ML20072E562
| ML20072E562 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 12/31/1993 |
| From: | Poist W, Siegfried R COMMONWEALTH ENERGY SYSTEM |
| To: | |
| Shared Package | |
| ML20072E546 | List: |
| References | |
| NUDOCS 9408220295 | |
| Download: ML20072E562 (28) | |
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SYmM PROFH.E ommomvealth Energy System is an exempt public utility holding company with investments in four Massachusetts u - -- m.--
operating public utihty -
companies kicated in central m y- / 1 '"" % ,. w .*
and eastern Massachusetts.
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Sy stem electne operations are Y ,, 4#
insoh ed in the production and '" i sale of electricity in 41 com- , , ,
munities includmg New fledford, sC g l Ply mouth. Cambridge and the
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U geographic area comprising Cape m'- - w '
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Cod. Gas operations serve 49 .
w communities including New Iledford, % {,,, """ [
Cambridge, Ply mouth and Worcester. '
In addition to the utility companies, the system includes a %
c Care CM Buy %
steam distnbution company, fhe real estate trusts and a company engaged in the operation of LNG facilities. The w~% ... , , , , %
retail electric subsidiaries recche a portion of their capacity - ==a= gg '
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and energy requirements from the system's ounership
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interests in four operating nuclear electric generating ""*"""
f acihties and one oil fired unit. S The System is a business trust organized in 1926 under
% 'a= a * *~a Nantucket Sound the law s of Massachusetts. Subsidiaries of the System have common executive and financial management and Q cas smer Area g . %,, q ,, ,
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- processing. accounting, legal and other senices f rom a sen ice company subsidiary. O c > e c'<<<"< smice ere- g sys t c m fa c t s COM/ Energy Research Park Gas Operations-1,0o7 square miles Electric covering 49 communities (including Cambridge Electric Light Company Realty (organized to develop
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a research building in Cambridge) 12 served with electricity) with a Canal Electric Company ~
Darvel Realty Trust (joint-owner of population of 1,128,000 Commonwealth Electric Company the Riverfront Office Park complex)
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Electric Plant in addition, the system has Capability-1,554 MW, including Commonwealth Gas Company sales under long-term contracts with a 149 interest in a jointly-owned ilopkinton LNG Corp. other utilities of 426.8 MW resulting oil-fired generating unit and also Other Companr.es owns from 2m to 4m interests in a net capability of 1,127.2 MW COM / Energy Services Company in five nuclear power plants (located Peak demand-909 MW on COM / Energy Steam Company in Massachusetts, New Ilampshire, July 9,1993 COM/ Energy Acushnet Realty Connecticut, Vermont and Maine). Gas Plant (leases land to Ilopkinton Distribution lines-2,739 miles LNG Corp.) Peak day send-out-314,114 COM / Energy Cambridge Realty MMiiTU on December 27,1993 (organized to hold various Rrritort/ of Lltilitif -
properties) Operating Companies Employees and Shareholders COM / Energy Freetown Realty Electric operations-1,112 square at Year-End (organized to develop a parcel - miles covering 41 communities Regular Employees-2,217 with a population of 645,000 Shareholders-15,877 of land)
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FIN A N('l AI <m / I'l R \ T I N (
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a 1993 1992 c; Earnings and Dividends Paid Common share Data Per Common Sharc Earnings 54.37 53.83 14.1 earnings dividenas I pn share O paid Dividend Rateat End of Year 52.92 $2.92 -
54 37 Closing Price Range $50%-540% $43-534% g /
, Average Shares Outstanding 10,215,614 10,081,868 1.3 .b 53.83 C.
i Operating Statistics 4 -
4' 52.92 r s2 92 s2.92
, Customers Served 3 .
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Electric 352,000 348,000 1.1
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^ w y 51.82 A Gas 232,000 227,000 2.2 2 -
4 4 y 4+ g ;d Regular Employees 2,217 2,414 (8.2) gj g g p g W y Unit Sales 43 7, s, q, M Wi l niegan atthouro O A W Residential 1,744,181 1,726,139 1.0 iw3 iw2 iwi Commercial 2,008,213 1,931,22E 2.9 industrial 411,527 414,7 / (0.8)
Other 392,103 377,728 3.8 Total Retail 4,556,024 4,469,872 1.9 Wholesale 3,665,089 3,898.924 (6.0) Afarket Price vs. Book t'atue Total 8,221,113 8,368,796 (1.8) closm O mark 5* price O book value BHTU iInihons or untish Thermal Unito 546.25 Residential 22,252 22,392 (0.6) sw. (~ 542.625 g 9 9.25 Commercial 10,931 10.913 0.2 7 s f'~
Industrial 4,205 4,717 ( 10.9) 40 -
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))- gi og -[~ um Other 1,831 1,788 2.4 . A __ ly --
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Total Firm 39,219 39,810 (1.5) h 2,464 Interruptible 1,896 (23.1 ) 20- Y M- N h N Total 41,115 42,274 (2.7) 't M M S &
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Total Return On investment Letter to Shareholders. .2 dividend appreoation/
O neia- O accreaation Momentum for Future Growth . . .6 207 -
Financial lnformation . .13 g .
Trustees and Officers . .24 a.5% s.6% R8%
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Shareholder Information . . Inside back cover
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, Please note that detailed financial statements and other information, prepared in accordance 0
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teith the rules and regulations of the Securities and Exchange Commission, are included in E2hibit A ef the 1994 Proxy Statement. Based on pnor year closmg pnce 1
4 Net income for 1993 was up 14.9 percent to 545.8 million ,
on consolidated revenues of $941 million.
i lh om SJ l ARH R H.)ERS
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As the Massachusetts economy begins to grow ag in, the resultant demand for electricity increased was a year of continued improvement with retail electric sales in 1993 improving by approxi.
for Commonwealth Energy System, both financially l
mately 2 percent. Firm sales of natural gas increased l and operationally.
by 3 percent during the heating season, when peak-L'arnings per common share increased 14.7 percent; period rates are in effect, and helped to produce record earnings for COM/ Gas in 1993. Additionally, the Return on equity improved to 13.7 percent; benefit of converting 1,100 households to natural gas Conunon shares traded at a new record high;and ' will be fully reah. zed m. 1994.
Cash dividends were paid for the 47th consecutive year.
COMMON SHARES OUTPERFORM S&P 500 iIowever, we realize that we cannot rest on our The market price of COM/ Energy's shares reached a new all-time trading high of $50.50 on August 18. During the accomplishments, but must move toward a well-defmed f vision-a vision focused on our long-term view of the year, we paid shareholders dividends totaling $2.92 per share, a yield of approximately 7 percent. Total return, energy world as it will hiok in the year 2000 and beyond.
assuming dividends were reinvested, was 15.6 percent Responding to the imperative of change, we are rapidly adapting to an increasingly competitive and complex for the year while the return for the Standard & Poor's 500 index of stocks was 10.1 percent. During the past -
marketplace. We have built a powerful momentum that will serve us wellin this new environment. five years, COM/ Energy's average annual total return l
l Our initiatives have been bold, far-reaching and, was 17.7 percent, more than doubling an initialinvest-ment of $1,000 to $2,180.
in some cases, painful. But they are necessary if
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COM/ Energy is going to endure as a profitable, top- e quality service provider. These actions have included: REGULATORY DEVELOPMENTS j
- 1) Aggressive cost cutting and improvements in produc- New electric rates went into effect June 1,1993 for tivity; 2) Working more closely with regulators to foster Cambridge Electric following authorization by the )i a better understanding of, and appreciation for, common Massachusetts Department of Public Utilities (DPU)of an i concerns; 3) Environmental and social initiatives that increase in retail revenues of $7.2 million or 6.4 percent.
will improve the quality of life in the communities we Together, Cambridge Electric and Commonwealth -f serve;and 4)Investmentsin technology, coupled with Electric filed to recover revenues lost by the companies' important training and development, to build the leader- reduction in sales which have resulted from successful w$
ship we need to provide superior customer service. energy conservation programs. The companies filed a
' forward-looking DPU plan that would encourage the EARNINGS and SALES eff cient use of electricity but not adversely affect utili k Earnings per common share for 1993 rose 14.1 percent, company earnings-a commendable objective. Tife a
increasing to 54.37, compared to $3.83 for the prior year. revenues lost by a utihty are calculated according to the
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actual number of kilowatthours saved. In June, regulators annually for heating, cooling and biopharmaceutical approved recovery, over a 12-month period, of $3.6 manufacturing. Genzyme's decision to use steam for air million in lost base revenues for the two companies. conditioning and process cooling avoids the need for v Initiatives to deregulate the natural gas industry refrigerants containing chlorofluorocarbons (CFCs), mak- l under Federal Energy Regulatory Commission Order ing steam both an environmental and ecot}omic winner.
636 has e produced significant modifications to the Negotiations with Biogen, another Cambridge bio-structure of many pipeline systems and have led to a technology firm, continue with the potential to increase major restructuring of the entire industry, from the steam sales to the company for a six-story facility now producer to the local distribution company. under construction. Plans for the building also call for COM/Cas responded proactively to Order 636 with gas and electric service from other system subsidiaries.
meaningful enhancements to its gas supply and pro-t curement areas. A highly trained staff and advanced ENERGY CONSERVATION i technology drive the competitive advantage COM/ Gas Energy conservation will become as much a part of holds. Two integrated information systems support our future as it has been our past. Energy is finite, a skilled employees with the real time information they precious commodity which must be used efficiently l
need to rnake incisive decisions in planning, analysis, to assure supplies for future generations. System sub-delivery, regulatory compliance and transaction tracking sidiaries offer gas and electric conservation programs to to provide reliable, competitively priced gas services. all classes of customers. Load management and energy conservation measures are taken to flatten peak demand.
V 3-YEAR LABOR CONTRACT SIGNED in a rather innovative move, COM/ Electric launched We must applaud the efforts of the men and women who approximately $30 million in electricity costs. Crcen worked so hard to reach a timely agreement for a three-Saect marks the first time a Massachusetts utility has <
year labor contract between COM/ Gas and the United '
I applied a competitive-bidding process for proposals for Steelworkers of America. We commend the COM/ Gas the development and implementation of conservation management and union teams for their long hours and ;
programs. The breadth of the program's unique approach ;
hard work to balance the needs of customers, employees~
expands nationwide, representing the first time a utility and shareholders-so that we can do what we do best:
has competed against prospective vendors in its own !
provide customers with high-quality, reliable service.
request for proposals. Green Saver is designed to mini- j mize program costs, while maximizing energy efficiency.
