ML20101M026
| ML20101M026 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 12/31/1991 |
| From: | Ellis W, Fox B NORTHEAST UTILITIES |
| To: | |
| Shared Package | |
| ML20101M003 | List: |
| References | |
| NUDOCS 9207080032 | |
| Download: ML20101M026 (123) | |
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NORTHEAST UTILITIES "'
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_ _ _ . _ _ . _ _ _ _ . . _ _ _ _ _ _ _ . _ . _ _ _ _ - - - ~ _ . _ _ _ _ _ _ _ _ _ _ _ 1991 ANNUAL REPORT
- e i THE REPORT THE COMPANY
' - The past year had elements of Nonheast Utihties a the parent great satisfaction, tempered company of the NU system somewha' by the economy and a (collectively referred to as NL1).
NU n one of the largest electric
; x : temporary falloff m our nuclear
.- operations. On the whole, utthries m the country and the i however,it was a ye,r of positive largest m New England, with
- 1 achievements. Our aggresswe 7,HS employees serving about g cost-management activities- 1.26 mdhon customers m i
f- supp!emented by the impact of rate Connecticut and westem
- - c -
decisions-helped offset the effects hiassachusetts. ! _= - ' of the recession and resulted in Durmg 1959 and 1990, NU improved financial performance. added two nonatihty subsidiarv hiost of the activities that compan es as part c. fits strategic w -. contributed positively to 1991 diverufication actmnes. These results will have a sustained, two enuties, Charter Oak Energy, Nn u e m crs musnre the nse or clei cru ao h t they p sitive influence. This strong Inc., and HEC Inc., are dpcussed m 1 basis for the continued more detail on page 15 et this d,~ wmb,,h:c the necJs char improvement and strengthenmg report. Current NU subsidiaries unin uin d, unt< nrcq nse, 1 of NU's operations is enhanced by are hsted below: h nk t, n .ulcqn.uc suppbes of adequate gennanng capadty umd l criern u h.ibh Jcin creJ midway through the next decade. Electric Operating Subsidiaries ; I Thi erL sen me a b tcJ m As a result, our new construction The Connecticut Light and ; ! - iht nu ro rcru s< rn s NL N , needs for the next several years will Power Company dcJu.ecJcipp! m e- h is be relatis ely modest and should Western hiassachusetts A.i ,nA.h, arhcnnnal Electric Company Aill' m cdcJ te nu , t r oJ n ; have a positive induence c,n the level and quality of future cammgs. Holyoke Water Power Company i n< n, n .parcou nm i , pl .n
, rt< , i < h r o Gnarc u ; The essence of our strategic Support Subsidiaries plan is to improve financial Northeast Nuclear Energy i
m 1 . n a e t hm Acm i n <, perf rmance by mcreasing the Company (hiillstone nuclear j w a n he n.. i d n n .nnanm competitiveness of NU's core operations) f ~n u J< r e ~ns t h n uW business, hiuch of this annual
- mun r h< , onnnoc1 Northeast Utilities Service l report is devoted to elements of our Company (systemwide service) pr. .tJ M cr wh . .t rhe Nonutility Subsidiaries business strategy. The report also i
Nt n.u.p,er
.monacm m uhu m
) discusses the progress achieved in the complementary strategies that Charter Oak Energy, Inc.
(cogeneration) address business diversification and HEC Inc. (energy management)
.nn d;on a n en! m n inJ ge graphical expansion: One Realty Subsidiaries
..eco ~ < < ompei a n ,n A, ,
section describes the activities of The Quinnehtuk Company
$nb b i
the two subsidiaries involved with The Rocky River Realty Company [n' ' diversification, and another tonJ nm m dh < h mein'. the u.n Nt sicu , nul provides an update of the Public NU is in the pruss of acquiring
<onJn,on husme- Bath Service C mpany of New Pukhc Service Company of New Hampshire acquisition. Fmally. Hampshire (PSNH), includmg on r a o ,n.dh ..nJ tm n a udh.
the report includes a guest essay oni 4 m c, uc s le irk that addresses the ways m which its share of the Seabnuk nuclear delnu.acJ m oursn nega . power plant. The three subsidiaries the functions and operations of that relate to the acquisition plan our gero.x h n successful utilities will evolve m apr bdom i h mame. bor our response to the competitive
-nun o ment io .openor PuHic Service Company of, business environment.
certonn nu e rem""" New Hampshire
'"""" North Atlantic Energy Corporation (ownership of PSNH's share of
. Seabrook)
North Atlantic Energy Service Corporation (Seabrook nuclear
- operations)
em.gv . Contents ~Page L Highlights . .. .. . . . 1 Letter to Our Shareholders . ... .. . 2 PSNH AcquisitionUpdate .. . . 5
. System Perfdrmance-Demand . 6
. Syst-m Performance--Supply .. . .. . . 8
- Unlity Business Dynamics (Guest Essay) . . . 10 '
o ,
. : . . .w .
Regulatory Activities , .. 12 .
,w .
v
. Cost Management ., . . 14 r . %, ' . , , ,.
15
'.Nonutility Subsidiaries .. .
f Customer and Community S-rkice = 16 -
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l5 Financial and Statistical m. Section . -17
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; Shareholder Information 1. . 54 -
~'
' Cfficers and Trustees ! . . . . . . . 56 HIGHLIGHTS 1991 1990 'yyc'[ < "3 Operating Revenues $2,753,803,000 $ 2,616,319,000 5.3 Net incomg $236.709,000 $211,007,000 12.2 Earnings Per Common Share $2.12 $ 1.94 9.3 Common Shares Outstanding ( Average) 111,453,550 109,003,818 2.2
, Dividends Paid Per Share $ 1.76 $1.76 -
Sales of Electricity (kWh-Thousands) 29,300.000 29,611,000 (l.1) Electric Customers (Year-end) 1,264,928 1,260,181 .4 Construction Expenditures u $250,482.000 $292,902,000 (14.5) (a) Excludes nudue fuel. i.m _ . _ _ _ . - _ . _ _ _ _ . _ - . . . _ _ _ _ _ . _ _ _ _ . _ _ _ _ _ _ _ _ . _ . . . - . . . _ . _ _ _ . _ . . _ _ _ _ _ _ . _
\ LETTER TO OUR SHAREHOLDERS In its first 20 years of existence, as we enter the 1990s-the exceedmgh well for D vears Northeast Utihties (NU) put in imract of a ugemn regional We've set a number of recorJs for place one of the nation's prcmier economy. We're ricased to outstandmg performanc e, and-systems for providing rehaHe. report that our strategy has pnor to IOl-vor comrmite etTicient electric service. As a key been suf6ciently tlexible to capacity factors en ceded example, by the end of 19% NU accommodate all these Pressures. nanonal averaecs for well over was operating fo,r nuclear plants We have the resources, ten years SeconJ, because our and had capaci' notlements m capabthries, and the skilled performance leveh were not l three of the och ;ur nuclear employees necessary for ulomate meenne our own heb l facihties orerating m New success. Our dedicanon to expec tanons, we had mmateJ England. In fact, nuclear power outstanJme operanonal comrrehensive stuJics aimed at i is now the primary source of perfonuance and customer unrrovme nuclear operatmns i enerey in the NU system, service remams and is raueJ even before the aJtent of the l typically accounting for some with an equal and comranHe mapr outnes expenenceJ 60 percent of total energy focus upon compentiveness and dunng 1001 Emally, we are l requirements financial results. Likewise, our committed to resolvmg our In the late 1980s, we were planning capabiht es are albed current ProNems and to ! faced with the emergence of with the mstehts necessary to recaining our roution as a leder ( l tough comretinen, Primanly meet the comretinve and in nuclear oreranons anJ have , economic challenges every reason to be con 6 dent we l that lie ahead. We've a will succeed. l wimam 8. Ems ' way to go, but the Overall, we are somewhat , results achieved m a disappomted that 1901 rate case l very difficult year are decisions eranted only about ( indicative of our will 40 percent of the total amounts j anJ ability to succeed. requested. However, it is l important to note that The 1991/n Review Connecticut Lmhr and Power l The year just enJed Company (CL&P) was allowed ; l about 70 percent of those ;
- was both different and dif6 cult. We take pnJe requested revenues that dacctly ;
in the level of NU's affect earnmgs. The phase-m of l 4 overall perormance an adJinonal 5 percent of , 1 tor the ye in both allowed Millstone 3 costs and a
..w-fmancial and i
. MI #' operational areas, but !
4 that pride is tempered s,,wm e, l by concerns about out - i l from nonutility power producers. nuclear performance. Three : l The business strategy we significant aspects of 1991 ! i I developed in response to this ar +cularly noteworthy: ~
'ecisions, our cost- l radically altered business _
environment is based on the ..... cement initiatives, and a ; f.dloff in our nuclear perfonnance. l l conviction that improvement .. in financial performance is The major disappointment of ;- ; funJamentally related to the the year was a series of problems , t l l increased competitiveness and at the nuclear plants we operate. ! ! strength of NU's core business. The causes of these proNems and : l It also recogni:es the incremental the actions taken to correct them g l
- contnbutions of geographical are desenbed chewhere in this report. Here, however, we woulJ expan3 ion and thversi6 cation ,
j j into related enterprises, like to make three specific observanons. First, NU has
~
gg l l To the pressure > of i i competition, we can now aJd- operated nuclear plants l
- .... 2
i three-year phase in of CL&P's was achieved without having to reflected in rates and CL&P'., share in Seabrook are particularly reduce or ehminate dividends, investment should be totally in sigmficant, since they increase unhke many others in our rate base by the twginnme of 1995. l the cash portion of total inJustry. This year, we've A three year phase-in of CL&P's l carnings. From 1988 through demonstrated our ability not Seabrook mvestment is in place l 1991, the nonca3h portion of only to mamtain earnines, but with reculatory approval. The earnings Jropped from over aho to improve them somewhat, end of these deferments, along ! f during a major economic with modest new construction 50 percent to approximately l l 28 percent. downturn. The lower sales we needs, means that the noncash
- The Massachusetts rate case experienced in 1991 retlect the ponion of total earnines should i deci3 ion reflects economic impact of a deepening of the realities in that state anJ recession, a continuation of - - -- - - -
I corrw. mimg prQures on moder.Le weather, and the EARNINGS /DMDENDS$b'c' ! regulators to deny any increases.. effecoveness of conyvation !
,. g j l l' ,,
Western Massachusetts Electric programs. Still, NU s earnings , y 4py
, . p g b ;
Company (WMECO) remains for 1991 were >2.12 ret share, well below industry financial up 18 cents from 1990. This 1,... .
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performance levels, and a improvement is attnbutaHe ' d.ph.;.;.:......... ..a .. .,: l new rate application was filed in December. to cost-control measures, rate uccisions, anJ lower interest m.. y%gy%m.. g l, 4 Our expan3 ion of cost- charges. i
~
W 6, i containment measures had a positive influence on 1991 Per/armance Outlook kh g,; l h@,Y camings and helped offset the in addinon to the transient effects of the current recession, OG ; O 0 P
%4 impact oflower retail sales and less-than-aJequate rate relief. the region is also undergoing an ! b ... . . .N Some of the spending cuts economic restructuring that may J. %
represented postponements, but have longer term implications. 13. O QRJ many will become pennanent. Thus, we project that annual TJ. - 5.t.{ The latter measures have become growth of retail sales m NU's , 3 b' g part of cos:-management ettorts existing service area will be 4 ,s 3~ that fundamentally address the about 1 percent for the next L % way we will conduct our business in the future. Two other five years, while a combined NU Public Service Company of g*i"ygpyy,yggjig( t important cost-control initiatives New Hampshire (PSNH) were the implementation of a system would achieve slightly be 1.4 percent at the end of 1996, five-year business planning higher levels, compareJ to 28 percent for 1991. ! process and the establishment of While the overall economic Prcmress also continues in the l a Corporate Business Practices outlook for the region is modest, two strategic areas Jesigned to j Group. These and related there are a number of bright supplement the performance of ; i accomplishments are described spots in NU's fmancial our core business-diversihcanon more fully on page 14 of this prospects. Aside from the and geographical expanson. ; report. The goal of our cost- acquisition of PSNH, NU has Charter Oak Energy, Inc., (COE) ; management efforts is to help rather hmited fmancing needs anJ HEC Inc., (HEC) represent ! improve earnings while limiting for the next several years. The our relatively madest the level of future rate requests. most significant requirement will diversification mto energy-related We've been quite pleaseJ that be approximately $190 mdlion businesses. COE was formed to ! key operational indicators in the for the replacement of two steam invest in nonutihty power i areas of system reliability and generators at Millstone 2. No generanon, whde HEC provides ' fossil / hydro plant availabdity new generating capacity energy conservation services. were met or exceeded, even as investment is currently expected Both subsidiaries are discussed on : costs were very tichtly controlled. until at least 2005. Also, pace 15 of this report. Earlier in our history, our WMECO's allowed investment The acquisition of PSNH wdl commitment to nuclear power in Millstone 3 is now completely expand NU's revenue and shoulJ l 3.....
enhance the cost-effectiveness of performance. Cost management partners working for the overall the expanJed system. Despite mitiatives, the five-year business success of the companv. delays in obtaining necessary planning concept, and creation Customers and sharehouers regulatorv approvals, we remain of the Corporate Business expect much of the company. convinced that the merger offers Practices Group are but thr-e and it is our commitment that significant benefits fer all of NU's vaned responses m this neither will 6nd us wantmg. customers and would contribute new reality. In different ways to improved long-term earnings. and to v,rying degrees, c ach . A major obstacle in the way of response directly affects out employees.
$gg ,g completion was overcome, on january 29,1992, when the It's important that employees Wilham B. Elks Federal Energy Regulatory understand that NU must Chairman and Commission approved an contmue to thange the way it Chief Executive Of6cer amended decision that resolved operates and that such changes concerns Gout equitable wdl entail different expectanons /
transmission access. Whde we and job requirements. As a first / ,@ f still need several more regulatory step in this transitional process, / approvals, we have reasonable we have introduced new Bernard M. Fox expectations that the merger can performance appraisal and PrestJent and be completed during the second compensation programs for Chief Operating Officer quarter of 1992. exempt emploices. The new It should be clear, then, that programs are mere flexible and we have done much to Unprove participatory. They provide a operational and financial clearer relanonship between performance of our core individual performance and business. Our diversification corporate objectives and more March 2,1992 and expansion initiatives will effectiveli link performance also contnbute to NU's to pay by emphasi:ing improved fmancial outlook. compensation incentives. Based on everything we know Change of any type can be today, we believe NU's dividend disconcerting, and we recogni:e is well founded at the current that employees are concerned level, and we're guardedly about changes that have such a optimistic about the longer term direct bearing on their careers n ,,, ,,,. m mm,,ya ,,,,n, ,, prospects for dividend growth. and their compensation. We m , ente Nm NU.,n my g&gw% Based upon this overall are convinced, however, that- m m5, sewmun yeun m, i Nea.ne assessment the Board of Trustees more than ever-individual p esufent of NU. the ned of Turus performance is vitally important announced an -Je b mancumar voted, on January 28,1992, to to the success of the company. '"""""" gm, undo se am n!ae maintain the indicated annual dividend rate at $1.76. In our opinion, the steps N"~*"""""d "" I"*""? 8 $2-I ua ucp am<n as auf umw e er on already taken are necessary for g g g g g g g , g g % ,a A NeW BUS / ness that success and equitable for g ,m m , , no ,,a,a n, m ,,en, x v Environinent employees, but they are only the p,ca.m una aicopeanne og<o. m The pace of change in our first steps. We still have ahead wccud mea acteiuuriw ol/<o. industry has accelerated of us the task of exploring The Am colh 9 me m rcmma acta e a' dramatically. Utilities have compensation programs that d=on of NU'5 Sw'd of T*'"$ "*d Aucun L MS. Benue Fox n an had to become proficient in build collaboration and "'* competitive techniques and the teamwork into the process. 7"[""j[g complexities of mergers and Our goal is to build upon an w, ,na. 3,3 m mue aany yea, acquisitions. Where quality organi:anonal philosophy sm,mah ana egxnug was once a matter of inspections that fully recogni:es the (4Tb and controls, more insightfut contributions of NU's skilled and rnE utilities now integrate quality dedicated work force and that concepts into every aspect of treats all employees as business .... 4
PSNHACQUISITION UPDATE In early 1988, Public Scrt> ice Company of New Hampshire The largest riece of tha (PSNH) filed for bankruptcy as a residt of the financial burden f'"2"'i"R " di be arrnannately m5 nullion of NU common i ofits otenership interest in the Scabrook nuclear power plant' eqmty. NU began the pnicess Northeast Utilities (NU) capitali~cd on this opportunity to of raiune these funds on expand its system, since the PSNH system and sertice territors December 3,1991, when it sou offer substantia! strategic and economic benefits. $1J5 nplion of 15-year notes to tuna an Employee Stock Ownership Plan (ESOP). NU is An NU-PENH merger shoulJ abihty to use :ts transnussion Pl annine an addmonal ESOP reduce overall costs as a result of systera freely. However, in financine of up to $75 milhon merger related efficiencies in January 1992, the FERC dunng the first quarter of 1992. nuclear onrathus, fossil. fuel amended in Frevious decistor. NU also is plannine a pubhc unit availability, peak-load and developed favorable offenng of about $200 million diversty, and admini,tranve provisions concernmg this spnne. In aJJition, NU's expenses. These savings should transmission access. dmdend reinvestment program amount to some $958 million State regulators in has been extremely well-received (present-value basis) over ame. Connecticut are now reviewing by its shareholders and should The cornerstone of provide up to $125 million in NU's acquisition is a equity over the next t~u three years. Lastly, some comrrehensive rate P lan for PSNH based on $355 mdlion of bonds seven annual 5.5 percent
~
w $* ' will be sold by North Atlantic Energy
' ~
rate increases. The plan .
~-l has been approved by Corporation (N AEC), a li the New Hampshire new company that will
' ^
Public Utilities
, be formed at the mereer.
Commission and the i NAEC wdl own PSNH's
- 'I ; exntmg share of New Hampshire Legislature and has been '
., 3j Seabrook.
affirmed by the New ~' Hampshire Supreme Summary - Court. Since NU first expressed The acquisition process was the merger in light of the recent interest in acquiring PSNH, structured to take place in two FERC decision. In addition, the several developments have steps. In Step 1, which occurred Nuclear Regulatory Commission impacted the economics of the on May 16,1991, PSNH cmerged and the Securities and Exchange ~ merger The economic recession from bankruptcy as a teorgani:ed, Commission still must dehver in the Northeast has lowered out independent company managed favorable rul,ags on the merger. forecasc of sales growth for bv NU under a management We anticipate that these PSNH. However, substanually s rvices agreement. The actual arrrovals wdl be secured during lower interest rates, combined merger will be consummated at the second quarter of 1992 and with continuing success in Step 2 but will not occur until that the merger wdl occur shortly idenufymg operanonal cost NU has secured the necessary 1.ereafter. savings, have generally balanced regulatory approvals. the lost sales revenue. Further, Step 2 Financm.# Seabrook's excellent performance Step 2 Status in order to consummate the to date and lower-than predicted in August 1991, the merger, NU will need to oil prices have kept PSNH rates acquisition process took a major purchase existmg PSNH withm the rate plan Projecuons. step forward when the Federal common stock and meet several Thus, we continue to believe that Energy Regulatory Commission additional fmancial obligations. this merger wdl produce real cost (FERC) unanimously approved In total, NU's financing savines and terresents significant the merger, subject to conditions requirements wdl amount to growth opportunines for NU's which would have hmited NU's arproximately $925 milhon. shareholders. 5.....
\ SYSTEM PERFORl4ANCE DEVIAND 1 Primarily as a result of the dotenturn of the regional could exceed 3 percen* m the
- ccanomy, the needs of Northeast Utilities (NU) rcrail W91-1996 Pend abwnt the effects of conservanon; inclu.hne I customers declined slightiy during 1991, < chile teholesale sales ,yo c c(7ce,,, ,ge 7,7c cou,3 9c increased 3.3 percent. NL7 projects positit c annual groicth about 1.8 percent. Simdarly, for the 1991-1996 period of about 1.5 percent for a ules to mJustrial customers are combined NU-PSNH system. That profccrion scouki haec been at 2.3 percent tvithout the influence of NL"s effectite UMw. Cma cut I Consert'ation and load-managcment (C8bM) programs. Demurs. .tsmes neu t '
a '
/ gl'..t. . l l Ibg 1991, NU served an enaHished dunne the summer of ~IN # n W # 4 'Jf. M l 195S. The wmter peak load of average of 1,261,56S retail . .,
i ) customers, meeting their need for 4,704 MW occurred on s n* 23.9 billion kilowatt-hours January 16,1992. O ., 4 ' i l i (kWh) of electricity. Withm the O retail segment, resiJential Demand Forecast The 1950s terresented a l customers accounted for 40 . ., a ' period af sustained economic \ l percent of 1991 sales, followed
- by commercial establishments expansion m the region. NU .
7 -
.ed . '
(37 percent) and the industrial was a direct beneficiary, with . sector (22 percent). ExcluJing sales growing at an average , ! bulk power sales, NU's wholesale annual rate of 3.7 percent during customers required another 1953-198S. The subsequent M
- _
l 1 t04 million kWh, a 3.3 reccent economic downturn had an l increase when compared to 1990. analogous effect-systemwide ; The NU system experienced a sales were dat Juring 1990 and projected to be 0.2 percent, summer peak load of 5,000 dechned shchtly for 1991. rather than the 1.1 rercent level megiwatts (MW) on July 23, Current NU and PSNH that would be hkely without the
- 1991, breaking the previous high economic forecasts indicate a effect of conservation.
i slow recovery beginning ReRecting the effects of , m 1992. However, we don't see conservation and projections l Hadey, Massachusetts the region experiencing during of a sustained weakness in the ! Perstreinuln. Larry tacro/1 David York the 1990s the phenomenal housing market, NU's residenttal ! growth achieved during the sales could increase 0.9 percent l ) previous decade. Total sales annually, well below the levels in ' i for the NU system are Projected the 1980s. l to grow at an averace annual . i compound rate of about Resource Planning \ i 1.2 percent through 1996, Excluding the effects of the ! excluding the impact of the NU PSNH merger, NU's most i
- PSNH merger. Combined recent Forecast of L<ub and
- ,N NU-PSNH annual growth Resources idennfics a need for f should approximate 1.5 percent new resources beginning in the I through 1996. year 2005. At that time, the !
While a moderare economic winter peak load demand is j
- outlook represents the foundation projected io be some 5,777 MW,
' of our sales projections, other or 23 percent hicher than the factors-particularly C&LM 1991 winter peak. A reserve procrams and compention from marcin must be adJed to that i self-generators--do have an Projecnon, bringing the total to l impact. For example, annual 7,080 MW. This level would growth in the commercial sector have been lugher without the i
.... 6 1
l i positive induence of NU's competitiveness. This acuvity smilar partnerships with members C&Lhi programs, which are also createJ full-ume of the private anJ pubhc sectors FrojecteJ to yield winte: peak emp'oyment for over 1,000 to strengthen our economy and to capacity savmgs oi toughly people Junnu a time of economic retain jobs m both states. 840 htW and summer peak sluggishness. NU's C&Lh1 rogramsP have savmes of about 370 htW. In 1991, NU's programs founJ favor with regulators and Again exc uJing the NU- proviJeJ comprehensis e services
- - - ~-~--
to over 150,000 residential PSNH merger, existing caracity anJ purchases should utisfy 80 percent of the projecteJ year customers anJ more than 8,000 mJustrial anJ commercial Q G M 15mn'sud 4 % M rj,5 L ;$ hd
% Q,4 2005 requirement.s, anJ C&Lhi wdl pronJe 11 percent.
cu.stomers. Over their lives. the>e mea 3ure> wdl achieve Gi#lu.,b V frQ){f @ p gyg y$ h,p Cogenerators and small-power annuali:ed energy savings of 3,"f"q g ,. ,p ?""y""""* *
"""""7 producers will provide some 1.2 milhon megawatt hours. #q> L 600 MW, or S percent, of the NU has maJe participating m r ,,-
requirement. New supply or its conservation Programs an fg g l Jemand resources will supply the eligibdity requirement for
- remaining i percent. economic-Jevelopment-oriented -
g UnJet a combined NU-PSNH Hexible pricing for both new and f'- sy> tem, capacity requirements in economically threatened y t 2005 woulJ be S,985 MW, customers. The combination of I
' t" including necessary reserves. C&LM programs and Rexible e" d .. .
Still, no major aJJed capacity rate plans is enabling NU to
- remurces will be neeJed become more effective in its .- .
untd 2005. efforts to retain business in h" 2" J "'" "- j": Conservallon ,
^
p~
\
and I. cad- y,ay py Management % 3 \ %y# -~ ~~qtg Progrims V \ .-_ in 1991, we \h '
%, % Q public energy policy advocates.
continued to develop \ 'N ** Consequently, NU is C&LM programs - alloweJ to earn incentive in a manner that V 4" returns for its C&LM complements and NT\ ^ Programs. The s reinforces NU marketing and Connecticut Derartment customer service objectives. of Public Unlity Control These .>bjectives include now permits CL&P to collect a i improving customer satisfaction s t 3 percent after-tax bonu3 on ! and enhanced competitive C&LM expenditures. In effectiveness for both NU and its . Massachu>etts, WMECO is customers through efficient allowed to collect an arproximate utili:ation of energy. C&LM 6 percent after-tax return on programs to date have achieved Connecticut C&LM expenditures. reductions in peak load resource and western NU's C&LM programs are requirements in excess of 300 MW. Massachusetts. improving the efficiency and , NU expended nearly Working closely with three competitive effectiveness of
$100 milhon dollars in energy manufacturers tt.at had been NU. They are also contnbunne i conservation programs in 1991. consiJering out-of-state opuons, to a substantial reducnon in l The majority of these resources economic packages were the neeJ for future capacay l was utili:ed to improve the develored that allowed each to aJJitions, thus improvmg the j efficiency of NU's commercial remain or expand in Conntcticut. environmental health of the ,
l and industrial customer base, Many such opportunities exist, entire region. j thereby improving their and NU is acavelv seeking ; 7.....l
SYSTEl4 PERFORIGANCE SUPPLY m terms of 8afe, etficient Narthcast Utilitics (NLU can proudly and justifiably clann
'Y"" #"l ""*D""'
to be a "70 pcccent nuclear capacits factor" utility-a let cl - capacity tactor tot the four plmts that typically exceeds the national at crage by set'cral anc3pygy ,,c; percentage points, and one that has placed NU among the reicent danne lul90, Icaders in the industry. During 1991 ue stumb!cd badly, ha comrated to the nanonal aveuge tee're recot cring quickly. More importantly, tec hat c o' O re" c"' Ni"reove' "Il four units have recen cd instituted ncte programs and hat'e the peop!c, the resources, consntentiv hich safety and and the needed commitment to at old a Tecn.rence and to eptunonal erfenn P mee rannes achict e our goal of becoming a "75 percent nuclcar capacity from the Nuclear Reculaterv Um"U#^n MO factor" utility by the mid-1990s. The 1991 composae iracar factor for the p} ants we operate _ The net veat-end generating with those caracay sales. hlany fell to 42.4 percent. Schedu!cJ caracity of the NU system was of those caracay contracts w di refuehnes at three of the unas 5,916 megawatts (htW). In exrire in 1993 and 1994. obvmusly had an unpact. Our aJJaion to surrlying the needs NU 6 rursume renewal of focus, however, is upon an of is retad anJ wholesale those contracts, but New Encland unusu dly hich number of now has a capacity surplus. This incdents that led to unplanned customers for 24.6 bdhon reduces our abihty to susta n bulk ouraces, parncularly the three kilowatt-hours (kWh) of electricity, NU also surrlied power sales. The terminanen of dncussed below. other New England utilities unh existine co aracts is a mapr Nidhrone 3 was shut down late an average of 1.4 million remon for a projected mcreme m m July 1991 m a resuh ot kilowatts (kW) of capacity. In our reserve marcins, currently corrosion and an unrrecedcored 1991, NU collected some $200 4 percentace points above our growth of mussels. Aner 22 percent reqmrement, We maintenance, clean up, and mdhon in revenues associated estimate that the combined inspecnon, the unit was returned ' NU PSNH surplus wdlreach to service in early February 1902. approximately 1,060 hiW by Plant modifications and Northfield. Massachusetts James Giknis, hmes WrigM, A#en Canee 1995. This surphis should improved monitonne procedures
~
IU~_ decrease as a resuh of projected should precluJe a recurrence at p ' 1
. future load growth. the hiithtone site.
I_ During 1991, the eicht la September 1991, eicht of g C ~ 20 bcense holders evaluated at S nuclear units in which NU has entitlements provided 44Percent hiillstone i faded NRC operator a [~
\ -
of out total energy requirements. requalification rests that have become mcreasmely comrles.
' Fossil-fueled units provided 39 rercent, followed by We elected to shut down so all GG f
- hydropower at 5 percent. "rerators cou!J concentrate upon an ureraded training g The remaining 12 percent was program. Tesang of 20
. provided by 44 qualifying
& cogenerators and smalbpower addmonal heense holders was
~
- g. producers. By 1996, nonutdity comrleted sansfacronly m November 1991.
