C for e disemesieneithe kasemillessueg AW- ~
M: 'T l7
) "See Noes D-3 yMygg:g@pgg . . [ '* {
^
I;.bri.oboutshareholderseemede, FSN J .. h dividendpayments;seimuselessW @M. W4 optionalconhpayments'mey$ be
$sg$MNp;,
g lV " M' contacting: S;- o n3 62vrk. h$gp?t m@ MmapummemmaakfM810770 ag .m mw ,; m a p ~ v Shoreholders may oleodive(rpmemma fT sharehower serviess iepresenemie.h )QgMg . 81PRb
. ,i.es u ed,o,he c o,e m+ w;ww %.e.c p@@p;pp . im WgN@q%, w
.eengenug . . .
n. w.n.e w; .,. Je .ug
- -y at_ ; . . -
/**t,*p.;g 32 ., ,,, . a un 7,3gy
+
i g.
... ~ , + ,er,*%t ' M:;.ge.-'AL A%w f , , nG*v - 7 L ' ' Ab##g
[ c ~Np , &g ((- _'f,: ' 'y; n a-- Q, .. .g..gpe; , 3( g.M . . r .'t
.; y :.y ~j < - ,y y)pv' .g a,,,,,,, ;.z ; A m . -
should be di . A - K"I ; . Q.M f. m y ,n.. o, mwg m c yn.,gM .
' . k . . y M...I'!T; . .. . , jg,r'243' ,.)'I k-
! 2^ ' - '
.3,. y, ggy , .s 0 y
% $ N T.,
4, . J % D'
-(.,..
., 7 .
Besson Stock Emsbangg N:D
.A V ' l ', F( ,....v. .
2 4 @ l. .F .' . .f I _
..,,.4
%~
M
+. 'E J
- s. m NS$< W M"? wee i f *N'M"- 4#
<U F..:".-
" *T "y g j y "J T . W5E.
* *}:n.gw?.. 1 ; . . . ;;3J Y b.i T- f.9,
< , wh ;
= '
- A.'
ij -
. The .- ? "' % ;
~
s
~ " ~ ^ ~ " 'i ' N; .
j k b bfhh d M .w ;" Y- ~kh'n ..
~ .
~'
H xb l [m .M.tagh.t2k b-.'S~,b r[-' ' L ?M .PhuA h 9 / ' j 'd" 4 ~ [ . I -' } -. *- \ 3
'~ '
.N F [ SM;;[Y kMWM N.[ ' ~a - -
9 - .
~
$2% r,i. g.;,
y&.Q<.L XD ; &p I i~ W - J a .; : ;.: : L < . :: .. &.4
- 4' ' ~ ~ U ^^
~ -
. ; &. ~'
Jg mfg ' ;gsg%ytw% ~ ; . . ~_- =; - ~ ;; =
<y ,, ,,'y:
~. .-.xm; M vih. ,N '.'
; ;' .' s' 'Lj: '.. ' pf a,.;: >.v. . <:
se ;s.~ f ee4ptsd wqy8 ~ r & 43, m/ j ' 1
~ ~ -
Q - (g#P. "[ l %
- d. Q:,.Q .
, wimete % yddmerAed -
N I ; .. '. ' g ..
- x - *
.Y"
&.Y. $.&h* m - nMnnFdm 4't : :*Af- 'Wr "
W g.. - p + . :s .] o m : m>t D,w.,wr "*? s t~ v. m
',;' - i,+q., , p: .i7 9 'h . , f j W ? Y L:: n ; 5 ~;7' ?. ' JKL l ll. . .'. u .'..'.a',,', [ ~J.-.n.
.. -t,
" ; fie .' ev, -nonl ie. ?.~ n.-
N : " ( '7 o* o . ' e ,
. E ~ .' '. ov e - ' 1r -
W_,t .%-,.. 4$ , p , ._ ,o -
~ p ~ - -
O ,
/fJ- y Yy;i
, 1
,.Nf.)C" .\.! ' *
.i i
. 4
*?-l_
l y a
, i. .
4'.4 O 4 g i e *
^ '
h%' b Db' . k b
} % St%96 N,DHv&. "
i N N'kMAM Wif i MO:5%f 44 T$lfe1I*b . ' . .
. .. =
N' Y^Y' . '. ' o
,, g *w.
, , -4: s.
- g
- a 7
g
. ,j a =
1 3 5
*' * ; 4 i
g I
+ -
r 4 * , J
.u I i '
-f.
_g . g,- g
< _i - -
s
. o g w ..
4 , - s a
; i ., .
.. +
4 %. b e 4 h s
$ . 5
, 4 -
.a. +
g i
, ,* 9 %
,1) .
4' '4
+, M
,_,. < y- '
, .' \
t . !
- 3
, j y s -
, . . ,- e
- Y f. ' I
,. p
. e
.-4 , - ,
3 ,- . , ., 4 4
- u. g
~
?
? s
\'
N
. t 4
+ ,:
T S % 4 9
. m"3 ,
.w . 't d
.-8-O h' -
4 .. 4 . RhA ' .. S 3
+ .
s e 'R r
-+
; . Ai
.[)
' 4 i '
e g ,3
- { '.. h j
+
6 '* ' s W-N g' t
., , 'd..
9 9 6 .- .
.+" t s- _
O
. . r. . . a.
is-v
'a f g q 3 g , 'r l*
g - , - Y b
. . . ,, . . . .. . ... , ...s- -
"d _: l' _
- - - , , - - - - , - - - - - - - - - - - - - - - , - - - - - - - - - - ~ - - - - - - - - - - - - - , - ,
! O Thf . mi I! $ 1 7 il
<v s .. .g
. ,j 1 x&~ , - g py,
. . ,W
- a.,s:na%v. :v ~m -
?_f&._y ,
s y -c 1 h:y +-; . A
- his 4,i t
& ' ,g-$pf?;a% pv ny ' ; a Mff ;4, i , cdyr ,. O* . c ;
.p j n g ,d[{
4 t 4py +
<ygp[kypn%
Rr / 3 o gM U ydME! tN D 's- #7 1w Ny 7g ", NW , ' , Ns p$$"ggg??d;p? p
- th- kN 4 y 4e A: m:
4.,. .. Api mm &
,$"s,fd;hi){Q;*.*$4 f
fi o . g4 pf.e9e
, - xq$O en$gg t l
& tl MS :~yp~BWje gjes. ts:.~
N y.;n.' N - ~ q ; . , , .
.A
* [bg Sik kh
,e--
L hf.=y a igg 3(If
- fp' [
n f m $0 i ' 6' sC 11 - p' y g; 4 em & ym k y h jffh*[ g '
.'%s
(. vaW %_ W. g m,pebh4 - %n g... u y m p yg u s,.u w '. # L. a ts.. ...s t
'*hp{Yh?U
;+y+ $m,,
'^
b . N hli'j h if kibE5 f $ . L?? . s
^
.MS!ppsapw 1 e t
- 1 a g g-t_]r[r w g: e n?t:k..py; -
- g
\ : l' < w M : pu ,w a gm 7 o-ms ,.
- t .
lf ^ , ,f,- i lt ^ 1}}