STEAM OPERATIONS The efh. .cient use of energy reduces the amount that COM/ Energy Steam Compar.y delivered yet another year we must produce or prc, cure and has a significant of outstanding performance. Following completion of a economic benefit for customers who choose to conserve.
steam line from Cambridge to Boston, we began service to We want our customers to use electricity in the most Genzyme Corporation, a Cambridge-lw.ed biotechnology efficient manner possible, but we also seek to increase C company which will soon grow to tecome our third our unit sales to maximize the use of our facilities l
largest steam customer. When in full operation, Genzyme through economic development efforts to attract ar$d i l
will use an estimated 230 million pounds of steam retain people and businesses in our service territory.
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ENVIRONMENTAL STEWARDSHIP 9 ECONOMIC DEVELOPMENT We have launched an alliance with the newly formed Canal Electric is moving swiftly with plans to conv ert Cape Cod Economic Development Council. Both gas one of its two generating units to use naturalKas n and electric subsidiaries are co-founders and active addition to oil. The flexibility of dual fuel capability at participants in the Massachusetts Alliance for Economic Canal will improve air quality for CapuCod-reducing Development, which is committed to attracting new our emissions by 25 percent-and give the company a business to the state. We have also built a partnership competitive advantage in fuel purchases. The %
with industry in the New Bedford area to conduct best- natural gas will allow Canal to be a better neighbor to practices audits to investigate opportunities for businesses residents of Bourne, Sandwich and other commun ties to become more competitive, more profitable and better on Cape Cod.
informed on environmental regulations. Other environmental initiatives underscore our commitment to take a leadership role when it comes b COST REDUCTION protecting and preserving the quality of the air, land Given the climate of today's energy marketplace, and water in our service areas. Environmental activities COM/ Energy is setting a sharper focus on fiscal range from burning oil with a lower sulphur content to recycling paper; from rebuilding a sand dune that responsibility-for both our customers and share-holders. Our re-engineering of the System willinclude pmented the destruction of a town beach to providing energy for cooling without the need for CFCs and; from the thorough review of every business unit and promoting the use of low- and no-emission vehicles to department. We are working to generate more profit helping to re-establish southeastern Massachusetts as a from every dollar of revenue and to encourage our nesting area for the osprey [a native fish hawk.
employees to become more entrepreneurial in their approach to our business.
STRENGTH THROUGH LEADERSHIP, an Restructuring of staffing levels during 1*G will save 58 million annually in direct payroll costs going ENDURING TRADITION forward. The system work force has been trimmed by in January IW4, Sinclair Weeks Jr. was elected to succeed 15 percent over the past five years. At the same time, Robert E. Siegfried as chairman of the board of trustees our customer base has grown by 14/m upon Mr. Siegfried's retirement on February 1,1994.
Working smarter at every level of the System has (Please see CEO note followiug this letter.) Mr. Weeks helped to produce a 512 million reduction in other has been a trustee since 1981, serving on the audit and operation and maintenance expense. The application of executive compensation committees. He is presently new technology to read gas meters and implementation chairman of the board of Reed & Barton Corporation and i
past president and chief executive officer. Mr.Weeksis ~!
of an automated work management information system have improved customer service and reduced costs. We a well respected leader in the business community and a
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are calling upon the ingenuity of every enyplovee to member of several boards of directors.
increase productivity and profitability in order to Calvin Siegal elected to retire from the theboard. effet deliver energy value to our customers and build tive December 31, lw3. Mr. Siegal had been a membfr of y n
shareholder value for our investors. our board since 1979, serving as a member of the audit %
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i-committee and its chairman since 1991. We are fortunate to leadership and marketing abilities to the board. We are
! have had the valuable support, counsel, and judgement of fortunate to have the opportunity to select an indivi-such a respected business leader. Ihs commitment to the dual with Mr. O'Brien's experience from within our board has been strong and his contributions many. We service territory.
s wish the very best to Mr. Siegal in his retirement. In summary,1993 was a strong year. Our employees The board elected William J. O'Brien to succeed produced significant accomplishments, and we thank Mr. Siegal as a trustee of the System, effective March 24, them for their achievements. Although many challenges 1944. Mr. O'Brien was formerly president and remain, the past year provides a good foundation chief executive officer of The llanover for us to continue to build on in 1994 and to insurance Co. in Worcester, Massachusetts. enhance value for you, our shareholder, 1 ollowing a distinguished career in the whose continued support is crucial to insurance industry, he brings strong COM/ Energy's success. O l l
W R. L Siegfrial Wilham G. Poist Gunrman
. President and Guicf Execurite Officer O
d A NOTE from the CHIEF EXECUTIVE:
hn Febr nary 1.1994. Robert E. Siegfried retired as chairm.m ofIhe hurd ofIrusices of Commomecalth Energy S close over 20 years of msightfut counsel. On behalf of the board. our emplovees, shareholders and customers, I extend my most sincere thanks and appreciation far his immense contributions. Ile has served all of our constituencies wcII.
Bob iomed our hurd in 1973 and subsequently served on the executive compensation and nominating committees. He hvame chairman of the hurd of Irustees in 1985, the yearfollowing his retnement as chairman of the hurd and chief executive oficer of the Badger ConifWilf, an illiernational engHleer5nll and con.struction colnjully.
Bob ,$5cgfried servCd (Ch1l Energy with distinction. A constun!!! ate bniinessman, he brought eXtensivC engineering CXperience and strong leadership to the COAfiEnergy hurd, providing invalvaHe guidance for sirategic decision making during a period of l
eXtraortDrmru cllangC, challenge anti HncCitainly for public utilities.
During my two years as chief crecutive Bob has been a valued counseler. I am grateful for his good advice. His mindful i stewardship and unpleidmg comnntment to excellence has helped bmld the foundatwn for steady growth in shareholder valtre.
Good luck in vaur retirement. Bob.
-W. G. Poist 5
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customer and opportunitiessatisfaction. Planning continuous 7 to m is a wide-ranging and MOMENTUM /m tutun- that has become an integral part of the COM/Ga* fabn.
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Giu)wrii Implementation of the Federal Energy Regulatory i
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Commission's Order 636 produced considerable chan qq interstate pipeline services and created new formsof l t the core of C,ommonwealth Energy System,s
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[;g petition. Under Order 636, interstate ~ pipelines shh business is the responsibility to provide a growm, g responsibihty for procurement, transportation and st l Massachusetts economy with reliable supplies of of natural gas supplies to local distribution comPa"*S.
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- i natural gas, electricity and steam. These forms of energv -
~A Responding decisively, C,OM / Gas diversified its gas are essential ingredients of the lifeblood of our service J" supply to include Appalachia, Gulf of Mexico 3 tesand area. I. hey are necessary resources to create new jobs for Canadian sources. Today C,OM/ Gas has more diversify a'
our customers, to produce new products for the nation
- f storage capabilities than at any other time in its history, .
i and to bring forth new technology for the world. assuring a cost-effective and reliable portfolio of a u plies. New gas supply planning technology and r at This responsibility presents a considerable challenge, '
and one that we take with utmost seriousness. For the sales and marketing solutions culminate in an effort u e 2,200 hard-working employees who accept this challenge mately producing customer benefits and company gro a; every day of the year, meeting this responsibility is only - -
A promising future awaits those who accept its chal- '
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part of the challenge; just as important is hom we meet our lenges. By employ.mg strategic thinking, creative solutions
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responsibility. We are committed to delivering energy '
and new technologies throughout the organization a 4'
- value to the consumer, while protecting the environment successful future for COM / Gas is ensured. These soiutio f and working to improve the quality of life m the are implemented by a strong management team and "
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, commumties we serve. entrusted employee 3 committed to the achievement of 1943 can best be described as a watershed year for the outstanding performance.
j g System, catapulting it into a strong forward motion toward " '
pg strategically focused goals. This report to shareholders 4 ELECTRIC OPERATIONS
'M showcases COM / Energy employees who accept this
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responsibility and the initiatives we took during the recent 1443 was a year of strong $
l Q past to build this momentum, which will help us fulfill our operating results for the elec- 14 j) '
responsibihty to employees. customers and shareholders. tric side of our business with p .
M growth in both earnings and M
Mj G As OPERATIONS Fw sales. COM/ Electric under-took a number of strategic initiatives to strengthen its L
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[0,1 Record earnings marked a l 1
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financial and operating
,j year of achievement durm.g #-
performance.
j kQ COM / Gas' 145th year of ]
- j operation. ~
Many words in this over- '
Faced with new challenges, view begin with the prefix
, g@' %}] l new competition and new Te" which means " anew," a word that best describes howl l we are h>oking at every procedure and process of our ,
responsibilities, COM/ Gas committed itself to a com- electric operations today. We renegotiated power con- d} i tracts which will lower future electric costs for customers. j 'i h}7j d prehensive strategic plan-C3 We refinanced securities to take advantage oflower long
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ning effort that reached deep mto the organi7ation.
term interest rates. We re-engineered the company and ,
,%l The result of this forward-looking, solution-driven plan-ning effort created new initiatives and the implementa-the way we operate to maximize prod ciency. And we refocused our thinking to sharpen our j
l tion of additional advanced technology into our business. competitive edge and to reaffirm our commitmen l Q communities and the environment. A new business l i These aggressive actions helped achieve record earnings environment demands that we look anew at every compon
[ and, more importantly, positioTed the company for nent of our operations.
Q continued future success.
Kilowatthour sales of electricity rose nearly 2,per
- The ultimate goal of this comprehensive plan is to 1993, making this the second consecutive year of mcrea encourage actis e participation at alllevels of the organi-sales. Supplies of electricity were in excess of demand, zation to produce creative, visionary business solutions.
j and we continue to seek innovative ways to market this These solutions ensure business growth and optimal 6
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d power to spread our fixed costs over a greater number of approximately 40 residential, commercial and industrial customers. In addition, we have been successful in customers from across the service territory provides reducing some future electricity costs to our customers, valuable input for decision making during the planning and initiatives to reduce them even more will continue. stages of acquiring resources of electricity. The goal of the panel is to assign priorities and balance important factors, including the cost of new resources, the environ-CUSTOMER SERVICE ment and the use of renewable forms of. energy. A second
. Many dimensions of customer service are considered group helps us best respond to public policy regarding when judging the quality of the job we do. We strive to energy efficiency matters.
meet our customers expectations for excellent service. Another COM/ Electric program brings customer Success in meeting our customers' ever-changing needs is service representatives out into the communities to train
- best achieved by listening, not by doing what is most and educate advocates and public agencies on energy convenient for business. assistance programs available to their clients. They also
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implementation of affordable payment plans.