,N .
sources wdl account for about NU ininated a comruter-15 percent of systemwide needs. asercJ pipe analvss and NUC/BM mspectmn program at all four facihties after a ripe tadore at Histonc,div, our nuclear
/ performance has been exemplary Nhlistone 3 late m IWO. A .... 8
subsequent failure at hiilhtone 2 Fossil / Hydro System Reliability in early November 1991 caused NU's fossd-fired units haJ NU's key elecinc Jistnbut mn us to accelerate and expand the a composite availabihty of 89 system reliabdity statntic program and to keep each facility percent m 1991, compared to a imrroved by 14 percent dunng shut down until it had been New England Power Pool target 1991, retlecting the cumulanvc inspected, hiilktone 1,2, and 3 of 84 percent. Dunne 1986-have returneJ to service, and 1990-the latest five year perioJ 2 Connecticut Yankee sheuld be for ,chich comparative data f ENERGY CONTR:8UT10N BY SO'URCE back on hne by mid-Alarch. exist-the availabihty of our I -c Even before these ir.c' dents, units exceeded the natic>nal ! ,@L e, ,, we had appointed four task forces to review and critique our nuclear averace by 5.5 percentage points. At the end of the third [7 m'- e.
. w.
operanons. All four completed quarter in 1991, seven of the $ . . . W -@Y 'h their assignments by September, olJest and least efficient of NU's I x W%# making 56 recommendations that fossiloteam units were retired. @> i: aJdress various aspects et our [ V , nuclear activities. They rance ? [ from a reaffirmation of NU's E * , uncompromising commitment to kg 1 gm a in g hkhqq+h.4M -- n. , = 4< , m k g%po f e .,2 n t: {7 - reliabdity anJ safety to impact of an intensified improved communications, distribution rehabihty pnigram and from more efficient begun in 1987. In that five-year procedures to the need for period, capital expenditures of better human relations skilk. nearly $667 mdlion were made hiany of these suggestions f for distribution system expansion have been-or will be- f and improvements and for plant - implemented, while others are % ~ moderni:ation work, much of - undergoing further review. Two which contributes to improve 1 separate actions have also been These units represented about rehabihty. Noncapital taken. First, all nuclear opentions 6 percent of NLrs overall expenditures totaled some have been consolidated under the generating capabihty. $627 million in the fiveqear new position of executive vice Aided by above-average period, including $106 mdhon president-Nuclear, thereby ainfall, productiot, at NU's for tree-trimming operations. eliminating one or more layers ot conventional hydroelectric Customer neeth for reliable management and concentrating plants exceeded one billion kWh service have increased and will nuclear operations under one for the first time in 1990. Under continue to do so. Obviondy, individual. Second, NU has more no mal conditions,1991 rate c;.se decnions play a role in committed some $10 million for production fell sliehtly but was our ability to sustmn the level of improved operational and still some 5.4 percent above tb - our efforts, but we remain training resources, including the average for the past five years. committed to improved adJition of about 2C0 employees. NU is also entitled to 22.8 reliability. Our 1992 plans These actions illustrate our very percent of the capability of call for $141 n dlion in capital real commitment to enhancing Phase 11 of the Hydro-Quebec expenJitures and $122 mdhon the contributions from a skilled interconnection, through which m noncapital excenthtures, and dedicated work force and to New England utilities wdl including $15 nulhon for tree-regaining our reputanon as a purchase 70 mdlion megawatt- tnmming operanons. leader in safe, efficient nuclear hours of Cimadian hydropower operations, donna this decade. 9.. . . ,
- - _ _ _ _ _ _ _ _ - _ _ _ _ _ . ~
UMITY BUSINESS DYNAMICS profde that unhties face under The remainder of this dCCade tvill prCsCnt extraordinary
'U## WU W #^##'
ClkNldngCS and Significant OpportunitiC5 f0T the nation'5 CICCtric With competition, such new utility COmpaniC5. Dynamic markCts, Competitive capacity is carred at regulated
- TC5truCluring, and a constantly 5bi[fing boundary bCttreCn rates of return but has unlimited downside consequences if YCgulated and maThet-baSCd GClivitiCS tVdl Continue to bc[ acts avadable market-based options oflife tvithin the industry, prove to be cheaper.
A 3econd flawed strategy is a imiwtant, the regulatory "businew as usual" appnuch of in almost every inJustry with _ barriers that buffered the operating solely like a regulated a regulatory heritage that I have studieJ-airlines, banking, vertically integrated electric utility with a protected market utility industry are changing, if monopoly. Pursuit of this trucking, railroads, gas pipelines, and retail brokerage-the not collapsing. In the 1980s, we strategy will allow the rate witness (d the removal of barriers making process to ignore the real regulatory umbrella has sown to unregulated power generation, costs of serving different market the seeds of its own destruction. in all of these industries, However, there are no economic segments, will provide a cost nor political reasons to assume umbrella for competitors, and regulation stimulated a high-cost that this is where it will end in will result m unmet customer system by rewarding capital needs. As a result. new, intensiveness, requiring cross fact. the evolution of regulation in other industries suggests that unregulated competitors could subsidies, and barring common carrier /open access is an become more firmly entrencheJ. competition. At the same time, almost inevitable consequence. Fmally, the perception among service differentiation was some within the industry that discouraged by such practices Similarly, large industrial cmtomers will have more options "the gran is always greener" in as bundled services and the to bypass traditional, regulated completely unrelated businesses failure to reward innovation. is--at best-extremely risky. Invariably, new entrants, electric power systems. innovative traditional players, Business strategies developed The outcome of such ventures is by electric utility companies can always clear; only the timing is changing economics, and new technology resulted in price not only respond effectively to in question, competition, service unbundling, this newly competitive environment, but can also gain Watkable Strafeples and cost reductions. As these market and competitive forces significant advantages. However, These five elements will this will only be possible by provide the cornerstone for the gained strength, industry and dealing with realities, not wishes. long-range business strategies of market restructuring were the Specifically, strategies that ignore successful electric utilities during inevitable results. the changes that are occurnng- the remainder of the 1990s and Newindustry Dynamics and that will continue to into the next century:
- Restructured costs; We already see evidence of evolve-will not work Likewise, strategies that focus
- Market re3egmentation; many of these same forces at work in the electric utility upon diversification into totally
- Development of related industry. Examples include unrelated areas are destined opportunities; te fail.
- Resource portfolio the emergence ofindependent There are many mdications management; power producers (IPPs) and that some utilities will soon
- Responsive organi:ational cogenerators, mergers and begin building regulated, restructuring.
acquisitions by traditional rate-of-return capacity-either Many electric unlities have regulated utilities, selected unbundling of services, and new plants or major repowenng embarked on cost-reduction projects. Notwithstanding the programs, often more than once. growing cost and price capacity needs that might be Cost cutting can be a valuable competition. Based on the and viable means for improving experience in other industries, projected, such undertakings should not be mstituted under a financial performance over a I anticipate that these and other
" good old days" mentality that relatively short period, but forces will accelerate rapidly over ignores the new risk-reward narrowly defined cost-reJuction the next few years. Equally
.... 10
l l GUEST ESSM IW ERIC ZAUSNER l programs simply don't work nccJed to succeed in the highly hinger both earn 12 or 13 from a stratcgic perspective. competinve, consohJat mg percent. Others hm e naugated Rather, the focus must be on industry which will surely result, these reefs before and the l testructuring w hat is donc, not Moreover, conservation and funJamentab of . heir success can j' on what it costs to do it. other demand side management work for electric unhties. Iti a l Moreover, many companies fall activities shoulJ be pursued demanding task, anJ some wdl ! into that fatal trap of beheving as a new, upandine busmess not N up to it. For those with i j' that costs and quality of service opportunity as well as an the foresight and the wdl. the ! are tradeoffs: Better service can important service and a means challenges wdl not be j only be had at high cost and of deferring the need for new insurmountable. anJ the i vice versa. Nothing could be generating capacity. orratunities wdl be excione. l further frem the truth. The most Most large compames use %%.,gy, w l , i successful companies invariabl> sophisticateJ portfolio mwmnm 6 % i provide superior or innovative management techniques to services at low cost, allocate available remurces Market resegmentation also among business segments. ~*v- [7 : is crucial in businesses where Typically, large utilities do not do [ vD . customer categones have been so, because of the historic view + set by regulators rather than by distinct custcmer needs, d ffering that all investments " weld the same returns." Nothmg could l'- , 1 - i costs of service, and competinve be further from the truth in this l economics. Bundling, new environment. Resource A unbundling, augmentation, portfolio management will -
\ '
anJ differentiation of services become an important provided can work in any management tool for the I .-' business, even those-such as successful utilities of rne future. , electric utilities-historically Finally, the organi:ational h viewe-J as providers of structure of regulated utihties commodity services. Just must be JesigncJ to become compare " telephone service" more responsive to customer hk 4 "' N !'rht M n"b ten years ago with such current needs and expectations and ta "nd ric"3" " " v "ce" service innovations as residential competitive forces 'n the past. P"i""" " ' W r"er "" ' " " ' voice mail services, call waiting, utilities evolved along functional """'""""""'"I""d "'I and inside wire insurance, to lines. In the future, I doubt very " " ^ " "' " ' " " " F " ' i b '" 'n i much that continuation of that *^"'""""'""""'# name but a few. Developing related opportunities is crucial to the approach wdl succeed. Today, transmission and distribution and
"" [ g[ "[
, ma , , i g[na ,a i ,
enhancement of shareholder electric power generation are am m gn , mm value. Shareho!Jers place a fundamentally different _n,nnnm ,na , nmnayn,c ; premium on a company's assets- businesses, with different hc . the market-to-book ratin-based customers, competitors, and k,n,oor ninne or mnnnm ni , on terums and growth prospects. regulatory lwhes. To build the As Jerun >Jonn%n n. 4 ! To the extent that a utility can responsive, market. oriented or du FcJaal Encres ; find opportunities to grow more culture needed to serve such AJunnnuauon.hc ! rapidly than its existing service distinct and diverse requirements -"Jm ocJ rrer." u ion "I i territory and can capture the will be a most difficult, but the PwJoui nanonal , operating synergies from doing necessary, step. A utility's c"" o Pr"cr.nn Fadio in j so, its success will be redected in organi:ation will have to redect I " ' x"" ' " " "" " " "' " ; I a higher market value. Many this new, more complex reality. M' L"'"" * '""" ' utilities are pursuing various IPP My message is a simple one- "'" #" ""'t"I '""d """' "" and cogeneration opportunities, it is not a regulated industry any . huronmental Ouhr) m the Execurwe Office of l but few have made the strategic more. It is a dynamic, marker- the preudent. ' l commitment or developed the dnven enterprise where the best l strategic alliances th,t will be anJ the worst performers will no 11 .....
i I, REGULATORYACTMTIES i Ihe sate ilectsun. 2 Connecticut pante 1 a simuficant R M 1hedesn'onako por: ion of the canungs te!ateil ret enues tltar trere teilneste l h
""T"" d "" N" d E*"U l -
betws en shm holder., anJ j 'llte C_,onnecticut Li' ht athl Potter C,ompany (L,lBP). As a aerams a wiums over resnIt. CL&P nmr nas a reasonaNe clunce to carn its allou c.1 12.9 but h- chan 149 penent, i l19 pcicent tate o[1cttan. Success i. Mamichusetts inn wi h all carnmes oser the latter l ntute limitcel anrl sk cessitatctl[thng anodter tute case m C"C"C'l"W~^" l q' proved were the phme m of an I I'"C - aJJinonal 5 peretm of allowed f l hidhtone I wsts, bnneme the i total t >f those u nh m iatt bec I From 1984 through 1993, the CPI, but not nearly enouch to 55 penent, anJ the stan of a ! l CL&P was able to counter to overwme cost mcremes nor to threcocar rhee-m of CL&Pi ; significant mercases in nonfuel provtJe an aJequate return on 426 percent share of Seabrook. j costs by a wmbination of robust equny (ROE) Concernme tcJucnons, the sales growth. cost rcJuction FaccJ with a dramanc smele larcest nem was nearb l owEwn m sales powE and 526 nullion in nuncarninge measures, qstty sales to other , utihties. a reduction m federal the exhamnon of farJ tax relatcJ wnservanon expenses, i tax rates, and the deferral of aedits that had been used t" xhieveJ through a redumen m I offset rate increases Western annual Tendmgand hiassachusett3 Electut Company mrnution of costs over ten ! waannni connectest (WhtECO) filed for a rate years. Another 514.2 mdhen i wn sernanon. Mane Kontist, mcreaseon Decembe-}f,}99) representeJ previomly arrroved i Linas straler, nsrmona neller to rel3ect cost mcremes and tgle deferd. relmcJ ro %Ilm>ne 3, l need to recover system H@@ba, mJ demwn
- investments. CL&P fded shooly of certam tax benefus. Despue thereafter, on January I,1991' these demah, the comnussion I s
W y - Connect / cut RBIO Decis/0#
'""K"'wd that deferred
"""""""dfl"Y'""""I"""'"
l role m raremakme, so thn CL&P's original request for decnion is Properly an excernon l
$228 mdlion was subsequently
;, _m F,
g = $ lowered to $200 mdhon to and a not rreceJent-sunng. l y- , The remamma reJuenons rdlect the effectiveness of mcluded costs and/or recovery l cost management programs ome for HyJro. Quebec Phase 11 t q g .; . f
, . . , '. j.,f g
-- and lowered costs of capital On August 1,1991, the amoniunon, PSNH acquismon t l
.[
9 f.3l '4 , 4 Lonnecucut Deranment of cmts, medical msurance anJ benefas, nuclear insurance, anJ t9 ~ q fd Pubhe Unhty Control (DPUC) nuclear outage amoni: anon. -
* , approved a $77.2 mdhon
' M .3 d Massachusetts I~ '%; ~hplM {5 . , ~$
increase, equivaler .. to about 4 percent. We are somewhat Rate Dec/slan l disappointed that CL&P in Arnl 1991, Wh1ECO an3 l received less than 40 percent the hianachusetts Ans nev substannal costs for future of as request. However, it is General reached a seulement recovery. As a result, CL&P significant to note that the that was accepted by the f customers were payine only DPUC did grant nearly Depanment of Pubhc Unknes slightly more for their electricity 70 rercent of the overall (DPU) on hiay 3,1991. ! in 1990 than they werc seven $188 million sought m carnme<- Wh1ECO haJ requested an t years earlier, w hde the Consumer ielated increases, while defernng mcrease just over i43 nullion, or l Pnce InJex (CPI) inacased certam items for future recovery. about 119 percent. Nearly one. l more than 30 percent. In Among the Ley provisions of founh of the request redected i hiassachusetts, rates increased to the decision was a continuanon mcreased state and local uxes a greater extent-still well below of the exisung 12.9 percent and the end of Cow-through to
.... 12
,f
s l j .................................................................................................... 1 I Custeincts of federal tax benefits. a fierce. hioteover,a u rre ilm DIUC assures th it equitaNe rate utocture foi our The settlement Provided Conneaicut s unluy cou> panic , l meluJme NU, rem.un urong " 42 rercent of that reque*t, or 1.ucest manufactunne customers some $1S milhon. Wh1ECO's .wolJ better enaNe NU to retam The proereu nude and the carnmes will sko benefa from loaJ, and this direc tly benefits all an adJitional m mdhon dollars ratepa3 ers, regarJless of iype
, s ia a decreme in derreaation or si e. . QUAllfY OF I ARNINGS .
expense. Nevertheless the Our Connecticut rate fihne tod
.= %.. /.w- ,
( 5elfletnent '.Iidn't represent the inClthled a proposed iate I
- lesel of procress needed to structure that would allevute, i l restore WhiECO to fmancial but not chmmate, such cross I '" - - " * " " " " " " " " "
l health, and another rate subsiJies. To a decree, the ! l case had to be (ded in 1901. DPUC diJ show procress m thn ; l area. Rates for most resiJennal l=" ! Rate Situcture customers increased about 4.9 L j Q NU has consistently urged the percent and those for mou .
^
l aJortion of c , based rates that commercial and industnal **
- I :" W' f;"
would eliminate Prevaihng crou customers went up between 2 ..1 "["" subsidies that penah:e our larger customers with rates well in and 3.5 percent, while the increme for larger manufacturers [i ="
'.l
[f "y hf
;g-.
h
.) p$
g;;4 I
*1 4 i , . . . . . . ':...n.. :Q ;,
., .i l
l 9{ h< lh l
. . . ;, ~ n . mi l
tI ..ex .. ,e a.u.i - .I o-excess of our true cahts of supplying their energy needs. , Interc; ass so; wit,ies t reate an adJm.onal revenues i additional burden on companies ranted in the DPUC l in our service areas at a time decn on Provided CL&P i i
- a realistic opportututy to when the region 3 economy is strugghnq and competition from m hW ROE e 199L '
other regions and other countries 1X,e anticipate avo Jme another i . (.,,olu)eCliCut rate filing unti, , mid 1992. i
- Demn Connecticut was hell to approximately The decision in hiawachmetts M/thst/ Msh06ty, Ro#ty rawell- helped set the stage for some 1.5 percent. ,
i In addition. CL&P received progrew. Sull. inunediate funher I DPUC approval for a series of i!"rf"VC"iC"I " # "CCdCd " "d flexible rates designed to help w.ur.unel Thus, MCO fded j businesses survive anJ grow. a rate increase application on Each qualifying comrany will December 13,1991, requesone j '. benefit from a five-year schedule an increme in retail revenues of of declining discounts and NU $3i8 nullion, or 9.1 Percent. r l .
~ '
I . will benefit from incremental revenues from in state busine s retention and expansion. I# f %. The wor , he DPUC dec.n ma_a ,,,-r . a %' s N _ stating,"It is important...tMt , 13 . . . . . ;
- - - - - - - . . _ e- ~, v m -~ - cm w-
- I
) COSTI4ANAGEl4ENT The goal of cost-managernent acriuties at Northeast olJest and leetstficient oJ.tned f Utilities (NLU is to pronde service at the lottest posssble cost, uene' d'nd "'" k D"U" will lower epetaune anJ consistent tvith our heritage of outstandmg settice and ,,u m c g _, q, ww ,gm performance let els We me trolling trith our employees to i100 nulhon Junne the 190 contain costs, rehing on their expetience and dedication and N01 penoJ. i recogni::ing iheir t alue in the achiet ement of our cost- ,gy,yg ,gg,g ,pp,gggy management ininatit es. As a result of this collaboratit e Tsomna m u>a. effort, NU is more cost-effective than it's ever been. Our m.,nagemem app,om hes uc merceme the vpe and ; efforts toll continue-and both shareholders and customers ev'nptchenvene" "I v"! co^
- tvill benefit from this dedication. manacement acovaies. Narung l'
meDure* allowed us to reduce in 1992, we are using a in response to emergine compennon, NU inaiated budected expenses by $101 prornetary fivewcar busmeu ; major cost management efforts milhon, contnbutmg Juectly to plan that features miegranon ; m 1987. As a result, NU better than exrectcJ eammes across funcnons. This new customers are currently paying approach to plannine provides l i only shghtly more, on average. broad busmess coals in a l
\ consntent, w ell JefmeJ, anJ l for their electoc ty thaa they JiJ in 1984 results orientcJ imhion. The ,
x result i.s a more cliicient,
- 1991 Accompl/Shments customer.respinsive, and cost.
i in 1991, we intensified our cost management efforts in k-effecove company. The Corporate Busmess ' L Practices Group (CDP) was response to the continued erosion of the regional economy, v estabhshed in June 1991 to : work wah management ! All possible expenses that diJn't . throuchout the company impinge upon safety ar.J service v
')' to idennfy new ,
bels were either eliminated
'.layeJ. By 3 ear-enJ such D4p- '
opportunities for more ! cfficient, cost etfective , I operationt Rather than to Mereen. Connecticut impose change on a particular ' Glenn cor. Mima smel, uno huson organi:atwn, the CDP approach is to help the orgam:ation ' and reducing pressure en identify opportunities for rate filings- efficiency improvements and to . M Between 1987 and 1991, we support its members m successf ul reduced our staffine level by implementation. about 700 employees, pnmarily The unJerlying objeenvc of through hiring free:es and CBP is to balance cost-
' attrition. In the fall of 1991, just effeenveness with ountandmg l
D over 400 employees agreed to service levels and to do so by accept a voluntary early working with employees rather retirement package Junne than by edict. To date, CBP he I 1991/1992. These retirement acavely worked with members of , Customer Service Operations ;
.yl plans will result in payroll savmus estimated at $27 milhon and Adnunistrative Services, O annually and will bona the mtal helang those organi:ations to
+
_, work force reduction since 1987 idennfy potential capital and I
.ap. ./ to more than 1100. expense reductions in excess of l l
During the thirJ quarter of $30 nulhon per year. 1991, NU renred seven of its ! i
..... 14
l i NONUTILITY SUBSIDIARIES l , l
- Nartheast L'tilities (NL') ss modestly dircrsifying into v(icr> dnerete servac8 such n
, unregidated arcas, concennating on the busmess it knou s concert deselorment and : enemeenng l'rojects rance m . best-encro related settices. C,hartcr Oak Enero, Inc., vie from one hundrcJ (COE) tras established to invest m the development and joint thouund to several million ; ! oirnership of private potrer generation facilitics. HEC inc. , Jolbrs. Among rnyects in I (HEC) tras added to providuncro management scruccs. Procrem comrlered in NUN j l HEC also provides NL1 state-of the art encre conscreation l sertices that tedl benefit customers. , p%stt,rp.w. . - 9, s We view coceneration facilines. Thus, it acuvely V and inJerendent power seeks stratecic alhances wnh $ proJuction-the focus of COEi estabhtheJ develorers to ; activities-as beneficial sources pursue joint deveh rment i j of capacity m the many areas of orportunines. One Partner is . A ! the country where energy Tenaska, Inc., the lead developer b @,i i shortages already exist or will of a 220-mecawatt plant in f'aris. - wwlM I soon occur. The Jiverufication initiative represented by HEC Texas,in which COE has a 10 percent interest. Another g g *ggy3 *
.o e ruts NU into an important Partner is the Power t growth area that is focusing Develorment Group, a p%p upon conservation as a means consonium of six electric utility of addressing the nation's subsidiaries and an inJependent ;
long term can city shooges development firm, J. Makowski and constraint . Associates, Inc. COE is rursuing COE is in the early stages of other orportunities in , its development. hs Securities Washmnton, Texas, Florida, and ; and Exchange Commisuon the Mid- Atlanne states. i approval-initially limited to HEC proviJes energy services cogeneration facihties .-has to utilities and to major service area are those for been expanded to include commercial, industrial, and Hartford Ho'rnal, Connecticut , I preliminary development of institutional chents. For utihnes, ellege, and the Unned States ; independent rower proJacnon. HEC offers consultmg services e ist Guard AcaJemy. l COE is legally limited to related to demand side COE and HEC represent two no more than 50 percent management Programs. For very Jifferent orportunines, but i ownership in qualifying hospaals, umversities, they also share important manufacturers, and office common attnbutes. Ihh are ' complexes, the HEC mission is well posnioned in high-growth, i p ,, 3 , to improve the energy efficiency enercy related markets. Pmth . of exisung facilities and to have the potential for returns m 3 l recommend energy conserving excess of those currently allowed I measures for new construction or projected for our regulateJ ; and addnions. core busmess Finally, both HEC has more than 100 should create future value for y,'
.+
c, - , clients m 15 states, Primarily in shareholders, and-over time-J L
.f ,
contnbute to earnings. 1 1% the Northeast and Midwest. A market expansion program will l increase its penetration in West Comt and Canadian markets. I HEC typically provides turnkey , operations, includme post-l instalianon service, but it also 15 .....
CUST01GER AND COIal0UNITYSERVICE Dte needs and expectations of our customers are gwtving. Conununity Sen ke Nu &nuly uppons It is also important that NU's cmtumer settice funenons ch unable enJeavon, by Jant become more cost effertite. Thmoue;t analysis andJua.tctous (m, ;g ggg, ( m.y m3 planning tall result in achievement of both tequnements. <ervices, and ens ouacme clotomer ointribution'. to energy Our wncept of service also [htribunen staff wdl result m a fuel funds. The NU enwmpasses astance for smaller, mor. st reamhneJ wmnunnent u, wmmunas ethtt'Hwt s e spt f ienC H1R t'pel.Ithm. An entire layer <>f se,cice [tn alw,n s been in lici,cj econonuc hardship. Likew ne, management will be elmunatcJ 1,v the cons ern of om emrlowr' it focuses upon inJividuals a hose in some units. Consohdation of who mve mo r anemu,1v of their special needs benef t from the the five reponal customer money, tune, and talents Our charitable acavaies supported mquiry functiom in Connecticut ;ong.stanJme mvolvement wnh - hy the company anJ by the spuit into a new Customer inqunY the Connecticut Special of civmg anJ volunteensm of Center represents the second Olynpics is an exceHent example its emplo>ces. change beine of the nneremn terresented by NU anJ its emplo3ect Forthe ' Customer Service 1991 Connnocut special Fonnation of the new Olympics NorJic events-+f Customer Service Operanons which NU was the pnmary (CSO) orgamwion in 1990 was pusor-the support provid:J the maial step m a plan to for the normal preparation fer increce the efficiency of services the compennon was auemented proviJed to eatomers CSO a b3a m.mn c snow-makine now m process of implemennnu operanon in order io .n oid three fundamental changes that postponements that occurred will improve the quality of in two of the three previous services provided and-at the years Wah equipment and same time-iessen the costs supphes Jonated by NU and associated with these services. other concemed companies, in the first case, reorganization NU volunteers worked around of the Transmission and the clock on two weekenJs and after hours on the dais preceding Masson. Connectot Sharon fontstells Grsrs Borbour, .lohn fullst the event to Ytve hiother Nature an assat anJ to assure
- 1. implemented. I the events went off as g
i ; By taking scheduled.
. f. .
L advantage of more Our concept of commumtv
' i ,.
mtensive automation, service goes beyond support of
'l this change wdl improve chantaHe acovines and y ./ our response time to custnmer organizations Our energy
; f inquines and requests and wdl conservation programs focus g,b.W , promote more uniform service for our customets. Once fully upon the special needs of disadvantaged customers. For f 4 d
! implemented, these changes example, NU conducted g%:b b j will save almost $5 mdhon annually. In a simdar fashion, satutanon campaigns in selected cines as part of our SPECTRUhim
< f A -
l
,k centrah:ation of the Credit and Neighborhood Procram. Dunne Collection function wdl retain 1991,15,000 needy customers m and enhance existing skdts, Connecucut and hiassachuseus M_
- 4, - while gaining substantial benefited from the free enern y
,. ' benefas from new collection software and a more conservation proJucts and services proviJed as a result ot 3 EI/ .- sophisticated telephone system. these campaigns.
.... 15
FINANCIAL AND STATISTICAL SECTION
' Contents n J< l' age
- I Management's Discesilon'and Analysis of Financial Condition and Results of Operations.. -
. . . . . . . . .. . . 18 23 s
.' Company Rerort. .
. . .. . . . . . 24 7
Repcirt ofIridependent Publ!: Accountants. .. . .... . . . . . 24 ,
' Coniolidated Statements of Income. .. .. . . . . .. .. . .
4
.. . .. .25 8 v' Consolidated Statenients of Cash Flows.. .. .. .. . ...... .. . . . .. 26
! Co,nsolidated Statemerits of Income'i' axes . .. . . . . . .. 27
' Consolidated Ihlance $heets.. . . .
6
.. . . . . . . . .. . . 28 29 4 , , s -
l Consolidated Statements of Capitalization . . . . . . . . ... . . . . 30 31 E Consolidated Statements of Common Sharcholders' Equity . .. . 32
' Notes to dnsolidsed' - . ,.
Finadetal Statements . .. . . ... . .. ... . 33 48
- s. 311a -d StaterEents of Quanerly Financial Data l. ....'. . ..... . 7.'49
'fj .ANw, v.jeneral Operating Statistics .... . ... . . . . . . . . . . . 49 s P.
Inted Cent.caidated Financial Data.. . . . . . . . . . . ... . ..; 50 51 i
!..... 4 .
Consolidated Electric Operating Statistics.... ..... . .. . . . 52 53'
, .. a >
ihareholder,Information.. . .. m. - .. . . . . . . . . . . . 54 l.
. . . . . . . . . - . . . . . . . . .. .. . ~. .
NCHTill AST UTil.lTILS ANI)SUlbilil AltlES 17 .....
MANAGEMENT'S DISCUSSION AND ANALYSIS ns,com,wna,, m w w s m ownes, een cam,no, which hus m the shonernus to m uuam aiewncor e!hhm LMaci hhc euluJe JefencJ return and allowance fm mc ul unos an i carmnn at thea w+my ve NL7 bnam uh edusn anJ fer funds meJ Junog wrc trucnon uneent lewh if(unent imans ul the pmnd fa gon haeq an mlu,t on ( AFLTC), hn e wnt mued to mc rease prionnance n mamtameJ m thn the ermla heawa. Tha hoen The orcentare of ca h , arnmes hn datnuh ewnoma enuronment an i shoutf N naJ m conwnen wnh the mcrened from 672 percent for the aJequate rate rehd a pouJcJ. the<e se.it endmg Iktember 11, lWO to cm,umstaiwc% m led a nh the wWs w+dJ.wd!nmoal mtmcnn anJ f unwra 716 percent for the scar enJme alJition of camme kom PSNil and Decemler .11,1991. Desptethis the new solmJurs tiot wdl holl imprm ement, othet factors wntmoe PSNIPs feabrwk mtere t, Nonh flNANCIAL CONDITION to atfeu the imancol heahh of the Atlantic Enero Corp.onan company. The conunucJ dechne m (NALCh should luhter M S New England s economy hn aJeerselv earmngs m the long run an i enaMe Ovnvlew The company's cammgs pr share affeued the company's olet Sales m the company to anuJer Jm knd 1992 a e prejecicJ to be relanvely mt reases and imrrm e ley am os ut mcreved to $212 m 1991 hem $1.94 m 1990. Thn mcreme was rnmardy Cat, compared to 1991 utes, w oh mdicator attnbutaHe to lower interest charges shght increases forecasted throuchout resuhing fmra lower interest rates the ternamler of the 19% Management lud imped for more and lower c_pt al reqmtements. The fnoraHe rate decniom in 1991 m increase w n aho anobutaHe to The market prne of the company's luh the CL& P and WMECO retail the effects of the August 1991 wmmon sharci conunued to remam eate cues in order to accelerate the Connecticut Department of Pubhc well above twL value in 1991. The race at w ha h the company could Utdity Control (DPUC) retad rate cloung pnce of the company's improve in fmancial conJmon. decision for The Connecticut Light common shares at December 31,1991 Although manacement is somewhat and Power Company (CL&P) and was $2 3% per share, compared to disapPunted w ah the les el of rehef the 1990 and 1991 Shhusetts $20 per share in 1990. Common proudeJ ihey I cheve that the rate dividends paid in 1991 and 1990 meremes, together w nh the Department of Pubhc Unhties (DPU) were $1.76 per share. After company's wst. management efforts retail rate decisions for Western Manachmetis Electr c Company consiJenne the current high dividend ha e prouded NU an oppinumty to payout rano (1991 shviJends were mamt.un as hnanual stabdov, (WMECO). These rate Jechions equal to 83 percent of earnmeh a Management aho beheses that a provided for the iecovery of higher 1992 projeuion of conimued modest favoraMe decmon m the upwmmg operating expenses, which were hmited by intermve cmt.contamment earmngs, and the potential . !vidend WMECO retad rate cue w ill ationi measures instituted by management, reqmrements on new common share the company a reahstic oppatunity to These items wcre partially offset by mues that wdl be needed to 6 nance improve earning. The company lower 1991 electne sales, which were the acquninon of PuMic Service would then be in a bener omnon to Company of New Hampshire meet as ongoing responubday of pnmanly the resuh of a downturn 'n the region's economy and moderate (PSNii), the company's Ibard of proviJmg quahty energy services to as Trustees concluJed that a dividend customers whde bmkhng a base upon w eather throughout mmt of '991. increase at this ome is not which progress can be made towarJ As of December 31,1991, CL&P and apprornate. Therefore, on January 28, achievmg the wmpany's long term WMECO have phned into rate base 1992, the Ibard voted to maintain hnancial olyecove of pninding a fair 80 percent and 100 percent of their the cunent quarterly dividend levcl at return to mmton and allowine respectne allowed Mdhtone 3 $0 44 per share. Pnyected 1992 aucu to earnal m.uleimn more mvesiments. In the Augmt 1991 camino are aho subject to remonaNe ierms decWon, the DPUC autherned connnued uncertainiv about wben CL&P to recogni:e m raies erfective the PSNil acqumnon wdl occur, the COSl Confalnment performance of the regional economy, in 1991, the company offered September 1,1991, the fmt step of a three year phne in plan for its and the outcome of the pendmg voluntary early retirement programs WMECO retad rate increase request. to 631 chpNe employees m allowed Seabnek 1 investment. In aJJition CL&P was authon:ed to Connecocut and Mauchusent The recogni:e in rates, effective January 1, llecause of the prevaihng per programs were avadaHe generally to 1992, an addaional 5 percent of as economic chmate, the company's general offices, regional and dntrict 1992 (mancial obje-rives conunue to services support staff, and emplosces alloweJ Milhtone 3 investment. As a be very conservanve. The pnnciral at cenain fond generating faahties. resuh of aJJaional phase.m j
..... 18
s
- Of the 611 cligiNe emploices,438 decision should allow NU anJ PSNil 19% mmpared w oh the actual les el acceptcJ ihe offer. The programs to move promptly tow arJ the for the penal 1987 to 1991, and i resulicJ m a one.nme, rectas cost of complenon of the acquainon. the change in the nature of the I aprroumately $32 mdhon. cy<nditorrs I Management twheves that the rians The i ERC Jecnion was the sabject of wdl sas e the company arrioximately DPUC hearingi that w ere comptercJ The wmrany rians to terix e the
$27 mdhon in annual payroll costo m February 1992. The DPUC alv hbihtone 2 steam rencraion m The rentement offen were male as a held hearings let fall on the (mancial nuJ.1902. The total cmt of the result of management's continumg impact of the acqumnon but had terlacernent n currenih einmaird efforts to maintain competitivenen in been aw aiting the IIRC deciuon to be $190 nuihon Et amount the energy services buimen and to before mumg an overall Jecmon on mcludes AIUDC but does not hmit the need for future rate increvet the tranuction. NU hopes to incluJe the owt of rerlacement comrlete the acqumtion soon after a pow er.
NU has reduced tri work ferce by (mal DPUC dec mon, now nret ted l more than 1,100 cmrloyees, or on hianh 31,1992. f/n3#Clng approximately 12 percent, from its Ceh reqmrements m caccu of 1987 leveh, mainly through attrinon For mformatmn regarJmg acqunition mternally generateJ funds generally and the early retirement programt (mancmgi, see the "Fmanc mg" are (manced through short , secnon m the next column. intermedute., and long tenn On August 31,1991. NU rented borrowmgi, nuclear fuel armt seven od-fired generating units at two For additional information regardmg f nancing. leaung agreements, and the kications in Connecticut and one in the PSNH acquintion, $ee the sale of Preferred and common stocL.
- Manachusetts. The company's " Notes to ConsoliJued Financial in adJition to construction and continued commitment to cost Statements " nuclear fuel requirements, the system managernent and the surrlui of compames are obhgatcJ to meet electric generating capacity in New COnSlfuC//On Program maturities and cash unkmg4and England were factors in the decision The construction Program's main requirements for long-term debe and to retire the gene ating units, which focus is now on the u;.gradmg of preferred snxL totaling $714.6 rerresented apprdximately 6 percent exisung transmisuon, distnbution, mdhon for ihe cears 1992 through of the company's oserall generating and generating facihner To 1996, withou' unmu effect to any capability. All of the units were complement an already strong ba e of fmanangs au,ociatcJ with the among the oldest,least med, and generation capabihty, the company sicquiunon of PSNil. External costliest to+perate facilines in the budgeted more than $100 milhon (mancmg wdl conunue to be nec esury NU system. NU estimates that over the next hve yean to improve to meet total cash reqmremenit retirement of the seven generatmg transmission and dutnbution un is wdl save the company more rehability, ne company does not in Decemler 1991, NU sold $175 than 51, ') mdlion over the next foresee the need for new major mdhon of amortning unsecured 15 decade, mostly through reduced generating facihties until the year year noies at a rate of 8.58 percent.
operating and maintenance costo 2005. Primarily became of the ProcerJs of the sale wcre used to male implementation of comprehensive a loan to ihe NU Erarloyee StmL PSN# conservanon and load management Ownership Plan Trust (ESOP tnnt b After hearing oral arguments on (C&LM) prograrns that have already The ESOP trust then med the January 8,1992, the Federal Energy result ed in sigmf. cant energy savmgs, Proceeds to purchase arproximately Regtdatory Commission (FERC) low forecasted sales grow th, an i firm 7.6 nulhon common shares from NU voted unanimously, on January 29, long. term purchase commitments for at a price o($2) a share. Over the 1992, to arrrove an amended decision Canadun hydropouer. In aJJiiion, coming years, these sharci wdl be on the PSNH acquisition. NU's energy proviJed t t new cogeneranon alkicated to chgible emrloyees of the management beheves that the FERC's and small power pmJucers contmues NU system compames m connection amended decision aJJresses the to postpone the need (or the with the employer match (m.ure of most entical concerns raised in an construction of new generating the exnting 401(L) supplemental August 1991 FERC decision, with facihties. retirernent and savings rian. The l respect to conditions on which orhers proceeds to NU from the sale of the woulJ be permitted to me the The charts on the next page show the common shares are expected to be j NU PSNH transmission system, Projected level of elecinc construction med io fund part of NU's equity , l Management also believes that the expenditures for the period 1992 to investment in PSNH anJ N AEC. i I 19 . . . . . I
a en e................................................................................ ...... .. ......... Poor to the cxpected acquoition {f PSNH, the nei proceeds of $173.' CONSTRuctio4 txPt NDITURES CONS 1RUCTl0N (xP[NDHUR($ mdhon w cre loaned by NU to the %,, , , , . , , , , . , _ system's money pool and, m tum, , , , , . ,._t,,,, m,,. ,- %, were used by iyuem compames to e repay oootanJmg short term debt. + - " " """"" "" " - - "" - - - p L Cl&P and WhiECO cononue to . . / unh:e a nuclear fuelinnt to fmance ' ' ' ' " " ' ' " " " their nuclear fuel tequirements for , hhlhtone 1. 2, and 3. As of ' Dccember 31.1991, the trust's ' mvestment in nucleat fuel was , , ,
,;, ,n ,,,, , , , , , , , , , , , , ,,, ,,, ,,, , , , , , ,,,,,,,
(1
} b, [,,,
$222.2 mdhon. Nuclear fuel ~
requ!remerits for hidhtone 1,2, anj ' 3 of $322.7 mdhon for the gears 1992 5- .. ? .. tj T' to 1996 are expecteJ to be (manceJ ; 4 [,, ,,,; ';'[,
,d,) ,y,( ;,$ ,',,,,, , , , , ;, , ,,, ,,, , , , , , ,
; ;, j,,
~
by the trust. g ,} @ 7 j ?, ,y , {'?k >k $ $ The chart on the next page dlustrates t<g %- b ..>
<-Ct- -
the relative percentages of all major b'k " * * *
"~'"T W'Y I 5:e' "A sources of funds for the five year periaJ 19fi7 to 1991.
h a-O - - -- -
$157 mdhon equity investment by $75 mdhon mue of NU common in 1992, the NU syuem companie' NU m NAEC, Outh of whkh are shares to the ESOP trmt is planncJ for expect to (mance $193 mdhon, or ed to be funded by NU sales of the end of the hrst quarter of 1992. A arproximately 38 percent, of their common shares and lurrowings), and pubhc offenne of aluut $200 nuthon non PSNil requirements extemally. of NU common shares is expectcJ at NAEC's inue and nle of $355 mdhon This amount mcludes $ 50 mdhon ("' principal amount of 6rst mortgage or shorJy lefore the equmnon. Any nuclear fuel requirements that are g expectcJ to be fmanceJ by the pay $639 milhon to PSNil common NU m the commercial paper marken Niantic ITay Fuel Trust. The syuem sMholders, pay $ U2 mdhon for or through bank terrowings and woulJ ~
companies continue to punue stock J:vidends accrued to Arni 1, be repaid over a renoJ of three years opportunit es to refmance high-cmt or leu by aJJinonal sales of NU 1992. reimburse $45 mdlion of NU secunties. Ehmination of higher cost common shares through NU's acquisition expenses under the plan of debt, or replacement with lower cmt teorgani:ation, pay a $7 milhon tax Dividend Reinvestment Nan. capital, provides opportumties for on the transfer of Seabrook from short. term improvement in cammgs PSNH to NAEC, and Provide in aJJition, the teorpnization plan and a long-tenn reduction m revenue calh for PSNH eqmty secunty
$52 mdhon to rcJuce PSNH's term reqmrements, nore. The balance would be u ed holJen to receive warrana to to reduce PSNHi revolving credit purchase arproximately 8 4 mdhon The rotal cash requireJ to effect the arrangements. NU common shares. The warrants acquintion of PSNH a approximately would be excrenable for five yearn
$922 mdlion, auuming an Arni 1, in total, NU plan to offer after the acqumnon at an excrene 1992 merger date. Each month of approximately 25 mdhon new rri; c of $24 rer share.
JeL, adds abot.; $7 million to the common shares in connection with co',t of the acquisition Jue to the this acquisioon. As a part of this Management ex en that,if the additional accrual of stock dividends. total, NU inucJ 7.6 mdhon common market conditions for NU common The merger is expected to take place shares to the ESOP trust in December shares remain at the leveh attained as in the second quaner of 1992. The 199: The ESOP trust purchased it.e end of 1991 and early 1992, then expected murces of the $922 milhon these shares from NU for $175 mdhon any Jdution of its camines resubmg requirement are a $410 mdhon with the pmcerth of a public offenng from the muance of adJmonal common equity investment by NU ir. I?N!!, a by NU ofin debt secunties. A secand shares should le mmimal and should
..... 20
l be more than offset by the benefas of $32 mdhon and pnn ded for the the acqumtion. The company continuanon of its 123 rercent SOURCf 0F CASH RI0lllRIM[ Nil expects that m rt the long term, the alloweJ ROE. WMLCO had _, , , . , . atqumtmn w di enhance hatcholden' requestcJ an increase of $4 U mdhon, m _, pro ncts for improved JmdenJs. or 11 A guent. The order ,, m un ..a incorporated a partial settlement *C- '- o o .- . .M The PSNH (mancme phn has been acreement that w artroved by the , structureJ so that NU w di ulomately DPU m May 1991, w hich allowcJ an obram as cash requirements from the $18 mdhon retad rate mcrease anj .c . . ..
..~ . ..... . . ...
$ ale of common shares. In aJ.hrion, authori:ed WMLCO to Jerrecute its !
PSNH and NAEC wdl meet their electnc generanon, tratummion. nd own Jcbt anJ rreferred itock Jatnbunon equirment over a longer .... , ., , ! ,, , , , , ,,,,, , ,m,,,, obhganons. AccotJmgly, NU wdi not perioJ. Whde the July 1991 order e ; l be dependent on cash Jntobonons proviJed an addinonal $9.9 nothon i , from any cunent NU onratmg int rease tur C&LM expenJaurn anJ g company either to pay interest or a $43 milhon mcrease for WMECOi "I ! '" Principal on the Jebt NU mcurs for mvestment in Hydro Quebec,ihne the acqumtion or to pay dividen,h on amounts terresented only a shift m common shares moed in connecnon the recovery mechanism for ihne , with the acqumnon. costi to base rates from the fuel : aJnntment clause and did not incre oe . [ Rate Mallers WMECOs total revenon. 9991 tudJ t ems s puo teet L in August 1991, the DPUC approved , CL&Pi(nst ret.nl base rate increase Even with the July 1991 rare incre.nc, since late 1988. The August decnion WMECO's 1991 ROE was 10.1 regubnons, se cocupany annnen to provided for an annual increase in percent, far below the !?.5 percent electnc revenues of $77.2 melhon, or tnae nomcunplance throud the that the DPU haJ authon:ed. arpmximately 4 percent. CL&P NotwnbstanJmg the rate decuion,
"" """ '" P"" '# I" "" "' "' h "
had requnted an annual increce in management behevn WMECO manvment rueun. , revenues of approximately $200 cannot earn as allowed ROE in 1992 nuthon, or 10.4 percent. Other without increascJ ratn. Therefore, m N.' "d""""""" '"U "d ' " C " "' I r d ' sigruficant aspects of the decision Decemt er 1991, WMFCO (ded an Jn onuniuioning, ens noinnental mclude the continuanon of CL&Pi apphcanon wnh the DPU requnting nuuns, and athn conungenact w allowed return on equery (ROE) at an inc rease in annual retail elecnic the " Notes to ConsohJared Fmans al 12.9 percent, with leveh between revenues of $35.8 mdlion, or 9.1 S t 3 t e'"c""? 12.9 percent and 14.9 percent shared percent. The need for an increne is equally between CL& P and its driven by necenary capital projects, Nuclear Per/ormance customen, provnions for a three. year hi;;her costs of service, and a The performance of the three nuclear phase in of $167 million of CL&P's deprened market for wholnale power. electne generating unns h.cated at mirial investment in Seabrook I, and Mdhrone Station was los than approval of requotcJ nuclear EnV/rontnenla/ MallerS satafactory in 1991 The ihree unnv decommmiomns expensn. The company devotes substantial compmne capacity fxtor was only rnourcn to iJennfying and then M4 percent in 1991 compareJ woh Ahhough the amount and tuning attempong to meet the mulotude of 793 percent m 1991 In PWihe have not betn Jerennined, environmental requiremenn that n national averaec we M i parent. management prestnity expects that it faen. The company ha acnve Thoe lower capauty fx ton wtre the wdl be necewary for Cl.& P to arply auditing programs that adJrco a rnuk of plumed outago and a to the DPUC m the second half of variety of different regulatory nurnber of unexpected techmcal and 1992 for ncreased rater, to become rcqmrements,includ ng an orcranna Johodon that leJ to effecove in the f nt half of 1993. envuonmental auJaing pmgram. unplanned outages. To the extent that management The OPU iuued a final decnion, determines that a system operation or When the nuclear unns are out of effective July 1,1941, which increascJ facihty is not m full comphance wah service, CL&P anJ WMECO must WMECOi bee rates by more than apphcaNe envuonmental laws or generate and/or purchase replu ment 21 . . . . .
i l l l l tevenues udlet ted in M.nsathusetts (MAS 10M 1hn new standirJ. j are whcct to p>tentul refund, wlut h w dl be alopted in Im.
; f . .d { 1H1 DISTP.!8UT10N OF fttytNUE
; [ rp J ,
j' *
. pnJine the DPU's esammanon of the requucs th it the eigticJ um i,t l 1 V f astual periornunce of generaung umts thew benefus be tharcel to espenw l f (Q'&Q,[ 3 m w hich WMLCO has interests during the gears th.H cuq Imen renJet seruce. Tha n a ucmtwant l
t , Mt , l I- 5. L Manwement behn es that the thange f rom the mmranv's t unent i U tompaiun have aticJ rmdenth m the poho of remnmne ihne co t> c j !l1 LQ'f,b,;%t.f{ Q ., operatrn of thea nudear umts Jurme the pends Jmuned ahme and that they are rad CL&P and WMLCO w di penton their reculaton to l l I QMi Q' '/ 1.4 I their fuel aJjustment clauws perma temvery for Prudently mcurred ett recm cr these onts mduJmg ihme tdateJ to poor wruce m future rate (t=>n,taa rtmL Houcser it udl be necesury for prot eeJmet Whde CLN P and Q(7
- g. Q N - *.4, .~. i- m eu , CLsP anJ WMtco to Jem nsnaie to the DPUC anJ the DPU, nitco engct to renwer ihne o4ts, shoulJ the nmme of rewtery
- p{6sem to**<a w p* 'wa '* or '" l
{g.,Q* i 'p ,
- g ,' me w '*** W 8M repeaisely, that their acnons have J,tfer from the acuual of such costs, been truJent. the compamn woull cunct to temrJ
[Nh. [.,hf}8f '"
.u /***" 'P""
_ ~*"*" " } a regulatory auet for the Joference.
.. _ j in an effort to improve nudear performance NU management has For addaional mformanon regarJmg power to meet their cunomen' nceJs. JeciJed, among other acnons, to adJ SFAS lL% see the "Notn to ,
in January 1992, the DPUC arrroximately 200 new ganions in ConsohJared Fmanaal Statemenn." announceJ plans to conduct pubhc the nudear engmeenne and heanngi to determme w hether operations funcoon anJ to ehredne replacement power com incurred complenon ohenain crocrann, at an RESUI.TS OF OPERAT/0NS by CL&P Junng extenJed outages at annual payroll cost of $10 milhon. 1 the three nuclear power uma at The idanvc nugnnuJe of the vanoin i Mdhrone should be passed on to AeC0unl/np Standards i espndnures mcurred by the sperm,s
! customers or home by shareholJers. The Financul Accountmg Standards continmne operanons n dlustrateJ in j T.he DPLO, could Jaallow some or l,uard (FASB) has surerseJeJ the chart on ihn page.
all of the rerfacement power com if prenously mued mcome tax l ! the company a found imrruJent accounting standards woh the in the outages at the nuclear unin. issuance of Statement of Fmancial Opetaling Revenues Replacement power costs are Accounung Standards No.109 Operanng revenun mcreascJ $11LS estimated at about $108 mdhon and Accounting for income Taxn mdhon from 1990 to 1991 and l , $21 mdhon for CL&P and WMECO, (SFAS 109h SFAS 109 requ rn, increaseJ $142.7 mdhon from 1989 to rnre tively, and are rdated to four among other ihmes, that regulated 1990. He componenn of the change separate Mdhtone outages. One utdion reflect, on their balance m operanng revenues for the past two [
- outage occurred during October 1990, sheen, the taxes related to the 3ean are pronJed m the taNe on 'he i anJ the other three outagn occurred cumulative amount of income tax next pige. [
at Jifferent times between July 1991 nming Jifferences for which deferred and Februny 1992, taxes hase not been provtJed. The Re enues relateJ to regulatory 1 comrany expects that, when the new decisiom increawJ in 1991, as In Massachu erts, the DPU allows full standard becomes effecove in 1993, compared to 1990, rrunardy because j recovery of energy costs thmuch a fuel it w dl mcreaw assets anJ habihties of the etfern of the June 1990 and the aJjustment clause that is calculatni on by arproumately $600 to 5700 July 1991 DPU ret.ul rate decmons i a quartedy baso.. An annual mdhon but w dl not have a matenal for WMECO and the December 1990 perfonnance program related to fuel effect on net income, and the August 1991 DPLIC retad pnxurement and use was estabbshed rate decmom for CL&P. Fuel cost by Massachusetts law and requirn the in December 1990, the FASB inued recoveties mcreawd pomanly becauw ; DPU to review generaung unit Statement of Fmancial Acconnung of a sigmficantly higher level of performance and fud costs if the StanJarJs No.106 Employen' hicher pnccJ outsiJe energy , unhty (mh to meet the performance Accounting for Postretirement purchaws Saln and other tevenue goab set for that unhty. Fuel danse Benefas Other Than Pensions mercased pnuurdy becan e of a i
.... 22 l l , - - ~ , . - + - - - - - . - - . - .---.-.--~~,.----~v-_
l FeJeral anJ state mcome t.un Change in Operating Rn enues l Jeaened $M nuhon in IW, a. ; Increaw/(LNcreaw) compared to 1969, primardv twauw ; 1991 vs.1990 1990vs.1989 of us benefits anociated with the f 0,wn. or MM 1990 weite.ot'f of a gurnon of CL&1". ! llegulatory decisions $ 57.8 $ 39 0 initial msntment n &abrool 1 [ Fuel cost recover ce 38.1 79.9 rnuhing from a attlement agrennent i
~ Saln and other revenues 41.6 218 appros ed by the DPUC in Novemi,cr i Total tevenue change $ 117.5 $142.7 1990, Taxes other than income t.uci inacased $7.2 mdhon in 1990, ai compareJ to 1989, Primardy becauw !
settlement agreement asweiarcJ with 1990, as compared to 1989, primardy of higher property tain. the reactivation of vanous umts at because of highet costs associated ihtee fouit generating facihties and wah C&l.M programs, refuehng and l#leteSi Ch#fgeS ! higher 1991 WMECO cost recoveries maintenance actnities at nuclear Internt chargo decreawJ $22.9 , associated with conwrvanon, electric production facihties. mdhon in 1991, as compared to 1990, ; capacity, onJ transminion activitin. including the amoritranon of prior- pnmanly becau e of more favoralle i
. penal outage costs, legal and internt rates and lower capital ,
Revenues related to regulatory - regulatory activities associated with reqmrements.
- decisions increawd in 1990, as NU's efforts to acquire PSNH, and compared to 1989, primarily because the general impact of milation on internt charges decreawJ $1 L)
; of the effects of the June 1989 and most expenws. parttally offset by mdhon in 1990, as compared to 1989 June 1990 DPU retail rate decisions. management's cost-contamment primarily because of lower long term ;
Fuel cost recoveries increased efforts in 1990, debt levels, partially off.et by higher i primanly because of higher energy short scim debt levels. costs. Sales and other revenues Deprectal/on Expenses increased primarily as a result of an Depreciation expernes increased ! increa e in bulk power sales. $26.4 million in 1991, ai comparcJ to , 1990, primatdy as a result of a ; fuel, Purchased and regulamry accision ihai required the Nellnlefchange Power company io return, in 1990, excns Foel, purchawd and net interchange defened taxes associated wah net of. power increased $$5.4 mdlion in tax AFUlX' and higher depreciable 1990, as compared to 1989. primanly plant balances in 1991. became of a greater level of higher priced cogeneration purchases, Depreciation expenses increased partially offset by a greater utilitation $14.6 milhon in 1990, as compared to oflower cost nuclear generation, 1939, primanly because of greater l plant investment and higher ; Other Operallon and depreciaaon noe,. hfalnlenance Expense # Other operation and maintenance TAXES , expenws increawd $58.8 million in - Federal and state income tain 1991, as compared to 1990, primanly - increased $57.0 mdlion in 1991, as lwcame of higher costs aimciated compared to 1990, pnmardy treause with the voluntary cady retirement of higher taxable income, partially programs, the commercial ogwration offset by an adjustment for revenue of the Phase 11 Hydro-Quebec project, agent reviews uhich were concluded - - __ and the identification and expensing in the fourth quarter. Taxn other ! o(excess /obmlete inventory at the than income taxes increased $5.0 Milhtone units, million in 1991. as compared to 1990, primardy because of higher emperty i
- Other operation and maintenance taxes and higher Connecticut grow expensa increased $64.6 million in camings axes due to higher revenues.
L 23 . . . . . l
j l COMPANY REPORT REPORT OF INDEPENDENT PUBLIO ACCOUNTANTS The conwhdated (mancial To the IW,J of Trunees anJ statemenn of Northeast Unhoes and hMkts of No'thext Utdra l subuJiatic: and other secuens of this i Annual Report uere Prepared by the We have audited the wneliJateJ In our er nmn, the 6nancul i company. Rese 6nancial statementi, bal.mcc sheets and conwlidated statemenn refened to a6 e prnent l wiuch were audited by Arthur uatementi ef cantahranon of fath, m all nutenal retects. the ' AnJenen & Co., were prepared m Northeast Unhties (a Masuchuseto finanml nmoon of Northeast ' accordance with generally accertcJ trust) and subsidianes as of Unht'es and subuJiann as of ac counung principles unng unmates L%c ember 31,1991 and 1990, and Ikcember 31. lW1 anJ 1990, and and judgment, where required, and the related (onmitJated statements of the enuits of their operations anJ giving consideration to materiality. mcome, common $hareholden' cash flows for each of the three scars eqmty, cash 110ws, and income ta xo in the penm! ended l'ecember 11, The company has endeavored to far each of the three yean m the 1991, in conformity with generally estabhsh a control environment that renoJ enJed ikcember 31,1991. xcepted accountmg runcirlet encourages the maintenance of high These 6nanual statements are the stanJ2tdi of conduct in all of its responubihty of the company *: businen activities. The company management. Our revonnbihty a to ARTliUR ANDERSEN & CO. maintains a system of intemal exrreu an opnion on these financial accounting controls that is surported uatemenn bascJ on our audat liartford, Connec ticut by an organitation of tramed Febn.ary 26,1992 management renonnel, pohcies and We conducted our audin in proceJures, arJ a comprehensive accordance with generally accepted program rfintemal audits. Through audmng standarJs. Those standards i estabbshedPrograms, the company require that we plan and rerform the regularly communicates to its auJit to obtain reasonable anurance management employees their intemal about whether the 6nancial control roponubihtin and pohcies statements are free of matenal prohibinng conflicts of interest. misstatement. An audit includes examining, on a test basis, evidence The Audit Committee of the Ibard supporting the amounti and of Trustees is composcJ entirely of Jnclosures m the 6nancial outside trustees. This committee statements. An audit aho mcludes meets perkidically with management, auening the accounting Princirles the intemal auJiton, and the used and sigm6 cant estimates maJe independent auditors to review the by management, as well as evaluating act vities of each and to Jncuss audit the overall fmancial watement matten,6nancial reportmg, and the Ornentanon. We believe that our aJequacy of intemal controls, audits Provide a teamnable basis for our orinion. Ikcause ofinherent limitations in any system of internal controh, errors or irregulanties may occur and not be detected. The company beheves, however, that its system of mtemal accounting controh and control envimnment provide reasonaNe anurance that its assets are safeguarded from low or unauthomed use and that its Snancial records, which are the losis for the preparatior of all 6nancial statements, are rehable. ..... 24
CONSol.10ATED STATEMENTS OF INCOME For the Years EnJed December 31, 1991 ._ 1990 1939 (%,unJn.f ( LNn. r u en ihm n e ,e ne.oM Operations Ewlading IbcontinueJ Gai operations: Operating lles enues _$ 2,7 51.M01 2.616.119 $ 2.473.571 Operating Expenses: Operation-Fuel, purchaseJ and net interchange powcr.. 674.096 678.257 622,814 Other. .. 76),610 646.699 629,791 M aintenanc e., . . . 210.166 238.32) 240,587 Depr ec ution.. . . . . . . 238,575 212.212 197,630 Amorti:ation/deferrah of regulatory assets. net.- . 80,643 74.166 71.763 Federal and state income taxes (See Conschdated Statements of tncome Taxes) . 190,556 154.412 151.401 Taxes other than income taxes.. . . . _ i86.645 181.6M 174.480 Total operating exrenses . . . 2.164,291 2.215.757 2.088.466 Operating income.. , . 189,512 180.562 1N 5.105 Other Income: Allowance for othet funJi used Juring construenon . 1,959 3.44* 2,711 Deferred nuclear plants return--other funds . 4 . 39,477 38,992 42.407 Equity in earnings of regional i.uclear generating comranies and transmission companies.. . 14,431 14,152 12.010 Write off of plant costs . .