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COM/ Electric's service area is one of ethnic, racial and economic diversity and the company strives to reach out 4, ~
to the s arious people of its area. Our Customer inquiry
/ Center provides Spanish- and Portuguese-speaking
-/ service representatives for improved communications.
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- . Telephone service for hearmg and speech impaired cus-k tomers enables two-way communications with customers who have similar equipment.
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a part of our ,gI .
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sifications, too.
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Iarge commeraal ga< meters are presently bemg adapte nor automated Oneofour
- meter readmg to smprove customer sernce. commercial .
customers, D ,
! A major enhancement to customer service instituted by Tedeschi Food .*
COM/ Gas was a new technology known as Automated 3d Shops, a grow- ' -
Meter Reading ( AMR). This cutting-edge system allows
- ing 68-outlet e COM/ Gas the ability to read indoor and outdoor meters i Massachu-from a vehicle while driving through a neighborhood '
setts- based Natural gas use for the period is transmitted from the onvenience customer's meter and recorded by a computer in the store cham, 7 vehicle using radio frequencies. Information is then transferred to a computerized billing system which wanted to get a better handle
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calculates, prints, and applies postage to bills for mailing.
l The benefits of AMR technology are two-fold. First, as on g-usage and to h[ :
with all new strategic changes, this technology increases consolidate customer satisfaction by virtually eliminating estimated billing and i
bills. Secondly, the improved speed and efficiency of the simplify . . , , , -
i meter reading process translates into improved cash Gow payment. Summary NImun s electric ceramers. Me and sigmftcant cost savings- COM/ Electric Tedeschi Food Shors. the oriertumty to consolidate l COM/ Gas has converted over 90,000 residential cus- responded T
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{ tomers to automated meter reading and is ahead of ched- with " Summary Billing" which it now offers to commer- l
- ule in its implementation plan. In addition to residential cial customers with multiple accounts. j
{ customers, COM/ Gas began the process of convertin 8 Commercial customers in Cambridge, Massachusetts j commercial customers to the AMR system in 1994. have benefited from the powerful synergies offered by '
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4 One of the ways COM/ Electric listens to its customers COM/ Energy subsidiaries, and available from no other is by meeting with customer advisory panels and energy single utility system in Massachusetts. Working with l j experts. A Planning Advisory Committee comprised of Cambridge biotechnology companies such as Genzyme l
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.y and Biogen, we have helped to maximize the efficient work procedure audits. These audits, which began in th' textile industry, identify how businesses can improve usage of electricity, natural gas, and steam in energy appli-efficiency and become more competitive in global cations best suited to customer needs. This outstanding markets. The program involves the analysis and teamwork, shared technology and "one-stop" service l implementation of technology-based opportunities' enhance customer satisfaction and shareholder value. f process change and waste reduction in industria] '
facilities. Recommendations identify best pr.acti technologies and operational techniques.
ECONON11C DEVELOPMENT This competitiveness program will add value to this Just as we are committed to building shareholder value, 4
area by making companies more profitable; better we have a proud tradition of promoting economic positioned to capitalize on new opportunities;and development throughout our service areas. Over the better informed about new technology, customer years, we have built partnerships with the business requirements and environmental regulations. We 3;sg community and municipalities to attract and retain offer Economic Development electric rates to qualified business. Our participation in the development of businesses to retain existing large users of electricity to commercial centers helps to create jobs that are an attract new business and to provide more jobs. Another essential part of improving the quality of life in our innovative initiative awaiting regulatory approval %
service territory.
to stabilize the fuel and purchased power portion of COM / Electric and COM/Cas are founding members customers' electric bills, of the Massachusetts Alliance for Economic Development Economic development is an essential part of our i and collaborate with the Massachusetts Office of Business corporate philosophy, and we are committed to stimu.
Development. The principal goal of the Alliance is to lating it with technology, energy and good service, promote a strong resurgence of the state's economy by l attracting domestic and international business invest-l ments in Massachusetts.
ADVANCED TECHNOLOGY Under a grant from COM/ Electric, the Hyannis Area Economic Develop- ggJg gg o 4m Delivering reliable energy requires more than just under.
ground pipes and overhead wires. We deploy technol-ment Corp-ogy to increase productivity, reduce operating costs and oration con- Mif$[18 x(
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+ improve customer service. We also build technology partnerships with customers, sharing knowledge and ducted a gggfyg research to help them compete globally. By successfully comprehen-QMMM ' assisting customers to integrate technology, we add sive study - - - -
h' p@ W. %@ h economic value and devel-oped an
- to their business.
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l ambitious Wli [ TW mcm of action plan
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y COM / Electric's #
- that will aid $w work manage- j existing ment informa-businesses y-j @og.
> $a ; t on system
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and help establish Three Setem communes werLed closely wah Biosen to (WMIS) has
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maunnu the unlgaulatrkay and stann in a~ - -
new busi. neurst huldmg in Cambridge Manachusens expectations. ,
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- WMIS is an nesses on Cape Cod. Ilighlights of the proposed plan include mformation
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( . i i major improvements to the highway infrastructure, management s
nq addition of a four-year college, development of a con- computer apph.- g .
vention and exposition center, and implementation g ,
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of an aggressive marketing plan to attract business and tourism to Cape Cod. ~
and directs the . ,
i jj '
COM / Electric also works with the Cape Cod Lifestyle progress of Council which reaches into off-Cape markets t, attract hundreds of '
potential retirees and vacation-home buyers. service and con- customer respmmrmss is enWha m at struction jobs manageme,n infonnatjowicm u*d trach, ' @ ,
We have launched an Industrial Competitiveness pro-from the initial in rNnx red"a5 M"Nd d"d w# Ih gram for industry in the New Bedford area to provide X
S
l- .
contact by the customer London Electric, Texas Utilities, Hawaiian Electric and through completion by Entergy Corp. have visited COM/ Electric to view and the company. This # , discuss this leading-edge solution to managing electric progressive system construction work load. Commissions paid to features real-time -
COM/ Electric resulting from such software sales will updating and generates p ~
total $1 million by the end of 1994 and will benefit accurate, expeditious .
COM/ Electric customers. .
responses to customer The combination of teamwork and forward vision at inquiries. Additionally, WMIS continues to be a -
[#o '
COM/ Gas can literally be seen on a computer monitor displaying the company's underground distribution sys-valuable management tem across the 49 communities it serves. This automated tool to monitor work an automalca mappmg and taa!jtics mapping and facilities management system replaces paper and district operations. nunagement su. tem computcrces the records documenting the kication of gas facilities. Accurate, WMIS also auto- t, .S[tII, detailed maps required for construction crews are pro-mates the process of duced at the push of a button. This innovative step estimating construction time an;i cost and produces increases productivity by facihtating information access necessary reports for telephone and cable- TV companies and ultimately improves responsiveness to customers.
as well as municipahties. WMIS streamlines work flow A good example of an industry-technology-energy util-
" 3 and has brought itv partnership is clearly evident with the recent approval
- about some of New England's first fuel cell. COM/ Gas sales staff, en# O business process working with the U.S. Army Research, Development and i g re-engineering Engineering Center in Natick, Massachusetts, will install Lp within operations. a fuel cell for the production of 200 kilowatts of electricity-
~ '
The system simpli- quietly and virtually emission free. The fuel cell uses fies the payroll chemistry, not combustion to convert natural gas into procedure for line electricity and heat.
W crews through an The installation of this new technology is the first of 15 interface with the f- 4 to be showcased nationwide by the U.S. Government.
j -
, payroll mainframe Selection of Natick as the first installation site is a proud A m.nor bencnt of the wmrutcrecd sy3 tem s computer system. achievement for COM/ Gas and was driven by a the rml"i tson of aan' ate xa4 facihhes a"J lan.1 . ;ture plans for concerted team effort by COM/ Gas employees and the
(#.c map for scIJ personucI WMIS include U.S. Army engineering staff.
integration with a materials management computer system for real-time transfer of information for stock items used bv line crews ENVIRONMENTAL INITI ATIVES durmg construction.
Working with the state's Department of Environmental The WMIS system has been marketed worldwide by a Protection (DEP), Canal Electric met rigorous air third-party consulting company. Utilities such as China quahty standards for opacity of stack emissions from Lignt & Power, its two generrting units in Sandwich, Massachusetts.
During the entire 26-week
- r ~ .- monitoring period, emissions were substantially better than di -
that allowed by the state.
n -
C
.- COEflectre __
q rre .l
- Ouss% - W2 %
t I
COAT Electric Pressdent Russell D. Wright trtghn a4 a proud Manny Rchello alvut some of the challenges taccd durmg conversion of a rchicic frcmt gamime 10 clectvictly.
9 .
L_______________________
This outstanding result was achieved by careful municipalities to comply with increasing state environ-mental regulations for underground fuel storage tanks.
operation of the plant by highly skilled employees, the Converting from oil to natural gas proves to be an use of lower-sulphur oil, new laser-designed burner environmental and economic solution that eliminates the tips and a 51 million enhancement in the control room, potential of soil contamination from aging tanks.
replacing controls and instrumentation. We are proud of this accomplishment which translates to improved CONI / Electric is blazing its own trail with electric vehicle (EV) technology. Enthused by the challenge of air quality for Cape Cod.