- (19,388) (9.010)
Other, net... . . 9,751 12,967 8.090 Income taxes-credit.. . . . , . 14.873 17.790, 27.797 Other income, net . . . . 80.491 87.957 84.027 income before interest charges. 470,005 468.519 469.132 Interest Charges Interest on long tenn debt. . . 205.585 218.858 230.212 Other interest.. . . . . . . . . . . . . . . 10.915 20.558 22,538 Allowance for borrowed funds med during const ruc tion.. , (6.770? (7,191) (5,676) Deferred nuclear plants return-borrowed funds, net of mcome taxes.. . . . . * (19.023) (19.678) (19,770) Interest charges, net.. . , , . . 190,707 212.547 227.104 income r,fter interest charges . . . 279,298 255.972 242.028 l' referred IM-idenJn of Subsidiaries.. . . 42,589 44.965 38.801 income from Continuing Orerations.. .. 236,709 211,007 20).225 Income from Discontinued Gas Operations . .
- 5.858 Net income... , .. . . .
5 236,709 $ 211.007 $ 209.081 Earnings l'er Common Share: Continumg operations.. .. .. . $ 2,12 $ 1.94 $ l.87 Dacontinued gas operations . .
- - 05 j . .
Net income.. . . . . 3 2.12_ $ l.94 $ 1.92 Common Sharen Outstanding (aserage). . . ...... 111.453,550 109.003.818 108.669.106 The a,cnmmrw. nom are an meccal pn s the., on.m.i .wemer.n NORTlILAST UTILITil S AND 5Ulb!DI Al'Ils 25 .....
CONSoll0ATED STATEMENTS OF CASH FLOWS Fer the Yean indel ik ember it, __ 1991 13 164 numa.4 Iw! ni Cash Ibw s l' rom Operationsi
$ 279.298 5 255,972 $ 242,02's income before [ referred diviJcnds.
AJ 3uitcJ for the follow me: 292,471 125,154 104,724 Ikprectation anJ amorteation of leasedPrepetty . 109,M 20 .11,066 17,506 DefencJ mcome ines and msestment en ctcJus. net - Defened nutlear plants return, net of amottuation. 4,657 (1,476) (10.N7) DeferrcJ fuel, net of amortcanon.. (128,047) 15.000 0.430) Deferred conservation and loaJ.manaeernent costs, net of amorteation . (47,402) (5.196) - Net change in defened charges anJ other 42,0s8 17.307 71,67i noncash items.. Changes in working carital: - Receivables anJ accrueJ unhty revenues.. (57.289) 24,602 (41.8981 T 1,191 (18.9tJ) (24,767) Fuel, mater.ah, and surphes.. Accounts payable . 81,891 (24,750) 35.9tJ (46,208) 19,227 10.160 Accrued taxes . 29,169 (21.608) (22,727) Other u orking opital (excludes cash) . Net cash Hows from operations.. 595,869 618.591 _ 602.0 N Cash Flows From Financing Actisities: 42,420 17,84S - Common shares . . Long. term debt and rrefetted $nwl . 197,207 61.144 295.121 29,261 88,982 32,515 Increar in obbgations under capualleases-(12 5,61 si 67,115 (25,000) Net mcrease (decrease) in short. term debt.. Reacqumoons and retirements oflong term debt (119,48M) (99,521) (190,165) and preferred itock.. . . (65,014) (108,114) (101,281) Repayment of capital lease obligations . (42,589) (44,965) (19,779) Cash dividends on Preferred suwL , (195,056) (191.651) (191,258) Cash ihvidenJs on common shares . Special JividenJ-discononuance of gas operanons .
- - (101.012)
Ne cash Hows from (mancing acovines.. (278,872) (209,524) (522.864) - Investment Activities: Investments in plant (including carital leases): Electric and other utdity plant . (250,482) (292,902) (259.430)
- - (11,159)
Gas utility plant . (21,251) (86,375) (22,616) Nuclear fuel.. (1,959) (1.444) (2,7111 Less: Allowance for other funds used during construction.. Net cash dows used for mvestments in plant.. , (271,776) (175.813) (290,512)
- 244,980 thontinuance of gas operanons.. -
Other mvestment ac tivities, net . (24,252) (25,466) (18.987) (296,028) (40l.299) (84.519) Net cash dows med for investments . 20,969 7,768 (5,144) Net increase (Decrea e) In Cash For The l'erial.. Cash beginning of penod . 16,302 8.534 11.878
$ 37,271 $ 16.302 $ 8.534 Cash end of penod .
Supplemental Cash lbw Information: Cwh paid during the year for: Interest, net of amounts capitah:ed during comtruction.. $ 201.021 $ 214,233 $ 24 4.2 M 3 116,314 i 61.642 $ 00.479 income taxes..
..... 26 NORTilEAST UTiliTil S AND SUBSIDI Aluh5 m wmr.im mm'n m .m mv 4 ran ih (>**m iih' im'** n'.
. 9 CONSOLIDATED STATEMENTS OF INCOME TAXES
~ '
For the Years Ended December 31. 1991 1990 1o89 iTw nu l . % e.ap n, anus The components of the feJeral and snte encome ax rrorisions l charged to contmuine operanons are: l Current income taxen i FeJeral .- $ 44,417 $ 55,581 $ 60.796 State. . . . 21,446 27.975 25.302 Total cutrent . o s,861 83,556 86.094 Deferred income taxes. net: FeJeral .. 88.659 41.776 44.275 State. . 28.007 7.792 8 002 Total deferreJ . . . I16,666 51.56s 52.277 Investment tax credits, net.. . (7.8691 (17.414) (14.505) Total income tax expense. $ 174.660 $ 117.710 5 124.070 The components of rotal mcome tax expense are clauificJ as follow s: Income taxes charged to operatmg exrenses . $ 190,556 $ 154,412 $ 151,401 income taxes anociated with the amorti:ation cf deferred nuclear plants return-borrowed funds.. (15.208) (13.454) (13.942) Income taxes associateJ with the allowance for funJ used dunng construction ( AFUDC) and deferred nuclear plants return-borroweJ funds.. 14.185 14.542 14,408 Other income taxes-credit.. . (14,873) (37.790) (27,797) Total income tax expense. $ 174.660 $ 117.710 $ 124.070 Deferred mcome taxes are comprised of the tax effects of timing differences as follows: Depreciation, excludmg leased nuclear fuel. $ 59,807 $ 53.439 $ 51,H 57 Construction overheaJs.. .. (979) (11,156) (10.473) Depreciation on leased nuclear fuel, settlement credas, and disposal costs.. (2,367) 2,369 7,068 Decommissionmg costs . . . (l.186) (I,245) 942 Energy adjustment clauses.. . . . 48,892 2,30s (3,825) AIUlX' and deferred nuclear riants return, net.. (1,021) 1,08S 465 Early retirement program accrual.. (11,612) - - Pension accrua! . . (656) 5.408 7,587 Conservation anJ load management . , 22.175 4,355 (1.595) Other.. . . 3.615 (5.088) I,251 Deferred income taxes, ner . . . , $ 116,666 $ 51.568 $ 52.277 The effective income tax rate is computed by dividing total income tax expense by the sum of such taxes and income after interest charges. The differences between the effective rate and the federal statutory income tax rate are: Federal statutory in ome tax rate.. . 34.00 % 34.00 % 34OM, Tax effect of differences: Depreciation differences . 2.24 1.26 1.25 Deferred nuclear plants return-other fonth . ( 2.96) ( 3.5 5) ( 3.94) Amortization of deferred nuclear plants return-other funds . 3.48 3.77 3.50 Construction overheads.. (0.2 2 ) ( 3.09) (1.14) ! Investment tax credit amortiunon . . . ( 1.7 3) (4 66) (2.62) l State income taxes, net of federal benefit . . 7.23 6.37 6.08 . Adjustment for prior years taxes.. ( 1.76) - - Other. net.. . . . ( 1.81 ) (2.60) (1.24) Effective mcome tax rate . . 38.47 % 31.50 % 11 89 % l l 4 l l ne m n . ,,,ine nac. mn ,nw.,t p n a ihne f.n t .urcuna NORTlIEAST UTil IT11 S ANinUhsil$1 ARll 5 -/..... 1 i I
CONSOLIDATED BALANCE SHEETS At December 31, 1991 1 _990 rrbuun hil w i Assets l'tility Plant, at original cast: Elec tric . 56,898,919 $ 6,75 3,512 103,779 100.852 Other . . 7,002.698 6.854,364 Less: AccumulatcJ provision for derreciation . _2.182,144 2.033,569 4,820,554 4,820,796 Construction work in progress . 200,843 184,551 Nuclear fuel, net.. 236,170 259.821 Teral net untity riant . 5,257,567 5,265.16R Other Property and investments: Nuclear decommisuoning trusts, at cost (Note 3).. 124,592 100,106 Investments in regional nuclear generatmg companies, at equity. 68,125 67,489 Investments in transminion companies, at equity. 30,800 28,551 Other, at cost.. . 31,286 32,023 _ 254,803 228.259 Cutrent Anets: Cash and special depouts.. . . . . 37,271 16,302 Receivables,less accumulated provnion for uncollectible accounts of $11,607,000 in 1991 and $10,568,000 m 1900.. 309,801 264,939 Accrued utility revenues . - 112,581 100,154 Fuel, mate tals, and surrlie$, at average cost . < 146,753 179,944 41.521 41,550 Prepaymerts and other.. . . 647,927 602,89S Deferred Charges: Unamortized debt expense. . . 15.953 14,461 Energy adjustment clauses, net.. . 127,i64 21,265 Unrecovered $ rent nuclear fuel duposal costs.. . 26.702 79,F66 Deferred costs-nuclear plants.. . , , 263,772 275,267 Amortizable property investments.. . 61.587 75,582 126,271 8s,605 Other . . . . . 621,449- 505.046 Total Assets. ..
$6,781.746 $6.601,371
..... 28 NORTilEAST UTILITIES ANDSUITSIDIARIES N mmr.in.es ner. m an m'erni re b 6n ='il .o'=nn
- . - - . . - - . - . - - .-__ ...- . --.. _ - - _ _ _ .- - . . _ _ - ~ _ - . - -
...................................................................+........+...................***.:
At December 31. 1991 1990-- (mm.a.L.t Iu c.) - Capit::i:ation and Liabilities Capitalization (See Consolidated Statements of Capital :ation) Common shareholden' equity: Common shares, $$ par value-authori:ed 225200,000 shares; outstanJing 119.254,125 shares in 1991 and 109.615,926 shares in 1990.. . . $ 596,271 $ 548.080 Capital surplus, paid in. . . . 4. . . .. . . 640,119 469.647 ; Deferred benefit plan-ESOP (Note 6)... .- . . . . . . (175,000) - Retained earnings .. . . . . . . , 814.684 _ 771.031 Total common shareholden' equity... . . . . . . 1,876,074 1,790,758 Preferred Stock not subjets to mandatory redemption.. . . . . . 194,695 394.695 Preferred stock suliect to mandatory redemrtion . .. . . . . 167,892 174.192 ;
~
Long term debt. . . . . . . . . . . . . . . . . _2,6I6,912 2.501.891 Total capitahration.. .. . . ..-.. . . . 5.055,59) _4.861.716 Obligations Under Capital Leases.. . .. . . . .. 213.374 221.91)_ , t Curre.,t Liabilities: ! Notes papble to banks.. . . . . . - . . .... . . .. . 62,500 105.500 Commercial paper... .. . . . . .. . . . . . . . . .... . . .. . . . . 82.615 ' leng. term debt and preferred stock-current portion . . . . .. . . . 82,813 104,123 Obligations under capital leases--current portion. .. . .. . . . . .. . . . 66,355 97,715 Accounts payable .. . . ... . , . . .. . . . . .... . . . . . . .. . 228,285 144.194 Accrued taxes . . . . . . . . . . . . . . 120,775 166.98) Accrued interest . . . . . . . . . . . ... . .. .. . . . . . . . .. . 43,418 49.005 Othe r . . .. . .. . . . . - . . ... . . . . .- . . .. . . . 77,566 55,552, ! 681.732 805.887 Deferred Credits: Accumulated deferred income tases.. .. . .. . . . 569,079 462,122 ! Accumulated deferred investment tax credits . . . . . . . . .. 216,647 210.356 : Oth r . . . . . . .. .. .. . .. . . .. . . . . .. . . .. 45.321 39.437 ! 831,047 711.915 i Commitments and Contingencies (Note 7) Total Capitalitation and Liabilities.. . . . . . . $6.781.746 $6.(41.371 l w .mme.mine n.m. m .m . nemat i uot ibu t.n.nc i ummenn NORTilEAST UTILITIES AN14UBSil)tARIFs 29 . . . , , i-
. . . ,-n, .-.. - - - - -- . . . , . ..-. ...-,_-~.._,.,w. -. . , - . - , , .- , .J
l
. i l
CONSOLIDATED STATEMENTS OF CAPITAllZATION
...........................................................................................l l At December 31, 1991 IWJ h n t. ot tw uo
_51p76,074 $ 1,70?,79 f Common Shareholder,s' Equity (See ConwhJatcJ iblance Sheets) _ Cumulative PreferrcJ Stock of Subsidiaries:
$25 Par value -authori:cd 11,600.000 shares at twember .11,1991 and 1990; outstanJ ne 10,280,000 shares m 1991 and 10.340,000 shares in 1990
$50 par value-authon:ed 9,000,000 shares at Dnember 31.1991 anJ 1990; outstand ng 5,461,737 shares in 1991 and 5,501,745 shares in 1990
$1N par value--authori:ed 1,000,000 shares at December 31,1991 anJ 1090, outstanJmg 350.000 shares m 1991 and 1990 Current Redemrtion Current Shares DmJend Rates Price o Out ons is_
Not Subject to Alandatory Redemption: 4,140,000.. 103,500 101,500
$ 25.00
$25 rar value-AJjmtaHe Rate 5.123,895.. 256,145 256,195
$50 par value-51.90 to 5 4.80 $ 50.50 to $ 54.00 f 150,000.. 35,000 15.000
$100 par value-$7.72 to $9.60 $10151 eo $10199 ,
Total Preferred Stock Not Subject to hianJatory Redemroon.. 194,695 194.695 l 1 Subject to blanJatory RcJemptionow
$ 26.67 to $ 26.95 6,140,000 . 153.502 155 AT l
$25 par value-$1.90 to $2.275 317,842. I6,892 21,892 i
$50 rar value-55.24 to $5,76 5 51.38 to 5 52.62 170.394 176,892 Total Preferred Stock Subject to hiandatory Redemrtion .
2,502 2,500 Lest Preferred Stock to be redeemed with n one year. 167,892 174.392 Preferred Stock Subject to hiandamry ReJemrtion, Net. . Long Term Debt:M First hiortgage BonJs- 1 Matunty Interest Rates 8,000 8A'O 1992 4 3/8 L i I40,000 140 A'0 1993 4 :'4% :o 81/2L 107,000 107,000 1994 41/2% to 9 3/4L , 169,324 175,000 1995 91/4% to 10% . 100,000 100AV 1996 8 7/S L , 450,000 450A'O 1997 2001 5 5/8% to 9 3/SL , 355,000 355,000 2002 2C06 71/2% to 91/4L , 125,000 125 A'0 2007 2008 8 7/S% to9 3/SL , 25,000 25 A'0 2016 9 3/4 L , , 279.650 279.650_ 2018-2019 7 3/8% to 101/8L , - 1.758,974 1,764.650_ Total First htortgage Ibnds . . l Other Long Term Debt-l Pollution Control Notes- 24,450 25,250 1998 2007 5.90% to 6.50L 430,800 l 430,800 2003-2020 AJ;ustaNe Rate.. Notes- 240,000 8.25% to 8.92 5L 85A'0 1991 2006 157.137 148,281 Fees and interest due for spent fuel Julwal costs.. l 91,151 155.660 Ot her . . 943,740 844,991 Total Other Long-Term Debt , , (5,451) (6,127) Unamorti:ed remium P and discount, net . . 2,697.263 2,603,.14 Totallong Term Debt.. 101,623 Less amounts due within one year.. 80.331 2.616,912 2,501J91_ Long Term Debr, Net . 55,055,591 $ 4,861.7 36 j Total Capitalization , l m e,,mrame n+. m .in inmi r.'n d % r niwl '=nr. l . . . . 30 NORTilEAST UTil.lTIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAllZATION (NOTES) (a) Each of these series is subject to certain refunding Essentially all unhiy plant of The Connecticut Light hmitations for the fint five years after they were inued. and Power Company (CL&p) and Westem ReJemption prices reduce in future years hiawachmetts Elecinc Company (WhtECO), w holly owned subsid>=nes of Nonheast Unhties, n subject io the liens of their rnrective fint mortgage hmd (b) Changes in Preferred Stock Subject to hiandatory mdenturn. In additen, CL&P and WhilIO have Redemption: secured $346,100.000 of pollutton controf notn with itu .u tut,o second mortgage beni on hiilhtone 1,lumor to the Bahnce at January 1,1989.. . . . . . . $111,812 liens of their ropective fint mortgace hind indenturn. Inues.. . .. . . .. ., 7$,000 Reacquintions and in connection v 4th the July 1,1989 divestiture of its
. Retirements... . . . . . . (4.940) gas businen, CL&P extingunbed its obhcations with Balance at December 31,1989. 181,592 '"I'" ' ' '
I"" N' **"""'"I"' Senes R hnt and Refundmg hiottgage lionds. CL&P Reacquisitions and extmguished its obhcations with inpect to this h,nd - Retirements.. . . .. (5,000) inue 'y depouting funds into an irrevocable trust on Balance at December 31.1990. ... 176,892 June 29,1989. The interest income and principal Reacquisitions and from the trust's investments in United States Treasury Retirements.. . . . . . .. (6,498) inues will be -1 to meet the internt and principal Balance at December 31,1991, . . $170,394 I*Y**"" "" ' d " "# " "' 'Y' ** "** At December 31.1991, the $25,000,000 pnncipal amount of the Series R Bonds temains outstanding The minimum sinking fund provisions of the series but is considered extinguished for (mancul subject to mandatory redemption aggregate reporting purposes. apptoximarely $2,500,000 in 1992 $6,400,000 in 1993, $5,000,0C0 in 1994, and $8,750,000 in 1995 and 1996. In case of default on.smking. fund payments, no payments may be made on any Junior stock by way of dividends or otherwise (other than in sharn of junior stock) so long as the ut f;mit continues. If a subsiJiary is in arrears in the payment of dividends on any outstanding shares of preferred stock, the subsidiary would be prohibited from redemption or purchase of less than all of the preferred stock outstandmg. _ (c) Long. term debt maturities and cash sinking. fund requirements on debt outstandmg at December 31,1991 for the years 1992 through 1996 are approximately
$ 80,300,000, $ 176,700,000, $ 119,700,000,
$186,200,000, and $120,300,000, respectively. In addition, there are annual I percent sinking. and improvement fund requirements of approximately
- $17.300,000 for 1992. $17,200,000 for 1993,
$16.000,000 for 1994. $15 C00,000 for 1995, and
$13,400,000 for 1996. Such sinking. and improvement-fund requirements may l e satisfied by the deposit of cash or bonds or by certtf; cation of property additions.
n NORTiiEAST UTILITIES AND SUliSIDI AnlLS - 31. . . . .
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY Deferred Carital llenefit Comnu.n Su rplus, Plan - Retained Shares Paid in FSOP Farninpm Totat a h onJ,a1 % ) Balance at January 1.1969 $ 543.346 $ 456,626 $ $ .417,062 $ 1, a7,014 Net mcome for 1959.. 209.081 209,053 Cash Jmdends on common shares-
$1.76 per share . (191,255) (191,25s)
Capital stock exrenses, ne t.. (1,452) (1,452) Special dividenJ-discontinuance of gas operations . . (101.012) (101.012)
~
Balance at December 31,1989. 543,346 455,174 753,575 1,752.195 Net income for 1990.. 211,007 211,007 Cash JividenJi on common shares-
$1.76 per share . , (191,851) (191,851) lisuance of 946,820 common shares,
$5 par value . 4,734 13,154 17,888 Capital stoc k expenses, net.. . 1,319 1,319 Balance at December 31,1990.. 548,080 469,647 773,031 1,790,758 Net tncome for 1991, 236,709 236,709 Cash diviJends on cc.mmon shares-
$1.76 per share .. . (l95,056) (195,056)
Issuance of 7,608,695 common shares,
$5 par value o ESOP Tnnt (Note 6) . 38,043 136,957 (175,0001 -
Issuance of 2,029,504 common shares,
$5 par value. 10.148 32.272 42,420 Capital stetk expenses, net.. 1,243 1,243 Balance at December 31,1991. $ 596,271 $ 640,119 $(175,000) $ 814,684 $ 1.876,074 (a) Certain consohdateJ subudianes have JmJend restuctions imnwed by their long term debt agreements. At Decemter 31,1991, these restnctions, wluch also hmn the amount of retamed earning r ulable for NU common JmdenJs, totaled artroumately
$583 4 milhon.
. . . . 32 NORTHEAST UTil.lT!ES AND SUlblDI ARIES m . metre rn& 'n m a -ral renue 'ma'.' ummem
.. ~. _. _ _ _._ _ .. _
l NOTES TO CONSOLIDATED FINANCIAL STATEMENTS l
- 1. Summary of Significant Accounting Policies Imcatments and Joindy owncJ Electric Utiliev Nant Recmnal Nudem Gencarmc Compmuct CL&P anJ Principles of Consolidation WMECO own common stocL of four reemnal nudear Northeast Unhties (NU or the company) n the parent g,neratmg compamer These compames, wah the miem's company of the Northeast Unhties system (the system), ownersh, interest s, are:
The consohdated financial statements of the comrany . mclude the accounts of. ll u holly ow ncJ subuJianes Sigruficant intercompany transacnons hne been Connecticut Yankee Ato:me Po er chmmareJ in consohdation. Company (CY) . .44 0 % Yankee Atomic Elecine Company (YAEC) . 11.5 Public Utility Regulation Mame Yankee Atomw Power NU is registered wah the Secunnes and Exchange Company (MY) .. .15 0 Comminion (SEC) as a holJmg company under the PuHic Vermont Yankee Nuclear Power Utdity HolJmg Company Act of 1935 (1935 Act), and it anJ Corporation (VY) . .12 0 its subsidianes are subject to the proviuons of the 1935 Act, Arrangements among the mtem com;unies, outside agencies, and other unhties covenng mierconnections, imerchange of The systemiinvestments m these compames are accounted c!cctric puer, and sales of unhty property are subject to for on the eqmty bam. The electricay praluccJ by regulaton by the reJeral Energy Regulatoty Comminion these facihnes is comnuned to the parocmants based on (FERC) and/or the SEC. The operating subsidianes are their ownershm mterests and is bdled pursuant to subject to further regulation for rates and other matters by contractual agreements. the FERC and/or applicable state regulatory comminior.s, and they follow the accounting pohcies presenbed by the YAEC went out of service permanently on February 26. respective commiumns. 1992. For more information on YAEC, see Note 7, "Commamenti and Contingencies." Revenues Utdity revenues are based on authonred rates arplied to Mdhtone 3 CL&P and WMECO have a 65.17 percent each customer's use of electricity. Rates can be increased jom ownership mterest in Mdhtone 3, a 1,146 megawan only through a formal proceedmg before the appropriate (MW) nuclear generating umt. As ofliccember it, IWl, regulatory commmion. At the end of each accounting plant m-service anJ the accumulatcJ proviuon for period, The Connecticut Light and Power Company Jerrecianon mcluded approximately $2.3 bdhon and (CL&P) and Western Massachusetts Electric Company $334.1 mdhon, respecovely, for the systemi share of (WMECO), wholly owned subsidiaries of NU, accrue an Mdistone 3. The system's sb ae of Mdhtone 3 expenses is estimate for the amount o(energy Jehvered but unbilleJ. included in the corresponding operaung expenses on the accompanying Consohdated Statements of Income. Spent Nuclear Fuel Disposal Costs Under the Nuclear Waste Policy Act of 1982, CLdP anJ Seabmok: CL&P has a 4.06 percent joint ownershm mierest WMECO must pay the United States Department of in Seabrook 1. Seabrook 1 i:. a 1,150-MW nuclear i Energy (DOE) for the Jarosal of spent nuclear fuel and generanng unit that was declared to be in commercial high-level radioactive waste. For nuclear fuel used to operation on June 30,1990. As of December il, lWl, i generate electricity pnor to April 7.1983 (prior renoJ plant in service and the actumulated provision for fuel), payment may be made cnytime prior to the first Jerreoation included approumately 5172.8 mdhon anJ delivery of spent fuel to the DOE At Ikccmber 31,1991, $7.3 milhon, respectively, for CL&Pi share of Seabrook 1. fees due to the DOE for the Jnrosal of prior perioJ fuel CL&P's share of Seabrook i expenses is mcludcJ m the were approximately $157.1 nullion,includmg interest costs corresponJmg operating expenses on the accompanymg cf $75.0 mit iion. As of December 31,1991, approximately Consohdated Starements of income. j $1304 mdhon had been collected through rates. j CL&P aho owns 4.06 percent of Seabrook 2, which i Fees for nuclear fuel burned after Arn! 7.1983 are paid to has been canceled by the jomt owncis. A IW0 settlement Se DOE on a tpiarterly hmt agreement with the Connetocut lYouunent of Pubhc Nolt.'HEAST UUt iTIES AN115Uhrilil Aldb 33 .....
Unhn Control (Drl'C) proudes for the wntin, J The company lu nei crouJcJ J,.fencJ mtome tau s f or amona anon of CL&l",im ntment m Seabnel 2 unn! the tenen tunme datenwes Jurma penah when apphU le f ull rei.nl im ntment is seun ereJ, w about a ictum on the regulatory authonnes JiJ not ptmut the reun ny of such on unortceJ bat uwe. m.ome ;asn theauch taus durecJ to tmeomen The cumulatn e net amount of mtome tax nmme Jakunt n lhJmQuchec NU he a 22 66 renent equits ownership for which JefericJ tun h u e not been prouJcJ w n minest, approumanne $103 mdhon, m two wmpamn arrn'umately 1700 to N0 unthon a themi er 11, IW1. th it noport (lecinoty from the ihJro Quebec sutem m As alloacJ under cunent n eubtory pranus, defencJ Canadi l'hne 11 bee m operanon at full buhnes rannc. tr m not peuomly pna alcJ are Ivmn tolkual m l'egintlinR in f uly 1991, incrCasing tile cap il'llity (if tbe tusnHner[ rato as tu(ll taso batiule payable, Plu e 11 livJro Qutbec interconnecnon frem 090 MW to 2ND MW. Under the terms of the Phne 11 equay in February 1992, the Fmantul Accounone sianJarJs acteernent, the eqmty sponson guarantee the obhganons of IbarJ (FAE1H inuel Statement of I manual Accounung other parnapants that have below mvestment.graJe ueJa Standards No.109, Acwunnog fm income Tmo (SFAS rannes, anJ they receive compenutmn for such guarantees. 109). SFAS 109 superseJn penously suued mcome See Note 7. " Commitments anJ Conungenoes," for tax accountmg stanJarJ5 and w di be ef feuite bermning adJmonal mfornntion about ihJro-Quebec. m 1993. The company expects ilut when SFAS 109 o adopted a w diinucce assen and habhnes by Depreciation approumately 1600 to $700 nulhen i ut w di not hn e a The pnn ision for Jerreciation n calculated using the nutenal effect on net income. straieht hne method based on otunatcJ remammg hves of depreciable utility riant.mocrvice, adjusted for salvage Allowance for Funds UscJ During Construction value and termn al costi as arpnn cd by ihe arprornate Allow ance for funJs useJ Jurme wnstrucnon ( AIUDC), reculatory agency. Except for major faahon, Jericcianon a noncash cmt calcubted m acwrJant e w ah IIJtC faaon are apphed to the m etage plant in.scruce Junne guidehnn, represents ti.e ntunateJ costs of carual funds the renol Major faahne are Jerreciated from the tune used to (mance the surem's wnstrucuon program they are placcJ in service. When riant i$ retired from These costs, which are one comp >nent of the total service. the enemal cost ofP lant incluJ ne costs of carnah:eJ cost of construct on, are not rewgnucJ as ran removal, less uh age, n charged to the accumulated of the rate base for ratenuline purenes unnt fauhun are Provmon for Jerrecianon. For nuclear rmJurnon P lants, placed m sernce. The eticenvc AFUDC rates unJer the - the cmts of removal, less salvage, that have been funJed gross of. income tax methad for 1991,1990, and 1W9 w ere through external decomnusuomng trusts will be charged to 7.8 percent,9.7 rercent, and 10.1 percent, ropecin elv. those trusts. See Note 3," Nuclear Decommissiomng," for adJaional informanon. Energy Adjustment Clauses CL6P: Retail electric rates mclude a fuel adjusonent The Jerreciation ratn for the several classes of clause (FAC) under wluch fossd. fuel pnces above or tlectne P lant.in sernce are equwalent to a compoute below base-rate leveh are charged or creJacd to emtomen. rate of 16 percent in1991 and 1990 and 3.4 percent Administratn e ProceeJings are requacJ each month to m 1959. approve the FAC charges or credm ProposeJ for the follow mg month. Monthly FAC rates are aha subject to income Taxes retroacave re iew anJ arrrornate aJjustment by the The tax effect of timing differences (Joferences between DPUC cach quaner after prblic heanngs. the periah in w hich transactions affect income m the (manaal statements and the renods in which they affect The DPUC Joes not pere.it deferreJ fossd-fuel accou:.ung. the determmanon ofincome subject to tax) is accounted The DPUC pemuts CL6tP to recover poor defened for m accorJance with the raremaking treatment of the fossil 4uct balancn, which at December 31,1991 apphcable regulatory commissions. See ConschJared amounted to $37.7 mdhon. over a remumne gnod of Statemenn of Income Tases, on page 27, for the four and one half yean, w about camnv a return on the components of mcome tax expense. outstandmg babnce
.... 34 NORTilEAST UTlllTIES AND SUlbiDI ARIES
t s 4 I
?
i l\eginnmg m 1979, the DPUC approved ihe use of a CL&P; As allowed by the DI'UC, CL6 P n phaung mio . generanon utih:ation adjustment clause (GUAC) w hich rate base its alloyed mvenment m Khlhtone 1 The ! leveh the efftct on fuel cosa caused b vananons from DPUC has prouded for full Jefened cammo and c arn mg a specified compoute nuclear generauon capacity chargn on the pornon of CL&Pi allowed invoiment m 7 Millstone 3 not included in rate base. nrough factor embedded m base rates (70 percent, effective january 1.1990 through August 19,1991; 72 percent, Decemhr 31,1991. CL& P lud placed mio rate b.ne , effective August 20,1991). At the end of a 12 month 51.4 bdlion, or 60 percent, of et, allow ed invntment n ! griod ending July 31 of each year, these net varianons from hhlhtone 3. The remainie4: $ 351.3 mdhon, or 20 nn ent, j the amounts included m base rate cost levels are refunded is to be phased into rate base annually in (our 5. percent to, or collected from, customen over the subsequent steps begmning January 1,1992. The amorn: anon and ; ll month penod begmnmg in September. ShoulJ the recovery of deferrah through roin beg.m January 1,19M i annual nuclear capacity factor fall below 55 percent, CL&P and will end no later than INcember 31,199L As of j would have to apply to the DPUC for permnsion to recover December 31.1971, $2118 mdhon of the deferred ; the additional fuel exgnse. Durmg the period from return,incluJmg carrymg charen, has been remvercJ, August 1,1990 to July 31,1991, the compoute nuclear and $206.5 rmilion of the deferred tetum recordnlio ; generation factor for the eight operating nuclear units in date, plus carrying charge $. remams to be recoverca by { which CL&P has an ownenhip interest was 64,3 percent, December 31,199L ! i resulting in an additional nei fuel cost of arproximately
$21.2 milhon, which is being collected from ratepayers. As allowed by the DPUCi Aucmt 1,1991 decnion, i CL&P is phasing into rate base in allowed investment in TMECO: In Manachusetts, all reta i fuel cosa are collected Seabrook 1. The DPUC has provded for full deferred t
on a current basis by means of a separate fuel charge bdling eamings and carrying charges on the poruon of CL&Pi rate. As permitted by the Massachusetts Depanment of allowed investment in Seabnek i nor included in rate base. [ Public Utilities (DPU), WMECO defers the difference % rough December 31,1991. CL&P had placed mro rate between forecasted and actual fuel costs until it is recovered base $ 55.6 milhon, or one third, of its allowed mvntment in or refunded quarterly under a reta I fuel adimiment clause. Seabrook 1. The remaining $111.1 milhon, or two.tlurds is ; Massachments law requires the establishment of an annual to be phased into rate bwe over a wo. year perial hegmning performance program related to fuel procurement and use. in 1992. The amortiration and remvery of deferrah through + The program establishes performance standards for plants rates began September 1,1991 and w di end no later than , owned and operated by WMECO or plants in which August 31,1996. WMECO has a hfe of unit contract. Therefore, revenues collected under the WMECO retail fod adjustment clause WMECO: As of December 31,1991, all of WMECO's are subject to refund rendmg review ? the DPU. To date, recoverable investment in Ahlhtone 3 was in rate base. there have been no sigmficant adjmtments as a resuh of lleginnin;;in 1986, the DPU has pernutted WMECO to this program. recover the porno , ofits Milhtone 3 investment representing the amount currently detenmned to be ! See Note 7."Commitmena and Contingencies," for "unuseful" by the DPU ($42.4 mdlion at December 31, addits 4 formation on energy adnntment clames. 1991), excludmg the apphcable equity AFLTC, over a l=' ten year pertoJ, wnhout caming a retum. On June 30,1987
~
Phase in Plans WMECO ahn began recovenne the deferred retum, l_j As disemsed below, CL&P is phasing into rates the - including carrying charges,on the recoverable but not yet ; i' recoverable parts of in invntments in Mdbrone 3 and phased in ponion of its invntment m hhthrone 3. This Seabrook 1 WMECO has completed the phase in portion recovery is taking place over a ninc9 ear perial As of ofits phase in plan for Milhtone 3. Ik,th plans are in December 31.1991; $41.1 milhon of the deferred retum, compliance with Statement of Fnancial Accounting inchding carrying charges, has been recovered, and $4 hl l Standards No. 92, Repdated Enterpmes-Accounting he milhon of the deferred retum, inclothng carrymg charges, i Phase-in Plans. r-mams to be recovered over the permd endmg June 30,1995.
?
NORTilEAST UTil.lTIES AND SUlWIDIARllis 35 . . . . .
- -. 1 .. . _ ._ _ _ _ _ _ _ _ . - _ _ _ _ _ . _ _ _ _ . _ _ ._ -. . .. - . _
2.l,caser t,antal Onranne
~ Year Ica cs 1. cases
( I Al' and WMirO luie entueJ uno the Nonnc 1% , i j n_mi, a t u ,,o l'oct Trust (NI\lT) tapaal lece acreement to finante up to
, 3
$510 nulhon of nuclear fuel for hhlhtone 1 an.1 ; and their pg 7g ;7 g dure of the nuclear fuel for hhlbtone L CL&P anJ iw4 7g n;x Wh1ECO nule quarterh lene pasments for the cost of 1M. 7M 12M noticar fuel cotnumed m the scactors (beeJ on a unacof. le 73N ll,1 N pnklutnon msthal at rates wluch reflect estunatcJ ^I'" I " "V# 4I M '
Lilowaii.houn of encrey pronJeJ) F l o, tuuncmg cosn f"""'*""""""k"' rauncua - INM il 2 t MN esoc uted u nh the f.uel m the reactors. L,ien pernunent , t{ shstharge from 'he reactors, ounerdup of the nuclear fuel i n, amount rentscunrut - tran ftrs to CLW anJ WhtECO. mtere.t - NN Pnunt ulue of Isture The system comranies h.n e aho entered into lease nunimum lease rauncoti agreements, some of w hich are capital leves, for the use of I"' "' h" ' h ^" ""' k I"' ' W substation equipment, data processmg and office I""' '"I"' "I I"'" ""' I' d ' fuel kase pannent . 2 11.4 'O equipment, whiclo, nuclear control room simulaton, and - 9-Total 127CN office trace. The rroviuons of thne lease agrectnents generally prouJe for renewal ornons. The follow me r<ntal paiments lus e been charged to operating espense:
- 3. Nuclear Decommhsioning Capital Operating Ye2r I caws 1. case. The company's 1969 decommnuoning study concluJcJ that complete and unmedute thsmantlement at retnement 1991. $ 73.761,000 $23.571,000 continues to be the most vuble and econonuc methaJ of 1990 133,318,000 24,526,000 Jecommmiomng the three hhlhtone umts. The esumated 1969. 127,602.000 29.274,000 cost of decommissiomng the ustem,s owneidup share ot-these umts a $769.7 mdhon m sear enJ 1991 dollars A 1991 Seabnuk Jecommisuoning study aho conf umed Interest included in capital lease rental payments was that comrlete and immedute Jnmantlement at retnanent
$2 2,677,000 m 1991, $25,859,000 in 1990, and is the most nable and economic method of
$ 31,177,000 m 1989 decommissioning Seabrook 1. The estmuted cost of Jecommissiomng CL&l"s ounership share of Seabrook 1 n Substantially all of the capaal lease rental payments w ere $1L7 mdlion in teat.cnd 1991 Jollars. Decommnuemng nuJe pursuant to the nuclear fuellease agreement, Future studies are reuewed anJ upJated penahcally :o reflect minunum lease payments under the nuclear fuel capaol lease changes m decommnuomng requaements, technology, cannot be reasonably estimated on an annual basa due to and mtlation varutions in the usage of nuclear fuel.
CL&P an 1 WhtECO have estabhshed mJependent Future mimmen rental payments, excludmg annual Jecemmnuamng trusts for their ;urtwas of the costs of nuclear fuellease payments and executory costi, such a decemransic>nme Millstone 1,2, anJ 3. CL&P's portion property taxes, state use taxes, msurance, and of the con of A rn.missioning Seabrook i n paid to an maimenance, under long-term noncancelable leases, ss of irdependent deccmmmwnmg fmanang fund managed December 31,1971, are approumately: by the tate d New Hampshire.
. .. M NORTHEAST UTILITIES AND SU1ElDIARIEs
As of Decemtwr 31,1991. CL&P and WhiECO have charter restncimns, NU, CLA P, anJ w hil CO w cie wilected, through rates, $133 0 rmlhon towarJ the authorucJ. as of Jano..r> 1,1991, to un or shen-inm future decomuunionmg com of the hhlbrone umts, of lvtrow me up to a maumum of $ 13 5 rmihon. 5 300 mdhon, duch $101.9 imikon h.n been transferrcJ to external anJ $95 mdhon, respectively decommissioning trusts, As of December 31.1991, CL&P has paid $2SS thousand into Seabrook l's decommuuoning (mancing fund. He decommnuomng trusts are 5. Postre Lement Benefits disclosed on the ConsohJatcJ Balance Sheets, at cost, which arrrounutes market. The company's subuJunn parncipate m a umform noncentnbutory denned benc6t rentement rian munne all regular system emplosces. Bene 6ts are beeJ on 3 ears of
- 4. Short. Term Debt sen ice and emrloyees* compensanon dunne the 1.nt 6ve years of employment. Total penuon cost, part of w hich The system compames have various creJit hnes totahng was charged to unhty Pl ant, approximate 1 $29,517.0N m 5400 mil'u n. Of thu amount. $350 mdlion is avadaMe to 1991, $11,275,000 m 1990, and $14.537,M in 1959.
NU, CL&P, and WhiECO through a revolving-credit Penuon costs for 1991 incluJe arrronmately $19,831,000 agreement wah a group of 11 bants. The manmum related to the voluntary early renrement rregram descnbed borrowing limit of CL&P unJer the agreement a below.
$350 nuthon, less amounts borrowed by WhiECO (not to exceed $105 mdlion) and by NU (not to exceed Currently, the subsidianes fund annually an amount at $100 mdhon). NU, CL&P, and WhtECO may bormw least equal to that whnh w di satufy the requirements of funds on a short.ienn revolving baus using either 6xcJ. rate the Empf-ce Renrement income Secunty Act and the loans or standby loans. Fixed rates are set uuna competitive Internal Revenue Code. Pension costs are determincJ bidding. Standby loan rates are based upon several unng market related values of remien aucts Pemion ahernanvc variaHe rates. NU, CL&P. and Wh1ECO are assets are invnted primanly m egmty secunnes, bonds, obligated to pay a facihty fee of.1875 percent per annum and msurance contracts.
on their proportionate shares of the commitmert At December 31,1991, these were no bormwmgs unJer this agreement. The cornponents of net rension cost are: For the Yean Ended The remaining $50 milhon is avadable to the NU system December 31, 1991 1990 im companies through a revolving-credit agreement with a %g ggg group of six banks. Under thu agreement, the NU Scruce cor .. $ 48,738 $ 30.4% $ 31,020 system comparues can borrow m the aggregate an amount 71,041 64,352 61,415 Interest east.. not to exceed $50 mdhon. Loans under thu agreement are (195,437) 10,498 (160,750) Retum on rian assen.. on a short term revolving basis in the form of either Net amoen: anon.. 108.175 (94.034) 82.852 EuroJollar Loans based on the London Interbank Otlered Net pennon cost. . $ 29.517 $11.27 5 1 14.517 Rate, rius 3/8 of 1 percent, or as Ahernatne Base Rate Loans at the grear r of the prime rate or 1/2 of I percent over the Federal Funds Effective Rate. This agreement will expite on August 25,1994 unless extended, on an annual For calculanng rension cost, the following assumptions basis, (vi a maxtmum of four gears beyond the expiration of were ased: the initial three year term. At December 31,1991, there were no borrowings under this agreement. For the Yean Ended grember 31, 1991 1990 1989 he amount of short term borrowmgs that may be mcurred D5c unt ' - 90% 90% 95%
'*d " " ' " " ' ' '
by the NU system comranies is subject to perioJic arrraval 9,7 ,7 9, by the SEC under the 1935 Act. In aJJaion, the charters Comrensation/rnwesson of CL&P and WMECO conta n Provinons resencnng the rate .. 7.s 7.5 ss emount of short term terrowmgt Under the SEC and NORTHEAST UTILITIES AND SUBSIDIARIES 37.....
The follow mg table terresents the P lan'$ fundcJ status Pomcmonent Bencfai Other 7bn Petumo (SFAS IM reconeded to the Consohdated lialance Sheett Tlus new standarJ requires that the expected er of pntretnement benehts, prim udy heahh and Ide insurant e At DecemM 11. 1991 IM benehts, must be chargeJ to evenw Jarme the scan th it (TMnh a NM lo renda cv Tb n a h6 - 4m Accumulate 3 benef;t obhcatien, the company's curicnt pohcy of recogm:ing thew costs as meluJtng $ 555.419NO of s e tcJ patJ. Nsed upon the mformanon avadable to dite, and 1 ,\ e te nefto t
$ 63,795 5425.0'4 current!Y rrovided are nuintamed m the future, w hen December 31,19R .
"" U# ' # #*#""" '"
Pro)ccteJ bencht obhgatwn.. $ 848,174 577?.518
>FAS 106 habihty, related to poor sean sertue, w di be l.cE Market value of plan amu 1,011,699 AM.497 approxanately $4N) to $500 nulhcn. The accrual of the Market value in exccu of projectcJ SFAS 106 habihty a not expected to have a maternt effect benentobhunon- 181.125 72.679 on net mcome. CLAP and WMidCO w di pention their -
UnrecognaeJ tranunon amount . (76,958) ( M97) tegul tors for recovery of thew costs, mcluJmg thow related UnrewgnacJ rein service costo 7.121 7,7M m rom years service, m future rate proceeJmgt The ' UnrecognacJ r.ct gam.. (176,180) (42.573) comparues would expect to recorJ a regulatory aut for the AccrucJ pennon asset (liahhty) . $ (12.600) $ 8.977 Jifference between the accrual and current recovery of these cost 3. The following actuanal assumptions were used m calculating the plan's year end funded $tatus:
- 6. Employee Stock Onnership l'lan (ESOP)
At December 11, 1991 E On December 3,1991, the corrpany inued 51/5 mdhon 8.5%, 9 0%, rnndpal amouru of unsecured and amortmng notes beanne Deunt rate .. an nnual ir.terest rate of 8.58 percent The company used Comrensanon/rtwresoon 3,3 g the proceeds to loan $175 nulhon to the inntee of the ESOP m exchange for the ESOP's note, which w di accrue mterest at a rate of 8.58 percent per annum on the outstanJing poncipal amount. The ESOP useJ the proceeds from the During 1991, the NU system offered voluntary early loan to purchase arrroximately 7.6 mdhon common shares - renrement programs to 631 clipble employees. The from NU at $23 per share. He common shares wdl be programs werc generally available to general offices and alk,cated to eligible emplosces of the NU system companies regional surport staff and employees at certain fossd. fuel m connection wah the employer match feature of NU's generating facihties. Of the eligible employees 438 401(k) emploice benefus plar. begmning January 1,1992. accepted the offer, resulting in a one time pretax cost of approximately $32 milhon,includmg $19.8 milhon in The common shares in the ESOP trust wdl be alh,cated to pension costs, to the NU system, employees at the same rate as pnncipal and interest are paiJ over the hfe of the ESOP note. Pursuant to the ESOP irust in addinon to pension benefits, the company's subsidiaries agreement, Northeast Unhties Service Comrany, a wholly currently have a tracuce of providing certain heahh care owned subsiJiary of NU, wdi be able o Jacct the ESOP and hfe insurance benefas to retired employees. The cast of trustee as to the timing, amount, and source of principal and providing those benefas was approximately $10,815,000 in interest payments. Ahhough the ESOP note is scheduled to 1991, $11,133,000 in 1990, and $9,618.000 in 1989. The mature on December 1,2011, management anocipates that company currently recogni:es health care benef"5 rnmanly the ESOP trustee wdl make quarterly payments of interest as raid and provides for hfe insurance benef.ts throuch and prepayn ents of rnncipal on the ESOP note, and that premiums paid to an msurance co.npany, the ESOP note will be fully paid by December 1,2006. The mte , xpense recogm:ed by the company on the ESOP in December 1990, the FASB issued Statement of Fmancial note wdl be offset by the interest mwme camed on the Acco mtmg Standards No.106, Emtbyers' Accountmgfor ESOP note.
. . . . 38 NORTilEAST UTILITIES AND SUrelDI ARIES
----- --.- ~--~- ----- -.-_-------
I i
- 7. Commitments and Contingem ies nothon through the GUAC. CIM eyects to seek recovery of the aJJmonal wits for operatum ktween the Construction Pregram projetted 49 percent level and the 55 peuent inel The mmiruction program is subject to periodic renew and (estimatcJ to be $29 nulhon) m a future rate pmceeJmg-teviuon. Actual ctmtructton expenditurca may $ ary from estimates due to facton such as revised lead estimates, Managenient does not believe that the lower capaci 5 ;
inflation, revned nuclear safety f cgulatio*u. delays, factors, in thermch es, are cause for the DPUC and the ' dif6cuhics in the hcemng enseu. the availability and cost DPU to deny CL&l and WMLCO full recmcry. of capital, and she grantma of tmicly and aJequate rate Management tehnes that the comp.nues have acieJ relief by reguluory comnmuom, as well as acnom by other prudently in the operatior. f then nuclear generatmg une regulatory tubes. Juring the perinJ in questt en 'nd remenun that CL&P ! anJ WMECO wdl be called von to demomtrate that thru The sptem companies cunently foreca.: con truction actions have been prudent. expenshtures 'incluJmg AFUDC) of $1.25 bdhon (or the years 19921996,incluJmg $379.4t milhon for 1992. In See Note 1. " Summary of Signi6 cant Accounting addamn, the sptem companies esumate that nuclear fuel Pohcies-Energy Adjustment Clauses," for adJaional requirements. including nuclear fuel 6nanced through the mforination regardmg nuclear perfonnance and NBFT, wdl be $330,1 million for the years 1992 1996, energy aJjustment clauses. including $51.4 mdhon for 1992. See Note 2. " Leases" for addalonal information about the financing of Environmental Matters nuclear fuel. The NU system is subject to regulation by federal, atate, anJ local authorines sith respect to air and water quality and Corrosion, pming, and denting of tubes wohin the steam the disposal of toxic substancn and hararJous and sohJ generator auemblics base been recuning problems at wastes. The cumulme long term economic cost impact of Millstone 2 for a number of years. In light of continuing increanngly sinngent environmental requirements cannot , repain and concerns about future performance, the NU be estimated. liowever, the NU system has an acine sptem rlans to replace the Millstone 2 steam generaton environmental auditing program to detect and remedy i beginning late in the second quarter of 1992. The cost of noncomphance with environmental law s or regulatiom. replacement is estimated to be approximately $190 million. The system may incur significant aJJaional costs, greater includmg AFUDC, but excludmg the cost of replacement than amounts included in cost of removal and other power. reserves, in connection with the generation and > transmission of electricity and the storace, tramportation, ; Nuclear Performance and duposal of by products and wastes. The system may - When their nuclear units are out of service, CL&P and aho encounter sigm6cantly increased wits to remedy WMECO need to generate and/or purchase replacement the environmental effects of prior waste handling and power. CL6 P and WMECO have incurred approximately disposal practices.
$108 million and $2 I million, respectively, in replacement i powcr costs associated with four separate Millstone outages. The system has recorded a hability for what it beheves is, Recovery of prudently incurred replacement power costs is based upon information cunently avadable, the esumated permitted, with hmitations, through ' .kCr id GUAC environmental remediation costs for sites (or w hich the for CL&P and through a retail fur' .%nent clause for sprem's subsidiaries expect to bear legal liabdity. To date, WMECO. these costs have not been material with respect to the camings or financial position of the company. In most CLEP will have to apply to the DPUC to recover the cases, the extent of addaional future environmental aJJitional fuel costs when the GUAC :apacity factor falls cleanup costs is not esumable due to factors such as the l below the 55 percent level for the 12-month GUAC period. unknown magnitude of pomble contamination, the p ...t,1c for the 12-month GUAC period ending July R 1992, effects of future L gislation and regulation, the possible management projects that the GUAC capacity facter will effects of technological changes related to future cleanup, be approximately 49 percent. Based upon past regulatory and the difficulty of determining future habihty, if any, for practices. CL&P expects to recover approximately $96 the cleanup of sites at which a system company has been l
l- NORTliEAST UTILITIES ANDSUITSIDIARIES 39 .....
~ _ , _ _ _
infonned that it may be Atermined to be legally liable by ownenhip interest in nuclear generating facihties would be the United States Environmental Protection Agency, the hmited to a maximum of $37.2 milhon ner madent Connecticut Department of Environmental Protection, or per year. the Massachusetts Department of Environmental Protection. In adJition, the system car,not estimate the Insurance has been purchased from Nuclar Electric potent:al liability for future claims that may be broug'.. Insurance Limited (NEIL) to coven M certain extra against it by private panies. However, considering known costs incurred in obtainmg terlacement power during facts and exisung laws and regulatory practices, prolonged accidental outages with resa et to CL&Pi anJ management does not beheve such matter. .'l have a WMECOi ownenhip interests in Milhtone 1, 2, and 3. matenally advene effect on the system's fmar~ial posinon and CY; anJ (ii) the cost of repair, replacement, or or future results of operations. decontaminanon or premature decommissioning of utility property resultmg from msured occurrences at hidhtone 1, Changing environmental requirements could hinder the 2, and 3. Seabrook 1, CY, MY, and VY, All companies constructmn of new fossil fuel generanng units, could insured with NEll are subject to retroactive assessments s require extensive and costly modificanons to the system's if losses exceed the accumulated funds avadable to existing hydro, nuclear, and fossil. fuel generating umts, NEIL The maximum potennal assessments aga nw , and could rahe operating costs signif cantly. The CL&P and WMECO with respect to losses arising donng system may also face sigm6cantly increaad capital and current policy years are approximately $10.2 millica operating costs for work centers, substations, and ciber under the replacement power pohcies and $11.5 million facihties as a result of environmental regulations. under the property damace, decontamination, and However, the NU system believes that it is in substantial decommissioning policies. Ahhough CL&P and comphance with current environmental laws and WMECO have purchased the hmits at coverage currently regulations. availat le from the conventional nuclear insurance pools, the cost of a nuclear incident could exceed available > Wuclear Insurance Cont!ngencies insurance proceeds. The Price Anderson Act currently limits pubhc liabihty from a single iacident at a nuclear power plant to Insurance has been purchau a Amencan Nuclear
$7.8 billion. The 6tst $200 million ofliability would be - Insurers / Mutual Atomic En .c ..iabihty UnJerwnien, provided by purchasing the maximum amount of aggregating $200 mdion on an industry basis, for coverage
, commercially available insurance. Additional coverage of of worker claims. All companies insured under this up to a total of $7.2 billion would be provided by an coverage are subject to retrospective assessments of assessment of $63 million per incident, levied on each of $3.2 million per reactor. The maximura potential the 115 nuclear units with operating licenses in the assessments against CL&P and WMECO with respect to United States, subject to a maximum assessment of losses arising during the current pohey period are
$10 million per incident per nuclear unit in any year, in approximately $12.0 million.
addition, if the sum of all public liability claims and legal costs arising from any nuclear' incident exceeds the Financing Arrangements for the Regional Nuclear maximum amount of financial protectton, each reactor Generating Companies , operator can be assessed an additional 5 percent, up to CL&P and WMECO believe that the regional nuclear
. $3.2 r m' inn, or $362.3 million in total, for all 115 nuclear generating companies will require additional external units. "I he maximum assessment e to be adjusted at least f nancing in the next several years for construction every five yean to reflect inflationary changes. Based on expenditures, nuclar fuel, and other purposex CL&P's and WMECO's ownenhip interests in the three Although the ways in which each regional nuclear Millstone units, and CL&P's ownenhip interest in generating company will attempt to finance these j_ Seabrook: the NU system's maximum liability would be expenditures have not been determined, CL&P and
$178.1 milhon per incideat. In adJition, through CL&P's WMECO expect that they may be asked to provide L and WMECUs power purchase contracts with the four direct or indirect financial support for one or mere of l Yank ee regional nuclear generating companies, the NU these companies.
j - system woulJ be responsiNe for up to an adJitional
$673 million per incident. Payments for the NU syster:.
l l' l -- . . . . 40 NORTilEAST UTILITIES AND SUBSIDIARIES l-
. Yankee Atomic Electric Cornpany The Rate Agreement
. CL&P and WMECO together have a 31.5 percent equity The Rate Agreement which provides the 6nancial basis for investment, approximatmg 56.7 million, in YAEC, a the acquisition allows, among other thine, for seven regional nuclear generating company which owns and successive annual rate increases of 5.5 percent per year (the operates a 173 MW nuclear power plant. On February 26, Fixed Rate Period). The 6rst rate mcrease, which went into 1992, the Board of Directors of YAEC voted to effect on january 1.1990, was held in extow, with part permanently cease power operation at YAEC and begin being released on th' E organi:ation Date, and the _- preparations for an orderly decommissioning of the facihty. mainder to be re w 4en the acquisition occurs. The
' The unit was shut down because of economic and nuclear second 5.5 percen : n case went into effect on the regulatery uncertainty associated with the restart of the Reorgani:ation Da 4Jdition, the Rate Agreement plant prior to the end ofits current license, which expires in contemplates that after the acquisition and the transfer of the year 2000. Management believes that CL&P and Seabrook I to NAEC, PSNH and NAEC will enter into WMECO 'wdl recover their investments in YAEC, along the Seabrook Power Contract (Contract). Under that 4 with any other costs associated with the shutdown and Contract, PSNH wdl be required to purchase the capacity ;
decommissic,aing of the unit, and output of Seabrook I for the full term of Seabrook I's operating hcense and to pay NAEC's cost of service. Hydro-Quebec Along with other New England utilities, CL&P, WMECO, Regulatory Approval and Holyoke Water Power Company (HWP), all wholly On December 20,194. the SEC approved NU's owned operating companies of the NU systec., entered into acquisition of PSNH. The SEC has reserved jurisdicoon agreements to support transmission and terminal facihties to over several financings for which the record was import electricity from the Hydro-Quebec system in incomplete. The SEC decision has been appealed by Canada. CL&P, WMECO, and HWP, in the aggregate, are intervenors to the United States Court of Appeals. Two obligated to pay, over a 30-year period, their proportionate Seabrook license amendments, necessary for the share of the annual operation, maintenance, and capital acquisition, are pendmg before the Nuclear Regulatory costs of these facilitie., which are currently forecast to be Commission (NRC). One wouki permit NAEC to purchase
$132.7 million for the an 1992-1996,includmg $28.0 PSNH's interest in Seabrook I and authorize North million for 1992. Atlantic Energy Service Corporation (NAESCO), a newly formed company that w 11 be a wholly owned subsidiary of NU, to manage Seabrook as agent for the Seabrook jomt
- 8. Public Service Company owners. The proposal for NAESCO to be manager / operator of New Hampshire (PSNH) of the Seabrook project is aho subject to SEC approval.
NU intends to acquire PSNH, the largest utility in New On Augu.t 9,1991, the FERC issued a decision approving Hampshire, which supplies electricity to approximately NU's acquisition of PSNH, subject to certain conditions. three-quarten of the state's population. After considering various appeals of the August 9 decision, the FERC voted unanimously, on January 29,1992, to The Plan of Reorganization (the Plan) approve an amended decision on the acquisition. The PSNH was in Chapter 1I reorgani:ation proceedings from amended FERC decision has been appealed by numerous January 198S to May 16,1991 (the Reorganization Date). intervenors and, on limited and technical grounJs, by NU
. PSNH emerged from bankruptcy on the Reorgani:ation The FERC decision will not become fmal unnt any and all .
Date as a free-standing, independent company subject to a appeals are resolved. However, based on a review of the
= contractual oNigation to be acquired by NU. When amended decision, management beheves that the decision -
regulatory approvals and all other conditions are satisfied, should allow NU and PSNH to move promptly toward PSNH will then become a wholly owned subsidiary of NU. completion of the acquisition. l - PSNH's 35.6 percent ownership in Seabrook I will be L transferred to North Atlantic Energy Corporation (NAEC), The FERC decision was the subject of further hearings before , I a newly formed company that will be a wholly owned the DPUC, which were completed in February 1992. The subsidiary of NU. DPUC also held hearings last fall on the fmancial impact of NORTHEAST UTi!.lTIEE . .ND SUINDI ARIES 41 . . . . . l
.- - _ -,,- - -____ -, . ~ _
7 _ _ --. _
-.c the acquisition but had been awaiting the final FERC decision before issumg an overall decmon on the transaction,--
The DPUCs decision is scheduled for March 31,1992. For planning purposes, management is projecti_ng that the , PSNH acquisition will be completed during the second quarter of 1992. While management remains optimistic about the ultimate success of the acquisition, financing , arrangements hue not been completed and regulatory approvals ao not assured. L Aequisition Costs in accordance with the merm agreement, PSNH, with certain exceptions, will t .a .e NU at the time of the acquisition for its reasonable out-of pocket costs, up to a
- maximum of $45 million, incurred in connection with the PSNH bankruptcy and acquisition. However, NU would not be entitled to such reimbursement if the acquisition terminates under certain conditions. Through s December 31,1991, NU has' expensed approximately
$41.5 million of costs associated with the acquisition
- of PSNH.