We wi'l build on this good environmental track record converting a retired company pick-up truck from gasoline to electricity, employees in the transportation department and improve local air quality even more with the intro-constructed the company's first electric vehicle. The duction of clean-burning natural gas as a f uel to generate vehicle emphasizes the company's commitment to toe electricity at one of Canal's two generating units. The 522 environment and encourages others to work on
. illion project includes the construction of a 3.8-mile m
improving (EV) technology.
pipeline by Algonquin Gas Transmission Company. The CONI /Electnc continues its participation in a public/
portion of the new line that will run beneath the Cape Cod Canal will be constructed by COM / Electric using an private sector electric vehicle program with the environmentally fnendly technique called directional Massachusetts Disision of Energy Resources (DOER),
drilhng which will result in vinually no impact on the Massachusetts Bay Transportation Authontv and other waterway. The use of natural gas, scheduled to begin in organizations. Initially,20 vehicles will be used by 19w6, will further reduce emissions by 25 percent. commuters to travel from home to a mass transit terminal The bench's of natural gas will contribute to improvmg in the Greater Boston area. The electric vehicles will be recharged at the transit sites while commuters are air quabty in Worcester, Massachusetts. Enlisting the working. The majority of funding for this first-of-its-kind technical and engineering 9 program has come from the Federalliighway Administra-expertise of COM / Gas a _
tion. The balance will be funded by the DOER and four I employees, the Worcester "." y
~
Massachusetts electric utilities, including COM / Electric.
Regional Transit { Additionally, COM/ Electric will contribute monitoring Authonty installed a /
- devices for the equipment at charging stations in Cambndge
~
4
{ compressed natural gas and Braintree, Massachusetts, two of the transit sites refuehng station to . y ukw 49 being used for the program. Launching of the electric power four new vans m vehicle program is slated for April 199-1.
the city's transit system.
Using natural gas as a Natnral gas aqi n,otor fact mo< int.o. In a firu for New England, COM / Electric introduced
)
Juced k the horcester Reponal Tra+st iuel source ret 3uces construction techniques that minimized negative impacts on utsrsu , nn ,,n n,ng' approximately 50 aircrnatibe sci, ni ,ts acci. wetlands during construction of an eight-mile 115,000-volt transmission line running from Rochester to Carver, percent of major pollutants produced by a motor vehicle, a factor Massachusetts. The use of the vibrated caisson method especially beneficialin a metropolitan area. Along with for tower foundations and an innovative temporary road tremendous environmental benefits, natural gas also system for vehicle access proved to be an ecological and i pmduces many operational benehts for fleet operators economical winner. Vibrated caissons eliminated the need such as reduced nuintenance, extended engine life and for expensive drilled concrete foundations. The temporary g
j lower fuel costs.
' The market for natural gas vehicles (NGVs) shows great promise. More and more flect operators h>ok to natural gas as an environmentally beneficial answer to meet rigid requirements of the Clean Air Act. COM/ Gas continues to
- follow advances in NGV technology through a pilot pro-gram at its headquarters in Southborough, Massachusetts, I w here a compressed natural gas refueling station is in i
operation. T his on-site fueling station enables COM / Gas l
to pa rticipate in emerging technology as well as to posibon itself to maximize the opportunities this~hcit,ing new WS _ -
market will present. l l The inherent advantages of natural gas will continue to g,,gy,gg y g y,47 ggg3 play an important role in traditional markets as an 3 ,,, 7,,
l environmentally desirable fuel. COM/ Gas assists ,,unn,n:cJ the cftccts on the ennron nent during the construction of an i g
homeowners, industrial customers, schools and ogunnic clectnc tramnnen hnc.
, 10 m
P 1
! road system protected surroundings with a geo-textile are acquired. Previously, we sought pre-approval from )
i fabric placed directly on the soil, a layer of gravel and an the Department of Public '
l interlocking system of wooden mats for vehicular traffic. Utilities for energy l '
Upon completion, the road system is removed and the efficiency I unharmed terrain returns to its previous natural state programs.
because of the minimal effects of this construction method.
l This construction process eliminates the need for 35-ton '
l cement trucks and heavy drilhng equipment +o travel over the terrain, reduces the amount of excavated soil by J 90 percent, minimizes construction time and eliminates
- the need for a permanent road.
me COM/ Electric always goes the extra step to ensure responsible environmental management, and everyone '
wins! In this case, electric customers benefit f rom lower '
n construction costs, the community benehts by reduced con- #
struction time and proper environmental management; and New England benefits from improved service reliability. .2 s Some utility poles carry more than power. COM/ Electric f h dk'h Id"clNce"'c" d"d Ddal Md"" d't idF d nim"c'y # r"crKV ettscrent hghting op! Ions to a COM11ectnc customer.
has set scores of used poles to provide osprey with nesting sites away from electric lines. A Now, under the Integrated Resource Management process, sociable bird, showing no fear of man, the we will solicit demand-side resources by issuing a com-
- osprey is a magnificent fish hawk with petitive solicitation to customers and energy service wingspreads up to six feet and is providers through a new $30 million program called re-establishing southeastern Green Sacer. Another important change for COM/ Electric
- Massachusetts as a nesting area.
was approval for the recovery of $3h million of revenues COM/ Electric plays an impor- '1ost" because conservation programs reduce electricity I l tant role in helpmg the species gjg, gs y , y wvings are realized. i
~
regain its habitat, while keeping our distribution system .
i A critical challenge to energy efh. .ciency programs is the i
safe and reliable. Since beginning this osprey recovery ' -
achievement of the cost efficignt energy savings they i project 13 vears ago. the osprev population has grown i
1 . .
trom b pairs to over 240 pairs. Today only four nests are promise. Effective control of program delivery to main-tain cost effectiveness while stavmg within budget limits to built in trees, many of the remainder enjov COM/Electnc man-made platforins. mmum7e rate impacts is of the utmost importance.
Comprehensive monitoring and verification standards All COM / Energy subsidiaries consider environmental have been established to ensure that we will achieve the stewardship a very high priority. Environmental svings of electricity planned.
solutions grow f rom environmentally aware employees.
, W,hether energy efficiency programs are implemented W,e educate our employees on all aspccts of responsible
, through the pre-approval process or the Integrated Resource environmental management from paper recycling to the 4
Management process, the ultimate responsibility for bal-i safe handling of hazardous materials. W,e have also taken significant steps to reduce the variety of hazardous ancing costs with savings, protecting the environment and ensunng customer satisfaction rests with COM/ Electric.
j chemicals purchased.
i A highly successful
. energy conservation l INTEGRATED RESOURCE PLANNING program established i
and administered
- integrated Resource Planning uses the appropriate blend bv COM/Cas
- of traditional energy supphes and demand-side activities, .
is ,,The Big 1
j such as energy conservation programs, to satisfy the
- S. AN.E.R." (Sa ve demand for energy requirements m the most reliable, America,s Vital cost-efficient and environmentally responsible manner.
i E.nergy Resources).
2 Iloth COM/ Electric and COM / Gas offer a broad range By participating j of programs that help cus'omers reduce energy consump- in this program,
- tion, improve comfort levels and conserve natural resources. customers Shedd D""" r"5"'"S 'hd' 'he '"5'dlld'*" o6"crKF At COM/ Electric, change was the watchword as 1993 receive valuable $$,[l,",((",hh"[.',[, g ;
ushered m a major shift in the way demand-side resources energy-saving couvrmtun Program ottered to oo'omers. '
i b 11
! l
.i.aee.6 4 l
l J
' f lds. In addition COM/ Gas employees par-in these two ie education, products, and services. At no direct cost, ticipate on advisory councils for public and private schoo
' eligible customers receive energy conservation measures to help align educational requirements with business y including water heater tank insulation, low flow shower needs and to share their expertise in other areas as well.
l
' heads, weatherstripping and caulking, and an insulationThe programc offered by COM/ Gas extend far into analysis. Additionally, qualified gas heating customersthe community. In addition to schools, we sponsor can save 50 percent of the cost of wall or attic insulation. KiEs Fair, a memorable and fun-fiiled day for our future cus omers. Another special program is Ccichrate Senior Expo, an educational event designed to communicate ;
> CORPORATE CITIZENSHIP with our senior citizens. As with all COM / Gas- l
! seek to improve
- Although we may insulate our customers' homes, we sponsored programs, we of life.
are not insulated from the customers whom we serve. our community's quality Community involvement is the cornerstone of the ) ,
COM/ Energy culture. This tradition was spawned from s, l values that have endured since COM/ Energy's earliest beginnings. Our responsibility to provide energy extends :
beyond the bottom line of our income statement. It reaches deep into the communities we serve through direct funding of programs educational partnerships,in kind donations, g --
corporate sponsorships and employee volunteers. -- ;
Comcas President, Kcimeth M. Marxorian, #" explams the compan COM / Gas and COM / Electric continue to facilitate and " **"""" " *#"N"# l contribute to the Good Neighbor Energy Fund through Massachusetts at Cektirate Senior Expo 93, an mtormatme and the Salvation Army which raised 5635,000 last year and cntertanung day 3;wsored by COM/ Gas. l provided financial assistance for 3A00 families. With e mvolvement m schools is nothing new at .
Actw. .
proposed federal budget reductions targeted at home COM / Electric. Over 100,000 students have participated energy assistance, the Good Neighbor program willinteractive safety and energy education programs during become increasingly important to families in need.
the past two deEades. Energy representatives visit c l Employees of COM/ Gas and COM/ Electric partici' rooms and deliver exciting, liigh-quality programs, which!
l
' pate in GatcAcepcr, a valuable program designed areto help supported by teaching kits, energy- related software !
senior citizen customers. Employees keep alert for and tours of generating stations. Another innovative l signs of potential problems and mishaps that couldprogram called Shadow for a Day reverses the roles otherwise go unnoticed and are on hand for ready ing students from the classroom into the workplace I assistance. Another program to keep our communities where they are assigned a mentor. I safe and trouble-free is COM/ Watch, which uses two-Educating our customers and their children on the way radio-equipped vehicles to report accidents, safe use f natural gas and electricity is another respon-me[lical emergencies or unusual activities. COM / Watch vehicles display eye-catching identification to alert s ty mat we take seriously. Thousands of students those in need that help is immediately available.
have participated in a variety of quality educational l
programs in public and private school systems in our l COM/ Gas sponsors Math Cormts. an academic challenge service territory. We also offer a number of informative j
for seventh and eighth-grade students,in cooperation with presentations to community and professional groups, l the Massachusetts Society of Professional Engineers. including Ma!h a speaker's bureau. Along with gas and 3 l Counts heightens students' interest in electric safety issues, topics include, fossil fuels,
- j
' A science and engineering careers, reaching the much-overlooked student seg' 1 quefied natural gas, energy efficiency, nuclear fu and the production and distribution of energy. At ment of females and minorities COM/ Energy we make a discernible difference-the difference is quality.