In addition,if the acquisition were terminated by PSNH, PSNH would have to pay NU a termination fee et
$25 million in'certain circumstances. If termination were a result of NU's breach of the merger agreement, then NU would have to pay PSNH a termination fee of $25 million.
r
..... 42 NORTHEAST UTIL.lTIES AND SUP.S! DIARIES l
- 9. Condensed Financial Statements-Pro Forma of $24 per share until the warrants expire five yean from ,
NU/PSNH (Unaudited) the acquisition date. Smce the $2Ph market price of NU's common shares at December 31,1991 was below The following pro forma financial statements of NU give the exercise price, the warrants have no effect on the effect to the proposed acquisiti< .of PSNH by NU. For - pro forma financial information presented.
. purposes of presenting pro forma consolidated income -
statement data, it was assumed that PSNH's emergence (4) In accordance with the Plan, PSNH will, with certain
= from bankruptcy on the Reorgani:ation Date and the exceptions, reimburse NU for its reuonable out.of-1 proposed acquisition of PSNH by NU had occurred rocket costs, fees, and expenses, up to a maximum sequentially hut otherwise simultaneously, as of the of $45 million. ne reimbursement for these costs ,
beginning of the period presented. For purposes of is not renected in the pro forma statement of income
~
presenting pro forma consolidated balance sheet data, other than as re0ccted in the calculation of the it was assumed that the proposed acquisition of PSNH by regulatory asset. NU occurred at the end of the period presented.- The pro forma financial statements do not give effect to the The pro forma statements included in this report combine synergies arising from the acquisiti on, which are expected to , the company's historical December 31.1991 consolidated occur after the acquisition date. The New Hampshire financial statements with PCNH's lii3torical December 31, Public Utilitie, Commission found, in its July 20,1990 1991 fins.ncial statements. PSNH's historical 12-rnonth decision approving the acquisition of PSNH by NU, that income statement for the period ended December 31.1991 NU, acting prudently, should be able to bring a minimum of is derived from the sum of four and one-half months of pre- $300 million in net present value of savings to PSNH as a teorgani:ation data and seven and one-half months of post- result of the acquisition.
- reorganiution data. ,
The equity collar under the Rate Agreemer ovides upper The adjustments necessary to derive the pro forma data are and lower limits on the level of the cumulative present based on available information and certain assumptions, value return on equity that may be achieved during the including the following: Fixed Rate Period. These pro forma financial statements do not include any effects on revenues or expenses that may (1) PSNH will apply traditional utility principles of result in the future if.he equity collar goes into effect. accounting that will recogni:e the economic impact of the Rate Agreement, which provides the (mancial basis for the acquisition, in its financial statements.' For purposes of deriving pro forma data, it is assumed that the rate increases were redected in income beginning on , January I ofcach year, commencing with January 1,1990. (2) The amount of the regulatory asset, wh'ich represents the aggregate value placed by the Plan on PSNH's assets in excess of the net bool value of PSNH's non Seabrook assets and the $700 million value _ assigned to Seabrook by the Plan, will be cakulated at the acquisition date in accordance with the Rate
' Agreement.
(3) The Plan provides for the issuance at the acquisition
'date of warrants to purchase approximately 8,431,000 NU shares to holders of certificates issued in accordance with the Plan to former preferred and common stockholders of PSNH. Each warrant holder will have the right to purchase one NU common share at a price NORTHEAST UTILITIES AND SUIVIDIARIES 43 .....
NU/PSNil Condensed Pro Forma Consolidated Statement of income (UuAited) Pro Fernu Giung EUet t Historical' Pro Forma To Prermd SU Adjustments Transactions For the Twelve Months Ended December 31,1991 Consohdated PSNH (Linaudited) (UnauJueJ) (Th= ands nt Mm. cuen sh.nc mbrmate n) Operating Revenues.. $ 2,753,803 $ 786,108 $ 18,26S ta $ 3,430.607 (127,572 hn Operating Expenses: Other operation.. 1,935,160 537,777 (22,425 )w 2,313,215 (127,572 hH (9.725 )u Depreciation.. 238,575 64,859 (6,685 h Ji 296,749 - Amorti:ation of .egulatary asset . - 53,554 31,745 (c) 85,299 FeJeral and state income taxes.. 190,556 25.547 20,505 to 236.90S 1 atal operating expenses . 2.364,291 681,73i t i 13.857 ) 2,932,171 Operating Income ._ 389,512 104,371 4,553 498.436 Other Income . 80,493 38,478 (8,999 ha 138.525 29,744 (t) (1,191 )tg) Interest Charges . 190,707 151,624 (20,348 )W 339,965 (151,624 hh) 156,406 (h) 13.200 th) Income After Interest Charges. 279,298 (8,775) 26,473 296,996 Preferred DiviJends of Subsidiaries . _ 42,584 8,282 (8.28210a 55,S39 13,250 th) Extraordinary Loss From Reorgani:ation.. - 39,322 09,322 ha - 236,709 (56,379) 60,827 241,157 Net Income (Loss).. Tax Benefit of ESOP Dividend.. - - 6.423 0) 6.423 ,,, Earnings For Common Shares . .
$ 236,709 $ (56.379) $ 67,250 $ 247.580 Earnings Per Common Share.. $ 2.12 $ N/A $ N/A $ 1.91 Common Shares Outstanding (average)., 111.453.550 N/A 18.432,970 0) 129,886.520 4 'Denwd from auJ2ted hta.
The no fmna fnuncui dam are resemed o enmply wnh the SEC's regu!anons, nhech gmmt only hmned adi mtmenu m Antorwal Jau-The yo fxma financul dau are not a forecast or pojecnon for any future date or period, rmr are they a repewntarnin of u hat the como:ny's fismcul pos:non er results of opranons would actua!Iy haw lumf such cramacuens m fact had occurred durmg the kvkid prewntcd. See accompanymg Notes e Cordemed Pro Forma Comoldated Surement of Income.
..... 44 NORTilEAST UTILITIES AND SUPSIDIARIES
_ __ _ _ m _ .- _ . . _ _ . _ _ - _ __ _ _ _ . . _ _ _ _ . _ __ _ _ __ _ i
....................................................................................................c Notes to Condensed Pro Forma Consolidated Statement (h) Ehminates PSNH's historical mterest/ preferred of Income dividenJs and redects the annuah:e i h terest/ preferred (a) Re0ccts PSNH's Operating Revenues and Fuel and dividends subsequent to the acquisinon as follows:
Purchased and Net Interch ige Power etTects of the Rate Agreement. Pro Forma i Principal Annualized (b) Eliminates intercompany transactions between NU Outstanding Inierest/ and PSNH. or Aggregaie p,,rerred ; Par alue D Macnd,
. (c) Ehminates the company's nonrecurring expenses f" "d associated with the acquisiti:n of PSNH' De (d) Adjusts depreciation of PSNH's Seabrook plant to PSNil:
re0cct depreciation on the $700 million value Fmt Mmgage Ibndt permitted by the Rate Agreement plus capital additions Sjhtkr.1,87/s% j subsequent to the Reorgani:ation Date. The Seabrook Senes B Ibnds.9.17% , plant is being depreciated on the straight.line method due 1998 (l). 170.000 15.5 9 at rates designed to depreciate the plant fully over the Securing Taxane pollunon remaining life of the NRC operating license. Cmuol Rnemw Ibnds. Vanable Rate (assume 50V (c) Amorti:es $425 million of PSNH's regulatory asset on a due 2021 (t)(2)- 229.000 11.450 straight-line basis over the first seven years after the Secunne Tax Exempt I "" ' Reorgani:ation Date, and the remainder of $49).7 d, 0 - W5 M0 million on a straight line basis over the first 20 years Term Lcian. Variable Rate after the Reorganizatim Date. (auume 5.0%)(3) .. 40020 20N0 Debt (f) Redects the income tax effects of the pro forma ^* , njat,n ,g 3,3g adjustments, g 5g9y g (g) Redects the deferred return on PSNH's Seabrook investment not yet in rate irse. The Rare Agreement - NAECt-provides for the phase.in to rate base of PSNH's $700 First Mortgage Ibndt (8$$ume 9PL).. 355.000 31,950
~ million initial investment in Seabrook over a six year . _ . .
Notes 15.23% due 2000 (4) . 205,000 31,222 perid Amortiution of Debt issuance Costs.... _ . . . . N/A 1.050 560.000 64,222 NU: , Term Loan, Variable Rate (anume 5.0%).. 51,000 2,550 NU Debe Secunns ESOp 1,8.58% (11/12 of one year)(5). 175.000 11,764 ESOp tl (anumc 8,5%) . 75.000 6,375 ESOp Dividends U cd to pay Debt Service.. . . - . N/A (18.891) Amortization of Debt lisuance Costs., N/A 817 301.000 4.615
$ 2.119.985 $156.406 NORTilEAST LITi!lTIES AN11SUlWililARifM 45 .....-
9 - , ~ , . . . , . -.- , - , - - _ _ _ , - - -
~c------ -- , _ - - _ . , , , _ . - - - _ _ _ _ _ _ _ _ _ _ __ ___ ___
i Other Debt: PSNH Revolvmg Credit Facihty (auume 5 0% 5 76AT $ 3.8A' NAEC hioney Pool (auame 5.0%).. 4A10 200 NU Consohdated (assume 5 0%)
-Refmance Money Pool ibnowmgs .. 175A10 8,750 Amortintion of PSNH Preferred Snxk luuance Costs.. N/A 450 5 255 000 $ 11.200 Preferred SixL:
PSNH Preferred Sixk Subject to hi.mdatory Redemption, - 10 6% (1) .. 5 125 000 5 iL250 (1) Issued on May 16,1991, in connection with the emergence of PSNH from bankrurtcy. (2) Interest rate includes letter of credit fees. (3) On May 16,1991, in connection with the emergence of PSNH from bankruptcy, PSNH borrowed $452 million under a Term Loan Agreement. At the time of the acquisition of PSNH by the company, PSNH will be required to reduce the Term Loan Agreement to $400 million (or a lesser amount if the acquisition occurs after amorti:ation of the Term Loan Agreement has begun).13nrmwings under the Term Loan Agreement may be prepaid in whole or in part. (4) On May 16,1991, in connection with the _ emergence of PSNH from bankruptcy, PSNH issued
$205 million of Notes. At the acquisition date.
PSNH will transfer its obligations under the Notes to N AEC along with its interest in Seabroot. (5) On December 3,1991, NU issued $175 milhon in notes, the proceeds of w.ti:h were loaned to the trustee of the ESOP. (i) Reflects the ta.c benefit of deducting common dividends on shares held by the trustee of the ESOP. (j) Reflects the issuance of additional common shares to finance part of the comrany's requirements for the acquisition of PSNH.
..... 46 NORTllEAST UTil.! TIES AND SUBSIDIARIES
- _ . . _ - _. . - ._- . _ ~ - - . . _ .-_. . _ _ . - -
....................................................................................................q NU/PSNil CondenscJ Pro Forma Consolidated Italance Sheet (Unaudited) l Pro Fonna Givmg Effect Hntorical' Pro Forma To PropvcJ NU Adjustments Transacnons As of December 11,1991 Consolidated PSNH (Unaudited) (UnauditcJ) (Tbmn.h ef itinara Assets Utility Plant, nes . . .. $ 5,257.567 $ 1.384.560 $ - $ 6.642,127 Other Property and investments.. . . 254.503 23.598 - 278,401 , Current Anets: Cash and mecial denwits.. . 37,271 1.357 (340)(.a 38,288 Other... . .....4 . . . . 610.656 203.638 (24.528 )(n 789.766 7 647,927 204,995 (24,868) 828.054 Deferred Charges: Regulatory anet . . , . .
- 864,972 51,729 M 916,701 Other.. .. . . .. 621,449 158,400 14,200 (J) 850,264 64,987 (e)
I (8.772 )(b) 621,449 1.023.372 122,144 1.766,965
- Total Assets.. - $ 6.781.746 $ 2,636.525 $ 97.276 $ 9.515.547 Capitalization and Liabilitieu Capirahzationi Common shareholders' equity.-. . . . . .. $ 1,876,074 $ 684,424 $ (460,724 ho $ 2.099,774 '
Preferred stock not subject to mandatory redemption.. . . .. . 394,695 - - 394,695 Preferred stock subject to . mandatory redemption... ... . . . 167,892 125,000 -
'92.892 Long-term debt . . .. -. 2.616.932 1,436,221 429.000 (0 4.4R2.153 5,055,593 2,245,645 (31,724) 7.269,514 Obligations Under Capital Leases.. . . . . . . . . . . 213,374 - - 213,374 Short. Term Debt.. . . 62,500 108.000 147.000 (o 317,500 Other Current Liabilities . . . . - , 619,232 251,387 (33,300)m 852,619 15,300 (o Accumulated Deferred Income Taxes.. .. . . . 569,079 - - 569,079 Other Deferred Credits-- .. . . . . . . . . . . .. 261,968 31.493 --
293.461 Total Capitali:ation and Liabilities.. .... .. . $ 6.781.746 $ 2.636.525 $ 97.276 $ 9.515.547
' *lkriwJfnnn awlaed Jua -- The pro forma [mancial a ta are presented to com! J y unh the SEC's regulawms. whkh permit only limned a,l i ustmenu to hutoncal dua.
The pro fmna founcul data are not a forecast or projectirm for any fiaure due or perni, nor are they a representan<m of u has the company's fmancial positwn or resuln of operanons uvu!J actually hast been if such traruactwns in fact had occurred dunng the perud wesen:ed t See accmnpemymg Notei to Cmdensel Pm Forma Consoldated 13alance Sheet. NOR TilEAST UTl! ITIES ANIblilNDI ARIES 47 ,....
Notes to Condensed Pro Forma Consolidated (O Adjusts capitah:stion -: the acquaition date as Italance Sheet follows (1); (a) Reduces cash to redect amounts to be paid at the acquisition date. Ghands of Mm) (b) Eliminates intercompany Payables and receivables Common Equity: betw-en NU and PSNH. Ehmmate PSNH's Common Equiry . $(684.424) Inue Common Shares-Pubhc O#enne 200,000 (c) Adjusts PSNH's assumed regulatory asset as allowed Redect Common Share issuance Cos,ts.. (6,0X) under the terms of the Rate Agreement. Redect PSNHi Reimbunement of NU's Expenses on the Aqumtion Date (2L 29.700 (d)Redects the new Jebt issuance expenses on the 3g733 acquisition date, which are to be amorti:ed over the terms of the respective debt issues. (e) Adjusts deferred charges by $65 million to reRect leng Term Debti _ PSNH Term Note.. $ (52,000) previously unrecorded net operating loss carryforwards. NAEC First Mortgage Ibnds.. 355.000 The Rate Agreement stipulates that such carryforwards NU Term Note . 51,000 be calculated in accordance with the Plan, and that to NU Debt Secunnes-EsoP 11.. 75.M the extent reali:ation is assured beyond a reasonable $ 429.000 doubt, such assured amounts be recorded as an asset. Short Term Debt: Northeast Utihties Consohdated-Refinance Money Pmi Ibert. wings .. $ 175.000 PSNH Revciving Credit Facihty- (32,0CO) NAEC Money PoolIkrmwings. 4.000
$ 147,000 (1) For additional information regarding the financings contemplated by the Plan, see Note (h) of the Notes to the Condensed Pro Forma GnschJared Statement of Income.
(2) Recoided net of $153 milhon ofincome taxes.
..... 48 NORTilEAST UTil.lTIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF QUARTERLY FINANCIAL DATA (UNAUDITED) . Quarter Ended 1991 Alarch 31 June 30 September 30 December 31 (Nuun.h d D h. eurre rer share data) Operating Revenues .. . . . . . . . . . . . - $ 701,289 $ 636,962 $ 692,722 $ 722,830 Operating income.. ..-.. . . $ 110,503 $ 88,482 $ 105,453 $ 85.074 Net income.. .. . .. .. $ 68.825 $ 50,931 $ 67.113 $ 49.840
- Earnings Per Common Share . .. . S 0.63 $ 0.46 $ 0.60 $0.43 i
1990 Operating Revenues . . . . . . $ 680.522 $ ' 603.801 $ 675,307 $ 656.689 Orerating Income.... . .. . . . . $ 109.021 $ 86.962 $ 105.681 $ 78.898 Net income._ . .
$ 66,109 5 40.678 5 65.896 $ 38.324 Earnings Per Common Share . $ 0.61 $ 0.37 $ 0.61 $ 0 35 ,
CONSOLIDATED GENERAL OPc ^ alNG STATISTICS 1991 1990 1989 1988 1987 System Capability-hlW W.. .. 5,916.2 5,909.6 5.963.7 5,737.7 5,564.5 System Peak Demand-hlW.-. . - . . . . . 4,999.8 4,753.9 4,858.0 4,883.3 4.590.5 Nuclear Capacity-hlW W.. . .. 2,380.0 2,459.5 2,397.1 2,590.4 2.420.2 Nuclear Capacity Factor (%) (a)... 46.4 72.2 71.2 79.2 74.9
- Nuclear Contribution to Total i Energy Requirements (%) W... -.. 43,5 57.5 56.8 68.5 68.5 i .
(a) includes the system's entitlements in regional nuclear generating companies, net of capacity sales and purchases l NORTHE AST UTil.lTIES ANI) SUllSII)l AltlEs 49 . . . .
SELECTED CONSOLIDATED FINANCIAL DATA 1991 1940 1999 10 %.- l (Thuurwh d [btlan. cuts granum and *h..re dea) Italance Sheet Data: Net Unhty Plant-Continuing Operations. $ 5.257,567 $ 5,265.168 $ 5,237.805 $ 5.267,629 Discontinued Gas Plant . '54,587 i Total Anets.. 6,781,746 6.601,371 6.523.202 6,764.e08 : Total Caritali:ation u . 5,138,426 4.965.859 4.954.083 5.123,504 Obligations Under Capital Leases W . 279.729 319.54S 341.246 410,352 Income Data Continuing Operatians: Operaung Revenues.. $ 2,7 5 3,803 $ 2,616.319 $ 2,47 ).571 $ 2.268,607 Net income . . 236,709 211,007 203.225 224.644 l Eammgs per Common Share.. $ 2.12 $1.94 $ 1.87 $ 2 07 l Discontinued Gas Operations: Operating Revenues.. $ -
$ - $ 124.229 $ 200.243 5.858 9.078 I Net Income . .
Eammgs per Common Share . $ - $ - $ 0.05 5 0 OS I Common Share Data: Eammgs per Share . . . . . $ 2.12 $ 1.94 $ 1.92 $ 2.15 Dividends per Share.. $ 1.76 $ 1.76 $ 1.76 $ 1.76 Payout Ratio (%) . 83.0 90.7 91.7 51.9 Number of Shares OutstanJmg-Average .. . 111.453.550 109,003,818 108,669,106 108,669,106 hiarket Price-High.. ..-.. $24% $22% $23 $ 231/< htartet Price-Low.. . $19 $ 177/, $ 18W $ 18i/4 htartet Price-Chwing Price (end of year)- $23% $20 $ 22% $ 197/4 lbok Value per Share (end of year) . $ 15.73 $16.34 516.13 $ 16.90 Rate of Retum Eamed on Average Common Equity (%) . .- , 13.0 12.0 11.8 13.0 Dividend Yield (end of year) (%) .. . 7.4 8.8 7.8 8.9 htarkct to+Ikok Ratio (end of year).. 1.5 1.2 1.4 1.2 Pnce-Eamings Ratio (end of year).. _ 11.1 10.3 11.7 9.2 Capitali:ation: W Common Shareholders' Equity. .
$ 1,876,074 $ 1,790,758 $ 1,752.395 $ 1,837,034 Preferred Smck Not Subject to hiandatory Redemption.. 394.695 394.695 394,695 344.695 Preferred Stock Subject to htandatory Redemption . 170.394 176.892 181,892 111.812 1.ong Term Debt . . 2.697.263 2.603,514 2.625,101 2.829.941 Total Capitali:ation . $ 5.138.426 $ 4.965.859 $ 4.954.081 $ 5.121,5N (allncludes portions due within one year.
! . . . . 50 NORTilEAST UTILITIES AN118UIMil11 ARIES
1987 1986 19S5 1984 1983 1982 (hund, d rullm. euert peranuges and sh re dan)
$ 5,229,242 $ 5.120,812 $ 5,204.687 $ 4,650,428 $ 4,122,692 $ 3,570,710 237,903 224,581 214,115 204,187 192,861 183,322 6,663,794 6,299,755 6,147,720 5,507,040 4,957,927 4,300,368 4,956,080 4,743,914 4,6S1,995 4,319,404 3,954,569 3,465,395 432,714 441,183 440,587 392,593 337,636 286,603 52,038,554 $ 2,006,842 $ 1,969,225 $ 2,030,557 $ 1,746,425 $ 1,641,308 214,529 171,234 277,768 276,615 209,905 143,040
$ 1.97 $ 1,58 $ 2.62 $ 2.73 $ 2.24 $ 1.67
$ 202,816 $ 203,814 $ 220,010 $ 224,430 $ 238,999 $ 224,447 14,616 10,705 10,773 12,323 11,643 8,202
$ 0.14 $ - 0,10 $ 0.10 $ 0.12 $ 0.13 $ 0 09
$ 2,11 $ 1.68 $ 2,72 $ 2.85 $ 2.37 $ 1.76
$ 1,76 - $ 1,68 $ 1.58 $ 1.48 $ 1.38 $ 1.28 83.4 100.0 58.1 51.9 58.2 72.7 108,669,106 108,352,517 106,221,131 101,398,235 93.497,945 85,777,230
$28 $28% $ 18% $ 14% $ 13% $ 12%
$18 $ 17% $ 13% $ 10% $ 11% $ 8%
$ 20% $24% $ 17% $ 14% $ 12% $ 12%
$ 16.53 $ 16.24 $ 16.21 $ 15.07 $ 13.84 $ 12.96 12.8 10,4 17.4 19.8 17,8 13.8
~ 8.7 6.9 8.9 10.4 11.3 10.6 1.2 1.5 1.1 0.9 0.9 0.9 9.6 14.4 6.5 5.0 5.2 6.9
$ 1,796,293 $ 1,765,090 $ 1,738,871 $ 1,575,705 $ 1,361,724 5 1,159,698
- 291,195 291,195 291,195 291,195 291,195 291,195 205,832- 166,832 185,833 186,978 I88,547 104,461 2,662,760 2,520,797 2,466,096 2.265,526 2,111,103 1,910.041
$ 4.956,080 $ 4,743,914 $ 4,681,995 $ 4,310.404 $ 3.954,569 5 3,465,395 NORTilEAST UTil.! TIES ANI)SUIWitilARil:S 51 . . . .
' CONSOLIDATED ELECTRIC OPERATING STATISTICS 1991 1990 1959 .
1988
--Source of Electric Energy:
(kWh-millions) W Nuclear-St eam ..-- . - . . . . . . . . . I1,062 17,724 17,119 19,146 hmil-Steam.. ... = . . , . .. . . . 6.179 6,S29 .S.956 8,805 iliydro-Conventional.. . . . . . . 994 1,174 956 825-liydro-Pumped Storage..- .. .. ,.-. 1.173 1,250 1,194 1,111 Internal Combustion.. .. _. ~. 5 11 77 84
- Energy Used for Pumring . . . . . . (I,605) (1.683) (1.629) (1.509)
' Net Generation. .~.. .. - 17,828 25,300 26,673 2s,462 Purchased and Net Interchange.. . .. . 13,430 6.249 5.178 2,456 Company Use and Unaccounred for . . . (1.9;8 ) (1.938) (2.104 ) (2,333)
Net Energy Sold . . -- 29.100 29.611 29.547 28.585 Revenuest (thousand.) Residential - . . - .. $ 995,098 $ 938.032 $ 898,471 $ S38.011 Commercial.. . . . . 828,117 788.478 734,709 673,819 Industrial . -. .- .. . . . , . . . - . . . . . 419,003 410,125 391.661 366,517
- Other Utihties... . . . . . . - 366,231 346,087 301.045 227,653 Streetlighting and Railroads . .. . . . . . - . 38,656 37.195 35,499 33,151 Miscellaneous .- - 49,539 42,882 64.282 62,169 Total Electric.. .. . . . . . . . 2,696,644 2.562,799 2,425,667 2.221,320 Othe r .. . ..~.. .... .. m... . . . 57.159 53,520 47.904 47,287 Total . .. .. . .. . . _ . $2,753.803 $ 2.616.319 $2.473.571 $2.26M07 Salen (kWh-millions)
Residential.. .. . 9.518 9,500 9,594 9.412
' Commercial.. .. . . . . . .. 8,900 8,981 8,757 8,585 inJustrial .m. . . . . . . . . 5,208 5,448 5,557 5,535 Other Utilities..... -.. . . . ~ . . . . . . . .,e, 5.388 5,394 5,351 4.77i Streetlighting anJ Railroad.s . ...... .. , . . _ . . . ~ . . . . . 286 288 288 282
. Total . -... .. .. . . .
29,300 29.611 29.547 28.585 Customern (average) - Resident ial.... .. . ..~... . . .. -- . .. 1.150,357 1,145,142 1.134,588 1,117,356
' Commercial.. . . . 102,867 102,900 101,301 98,095 Induitnal . . . ., - . . . . .. .. . .. 5,067 5,i14 5,090 5,063 Other.. . . . . 3,305 3.283 1.277 3.222
' Total . ., . . . . . .. . 1,261.596 -1,256.439 1.244.256 1.223.736 Average Annual Use Per llesidential Customer (LWh) . . . .. 8,285 8,104 8,460 8.418 l- Average Annual Ilill Per llesittential Cu s tomer ...-.. . . _ . . .. ,.. . $ 866.20 $ 819.94 $ 792.28 $ 749.54 l ' Average Revenue Per kWht Residential...-.. ..~ , . . . - . . . .. . . . . . . 10.4 5 e 9.87 e 9.36e 8.90 e i Commercial.. . -. 9.30 8.78 8.39 7.85 Industrial . . . .. . . - . . .._ 8.05 7.53 7.05 6.62 (a) Generated m system and regional nuclear generanng companies.
, ..... 52 NORTilEAST UTIUTIES ANDSUhSIDIAluES
l 1937- 1986- -1985 19S4 1933 1982_ i
.. 7 18,019 - 16,624 11,453 13,711 10,898 12,343 7,912 9,04S S325 9,065 7,963 7,503 866 895 726 840 833 791 973 950 925 875 697 795 39 33- 16 34 13 15 (1,322) (1,293) (1,287) (1,199) (1,244) (1,108) ;
26.487 26,257 20,158 23,326 19,360 20,339 l " 2,585 3.328 5,398 2,916 4,648 2,743 l'
- (2,082 ) - - (2,050) (1,859) (1,793) (1,801) (1,631) 26,990 -27,535 23,697 24,449 22,207 21,451
$ 780,866 $ 741,838 $ 750,076 5 754,075 $ 668,794 5 633,124 630,678 - 602,924 606,414 589,898 515,750 479,976 353.394' 350,310 371,079 381,289 332,460 314,420 203,642 234,222 165,071 216,227 151,800 150,357
'32,318 34,741 34,899 32,252 26,456 23,767
- (2,464 ) 9.698 29,340 28,413 23,114 (18.146) 1.982,752 1,961,571 1,937,237 2,003,081 1,723,673 1,624,758 55,802 45,271 31,988 27,476 22.752 16.550
$2,038,554 $2,006.842 $ 1,969,225 $2,030,557 $ 1,746,425 $1.641,308 8,325 8,274 7,837 7,804 7,554 7,342 8,151 -7,676 7,185 6,904 6,493 6,166 '
5,449 5,394 5,286 5,374 5,046 4.871- , 4,284 5,883 3,094. 4,113 2,910 2,895 281 308- 295 254 204 177 26.990 27,535 23,697 24,449 22.207 21,451
- 1,091,539 1,063,998. 1,041,254 1,021,871 1,005,005 991,069 94,164 90,924_ 88,031 85,658 S3,955 88J15 5,084 5,102 ' 5,087 5,022 4,979 5,004 3,120 - 3.096 3,067 3.025 3,010 2,428 1,193.907 1,163.120 ' 1,137,439 1,115,576 1,096,949 -1,086,816 8,061- 7,746- 7,492 - 7,596 7,472 7,361
. $ 713.24 - $ 694.51 $ - 717.06 $ 734.00 $ 661.57 5 634,71 8.85 e 8.97 e 9.57 e 9.66 e 8.85e 8.62 e 7.74 7,85 8.44 8.54 7,94 7.78 6.49 7.02 7,10 6,59 6,45 6.49 NORTIIEAST UTILITIES ANI)SURSilil ARits 53 . . . .