I OUR PLEDGE toSHAREHOLDERS 1
Commonwealth Energy System will continue to be g by ethical and sound business principles. This p enhances our ability to contribute to the quality of oer neighborhoods, deliver good service to our customers
' i At an clxtrw defy presentation im COM Hvtric% Amy Sellers,a ,
l and earn a fair return for our shareholders.
Cambridge. I l Massachusetts third-graJct don 3 22 ;wmds of hncma>n equipment.
I -
t l 17 _ _ ~ - . .
Return on Equity and Tetal Return FIN ANUl A1. SU MM AIRY The System's return or average common equity was
_. 135% compared to 12.5% for 1992. In addition, the System's 1993 market price per common share closed at
, . $46 %, up 53 %, or 8.5%. This appreciation coupled with lie [ollowm, g IS a brlC[d/SCHSSloH dividends paid of $2.92 per share during the year (a 6.99 wturn) provided a total return of 1149.
and RHall/S/S o((iHRHClal ConditloH and reSults of operations for 1993. For ELECTRIC OPERATING REVENUES and FUEL more detailed mformation and anahj$is, -
and PURCHASED POWER f
. please refer to Exhibit A of the 1994 in 1993, electric operating revenues increased 526.8 4
Proxy Statement. minion asu This change was due primaray to the nei t
increase in fuel and purchased power costs of 535.8 million or 11.4%. Also contributing to higher revenues in ,
) EARNINGS 1993 wr. sus 199, 1993 were the base rate increase for Cambridge Electric mi n n an annu lized basis) and a 1.99 increase l
m retail unit sales, which reflects the moderate growth m l
J During 1943, the System's earnings per common share customers, primarily residential, and a greater demand i were 54.37 representing a 14.10 increase from the $3.83 for power from commercial and seasonal customers. The !
experienced during 1492. Contributing to this increase increased demand for power was due primarily to an I were significant reductions in other operations expense improving economy and to a lesser extent, more extreme reflecting the system's continued cost containment efforts
~
weather conditions requiring greater load for heating or which efforts included the late 1992 shutdown of the air conditioning requirements. Somewhat offsetting the Cannon Street generating station and a 1993 work force increases in fuel and purchased power costs was a lower ,
reduction. Other factors contributing to improved level (59 million) of C&LM program costs. !
earnings were: higher retail electric unit sales as well as h am ge et fu and pm6ad pown pa l an increase in firm gas sales during the heating season; new base rates for Cambridge Electric Light Company, so wa em compamd to 3R fm W elfective June 1,1993; the recognition of " lost base and reflects the impact of higher-cost power contracted revenues" ($2.4 million) relating to electric conservation for in the 1980s when the system's customer base grew and load management (C&LM) programs; a $2.7 million dramatically and forecasts at that time predicted decline in the provision for bad debt expense that resulted continued gmwth. The system is currently involved in from improved collection experience; and the reversal of negotiations to restructure or buy out certain of these I a reserve (53.8 million) related to the system's Seabrook longanm obligations.
investment. The system's earnings per' share summary is In 1993. ruel and purchased power costs increased presented below: 11.49 dee to higher unit sales and the aforementioned contactual obligations, including additional power 1 rarning 19 organi:atmnal ucment purchases from certain gas fired independent power l uw. ur 3m producing (IPP) facilities. These costs also reflect reduced
]
- ' *" generation from Canal Electric Company's units and 1
, w :o other oil-fired units. The increased costs for power from W- sm m.'
~
ma the IPPs and other sources were offset somewhat by a i *- wo decline in Seabrook 1 costs. Also reflected in the 1993 cost 3
2.w _ of fuel and purchased power is approximately $3.6 i ;, , , mdlion for capacity-related costs associated with certain i
,y purchased power contracts which were not recovered in revenues due to the recovery mechanism established by
- " ~
, the Massachusetts Department of Public Utilities (DPd)
W- ,
compared to $3.9 million in 1992, and the continued ;
w .
greater use of a cleaner burning (14 sulphur) but more !
.c w . expensive fuel oil ai Canal Electric. I aw.
m x y GAS OPERATING REVENUES and COSTof GAS l
E riutne 3 ca, 3 Other E Frcrtown Wnte.down ring M, gas opGating NMM inma%d by appN {
mately 57.8 million due primarily to increases in the cost of 13
, .- , . . - ,m-r , - - - - - , , , -
related to a final FERC settlement which provided for the
~
i fun movery ohhny*m's Seabrook investment. j FIN ANCIA1 SUMMAW For 1993, total interest charges increased $2.5 million or :
6.19 due to a lower level of AFUDC debt resulting from the Seabrook settlement noted previously and an increase -
gas sold ($2.4 million) and C&LN1 costs ($4.8 mi!! ion) that in interest on long-term debt of $700,000 primarily due to s
Commomvealth Gas began recovering through a Conserva- the issuance of 565 million in new long-teun notes in the i tion Charge (CC) decimal in late 1992. Also contributing to '
first quarter of 1993. Somewhat offsetting these increases the increase in revenues were transition costs of approxi- was a $300,000 decline in other interest charges resulting ,
matelv $1.4 million associated with the implementation of f m I wer interest rates and a lower average level of 3j the Federal Energy Regulatory Commission's (FERC)
Order No. 636 and an increase in firm transportation rev-short-term borrowings ($103 million versus $126 million). [l '
Interest rates on short-term bank borrowings averaged enues of $474,000. Offsetting these increases somewhat 3M in W as compared to 49 for 1992.
- were lower unit sales. Firm unit sales decreased by 1.5% oi for 1993, including a 10.99 decline in sales to industrial customers, however, hrm sales during the heating season CANAL UNIT NO. 2 G AS CONVERSION mcreased by nearly 39. During these periods, seasonal -
l rates were in effect. These rates recognize the increased in October 1993, the system reached an agreement with cost of providmg gas service during the winter months. The N1ontaup Electric Company (a 50% owner of Canal Unit 2) ;l total number of customers increased at a rate of 2.29 in and Algonquin Gas Transmission Company to build a j; natural gas pipeline that will serve the Canal Unit 2 gen- j :
lo93 due to new home construction and conversion activity. 4 erating station, subject to regulatory approvals. Unit 2 i'
will be modified to burn gas as well as oil. The project
- OTHER OPERATION and willimprove air quality on Cape Cod, enable the plant to ~'
exceed the stringent 1995 air quality standards established MAINTENANCE EXPENSES by the Niassachusetts Department of Environmental in 1993, other operation expense decreased 512.6 million Pmtection and strengthen the system's bargaining position 4 or 6.19 due, in part, to the absence in the current year of nH w & h- N M for b e m 4-
' costs associated with Lommonwealth Electric Company's Plant conversion and pipeline construction are Cannon Street generating station (52.2 million) which I' anticipated to be completed in 1996. j-ceased operations in October 1992 and the net savings of
$1.6 million associated with the second quarter work force reduction. Also contributing to the decrease in WORK FORCE REDUCTION costs in 1993 were: 1) the provision for bad debts expense The system implemented a work force reduction during which declined $2.7 million or 22.89 due to improved the second quarter o11993. The payroll savings realized in .l payment experience; 2) lower liability insurance costs 1993 exceeded $5 million-more than offsetting the $3./ ;
of $1.7 million due to lower claims; 3) lower Seabrook million in severance costs incurred to reduce the work ;
operating costs of $1.7 million; and 4) a decline in force by approximately 89. Payroll savings for 1994 ,
employee medical and life insurance costs of 5800,000. !
should approach $s million. The total number of full-Somewhat offsetting these decreases was an increase time employees has declined 11.7% since year-end 1991.
! in pension costs of $1.2 million. Maintenance costs increased by $700.000 or 1.99 due primarily to a scheduled major inspection and overhaul of the REGULATORY ISSUES Canal 2 boiler, turbine and generator.
Retail Rate Proceeding Cambridge Electric filed a petition with the DPU on OTHER INCOME and INTEREST CH ARGES November 16,1992 requesting an increase in base The substantial increase in other income during 1993 revenues of approximately $10.2 million-a 99 increase reflects the reversal of a reserve ($3.8 million pretax) over its 1991 revenues. On May 28,1993, the DPU issued related to the system's Seabrook 1 investment. The an order increasing Cambridge Electric's retail revenues decision to eliminate the reserve wasprom,pted by the by approximately $7.2 million, or 6.49. The rates, based on a June 30,1992 test year, became effective June 1,199
allowance of Seabrook 1 costs in base rates at the state
. level for Cambridge Electric. Offsetting this,in part, was and provide an overall return of 9.959, including an the absence in the current year of the equity component equity return of 119. More than SOG of the increasJ of allowance for funds used during construction related to: 1) plant additions sirice Cambridge Electric's
( AFUDC). The $18 million in equity AFUDC for 1992 last retail rate proceeding in 1989; 2) capacity costs l
N
, - ge.wes@
-m-
l
,, successfulimplementation of C&LM programs. Approxi-FIN ANC,I Al DUMM ARY r
mately $2.4 million was collected in lu93 based on KWH savings which resulted from these programs.
associated with certain long-term purchased power FINANCING AcTlvlTY contracts;and 3) costs of postretirement benefits other than pensions determined in accordance with Statement During 1993, the System and various subwdiaries issued a oao m nm np erm M as Mon of Financial Accounting Standards No.106 (SFAS 106).
l The DPU authorized the recovery oi these costs over a Commomecalth Electric four-year period with carrying costs on the deferred 10 Year,7.43'i Notes, Due 2003 $ 15,000,000 portion. The new base rates also reflect costs associated 15 Year,7.70% Notes, Due 200S 10,000,000 20 Year,7.989 Notes, Due 2013 25,000,000 with power from the Seabrook nuclear power plant 30 Year,8.47G Notes, Due 2023
- which are billed to Cambridge Electnc by Canal Electric. 15,000,000
, Previously these costs were recovered through ed000,000
! Cambridge Electnc's Fuel Charge decimal. Commomccalth Gas 40 Year,7,119 First Mortgage Bonds Due 2033 35,000,000 Commomvealth Encrgy System
- Po
- ccr Cost Charge 2 Year Term Loan,4.79, Due 1993 2;,000,000 1 Cambridge Electric and Commonwealth Electric have Hoplinton LNG Corp. l l
long-term contracts for the purchase of electricity from 5 Year, variable rate (4.037 in 1943), Due 1998 9,000,000 i various sources. Generally, these contracts are for fixed S134,000,000 ,
penocis and require payment of a demand charge for l
their capacity entitlement in each unit and an energy The proceeds from these issues, together with the sale charge to cover the cost of fuel. Cambridge Electric and of common stock to the System by Commonwealth Commonwealth Electric recover a portion of these Electric (518 million) and Commonwealth Gas ($35 capacity-related costs through base rates. The recovery million), were used primarily to repay outstanding short-mechanism for these costs uses a per kilowatthour term debt incurred to temporarily finance additions to 1 (KWil) factor that is (alculated using historical (test- property, plant and equipment and the early retirement period) capacity costs and unit sales. This factor is then of long-term debt. Retirements of long-term debt during applied to current monthly KW1i sales. Under this 1993 were as follows: -
recovery method, when current period capacity costs and/or unit sales vary from test-penod levels, Cambridge Commomecalth Electric Series E 81259 5 4,860,000 Flectne and Commonwealth Electric experience a Commomccalth Electnc Series B 6.125'; 4,440,000 revenue excess or shortfall which can have a significant Commomccalth Elecinc Series F 8.3750 12,000,000 impact on net income. Undercollection of these costs HopAmton LNG Term Loan 7.110's 7,000,000 resulted in negative impacts on net income of $3.4 and Canal Electric Series D 11.125% 9,300.000 52.5 million in 1993 and 1992, respectively. Cambridge S37,600 000 Electric and Commonwealth Electric made a fihng in late 1992 with the DPU seekmg an alternative method of The system's capitalization structure is presented below:
recovery. This request was denied in a letter order issued on October 6,1993. Ilowever, Cambridge Electric and C"Pd d h d'h* 6"**d'"
" 5" . tDullars m MillionM Commonwealth Electnc were encouraged by the DPU's acknowledgement that the issues presented warrant further consideration. The DPU encouraged each "'
'5a company to continue to work with other interested g 'sn parties, including the Attorney General of Massachusetts, *'
to reach a con.sensus on the issue for consideration in each company's next base rate proceeding. a-w-
C&LM Programs .
On lune 30,1093, the DPU allowed Commonwealth o ' ' '
1W3 l e' IWI
- Eh ctric and Cambridge Electric to recover a total of 53 6 million in " lost base revenues" from customers over a M $7"* M [y"p'" M Q7 5 7"*
twelve-month period ending lune 30,1994 due to the 15
.1 Y
k
}
CON DENSED b FNFEM ENTS
"/ 1 NCOM E y
Commomocalth Energy System and Subsidiary Companics ,
I ;
1l s 1 1993 1942 1941 l Years Ended December 31, (Dollars in Thousands, cuept per share amount 4 OPERATING REVENUES $607,371 Electric
$624,020 $597,269 f 302,644 294,874 252,239 ; l Gas 14,035 14,307 13,824 l Steam and other 873,434 906,450 940,699 f OPERATING EXPENSES j
348,836 313,067 282,720 j Fuel and purchased power 156,709 154,304 139,169 l Cost of gas sold 235,214 247,098 245,344 Other operation and maintenance 44,660 48,493 50,861 Depreciation and amortization 42,334 12,164 16.358 ;
Conservation and load management l 53,282 44,837 39,751 Taxes 854,698 826,525 793,978 .;
86,001 79,925 79,456 i Operating income l
i OTHER INCOME (EXPENSE) - 1,827 - .
Allowance for equity funds used during construction
- - (22,974) j Freetown project write-down (Note 4) ,
9,555 3,784 (417) 1 ,
Other, net " '
3,784 1,410 (13,419) 89,785 81,335 66,037 income Before Interest Charges INTEREST CHARGES 36,722 37,657 37,416 .;
Long-term debt l 6,730 7,034 9,702 Other interest charges (195) (2,318) (794)
Allowance for borrowed funds used during construction 43,951 41,438 46,565 i
45,834 39,897 19,472 NET INCOME 1,291 1,352 1,230 1 i Dividends on preferred shares i
5 44,604 $ 38,606 5 18,120 EARNINGS APPLICABLEo/ COMMON SHARES 10,081,868 9,944,433 4 l AVERAGE NUMBERof COMMON SHARES OUTSTANDING 10,215,614 i
54.37 53.83 $1.82 <
EARNINGS PER COMMON SHARE 5 4
The accompanying notes are an integral part of these conden ed financial statements.
1 e
r
- g a
E0
,l
l C()NI)liNSI I) I3 AI A NC 'l Si iins Connnonwealth Energy System and Subsidiani Companies '?
l
. i December 31, 1993 1992
' awum in wusanau ASSETS PROPERTY, PLANT AND EQUIPMENT, at original cost 51,398,908 $1,376,757 l Lew-Accumulated depreciation and amortization 425,483 406,069 )
973,425 970,688 I
, Construction work in progress and nuclear fuel in process 11,089 7,877 l 984,514 978,565 l LEASED PROPERTY, net 16,150 18,388 EoUnY IN CORPORATE JOINT VENTURES 13,549 13,888 CURRENT ASSETS Cash 6,007 1,522 Accounts receivable, net 93,663 85,325 Unbilled revenues 43,279 47,656 Other current assets 51,333 53,497 194,282 188,000 DEFERRED CHARGES 106,668 73.178 51,315,163 51,272,019 CAPITAUZATION and LIABILITIES .
CAPITALIZATION Common share investment 5 337,070 $ 315,219 Redeemable preferred shares,less current sinking fund requirements 15,480 16,300 Long-term debt, less current sinking fund requirements and maturing debt 448,893 361,092 801,443 692.611 CAPITAL LEASE OBLIGATIONS 14,456 15,487 CURRENT LIABILITIES Interim financing-Notes payable to banks 71,975 165,600 Maturing long-term debt 10,000 7,000 Accounts payable 90,006 86,976 Accrued taws 9,090 8,078 Other current liabilities 44,115 38,057 225,186 305,711 DEFERRED CREDITS Accumulated deferred income taxes 156,851 146,328 Unamortized investment tax credits and other 117,227 111,882 274,078 258,210 COMMrrMENE and CO?NTINGENCIES (Note 3) 51,315,163 $1,272,019 The accompanymg notes are an integral part of these condensed financial statements.
1I
l CONDi(NsEI) STATEMI NTS
"! Casii Fu >ws O Commonwealth Energy System and Subsidiary Companies y 1993 1992 1991 Years Ended December 31, wum m rnousanu l OPERATING ACTIVITIES 5 39,897 5 19,472 5 45,834 i Net income ,
Effects of non-cash items- 58,8S3 59,489 53,337 4 Depreciation and amortization 22,974 j
Freetown write-down (Note 4) (1,617) (5,439)
~
15,559 Deterred income taxes and investment tax credits, net
- (1,827) ~
l Allowance for equity funds used during construction '
(1,642) (2,016) (2,699)
Earnings from corporate joint ventures 1,626 j 1,981 2,157 Dividends from corporate joint ventures 8,303 1,118 (29,345) ;
Change in working capital, exclusive of cash (8,805) -- -
Uncollected Order 636 transition costs (8,910) - -
Uncollected postretirement benefits costs (4,180)
(18,965) 3,815 All other operating items 61,898 86,692 100,410 j Net cash provided by operating activities i
INVESTING ACTIVITIES (49,094) (60,129)
(54,385) .
Additions to property, plant and equipment (exclusive of AFUDC) ~
(195) (2,318) (794)
Allowance for borrowed funds used during construction (54,580) (51,412) (60,923)
Net cash used for investing activities FINANCING ACTIVITIES 5,233 4,533 7,118 l Sale of common shares (30,770) (30,428)
(31,101)
Payment of dividends 19,800 2,375 (93,625)
Proceeds from (payment of) short-term borrmvings 134,000 15,000 27,000 Long-term debt issues (37,600) (51,632) -
Long-term debt issues refunded (5,829)
(6,419) (5,678)
Sinking funds payments (48,047) (2,349) l (27,627)
Net cash used for financing activities >
4,485 951 (1,374)
Net increase (decrease)in cash 1,945 1,522 571 Cash at beginning of period 5 6,007 5 1,522 5 571 Q Cash at end of penod i SUPPLEMENTAL DISCLOSURES of C ASH FLOW INFORMATION i l Cash paid during the period for: 5 45,858 5 39,685 5 40,116 Interest (net of capitalized amounts) 5 13,528 5 14,460 5 15.478 l Income tases 1 The accompanymg notes are an integral part of these condensed financial statements.
1' 18 -
F V
. No/cs to CON DENSED FIN ANCI Al. STATEMENTS A
Commonwealth Energy System and Subsidiary Companies
- 1) DETAILED INFORMATION 571.9 million is estimated for 1994. The program is The detailed Consolidated Statements of income, subj&t to periodic review and revision.