SHAREH01.0ER INFORMATION Shareholders Transfer Agents and Registrars As of January 31,1992, there were 146,765 common Northeast Unhnes Scruce Company shareholJets of recorJ of Northeast Utihtie3 holJmg an Shareho1 Jet Scruces aggregate of 119,624,077 common shares P.O.I W 5006 11artford, Connecticut 06102-5N6 Common Share Information state s.reet Ibnk and Trust Company The common shares of Northeast Utihties are hsted on the Corporate Stock Transfer Department New York Stock Exchange. The ticker symbol n -NU", p,0.gyx3:00 ahhough it a frequently presented as "Noest Ut" m vanous lhton, Massachusetts 02266 8200 financial publications The high and low sales pnce5 and Jwidends paid for the past two years by quarters are shown below: Form 10-K Northeast Utilities will provide shareholders a copy of its Quarterly 1991 Annual Report to the Securities and Exchange - Dividend Commioion on Form 10.K. including the financial Year Quarter liigh Low Per Share statements and schedules thereto, without charge, upon 1091 First $21 % $19 $0.44 '"# *IP ' "I ' " 'I"'" '"9""" '# "' '
- Second 21 % 19 % 0.44 Theresa 11. Allsop ThirJ 22 % 20 W 0.44 Fourth 24 % 21 % 0.44 AI"'S*CY N,ortheast Utihties 1990 First $22% $20W $0.44 P.O. Box 270 Second 21 % 19 0.44 llattford, Connecticut 06141 0270 Third 20 % 17 % 0.44 Fourth 20 % 18 % 0 44 Dividend Reinvestment Plan The company has a lhvidend Reinvestment Plan under which all common shareholJets may use their dividends to purchase additional common shares, The company absorbs all brokerage fees for purchases unJer the plan. .
Northeast Untities Service Company, Shareholder Services, P O. Ibx 5006 liartford, Connecticut 06102-5006, is the company's dividend paymg agerit and admmisters the company's Dividend Reinvestment Plan Annual Meeting The annual meenng of shareholJers of Northeast Utihnes will be helJ on Tuesday, May 19,1992, at 10 a m., at La Renaissance, East Wmdsor, Connecticut, which is located at Exit 44 (East Wmdsor) of Interstare 91. ..... 54 NORTi1 EAST UTil.lTIE4 ant 1 SLWIDIARIES
i V NORTHEAST UTILITIES SERl/ ICE COMPANY Olti lCLRS Chairman and Chief Esecutive Officer
~
'Rkha:J A. Rcdtre Food'HyJro Engmccmg and Ol v., som Wdlum B Elin W.n ne D. Romberg Nm kar,0;vranons Sen u o President and Chief Operat,ng i -
Officer Frant P. Sab,.nno BernarJ M Fox , Mm Lerm: C FrcJenck Scar, Esecutive Vice President Eng,ran ncnral
' George D. Uhl John F. Orek a Cont, kr nuclear Roger C Zaklukiemc:
Senior Vice Presidents Transnumon anJ Dnmhunon Robert E. Bush Regional Vice Presidents - Chief Fmanc al O ;na r Rolert G Abatt John P. Cagnetta Wntcrn Masuu knneus Cornwatc Pimmmg and Reedmwy RcLuums Rwhard R. Carella Frank R. Locke Ea5 tem Chief Admmistraus e Offscer-Nere Hampshrre Lesley C GeroulJ Hugh C MacKenne Southen Customer Senice Operanons
' Lawrence H. Shay
'Roy C. J. Normen No"her" Admmarrauw Sertices Alfred R. Rogers
- Walter F. Torrance. Jr.
Central Secretary and Genera! Counsel
'Roberr W. 7onehetti Vice Presidents Westctn C Thaver Bnu ne Assistant Controllers - - -
Treasurer I' ncu R. McLaughhn Eric A. Ikihtu Nucicar, Engmcermg Senices 'S." James Marneault Tod O. Dixon , Assistant Secretaries fr@wmanon Resources Cheryl W. Gnsd Theresa H. Albor Hum.m Resources
' Douglas R. Teece Karen G. Wenn Barry !!berman Corporate Plannmg Ass.is tant Treasurers Francis L. Kmney Pubhc Affxrs Robert C Aronen Arthur 11. Hier!
Keith R. Marvin Eng x G W n & nHe Purchmmg and Maraints Maturetncnt John W. Noyc3 Kegsdaury RcLainsn
*! late ckcred en pmwyure m a oemrary emly rcrnement til.m und uJ! rente m 19C Inn i.an e Oumien-Robert E. Husch um ektied emunse uce pesdra and chef fmanoal offwe, clfecme Ajird I, i992. John l'. Ol.eLa um di ecJ execun+c tue twes&nt-Nm kar, effetnw %wmher I,1991. Eric A. DeBarba um ekcred swe pnent-%dar. Enencerme Sen nes, effame Mar.h I, 1992, Cheryl W. GrisJ um ekocJ uce poent-Hum.m Remurtn, effecme June I,199 h Harry liberman u us &cred tue twndnt-Grenate Ibnnmc.
J effecnw January 29.1992. Keith R. Marvin was ekaed uce peudent-Purchaung and Geneal Seucci, ej!ccme AF l 1992, John W. Lyes uas chteJ nce tenant and conmdler effecose ApJ L 1992. Wayne D. Rumberg um ekered uce penknt-Nm kar, Olieranons Scucn, effanse Marc h I; 1902, C. Frederkk Sears um elected me peudent-Entrmnmenul. effante March I,1992, and George D. Uhl um ch red tse peuJcne, effanw ApJ f.1992 Edward J. Mroctka, unan twe peuJent-Nuckar Engmeenng and Onwanons .cugned m 1991 afec 24 yean of wence. Retiremaui-Albert J. Iluick, oce newknt-Cepmne Pc/<wmance Sen en and Organnanon,J Conrd reneci m 1991 afia 44 yenn el en ice. and Wmstow C. Wentworth, Jr., Asuuant Controller, renred m 1991 afwr 32 yean of scuce. In Man..rium Te noce usrh ubwn, the pnung. Jarme the war. of Warren A. Greten, renred sue peudent-T.md and I hJro 1%L., non An of March 1,1992 55 ....
. NORTHEAST UTILITIES OFFICERS TRUSTEES __
William B. Ellis +# Richard L Creviston Chaaman of the Board ard Chief Execurae O&er Renred Chamnan and a Director NESB Ccep and ru subsdwy banks Bernard M. Fox Presdent ad Chief Operanng Office t' George David Besdent, Chef Operanr.g Offwer, ad a Decctm Robert E. Busch Unned Tuhn4cs Cornwaren (proudes proleu. Senior Vue Presdent and Chief rmancul Offeer tystems, and snuces to anospre ard defeue, Walter F. Torrance. Jr. constnencn. and automc.rac indwrnes) Scruor Vre Presdent. Sxtewy, and Geneal Covuel
*t Donald W. Davis C. Thayer Browne Ch.mrman of Execunse Commarre ad a Dnecer Vee Presdent and Treasurer The Stanley LLs (tuob Jurduce. ard irdernal George D. Uhl mducu)
Vice Presidene end Control!ct *+# Donald J. Donahue Theresa H. Allsop Chartman Assistant Secretary Macro Copper Company Karen G. Valenti *+ William B. Ulis Assistant Secretary Chamnan of the Board and CA:cf Execurae Officer Robert C. Aronson *+ Bernard M. Fox Assurant Treasurer Presdene and Chief Opcarms Oficce Arthur H. Hierl *t* George B. Han ey Assman: Treasurn Charrman of the Board, Presdent. Chuf Execunse Officer, and a Drrector Eugene G. Vertefeuille Puney ikses Inc. (maz!mg and of:ce prcducu, ksnwss A tant Treasures ,uppia,,a,ygmancut,,7uc,,;
#t* Eugene D. Jones Scruar Vice Presdent Grerner Inc. (::onsulung ergnens) t* Elizabeth T. Kennan Presden:
Mount HolyoLe Co!!cge
*+t Denham C.1.unt. Jr.
Chaeman and a Daector Luns Sdsersmnhs
+#* Burke Marshall Nicholas delt Kar:enluch Professor of Law Yale law School
*#t* William J. Pape 11 Pubbsher
%cbury Repub!wan-Amencan (newspaper)
+#* Norman C. Rasmussen
- Executive Cornmittee Profesor of Nuclear Erenecemg
'y }""", " Massachusetts Institute of Technohn i Commutee on Organnation, *+#t Albert E. Steiger. Jr.
Comrensatson and Ikurd Aff.nrs Charrman and a Drt:cror
- Corporare Responnbihty Commutee Alberr 5 eiger, Inc. (department store cham) l l
i Kushem S. Fuller vennwd as a Tnsure m I99I. As of March 1,1992
..... 56
d
~
i Net Generating Capacite f, b. l In hiegawatts (htW) L : As Of January 1.1992 _ /Nf '> j < h NU PSNH : 2,500 '
. - Nuclear 567
!. ) 4 Y g Fossil-Steam 1,712 SSS I I
> Hydroelectric 1,0S 3 63
/k'
. h Other Units 454 110 Q s%* ,f' s D'Jhj$ i Cogeneration Total 475 6,224 158 1,791 l t % nami,% aaman.,aom I
I j f b I J s y th.m m monm..
$ :l t
/
4 [ gg ,,g. l A Nuclear NU wnoHv ewns !
!?%. c:.. .:.3 : two nuclear units anJ shares in six 4
5k [ [ > "" # l others. PSNH shares m sn units. Capacities above redect
, x x. ..c^t
- ' u:'Ji ;
enntlements from the plants.
; Z C'i~
- E~ ~l. E E Fossil-Steam NU has 11 4 _
units at six locations: 8 oil fireJ, l ! ny f &. 3
-(--g --
A one coal buming, and two with i ( ; x - ~ _ ~ ~g. l Jual oil-gas capabihnes. PSNH has j W . -- " M ( 7 units (one jointly owned) at four l' d"[ ~C locations. l
~:: :':. . , - ~ >. %'
MA ] 4,?%. ' : . ,. . c^ ., a , e H3droelectric NU has 64 i
*g ;:"
. ~ , .
conventional and seven rumped. storace units at 25 plant sites. L
' '", 'C i PSNH has 13 conventional unit, at
~ ~~ '
l m I 9 5i'C8-f.-
- Other Units NU has 24 jn3.g rp. Cp _'E . g. - .
internal combustion units (not shown on map) for use during , f.,. . . . ' l g.~. -
. g ~ . -- '
penods of high demand. Two
,. " turbines at a trash-to-energy unit in '
. d'Dp -.--g [- N .. -- - - ^
_.n i Hartford are owned by NU. PSNH has 8 internal combusuon units g g. A ~ - -e s ,_._. . _ . . a l N % . .> - -. - - - - " (also not shown).
. ~
~
' w ~n. ~.. - w- P m- s.w. w s.m. % s.~. '=' Cogeneration independent i l
L_ . _ _._ _ _f cogenerators and small power I
- producers under long term ,
Northeast Utilities (NU) is in the process of acquiring the assets and contracts operate in the NU service operating business of Public Service Company of New Hampshire (PSNH). territory and have a total capacity : NU serves 1,264,928 customers in a service area that stretches from the of about 475 hiW. Comparable Connecticut shore to the Berkshires m hiassachusetts. The service area independents in the PSNH service ! i covers approximately 5,890 square miles (4,400 in Connecticut and 1,490 area have about 160 htW of in hiassachusetts) in 208 communities (149 in Connecticut and 59 in capacity. i hiassachusetts). AdJition of PSNH to the NU system would add 389,576 : customers in 198 communities. The nonhern boundai would stretch to Canada and the combined system would add 5,445 squa c miles.
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a SECURITIES AND EXCHANGE COMKISSION
- C=hingtcn, D. C. 20549-1004
, Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECUPlTIES EXCHANGE ACT OF 1934 (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 1 OR 15(d) OF THE SECURITIES EXCMANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1991 OR TRANSITION REPORT PURSUANT 'IV SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED)
%r the transition p(riod from to Commission file number 1-7316 COMMONWEALTR ENERGY SYSTEM (Exact name of registrant as specified in its Declaration of Trust)
Massachocetts J4-1662010 (State or other jurisdiction of (1.R.G. Employer incorporation er organization) Identification No.) One Main Street, Cambridoe, Massachusetts 02142-9150 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (617) 225-4000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchance on which recistered Common Shares of Beneficial New York Stock Exchange, Inc. Interest $4 par value Boston Stock Exchange, Inc. Pacific Stock Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: Title of Class None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be centained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. TES x HO Aggregate market value of the voting stock held by non-affiliates of the registrant as of March 16, 1992: $385,403,886 Common Shares outstanding at March 16, 1992: 10,043,098 shares Document Incorporated by Reference Part in Form 10-K Notice of 1992 Annual Meeting, Proxy State-ment and 1991 Financial Information, dated April 3, 1992 (pages as specified herein) Parts I, II and III List of Exhibits begins on page 26 of this report.
COMMONWEALTH ENERGY SYSTEM 4 YORE 10-K DECEMBER 31. 1991 TABLE OF CONTENTS PART I PAGI, Item 1. Busine3s........................'....................... 3 General...... .................................. 3 Electric Power Supply............................... .... 5 Power Supply Commitments and Support Agreements..... 7 Price-Anderson Act.................................. 8 Electric Fuel Supply................................ 9 i Gas Supply.......................................... 10 Rates, Regulation and Legislation................... 12 Segment'Information................................. 18 Environmental Matters............................... 18 Construction and Financing.......................... 18 Employees........................................... 19 Item 2. Properties............................................. 19 Item 3. Legal Proceedings...................................... 20 Item 4. Submission of Matters to a Vote of Security Holders.... 20 PART II Item 5. Market for the T.egistrant's Securities and Related Stockholder-Matters.................................... 21 Item 6. Selected Financial Data................................ 21 Item 7. Managemert's Discussion and Analysis of Financial Condition and Results of Operations.................... 21 Item 8. Financial Statements and Supplementary Data............ 22 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................... 22 PART III Item 10. Trustees and Executive Officers of the Registrant...... 23 Item 11. Executive Compensation................................. 24 Item 12. Security Ownership of Certain Beneficial Owners and Management............................................. 24 Item 13. Certain Relationships and Related Transactions......... 24 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................................ 25 Signatures...................................................... 61 COMMONWEALTH ENERGY SYSTEM FORM 10-K plCEBER 31, 1991 PART I. Item 1. Business general l Commonwealth Energy System, a Massachusetts trust, is an unin-corporated business organization with -ransferable shares. It is organized under a Declaration vi Trust dated December 31, 1976, as amended, pursuant to the laws of Massachusetts. It is an exempt public utility holding company under the provisions of the Public l Utility Holding Company Act of 1935, holding all of the stock of four operating public utility companies. Commonwealth Energy System, the parent company, is referred to in this report as the " System" and i together with its subsidiaries is sometimes collectively referred to as "the system." l l The operating utility subsidiaries of the Syctem are engaged in l the generation, transmission and distribution of electricity and the i distribution of natural gas, all within Massachusetts. These subsid-l laries are: Eectric gas a Cambridge 41octric Light Company Commonwealth Gas Company l Canal Eleutric Company Commonwealth Electric Company In addition to the utility companies, the System also owns all of the stock of a steam distribution company (COM/ Energy Steam Company), i five real estate trusts and a liquefied natural cas (LNG) and vapor- 1 ization facility (Hopkinton LNG Corp.). Subsidiaries of the System have common executive and financial management and receive technical l assistance as well as financial, data processing, accounting, legal and other services from a wholly-owned services company subsidiary (COM/ Energy Services Company). The five real estate subsidiaries are: Darvel Realty Trust, l which.is a joint-owner of the Riverfront Office Park complex in Cam-bridge; COM/ Energy Acushnet Rcalty, which leases land to Hopkinton LNG Corp.; COM/ Energy Research Park Realty, which was organized to develop
- a research building in Cambridge; COM/ Energy Cambridge Realty, which was organized to hold various properties; and COM/ Energy Freetown
' Realty (Freetown), which was organized in 1986 to purchase and develop 596 acres of land in Freetown, Massachusetts. Freetown's preliminary plans called for the development of an energy park, the first phase of which included the construction of a 440 megawatt (MW) generating unit, through the joint efforts of Freetown and Texaco Syngas, Inc. ar" 3 subsidiary of General Electric Company (the co-developers), l Effective November 30, 1991, the co-developers notified Freetown of their intent not to continue with the project due to poor economic conditions and significant declines in regional load forecasts which COMMONWEALTH EMERGY SYSTEM , FORM 10-K DECEMBER 31, 1991 Item JLt Business (Continued) General (Continued) pushed the need far power out to the late 1990s. Subsequent efforts by the System to generate interest in alternative uses of the site were hampered by continuing difficulties in the regional economy, particularly in the real estate market. On January 23, 1992, the System announced its decision to write-dcwn its investment in the Freetown project. This action resulted in the recognition of a one-time (net of tax) charge of $14.8 million. For additional informa-tion, refer to Note 11(a) of the Notes to Consolidated Financial Statements filed under Item 8 of this report. Each of the operating utility subcidiaries previously listed ~ serves retail customers except for Canal Electric Company (Canal) which operates an electric generating station located at the eastern and of the Cape Cod Canal in Sandwich, Massachusetts. The station consists of two oil-fired steam electric generating units: Canal Unit 1, with a rated capacity of 569 MW, wholly-owned by Canal; and Canal Unit 2, with a rated capacity of 580 MW, jointly-owned by Canal and Montaup Electric Company (Montaup) Canal Unit 2 is operated under an agreemen(an unaffiliated t with Montaup company). which provides for the equal sharing of output, fixed charges and operating expenses. Electric service is furnished by Cambridge Electric Light Company (Cambridge Electric) and Commonwealth Electric Company (Commonwealth Electric)ont retail to approximately 304,000 year-round customers in 41 communities in eastern Massachusetts covering 1,112 square miles and having an aggregate population of 645,000. The system also serves approximately 49,000 seasonal retail customers. The territory served includes the communities of Cambridge, New Bedford and Plymouth and the geographic area comprising Cape Cod and Martha's vinoyard. Cam-bridge Electric also sells power at wholesale to the Town of Belmont, Massachusetts, Natural gas is distributed by Commonwealth Gas to approximately 228,000 customers in 49 communities in central and eastern-Massachu-setts covering 1,067 square miles and having an aggregate population of 1,128,000. Twelve of these communities are also served by system companies with electricity. Some of the larger communities served by Commonwealth Gas include Cambridge, Somerville, New Bedford, Plymouth, Worcester, Framingham, Dedham and the Hyde Park area of Boston. The population in the system's electric service area increased by 15.2% while the population in the gas service area increased by 12% since the last federal census was taken in 1980. Steam, which is produced by Cambridge Electric in connection with the generation of electricity, is purchased by COM/ Energy Steam and, together with its own production, is distributed to 19 customers in Cambridge and 1 customer (Massachusetts General Hocpital) in Boston. Steam is used for space heating and other purposes. A major new customer, New England Confectionary Company (Necco), is scheduled to
COMMONWEALTH ENERGY SYSTEM FORM 10-K- DECEKBER 31. 1991 Item 1. Business (Continued) General (Continued) begin receiving steam service in June 1992. Necco will become the fourth largest customer of COM/ Energy Steam. Industry in the territories served is highly diversified. The larger industrial customers include high-technology firms and manu-facturers of such products as photographic equipment and supplies, rubber products, textiles, wire and other lastening devices, abrasives and grinding wheels, candy, copper and alloys, and chemicals. Among customers served are several major educational institutions, including Harvard University and the Massachusetts Institute of Technology. Electric Power Supply System companies own generating facilities with a capability totaling 1,078.4 MW. Included in this amount is 572 MW provided by Canal Unit 1, of which three-quarters (429 MW) is sold to neighboring utilities under long-term contracts, and 292 MW provided by Canal Unit
- 2. In 1991, Canal executed an exchange transaction with Central Vermont Public Service Corporation (CVPS) whereby 50 MW of Canal Unit 2 was exchanged for 25 1N each of CVPS's entitlement in the Vennont Yankee nuclear power plant and the Merrimack 2 coal-fired unit through October 1995 in order to reduce the system's reliance on oil. Another 214.4 MW is provided by various smaller system units. Of the 649.4 MW available to the system, 66.4 MW is used principally for peaking purposes. Seabrook 1 provides 40.5 MW of capability to the system and Central Maine Power Company's Wyman Unit 4, an oil-fired facility in which the system has a 1.4% joint-ownership interest, provides 8.9 MW.
In addition, i.te system has available 77.7 MW from four (4) " nuclear units in which the distribution companies have ownership interests. Information with respect to thass units is as follows: Connecticut Maine Vermont Yankee Yankee Yankee Yankee Atomic Location Haddam Neck, Wiscasset, Vernon, Rowe, Cennecticut Maine Vermont Mass. Year of Initial Operation 1968 1972 1972 1961 Contract Expiration Date 1998 2008 2012 2000 System Percent of Equity Ownership 4.50% 4.00% 2.50% 4.50% System Percent of Plant Entitlement 4.50% 3.59% 2.25% 4.50% Plant Capability (MW) 591.1 880.0 520.0 173.6 System Entitlement (MW) 26.6 31.6 11.7 7.8 1991 Actual Cost (S000) 59,692 $5,900 S3,383 S3,210 ( 1992 Estimated Cost ($000) $9,127 $7,484 S3,972 S3,891
COMMONWEALTH ENERGY SYSTEM . FORM 10-K DECEMBER 31, 1991 Item 1. Business (Continued) Electric Power Supolv (Continued) On February 26, 1992, the Board of Directors of the Yankee Atomic unit decided to permanently close the plant and, in time, decommission the facility. For additional information, refer to Note 4(f) of the Notes report. to Consolidated Financial Statements filed under Item 8 of this To satisfy demand requirements and provide required reserve capacity, the system supplements its generating capacity by purchasing power on a long and short-term basis through capacity entitlements under power contracts with other New England and Canadian utilities and with Qualifying Facilities through a competitive bidding process ' which is regulated by the Mr.ssachusetts Department of Public Utilities and also with other non-utility generators. Long-term purchase arrangements include a 73.7 MW entitlement from a nuclear unit in Plymouth, Massachusetts (Pilgrim) under a life-of-the-unit contract with Boston Edison Company. In addition, through Canal's equity ownership in Hydro-Quebec Phase II, the system has an entitlement of 67.9 MW. Long-term purchase arrangements are in place with the following natural gas-fired cogenerating units in Massachu-setts: 26.8 MW from the Consolidated Powcr Company, 37.2 MW from Pep-perell Power Associates and 53 MW from Northeast Energy Associates. Additionally, the system receives 46.2 MW from the SEMASS waste-to-energy plant in Rochester, Massachusetts, and has entitlements totaling 24.7 MW through contracts with five (5) hydroelectric sup-pliers, including 20 MW from Boott Hydropower, Inc., in Lowell, Massachusetts. The system anticipates providing for future peak load plus reserve requirements through existing and planned system generation, including purchasing excess capacity from neighboring utilities and/or non-utility generators. L Cambridge Electric, Canal and Commonwealth Electric, together with other electric utility companies in the New England area, are members of the New England Power Pool (NEPOOL), which was formed in 1971 to provide for the joint planning and operation of electric systems throughout New England. NEPOOL operates a centralized dispatching facility to ensure reliability of service and to dispatch the most economically available generating units of the member companies to fulfill the region's energy requirement. This concept is accomplished by use of computers to monitor and forecast load requirements and provide for the economic dispatching of generation. NEPOOL, on behalf of its members entered into an Interconnection Agreement with Hydro-Quebec, a Canadian utility operating in the Province of Quebec. The agreement provided for construction of an interconnection (Phase I) between the electrical systems of New England and Quebec. These parties have also entered into an Energy
._.._____.__.m. _ _ - - - - - - - - - - - - - - - - ' - - - - - -
COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 Item 1. Business (Continued)
,glectric Power Supply (Continued)
Contract and an Energy Banking Agreament; the former obligates Hydro-Quebec to offer NEPOOL participants up to 33 million MWH of surplus energy during an eleven-year term commencing September 1, 1986 and the latter provides for energy transfers between the two systems. The Phase I Interconnection began operation in October 1986. NEPOOL has also entered into Phase II agreements for an additional purchase from Hydro-Quebec of 7 million MWH per year for a twenty-five year period which began in late 1990. The System's electric subsidiaries are also members of the horth-east Power Coordinating Council (NPCC), an advisory organization which includes the major power systems in New England and New York plus the provinces of Ontario and New Brunswick in Canada. NPCC establishes criteria and standards for reliability and serves as a vehicle for co-ordinction in the planning and operation of these systems in enhancing reliability. The reserve requirements used by the NEPOOL participants in plan-ning future additions are determined by NEPOOL to meet the reliability criteria recommended by NPCC. The system estimates that, during the next ten years, reserve requirements so determined will be in the range of 23% to 29% of peak load. Power Supply Commitments and Support Acreements Cambridge Electric and Commonwealth Electric, through Canal, secure cost savings for their respective customers by planning for bulk power supply on a single system basis. The system's 3.52% interest in the Seabrook nuclear power plant is owned by Canal to provide for a portion of the capacity and energy needs of Cambridge Electric and Commonwealth Electric. Seabrook was originally designed to have two pressurized water reactors, each with a rated capacity of 1,150 MW. Seabrook I has been completed since mid-1986. The second reactor, however, was abandoned in 1984. Upon the plant's commercial operation in 1990, Canal began recovering 100% of its Seabrook 1 investment through power contracts with Cambridge Electric and Commonwealth Electric, subject to refund pending a full review of Canal's investment in the unit by the FERC. For additional information concerning Eeabrook 1, refer to Note 4(b) of Notes to Consolidated Financial Statements filed under Item 8 of this report. In response to solicitations made to NEPOOL members by Northeast Utilities (NU) Canal, on behalf of Commonwealth Electric and Cambridge Electric, agreed to purchase entitlements through short and long-term contracts in various selected generating units. The length of these separate agreements range up to a five-year period. COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 Item 1. Business (Continued) " Power Supply Commitments and Suopost Acreements (Continued) The terms of the five-year agreement stipulate the purchase of 50 MW, on average, from NU annually from November 1989 through October 1994. Commonwealth Electric and Cambridge Electric are each appropriated a portion of the power received from NU based on need. These and other bulk electric power purchases are necessary in order to fulfill the system's NEPOOL obligation and to meet Commonwealth Electric and Cambridge Electric capacity requirements. Canal participated with other electric utilities in the construc-tion and operation of Hydro-Quebec Phase I transmission facilities in northeastern Vermont, which were completed in 1986 at a cost of - approximately $140 million. Upon commercial operation of Phase II and per the Phase I Support Agreements, Canal's share of Phase I was reduced to 3.7% to allow for greater participating interest of two other utilities. Canal has also entered into a support agreement for 3.8% of Hydro-Quebec Phase II facilities which were completed in November 1990 at a cost of $487 million. For additional information relating to Canal's interest in Hydro-Quebec Phases I and II, refer to Note 4(e) of Notes to Consolidated Financial Statements filed under Item 8 of this report. Price-Andercon Act The Price-Anderson Act (the Act) is a federal statute that in-cludes among its provisions a requirement for licensees of nuclear electric generating units to maintain financial protection to cover public liability claims resulting from a nuclear incident or precau-tionarr evacuation and a restriction on the maximum liability exposure resulting from any single nuclear incident. In 1988, Congress enacted a fifteen-year extension of the Act and increased the available insur- . ance and the maximum liability. The higher coverage is provided by existing private insurance and retrospective assessments for costs in excess of that covered by insurance, up to $66.2 million for each nuclear reactor which is licensed to operate with a maximum assessment of $10 million per incident within one calendar year. Based on the system's equity ownership in the corporations owning four nuclear generating facilities and its 3.52% ownership interest in Seabrook 1, the system's retrospective premium could be as high as $1.9 million yearly or a cumulative total of $12.6 million, exclusive of the effect of inflation indexing (at five-year intervals) and a 5% surcharge ($3.3 million) in the event that total public liability claims from a nuclear incident exceed the funds available to pay such claims.