Statements of Cash Flows, llalance Sheets, Statements of Capitalization Statements of Changes in Common W &abnnd Nuclear Power Plant Shareholders' investment, Statements of Changes in The system's 3.52's interest in the Seabrook nuclear Redeemable Preferred Shares, Notes to Consolidated pmver plant is owned by Canal Electric Company Financial Statements and Management's Discussion and (Canal), a wholesale electric generating subsidiary, to Analysis of Financial Condition and Results of provide for a portion of the capacity and energy needs j Operations are included in the Proxy Statement. of affiliates Cambridge Electric Light Company (Cambridge) and Commonwealth Electric Company
' " " " " " " * " " " " 1""i'L " "" " """*i " 8 0 "i
- 2) SIGNMCANT ACCOUNTING POUClES its Seabrook 1 investment through a power contract Commonwealth Energy System, the parent with Cambridge and Commonwealth Electric pursuant company, is referred to in this report as the " System" to FERC and DPU approval.
and, together with its subsidiaries, is collectively referred to as ',the system., Pertinent information with respect to Canars joint-ownership interest m Seabrook 1 and information Regulated subsidiaries of the System have established relating to operating expenses which are included in the various regulatory assets in cases where the Massachusetts accompanving financial statements are as follows:
^
Department of Public Utilities (DPU) and/or the Federal tw1 IW2 Energy Regulatory Commission (FERC) have permitted, m,n,,, ,n w as,nu or are expected to permit, recovery of sEecific costs over '"W P h"nonennw 5233.140 i3wi rianmpaonem,150
\uclear fuel 1 % 514 17,0M Canali share:
time. At December 31,1993, principal regulatory assets A(cumulated Jerreaahon l'ercent mteresi 3.32 :;
and amortuation 04,771) (25,3C Er.titlement tMW) 40.5 included in deferred charges weh $2}.9 million for ConstrucDon work in+cruce date 1990
'"P"#'"
transition costs associated with FERC Order 636,515.5 g g[ "M"lr'a"$N"E ; 202n million for unrecovered plant and decommissioning y p,g g costs for the Yankee Atomic nuclear plant,515.5 million OP "annerense' I uel 5 m3 s 3.u32 5 4.337 for abandonment and nonconstruction costs related to Other operahon 4.%0 5J05 4,2 N
%nntenance m 1 ;ns Iml theS.eabrook project,58.9 million for postretirement Depenahon 6.522 n[42n 7,34 benefits costs,57.4 million in litigation costs associated ^ " " " ""
sl7,167 51K911 sluB%
i with a settlement agreement with lloston Edison -
Company relative to the Pilgrim nuclear power plant Canal and the other joint owners have established a and 57.3 million related to deferred income taxes.
Seabrook Nuclear Decommissioning Financing Fund to The more sigmficant regulatory liabilities, reflected cover post-operational decommissioning costs. For the in deferred credits, include $17.9 milhon related to years 1993,1992 and 1991, Canal paid $259,000,5235,000 income taxes and $15.5 million related to the Yankee and 5181,000, respectively, as its share of the cost of this Atomic nuclear plant.
fund. The estimated cost to decommission the plant is 5366 million. Canal's share,less its share of the market 4 3) COMMITMENTS and CONTINGENCIES value of the decommissioning trust, would amount to approximately 511.t> million.
Go Construction The system is engaged m a continuous construction # """ "" "F" M""#"
program presently estimated at $358.3 million for the Cambridge and Commonwealth Electric have long-five-year period 1W4 through 1WS Of that amount, term contracts for the purchase of electricity from various 19 l
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1 decommissioning of the unit, are billed to Cambridge and l
- b h' CONI)ENNEI)
Commonwealth Electric and collected from customers.
Cambridge and Commonwealth Electric have estimated FIN ANCI A1 STATEMENTS their unrecovered share of all costs associated with the shutdown of the facility, recovery of their respective sources. Generally, these contracts are for fixed periods plad investment and decommidioning and closing the and require payment of a demand charge for the capacity plan: to be approximately $15.5 million. This amount is 4 entitlement and an energy charge to cover the cost of fuel. reflected in the accompanying Condensed Balance Sheets l Pertinent information with respect to life-of-the-unit con- as a liability and a corresponding regulatory asset at i tratts for power from operating nuclear units is as follows: December ll,1993.
L ormei twut Mame Vermont y i a nke b nkee Tankee Pilgnm i quav On nership 4 ;ou 4 00'; 2 NP; - (c) Em'iromucntal Matter.s ,
Plant I ntolomerit 43r 3 3 W; 2.2% 11.09 .
'I.he system is subject to laws and regulations admin-Plant capaNhtv nnvi ;oo o 870 0 4% o as4 7 ,
2; 2 n: 73 i istered by federal, state and local authorities relating to the ksiem I ntalement nnvi 31 2
( ontract I spiranon noe tws oos 201: 201: quality of the environment. These laws and regulations iwi Aouai c ost sum: s w oo 533x3 s3.2m affect, among other things, the siting and operation of tw2 At tual cost "D n.671 3:470 37.5 ln .
10 ein 7v;o av7o 40.;7s electric generating and transmission facilities and can ;
IwT Actual cost tw4 i somated cosi 10 on; h7;; m; ai on , require the installation of expensive air and water pollu- q tion control equipment. These regulations have had an C.ambn.dge and L~ommonwealth Electric pay their share '
impact upon the System's operations in the past and will i #
of decommissioning expense to each of the operators of the t i
continue to have an impact upon future operations, capital nuclear facilities as a cost of electricity purchased for resale.
, j costs and construction schedules of major facihties. ;
The system has also contracted to purchase power and l transmission capacity from various other generating and (p FERC Order No. 636 transmission facilities as follows:
g snmated On April 8,1992, the FERC issued iwl iw2 im tw4 Order No. b36 (Order 636), requiring sm ( o~t snv t ost Mw cosi snv t ost interstate pipelines to unbundle beparate) existing gas sales contracts Purt based Power Nuclear Wi 54 3 esn 1; 3 $ 3.546 15 4 s 4.47h 21.1 5 Wn into separate components (gas sales, lipro 3; 4 14.214 203 13.161 23.2 12370 No 14r7 transportation and storage services).
- 4,4% 1620 69,742 161.0 lo4 71u 261 3 1 ;;,3n3 cogenerahng 117.o ;
Order 636 provides mechanisms Waste-to-enerp and other 12 T o 3Ros4 1141 3944 54 1 33.un - u]p 442;" which will allow customers such as ,
T rans missmn Commonwealth Gas Company 4.247 4.4;7 il h a roquebea -
1470 -
4.213 - -
(Commonwealth Gas) to reduce the Costs under these and other contracts are included in level of firm services from pipelines and permits the ;
electricity purchased for resale in the accompanying "brokering" of excess capacity on a temporary or Condensed Statements of Income and are recos erable in permanent basis. Order 636 also requires pipelines to [
ievenues through either the Fuel Charge or in base rates. provide transportation services which allow customers to receive the same level of service they had with bundled f contracts. Pipelines were required to be operating under id) Yankee Atomic Nuclear Poiecr Pl.mt Order 636 by N,ovember 1,1993.
On February 26,1992, the Board of Directors of Yankee As a result of implementing Order 636, each pipeline r
Atomic Electric Company agreed to permanently discon- company is allowed to collect certain " transition costs" tinue power operation of its plant, and in time, decom- from their customers. Commonwealth Gas has been mission that facility. This plant provided less than 19 of billed a total of approximately $16.9 million from system capacity. Cambridge's and Commonwealth Tennessee Gas Pipeline Company, Algonquin Gas Electric's respective 29 and 2.50 investment in Yankee Transmission Company and Texas Eastern Transmis'sion Atomic is approximately $1 million. Presently, purchased Company through December 31,1993. It is anticipated j power costs, which include a provision for ultimate that as much as $45 million in transition costs could be 20 . a ,
_ W
$7.9 million of the amount paid to the pipehne Notes to C()NI )l{NSiil) companies relates to gas inv"ntm costs being FI N A N( ~l A l ' b', l A l'l:~ M i { N TS allocated new storage services under Order 636.
The Coi..pany will recover these inventory costs through the CGA.
sought by these suppliers through a series of FERC '
filings over the 12 to 24 month period which began on June l,1993. The largest element of the aforementioned ( Other Comnntments transition costs results from the pipelines' need to buy Other major commitments of System subsidiaries out gas supply contracts entered into prior to Order 636. include construction expenditures, maturing debt The total amount of such costs ultimately billed to issues, sinking fund payments and support payments Commomvealth Gas will vary depending on the success as summarized below:
of the pipehnes in negotiating settlements with their
, g g former suppliers, and final review hy the FERC.
dbilars m Thousand a Commomvealth Gas is actively reviewing the prudency construction openditures 571M2 57n.t su 5s0.403 son.918 so2 sus of transition costs billed in order to minimi/e costs to Wtunng debt issues 10A M 2i000 3W0 1430 IWO its customers. Commonwealth Gas has recorded its smtmg tuna requirements syn 3r3 8.2s3 7+s3 7,69 estimated liability based on amounts incurred bv the-respective pipehnes as of December 31,1993 Support pnments 4,4 r 4.419 437n 4.' N 4.30s On October 29,1993, Commonwealth Gas received j
preliminary DPU authorization to recover these costs, with carrying charges, through the c,ost of Gas 4) ENERGY PARK DEVELOPMENT Adiustment (CGA) over a four year period which As a result of unsuccessful efforts to develop an began in November 1993. As a result, a ti tulatory energy park, the System announced on January 23, asset totaling $21.9 million, net of $400,000 recovered 1992 its decision to write down its investment in the l during the fourth quarter, was recorded as of Freetown Energy Park project. This action resulted December 31,1993 and reflected in deferred charges. in the recognition of a charge (net of tax)in 1991 of in addition, a related hability of $13.1 million was $lU million recorded by COM / Energy Freetown refletted m deferred credits. Also, approximately Realty, a wholly-owned subsidiary of the System.
, appearing in Exhibit A to the proxy statement for the C l "I ol } NI)l{I'l{NI)lf NT 1994 annual rneeung of shareMdm of the Spen (not presented herein). In our report dated February l e,,
PUlit l( ACC1)UNTANTS 1994, also appearing in that proxy statement, we expressed an unqualified opinion on those consoli-o the Board of.frustees of Commonwealth dated financial statements.
E.nergy System In our opinion, the m. formation set forth m. the accom-panying condensed consolidated balance sheets as of We have audited, in accordance with generally Dwember 31,1993 and 1992, and the related condensed accepted auditing standards, the consolidated balance sheets and consolidated statements of capitalization statements of consolidated income and cash flows for wh of the Ouee years in the period ended December 31, of COMMONWEALTil ENERGY SYSTEM (a Massa-1993, is fa rly stated, in all material respects, in relation chusetts Trust) and subsidiary companie3 as of December 31,1993 and 1992, and thi~related consoli- to the consolidated financial statements from which it has been derived.
dated statements of income, changes in common shareholders' investment, changes in redeemable
- preferred shares and cash flows for each of the Ibf on, Massachn3cf ts Arthur Ander.sen & Co.
three years in the period ended December 31,1993, Fel'rnary 77,1994.
27
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C oMi>^i<^uvit Srausucai. Dam Commonwealth Energy System and Subsidiary Companies s Ol I 1992 1991 1990 1989 1993 tooltars in Thousanda I
OPERATIONS $ 835,748 5 827,498
' S 940,699 $ 906.450 $ 873,434 Revenues ,
Operating Expenses -
712,349 690,991 665,255 645,019 635,938 Operations 40,574 39,836 44,312 53,812 48,127 Maintenance 50,861 44,660 45,497 34,625 48,493 Depreciation and amortization 37,667
~
53,282 44,837 39,751 28,072 Tases 826,525 793,978 772,400 756,357 )
854,698 79,925 79,456 63,398 71,141 86,001 Operating income 4,937 3,784 1,410 (13,419) 2,342 Add-Other income (expense) 43,951 41,438 46,565 43,104 34,460 ,
Less-Interest charges 45,834 39,897 19,472 22,636 41,618 !
i f Net income 1,352 1,412 1,473 Preferred dividends 1,230 1,291 l
$ 44,604 5 38,606 5 18,120 $ 21,224 $ 40,14:3 Earnings applicable to common shares Sources of Consolidated Net Income-
$ 30,301 $ 28,415 $ 32,874 5 24,953 $ 26,975 Electric 14,855 3,120 (2,542) 12,386 16,299 Gas (3,373) (16,522) -
225 2,257 l l Steam and ather (766) 5 45,834 $ 39,897 $ 19,472 5 22,636 5 41,618 l Total i
FINANCIAL Property, plant and equipment (including construction work in progress, net 51,409,997 $1,384,634 51,335,795 51,304,441 $1,231,564 and nuclear fuelin process) 425,483 406,069 372,987 338,054 316,007 Accumulated depreciation and amortization
{
l CAPITAllZATION $ 412,211 5 342,803
$ 458,893 5 368,092 5 409,582 l Long-term debt (1)
Preferred shares 15,480 16,300 17,120 17,940 18,760 'l 337,070 315,219 300,859 307,282 310,566 Common equity
$ 811,443 $ 699,611 $ 727,561 5 737,433 $ 672,129 ,
Total l
(1) Includes rnatunng long-terrn debt.
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STa risTicai. DATA Commonwealth Energy System and Subsidiary Companies ,
1993 1992 1991 1990 1989 STATISTICS and RATIOS Unit Sales -
MWH - Residential 1,744,181 1,726,139 1,694,445 1,741,260 1,849,225 Commercial 2,008,213 1,951,228 1,929,852 1,952,636 1,977,156
, Industrial 411,527 414,777 419,940 455,795 480,961 Other 392,103 377,728 362,859 369,406 376,837 Total Retail 4,556,024 4,469,872 4,407,096 4,519,097 4,684,179 Wholesale 3,665,089 3,898,924 4,027,714 3,194,795 3,368,889 Total 8,221,113 8,368,796 8,434,810 7,713,892 8,053,068 IlBTU- Residential 22,252 22.392 19,851 19,478 22,328 Commercial 10,931 10,913 9,575 9,113 10,160 Industrial 4,205 4,717 5,388 5,478 5,710 Other 1,831 1,788 1,581 1,383 1,504 Total Firm 39,219 39,810 36,395 35,452 39,702 Interruptible 1,896 2,464 2,937 2,993 3,671 Total 41,115 42,274 39,332 38,445 43,373 Capitalization Ratios - -
Long-term debt 56.6 % 52.6% 56.3 % 55.9 % 51.0%
Preferred shares 1.9 2.3 2.3 2.4 2.8 Common equity 41.5 45.1 41.4 41.7 46.2 Total 100.0 '7r 100.0 % 100.0 % 100.0 % 100.0 %
Return on average common equity 13.7 % 12.5 % 6.09 6.9 % 13.3 %
Common share dividend pay-out 66.8 % 76.2 % 160.4'1 133.8 % 67.6 %
Average price / earnings ratio 10.4 10.2 19.2 15.8 8.2 Common Share Data -
Earnings per share (1) 5 4.37 $ 3.83 $ 1.82 $ 2.16 5 4.14 Dividends paid 2.92 2.92 2.92 2.89 2.80 Annual dividend rate at end of year 2.92 2.92 2.92 2.92 2.80 Ikiok value 32.74 31.08 30.06 31.13 31.87 Closing price range High 50% 43 39% 38% 38% l Low 40% 34 % 30 29h 29% ,
(1)liased on the average number of shares outstanding.
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e m 4 a
CORPORATE DIVISION
] ,K U % f'I:I 5 att<l O f: n C I: N s William G. Poist, j
I"mes A1. nrown, ta Sheldon A. Buckler, Vice President-Chief information Of ficer-
~
.g g Vice Chairman of the Board, Polaroid Corp., j Leonard R. Deranna, Cambridge, Massachusetts Vice President-Systems, Planning and Devek pment j )
I"'" D* R"PP li' m Henry Dormitzer, Financial Vice President and Treasurer 6 i
") formerly Executive Vice President, Wyman Gordon (
AIICI'"fl E* 3"IIIP""'
Company, Worcester, Massachusetts Vice President, Secretary and General Counsel ,
l I I'" ^* W"l'"' ,
in Betty L. Francis, Comptroller Comptroller, Bank of Boston Corp., Boston, Massachusetts ELECTRIC DIVISION l m franklin M. Hnndley, Russell D. Wrigitt, j
- Member and a Managing Director, Rich, May, Bilodeau & President and Chief Operating Of ficer l
Flaherty, P.C., Boston Massachusetts ( Attorneys) Andrew S. Griffiths, Vice President- Admimstration William J. O'Brien, James 1. Keane, formerly President and Chief Executive Officer, Vice President-Power Supply and Transmission The Hanos er Insurance, Co. Worcester, Massachusetts Deborah A. AscLaughlin, Vice President--Customer Service William G. Poist, Jolut R. Williams, President and Chief Executive Officer of the System Vice President-Operations l and Chairman and Chief Executive Officer of its principal subsidiaries gas DIylSION l
i Kenneth A1. Stargossian, President and Chief Operating Otficer m Sinclair Wecks, Jr.,
- Chairman of the Board of Trustees of the System; Chairman Stephen H. Btvant, of the Board, Reed & Barton Corp., Taunton, Massachusetts Vice President-Marketing and Customer Relations l
Samy II. Ibrahim, Ia Gerald L. Wilson, Vice President-Gas Supply
- Vannevar Bush Proft~.or of Engineering, Massachusetts Richard D. Johnston, institute of Technology. Cambridge, Massachusetts Vice President-Operations p
m Member of Auda Commatee (2) Member of becutwe Compensaion Commatee m Member of Nominatmg Committee (4) Member of Bemfit Reciew Committ The sole purpose of this report is to give pr esent security holders information ahma this System and its subsidiary companies andit is not a representation.
prmpectus or ctrcular in respect to any sec uruy of this System or ofits subsidiary e umpames.
The name "Commonweahh Energy System" means the trusteesfor the time being (as trustees but not individuallya under a Declaration of Trust dated Des ember 31. I926. as amended. whk h is hereby referred 10. and a copy of which has beenfded with the Secretary of The Commonweahh of Massachusetts.
Any agreement. ohhgarwn or liability made. entered onto or incurred by or em behalf of said System binds only the trust estate. and no shareholder. director, trustre, officex,or agent assumes. or shall be held to. any liabihty by reason thereof.
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DIVIDEND PAYMENTS Slia r cliolticr I N FOR M ATION Dividends are paid by the System subject to declaration by the Board of Trustees. Common dividends are paid on the first day of February, May, ANNUAL MEETING August and Novernber. Preferred dividends are paid All shareholders are invited to attend the next Annual on the first day of Januarv, April, July and October.
Meeting; which will be held on May 5,1994 at the -
System's corporate headquarters at One Main Street in SHAREHOLDER SERVICES Cambridge, Massachusetts. A formal notice of the The System has a dividend reinvestment plan which meeting together with a proxy statement, a form of provibles holders of Common Shares with an econom-proxy and financialinformation is enclosed for use by ical and convenient method for purchasing additional shareholders entitled to vote at the meeting.
Common Shares of the System without paying CLOSING MARKFT PRICE ofCOMMON SHARES ami DIVIDENDS PAID The System also of fers direct deposit to Common Shareholders so that dividends can be received faster.
1993 Iligh Low Dividends Dividends can be electronically credited to a checking, 1st Quarter S48 h S405 savings, credit union or thrift account.
S.73 2nd Quarter 4HS 43'/ .73 A seasonal mailing address for your shareholder 3rd Quarter 50', 40. .73 account (s)is also available for IIie period of time 4th Quarter 492 43 .73 requested. This can help avoid lost interest on 1992 Hich Low Dividends ist Quarter S39 S3C S.73 For more information about these services or any 2nd Quarter 40 34 % .73 other inquiries, please contact a Shareholder Services 3rd Quarter 43 395 .73 representative at the appropriate toll-free number 4th Quarter 43 40 % .73 listed below:
The System's Common Shares are listed on the 1-800-336-3773 (within Massachusetts)
Boston, New York, and Pacific stock exchanges: 1-800-447-1183 (outsid'e Massachusetts)
Ticker Symbol "CES" FORMS 10-K amf 10-Q Daily Newspaper Quotation "ComES" The System's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the TRANSFER AGENTS and REGISTRARS Securities and Exchange Commission are available Shareholder communications regarding transfer of without charge upon request to:
Common Shares or lost certificates should be directed to:
Michael P. Sullivan
, """"" ' ' " ' ~
Vice President, Secretarv and General Counsel Commonwealth Energy System Transfer Agent and Registrar:
P.O. Box 9150 The Iirst National Bank of Boston P.O. Box 644 Cambridge, M A 02142-9150 Boston, M A 02102-0644 P.
Many of the information requirements of Form 10-K
- are satisfied by the 1994 Proxy Statement.
Preferred Shares -
Transfer Agent: BOND DATA Commonwealth Energy System Trustees under indentures of trust are:
P. O. Box 9150 Citibank, N. A. -
Cambridge, M A 02142-9150 Canal Electric Company Series B, E and F Bonds Registrar: State Street Bank and Trust Company -
State Street Bank and Trust Company Other Subsidiary Companies' Long-term Debt ,
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f o%@m uiu : Energy' e+
Cornnionwealth Energy Systent One Main Street 1%t 01fice Bot 9I50 h Canibridge, Massachusetts 02142-9150 Telephone 1617) 225-4000
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& l'ruitest witi; soph'an Ink on recyt fest paper to purcserve our crtetronrucnl anal natural resourt c;
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