1 l
' I COMMONWEALTH ENERGY SYSTEM l
FORM 10-K DECEMBER 31, 1991 Item 1. Business (Continued) l Electric Fuel Sucolv i l (a) Q M 1 Imported residual oil is the primary fuel used in the generation of power in system generating plants. Approximately 42% of the system's current energy requirements for retail sales are from oil 3 producing plants. ' Effective July 1, 1991, Canal executed a two-year contract with Coastal Oil New England, Inc. (Coasta.) for the purchase of reLidual fuel oil. .The contract provides for the delivery of a set percentage of Canal's fuel requirement, the balance to be met by spot purchases or by Coastal at the discretion of Canal. 1 L Energy Supply and Credit Corporation (ESCO) operates Canal's oil i terminal for the purchase, receipt and payment of oil under assignment t of Canal's supply contracts to ESCO (Massachusetts), Inc. Oil in the terminal's tanks is held in inventory by ESCO and delivered upon demand to Canal's tanks. Fuel oil storage facilities at the Canal site have a capacity of 1,199,000 barrels, representing 34 days of normal operation of the two units. During 1991, ESCO maintained an average daily inventory of 623,000 barrels of fuel oil which represents 18 days of normal oper-ation of the two units. This supply is maintained by tanker deliv-l eries approximately every ten to fifteen days. ! Reference is made to Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations," for a discus.' ion of the cost of fuel oil. (b) Nuclear Fuel Sucolv and Disposal l Approximately 31% of the system's 1991 energy requirements for retail sales was generated by nuclear plants. The supply of fuel for nuclear generating plants generally involves the acquisition of uran-ium concentrate, its conversion to uranium hexafluoride, enrichment, fabrication of the nuclear fuel assemblies and disposition through reprocessing or storage of spent fuel. The contract and inventory information which follows for Seabrook 1 has been furnished to Canal by New Hampshire Yankee (NHY), the plant ) manager responsible for operation of the unit. With respect to uran-ium and converted uranium requirements, there is existing inventory for the second reload and 100% coverage for the third reload. Uranium requirements are 65% covered through 1996 and converted uranium re-quirements are up to 100% covered through 1999. The contract for l fabrication services is fully covered through 1998. With respect to enrichment services, Seabrook 1 has 100% coverage COMMONWEALTH ENERGY SYSTEM ' FORM 10-K PLCEMBER 31, 1991 Item 1. Business (Continued) (b) Nuclear Fuel Supoly and Disposal (Continued) for the second reload and 70% coverage for the third reload. During the 1995-2014 period, there is full coverage. There are no spent fuel reprocessing fa;ilities currently oper-ating in the United States. Instead, United States operating nuclear generating un ts are required to retain high level wastes and spent fuel on-site or make long-term arrangements for their storage. As required by the Nuclear Waste Policy Act of 1982 (the Act), as amen-ded, the joint-owners entered into a contract wJth the Department of i Energy for the transport and disposal of spent fuel and high level ! radioactive waste at a national nuclear waste repository. Owners or generators of spent nuclear fuel ar its associated wastes are required to bear all of the costs for such transportation and disy.Ja1 through payment of a fee of approximately 1 mill /KWH based on net electric generation to the Nuclear Waste Fund. Under the Act, a temporary national repository for nuclear waste was anticipated to be in operation by 1998; however, a reassessment of the project's schedule I requires extending the completion date of the permanent f acility until at least 2010. Seabrook 1 is currently licensed for enough on-site storage to accommodate all spent fuel expected to be accumulated through the year 2010. Furthermore, NHY will be evaluating options for extending on-site spent fuel storage capacity beyond this time. , Gas sucolv General The system obtains its natural gas supplies under long-term con-acts with two pipeline companies, Tennessee Gas Pipeline Company (tennessee), a division of Tenneco, Inc., and Algonquin Gas Transmis-sion Company (Algonquin), a wholly-owned subsidiary of Texas Eastern Transmission Corporation. The principal Algonquin contra- , extend through 1996 and the Tennessee contract through the year i a0. These contracts provide for specified quantities of natural gas, which con-stitute the system's principal sources of supply to meet its require-ments for firm gas (i.e., gas sales which are not contractually su',- jact to interruption). The system also purchases gas on the spot market. In addition, LNG facilities, described below, are used to iquefy and store pi the heating season. peline Duringgas during 1991, allthe warmer of the months system's firmforgas use during requireGents were supplied by pipeline gas. Approximately 57% of these supplies were purchased on the spot market. In 1990, the system exercised its right to convert a portion of its firm sales contract with Algonquin to firm transportation. Effec-tive November 1, 1990, the system converted 17,285 MMBTU/ day out of its 87,207 MMBTU/ day contract. The gas will be purchased under long-term firm contracts (five to six years) from four separate suppliers and transportation will be provided by Texas Eastern and Algonquin on
.' , COMMONWEALTH ENERGY SYSTEM FORM 10-E DECEMBER 31, 1991 Item 1. Business (Continued) Gas Suco1v (Continued) a firm basja from the supply area to our city gate stations. Approxi-mately 87% of this gas is covered by three contracts that were approved by the CPU on January 11, 1991. These contracts allow for increased reliability and the ability to purchase gas at a cost lower than the prior firm sales arrangements with Algonquin. The remaining contract has been signed and submitted to the DPU for its review and approval. In 1991, the system converted a portion of its existing firm gas supply contract with Tennessee Gas Pipeline to firm transportation. The conversion became effective in September 1,1991 with a maximum daily quantity (MDQ) of 10,000 MKBTU representing approntmately 10% of the then existing sales MDQ of 56,826 MMBTU. The purchase contract associated with the conversion has been submitted to the DPU for its review and approval Commenwealth Gas began transporting gas in 1990 for end-users on its system. There are currently only three customers using this transportation service. Total end-user transportation accounted for only 299,760 MMBTU of throughput in 1991 which represented approxi-mately 0.7% of system throughput. Hookinton LNG eacility A portion of the system's gas requirements during the heating season are provided by Hopkinton LNG Corp. (Hopkinton), a wholly-owned subsidiary of the System. The facility consists of a liquefaction and vaporization plant and three above-ground cryogenic storage tanks having an aggregate capacity of 3 million MCF of natural gas. In addition, Hopkinton owns a satellite vaporization plant and two above-ground cryogenic storage tanks located in Acushnet, Massa-chusetts. These storage tanks have an aggregate capacity of 500,000 MCF of natural gas and are filled with LNG trucked from the tanks in Hopkinton. Commonwealth Gas Company has a contract for LNG service with Hopkinton extending through 1996, thereafter renewable year to year with notice of termination due five years in advance. Contract payments include a demand charge sufficient to cevar Hopkinton's fixed , charges and an operating charge which covers. liquefaction and vaporization expenses. Commonwealth Gas furnishes pipeline gas during the period April 15 to November 15 each year for liquefaction and storage. As the need arises, LNG is vaporized and placed in the distribution system of Commonwealth Gas.
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COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31. 1991 Item 1. Business (Continued) Hookinton LNG Facility (Continued) Based upot.- information presently available regarding projected growth in demano and estimates of availability of future supplies of pipeline gas, the System believes that its present sources of gas supply are adequate to meet existing load and allow for future growth in sales. { i Rates. Reculation and Locislation ! Certain of the System's utility subsidiaries operate under the ! jurisdiction of the DPU, which regulates retail rates, accounting, ! issuance of securities and other matters. In addition, Cant. Electric and Cambridge Electric file their respective wholesale rates with the i Federal Energy Regulatory Commission (FERC) . (a) Wholesale Rate Proceedinos Cambridge Electric needs PERC approval to increase its wholesale rates to the Town of 40.mont, Massachusetts (Belmont), a " partial requirements
- customer of Cambridge Electric since 1986. These rates include a fuel adjustment clause which reflects changes in costs of .
fuels and purchased power used to supply Belmont. On March 23, 1990, Cambridge Electric filed a request with the FERC to increase its wholesale rates to Belmont by $2,252,000 annually. The request was largely due to increased purchased power costs and major additions to plant-in-service since the last filing in 1985. cambridge Electric proposed rates, subsequently accepted by the FERw, which went into effect, subject to refund, on August 1, 1990. On September 19, 1990, Cambridge Electric and Belmont filed an uncontested Offer of Settle-ment which the FERC approved on December 6, 1990. This settlement resolved all issues with the exception of Seabrook 1 costs which are subject to change based upon the results of the FERC's final review of Canal's investment in-the unit. This settlement required Cambridge Electric te edjust its Belmont rate to reflect the final allocation of power purchased by Canal on behalf of Cambridge Electric and Common-wealth Electric. Osmbridge Electric made a refund to Belmont in August 1991 and filed the requisite compliance report with the FERC on September 16, 1991. A settlement agreement between Canal and Belmont addressing all Seabrook cost-of-service issues (except rate of return on common equity) was filed with the PERC on April 16, 1991 and subsequently approved by the FERC on November 13, 1991. This settlemont resulted in refunds to Cambridge Electric and Commonwealth Electric by Canal and further resulted in changes to Belmont's rate. In addition, this settlement changed the ef fective date of the Belmont Service Agreement f rom August 1, 1990 to June 30, 1990. The charges and refunds resulting from this mottlement were applied to Belmont's bill in January 1992. [ COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMDER 31, 1991 l Item 1. Dusiness (Continusd) l Rates, Reculation and Lecislation (Continued) (b) Aytomatic Adiustment Clausta -- O s irig. Boto commonwealth Electric and Cambridge Electric have Fuel Charge rate schedules (formerly the Power Cost Charge or PCC) which allow for current recovery, from retail customers, of fuel used in electric generation and a substantial portion of purchased power, demand and transmission costs. Such schedules repire a quarterly computation and DPU approval of a Fuel Charge dechal. The computa-tion is based upon forecasts of fuel, purchased power and transmission costs and billed unit sales for each period. To the extent that collections under the rate schedule do not match actual costs for that period, an appropriate adjustment is reflected in t:w calculation of l the decimal for the next subsequent calendar quarter. Amounts l recoverable under thest clauses are subject to review and approval by the DPU. Cambridge Electric collect: the capacity-related portion of its purchased power costs associated with certain long-term power arrangements through its base rates. The DPU ordered Commonwealth Electric, effective July 1, 1991, to collect its capacity-related costs associated with certain long-term power arrangements through its base rates. Prior to July 1, Commonwealth Electrin was recovering the entire capacity-related portion of purchased power through its Fuel Charge. This was the same method of recovery used by Commonwealth
. Electric prior to its January 1989 retail rate increase.
On July 30, 1990, Cambridge Electric and Commonwealth Electric received DPU approvsl to recover conservation and load management (C&LM) costs through their respective Fuel C 'rge. The C&LM programs were developed in 1988 in collaboration with ocher Massachusetts electric utilities as well as the Conservation Law Foundation of New England, Inc., the Massachusetts Attorney General and other public interest groups and offer opportunities to all customers to save energy by investing in C&LM measures. The overall benefit of the programs vill be to reduce capacity and energy requirements which thereby reduce the cost of providing service. For further information, refer to Note 8 of the Notes to Consolidated Financial Statements filed under Item 8 of this report. Upon the declaration of commercial operation in 1990, Canal began l recovering 100% of its Seabrook 1 investment through power contracts with Commonwealth Electric and Cambridge Electric, subject to refund pending a full FERC review of Cansl's investment in the unit by the l FERC. On December 6, 1991, a FERC Administrative Law Judge (ALJ) l issued an initial ruling affirming the prudence of Canal's oversight of emergency response planning for Seabrook. The ALJ further agreed with Canal that all costa were prudently incurred and therefore just and reasonable. Although a final FERC order has not been received, it is expected that the FERC will uphold the ALJ's ruling. Commonwealth L
COMMONWEALTH ENERGY SYSTEM
- FORM 10-K DECEMBER 31, 1991 Item 1. ggsiness (Continued)
Rates. Reaulation and Lealslation (Continued) (b) Automatic Adiustment Clauses (Continued) Electric and Cambridge Electric have been billing, subject to refund, Seabrook 1 charges to their retail customers since August 1, 1990 through Fuel Charge decimals approved by the DPU. Prior to commercial operation, Cambridge Electric and commonwealth Electric collected, subject to refund, approximately 50% of pre-commercial financing costs related to seabrook 1. Cambridge Electric and Commonwealth Electric are collecting, through their respective Fuel Charge, amounts being billed to them by Canal Electric for costs associated with Seabrook 2 (over a ten-year . period) pursuant to a Capacity Acquisition Agreement and both FERC and DPU approval. ftA1 Commonwealth Gas has a standard seasonal cost of gas adjustment rate schedule which provides for the recovery, from firm customers, of purchased gas costs not collected through base rates. These adjust-ment charges,- which require DPU approval, are estimated semi-annually and include credits for gas pipeline refunds and profit margins applicable to interruptible sales. Actual gas costs are reconciled annually as of October 31 and any difference is included as an adjustment in the calculation of the decimals for the two subsequent six-month periods. Periodically, Commonwealth Gas is required to file a long-range forecast of the needs and requirements of its market area and annual supplements thereto with the Massachusetts Energy Facilities Siting Council (the Council). To approve a long-range forecast, the Council must find, among other things, that Commonwealth Gas's plans for con-struction of new gas manufacturing or storage facilities and certain high-pressure gas pipelines are consistent with current health, envi-ronmental protection and resource use and development policies as adopted by the Commonwealth of Massachusetts. Commonwealth Gas filed a long-range forecast with the Council on July 20, 1990 and updated aspects of the filing in March 1991. This forecast remains pending before the Council. (c) Gas Demand and Tako-or-Pav Costs Commonwealth Gas is obligated to pay demand charges pursuant to long-term firm contracts with its principal suppliers which are recovered from customers through a cost of gas adjustment clause (CGA).
COMMONWEALTH ENERGY SYSTEM PORM 10-K DECEMBER 31, 1991 It.e,m_L, Business (Continued) Rates, Reculat.,1,pA_and Lecielation (Continued) (c) Gas Demand and Take-or-Pay Costs (Continued) In June 1991, Tennessee Gas Pipeline Company (Tennessee), one of Commonwealth Gas Company's principal suppliers, filed a comprehensive settlement with the Federal Energy Regulatory Commission (FERC) deal-ing with a variety of contract restructuring issues, including the allocation of take-or-pay costs to Tennessee's customers. The settle-ment was partly in response to recent court cases which rejected the FERC's approval of the purchase deficiency basis for allocating pipeline take-or-pay costs. The settlement, if approved by the FERC, would modify the manner in which the Tennessee taXe-or-pay costs are allocated to customers, increasing Commonwealth Gas Company's cost compared to the purchase deficiency basis rejected by the courts. The settlement would also create a mechanism for recovering prospective take-or-pay costs. Algonquin Gas Transmission Company (Algonquin) has made a series of filings with the FERC to recover from its customers take-or-pay charges imposed on it from its upstream suppliers. As a result, Com-monwealth Gas has been allocated a share of these costs. Algonquin is currently billing Commonwealth Gas for gas supply inventory charges from Texas Eastern Transmission. Company (Texas Eastern) through the Algonquin commodity rate. Both the Texas Eastern and Algonquin contracts are being restructured which will likely result in additional costs to commonwealth Gas. Commonwealth Gas is collecting take-or-pay and other contract restructuring costs imposed by Algonquin and Tennessee from its customers through the CGA as permitted by the DPU. (d) Most Recent Rate Case Proceedinos On April 16, 1991, Commonwealth Gas requested a $27.7 million (11.3%) revenue incrons3 in a filing with the DPU using a test year ended December 31, 1990. This was the first rate increase request since May 1987. On September 16, 1991, the DPU approved a settlement of the revenue requirements portion of the Commonwealth Gas filing. The
$22.8 million increase in annual revenues represented approximately 82% of the original request and included a return on equity, for accounting purposes, of 13%. The DPU later ruled on the rate design portion of the request and the new rate 3 went into effect on November 1, 1991. The incroace was necessitated by the rising costs of pro-viding service to customers and substantial expenditures to upgrade, improve and maintain the Commonwealth Gas distribution system.
COMMONWEALTH EERGY SYSTEM . FORM 10-K DECEMBER 31, 1991 Item 1. Business (Continued) l 1 Rates, Renulation and Lecislation (Continued) l l (d) Most Recent Rate Case Proceedincs (Continued) On December 31, 1987, Commonwealth Gas received authorization from the DPU to increase base revenues by $12.5 million or 5.6% of total test-year revenues and approximately 80% of the $15.6 million originally requested. The overall rate of return was set at 11.2%, including an allowed return on common equity of 13.25%. This was the first increase for Commonwealth Gas since 1982. In the order, the DPU endorsed Commonwealth Gas's proposal to offer cost-based firm trans-portation services to its industrial customers. On May 17, 1989, Cambridge Electric. filed for an increase in its base rates using a 1988 test year. On August 31, 1989, the DPU approved an Offer of Settlement between the parties which resolved all issues involving revenue requirement. Cambridge Electric was allowed to increase annual revenues by $4,438,000 or 5.5% of total test-year revenue, approximately 73% of the $6,111,000 originally requested. The new rates became effective on December 18, 1989 and represent the first increase in Cambridge Electric's rates since 1982. On May 31, 1988, Cambridge Electric received authorization from the DPU to implement the final stage in its move to equalization of rates of return across rate classes. The revised' rates reflect a settlement agreement which reduced base revenue by $300,000, effective March 1, 1988. In January 1989, Commonwealth Electric received authorization from the DPU to increase base revenues by $18 million or 6.6% of total
, test-year revenues. This increase represented approximately 77% of its original $23.3 million request and included an overall rate of -
return of 10.89% and return on common equity of 13% and represented the first increase in Commonwealth Electric's base rates since 1982. As part of this proceeding, the DPU ordered a restructuring of Commonwealth Electric's rates which resulted in significant increases to certain customer rate classes. Subsequently, as a result of c,usto-mer pressure, the Massachusetts state legislature passed, and the Gov-ernor signed, precedent-setting legislation which required that the increase to any ratepayer or class of ratepayers not exceed 7% per year. This legislation became effective February 1, 1990 and speci-fled that in allowed the revision that would January 1989not reduce the amount of annual revenues order. On July 1, 1991, the DPU issued an order increasing Commonwealth Electric's retail electric revenuea by $10.9 million, or 3.1%. The requested incrwase was $17.3 million. The order, based on a June 30, 1990 test year, provides an overall return of 10.49%, including a return on equity of 12%. The DPU also ordered the restructuring of the Company's rates to more closely reflect the actual cost of
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COMM0!TWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 ftem 1. Business (Continued) l l Rates, Reculation and Lecislation (Continued) (d) Most Recent Rate Case Proceedinos (Continued) providing service to each customer class. Further, the DPU ordered Commonwealth Electric to undertake an independent management audit in 1992 to address, among other areas, its management, planning and control practices. On February 14, 1992, Ernst & Young was selected by the DPU from three qualified management consulting firms submitted by Commonwealth Electric to perform the audit. The audit began on March 6, 1992. (e) Economic Development Rate In an effort to foster industrial development in its service area, Commonwealth Electric filed a new Economic Development Rate with the DPU in mid-September. The rate,'bich was approved by the DPU, became effective on October 1, 1991 (t is being offered to new or existing industrial customers who have an electric demand of 500 kilowatts or more and meet specific financial critoria. Eligible customers must also be one of the 20 largest industrial employers in the city or town or recognized as a major employer in the smaller towns. The rate is available for a six-year term. Nineteen indus-trial customers are presently benefiting from this special rate. (f) Other As a result of the Tax Reform Act of 1986, the DPU issued an order on June 1, 1987 requiring essentially all utilities under its jurisdiction to file new rates, effective July 1, 1987, to reflect the lower revenue requirement caused by the tax rate reduction. As a result, Cambridge Electric, Commonwealth Gas and Commonwealth Electric filed revised rates that reduce annual revenues by $787,000,
$3,201,000 and $4,006,000, respectively. Subsequently, as discussed above, all three companies completed base rate proceedings affecting their total costs of providing service, including income taxes.
Replacement Power Costs In connection with its ongoing review of the fuel and purchased power costs of certain Massachusetts electric companies, the DPU reviews the operating performance of all plants from which power is obtained. For additional information concerning replacement power . costs, refer to Note 4(d) of Notes to Consolidated Financial Statements filed under Item 8 of this report. t l l
- 17 -
1 COMMONREALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 Item 1. Dysiness (Continued) Storm Damace In August 1991, Commonwealth Electric's service territory was particularly hard hit by Hurricane Bob. Its transmission and distribution system suffered such extensive damage that its entire service territory (with minor exceptions) was without power at one point. Commonwealth Electric's franchise is located entirely within four of the disaster ten Massachusetts counties which were declared federal zones. For further information on costs and recovery options, refer to Note 4(h) of Notes to Consolidated Financial Statements filed under Item 8 of this. report. Seement Information System companies provide electric, gas and steam services to re-tail customers in service territories located in central and eastern Massachusetts and, in addition, sell electricity at wholesale to Massachusetts customers. Other operations of the system include the development and management of new real estate ventures and operation of rental properties and other investment activities which do not presently income. contribute significantly to either revenues or operating
. Reference is made to additional industry segment information in Note 10 ofreport.
8 of this Notes to Consolidated Financial Statements filed under Item Environmental Matters The system, as with all other utility companies, is subject to regulations administered by federal, state and local authorities relating to the quality of the environment. Compliance with these regulations has required capital expenditures by the system for the period 1968 through 1991 of approximately $50.3 million, $29.7 million of which was for facilities and studies at Seabrook. Additional capital expenditures through 1996 will require an estimated $1.1 million including $295,000 relating to Seabrook. For additional information concerning these and other environ-mental issues relating to former gas manufacturing sites, refer to the
" Environmental Matters" section of " Management's Discussion and Analy-sis of Financial Condition and Results of Operations" filed under Item 7 of this report.
Construction and Financina For information concerning the system's financing and construc-tion programs refer to Management's Discussion and Analysis of Finan-cial Condition and Results of Operations filed under Item 7 and Note 4(a) of the Notes to Consclidated Fine-ncial Statements filed under Item 8 of this report.
- w. -_- -. - . - . - - - _ - . - . - _ - - _ . - - ~ - - - - - - - - . - _ . - - - m
COMMONWEALTH ENERGY SYSTEM ' FORM 10-K DECEMBER 31, 1991 Item 1. Musiness (Continued) Emolovees There were 2,510 regular employees of the system at December 31, 1991, 1,500 (60%) of whom are represented by various collective bar- , gaining units. Existing agreements are for varying periods and expire in 1993 and thereafter. Employee relations have generally been satis-factory. Item 2. ProDerties The system's principal electric properties consist of Canal Unit 1, a 569 MW oil-fired steam electric generating unit, and its one-half ownership in Canal Unit 2, a 580 MW oil-fired steam electric gener-ating unit, both located at Canal Electric's facility in Sandwich, Massachusetts. Other electric properties include an integrated system of distribution lines and substations together with Commonwealth Elec-tric's S9 MW steam electric generating station located in New Bedford, Massachusetts, and Cambridge Electric's two steam electric generating stations with a not capability of 78.5 MW located in Cambridge, Massa-chusetts. Ir. addition, the system has a 1.4% or 8.9 MW joint-owner-ship interest in Central Maine Power Company's Wyman Unit 4 and a 3.52% interest (40.5 MW of capacity) in Seabrook 1. The system also owns smaller generating units totaling 51.8 MW used primarily for peaking and emergency purposes. In addition, the system's other principal properties consist of an electric division office building in Wareham, Massachusetts and i other structures such as garages and service buildings. The system's gas division owns a central headquarters and service building in / Southborough, Massachusetts, five district office buildings and several natural gas receiving and take stations. At December 31, 1991, the electric transmission and distribution system consisted of 5,790 pole miles of overhead lines, 3,938 cable miles of underground line, 369 substations and 367,207 active customer meters. The principal natural gas properties consist of distribution mains, services and meters necessary to maintain reliable service to
- customers. At the end of 1991, the gas system included 2,686 miles of gas distribution lines, 156,271 services and 228,520 customer meters together with the necessary measuring and regulating equipment. In addition, the system owns a liquefaction and vaporization plant, a
( satellite vaporization plant and above-ground cryogenic storage tanks i having an aggregate storage capacity equivalent to 3.5 million MCP of l natural gas. 1
COMMO}NIALTH ENERGY SYSTEM *
- TORM 10-K QECEMBER 31, 1991 Item 3. Lecal Proceedinos l Refer to the ' Environmental Matters
- section of " Management's Discussion and Analysis of Financial Condition and Results of Oper- '
ations" section of the Notice of 1992 Annual Meeting, Proxy Statement and 1991 Financial Information dated April 3, 1992, pages A-9 and A-10. , Item 4. Submission of Matters to a Vote of Security Holders None
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COMMONWEALTH ENERGY SYSTEM FORM 10-K RECEMBER 31, 1991 l PART II. 1 l Item 5. Market for the Recistrant's Securities and Related !' Stockholder Matters (a) Princloal Markets The System's common shares are listed on the New York, Boston and Pacific Stock Exchanges. The table below sets forth the high and low closing prices as reported on the New York Stock Exchange composite transactions tape. 1991 bv Quarter 1990 hv Oteter AG 2IEl lI51 iLD lEl 2L4 2 I 51 11b High 33 34 7/8 36 3/4 39 3/4 38 7/8 37 3/8 35 1/8 33 1/4 Iow 30 30 7/8 32 35 1/4 34 5/8 33 1/2 29 3/8 29 1/2 (b) Number of Shareholders at December 31, 1991 16,699 shareholders I (c) Frecuency and Amount of Dividends Declared in 1991 and 1990 i 1991 1990 Per Per Shara Share . Declaration Date Amount Declaration Date Amount March 28, 1991 $ .73 March 22, 1990 $ .73 June 26, 1991 .73 June 28, 1990 .73 September-26, 1991 .73 September 27, 1990 .73 December 19, 1991 .73 December 13, 1990 .73
$2.92 $2.92 (d) Future dividends may vary depending upon the System's earnings and capital requirements as well as financial and other conditions existing at that time.
Item 6. Selected Financial Data Information required by this item is incorporated herein by ref-erence to Exhibit A to the Notice of 1992 Annual Meeting, Proxy State- i ment and 1991 Financial Information dated April 3, 1992, page A-32. , Item 7. Manacement's Discussion and Analysis of Financial Condition and Results of Operations Information required by this item is incorporated herein by ref-erence to Exhibit A to the Notice of 1992 Annual Meeting, Proxy State-ment and 1991 Financial Information dated April 3, 1992, pages A-3 through A-12. 1
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_ , - -._.m, - - . _ _ , - , . , _ ,
COMMOfMEALTH ENERGY SYSTEM , FORM 10-1 DECEMBER 31, 1991 Item 8. Financial Statements and Sucolementary Data The following consolidated financial statements and supplementary data of the System and its subsidiaries are incorporated herein by reference to Exhibit A to the Notice of 1992 Annual Meeting, Proxy Statement and 1991 Financial Information dated April 3, 1992 on pages A-12 through A-32. Proxy Page Reference Management's Report A-12 Report of Independent Public Accountants A-13 Consolidated Balance Sheets - At December 31, 1991 and 1990 A-14/A-15 Consolidated Statements of Income - Years Ended December 31, 1991, 1990 and 1989 A-16 Consolidated Statements of Cash Flows - Yeers Ended December 31, 1991, 1990 and 1989 A-17 Consolidated Statements of Capitalization - At December 31, 1991 and 1990 A-18 Consolidated Statements of Changes in Common Shareholders'
- Investment and in Redeemable Preferred Shares - Years Ended December 31, 1991, 1990 and 1989 A-19 Notes to Consolidated Financial Statements A-20/A-31 Quarterly Information pertaining to the resv3ts of operations for the years ended December 31, 1991 and 1990 A-32 Item 9.
Chances in and D(Sacreements With Accountants on Accountino and Financial Disclosure None 9 e COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 PART III. Item 10. Trustees and Executive Of ficers of the Recistr6nt l
- a. Trustees of the Registrants Information required by this item is incorporated herein by ref-erence to the Notice of 1992 Annual Meeting, Proxy Statomont and 1991 Financial Information dated April 3, 1992, pages 3, 4 and 5.
- b. Executive Officers of the Registrant Ace at Name of Officer Position and Bustress Exreriarce December 31, 1991 Gerald E. Anderson Trustas, Prus1 dent ard Chief Executive Officer 60 of the Systen and Chaiman and Chief Executive officar of its principal subsWary cmpanies since 1975 (rvtired effective January 1, 1992).
William G. Poist President and Chief Operating Officer of Ccrmon- 58 ! wealth Gas Ccmpany* frun 1963 to 1991 and Hopkin-ton UG Corp.* frun 1985 to 1991; Vice President of the System and CCPUEnergy Servlees Cmpany* effective Septater 1,1991; Trustee, President and Chief Execut.ive Officer of the Systan and Chaiman and Chief Executive Officer of its principal sub-
- sidiary ccupanies (offactive January 1,1992).
Russell D. Wright Financial Vice President and Treasurer of the 45 Systen and Financial Vice President of its sub-sidiary campanies siare 1987, Treasurer of System subsidiary empanies (D.wi.er 1989 to Deceber 1990), Assistant Vice President-Finarce of Systan subsidiary em panies 1986. ' Harold N. Scherer, Jr. President and Chisf Operating Officer of 62 Cambridge Electric Light Ocmpany*, Canal Electric Ccmpany*, CDVEnergy Steam Cmpany* and Ccrmierusalth Electric Ccmpany* sirce
!bvwier 26, 1990; Senior Vice President of Electrical Engineering for American Electric Power, Coltsnbus, Ohio 1982 to !bvunbar 1990.
Kenneth M. Margossian Vice President of Human Resources and Admin- 43 istration of Ccrmonwealth Gas Cmpany frun 1985 to 1987; Vice President of Facilities Developnent from 1987 to 1988; Vice President of Operations frun 1988 to 1991; President and Chief Operating Officer of Ccamenwealth Gas cmpany and Ibpkin-ton U G Corp. effactive Septa ber 1, 1991. Michael P. Sullivan Vice President, Secretary and General Attorney of 43 , the Systan ard subsidiary empanier since 1981. John A. Whalen cm ptrol, of the Systan and subsidiary 44 capanies since 1978.
- Subsidiary of the Systan.
e c, ,,.~,w- - ~ - - , - . . - . , - c.,,. ,c--- -~ -, w--e-- ,,-----.--c-y --,- --n-----,~,---e-,, - ~ ~ -
COMMONWEALTH ENERGY SYSTEM ' FORM 10-K DECEMBER 31, 1991 Item 10. Trustees and Executive Of ficers of the Reaistrant (Continued) The term of office for System officers expires May 7, 1992, the date of the next Annual Organizational Meeting. There are no family relationships between any trustee and executive of ficer and any other trustee or executive of the System. There were no arrangements or understandings between any officer or trustee and any other person pursuant to which he was or is to be selected as an of ficer, trustee or nominee. There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any trustee or executive officer ^ during the past five years. Item Llx Executive Compensatien Information required by this item is incor reference to the Notice of 1992 Annual Meeting,porated herein byand Proxy Statement 1991 Financial Information dated April 3, 1992, pages 5, 6 and 7. Item.122 Security ownership of certain Beneficial owners and Manacement Information reference to tht. Notice required by this item is incorporated herein by of 1992 Annual Meeting, Proxy Statement and 1991 Financial Information dated April 3, 1992, pages 3, 4 and 5. Item 13. Certain Relationships and Related Transactions
- Information required by this item is incorporated herein by reference to the Notice of 1992 Annual Meeting, Proxy Statement and ~
1991 Financial Information dated April 3, 1992, pages 3, 4 and 5.
I COMMOWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 PART IV. Item 14. Exhibits, Financial Statement Schedules and Reports on Form B-K (a) 1. Index to Financial Statements Consolidated financial statements and notes thereto of Common-wealth Energy System and Subsidiary Companies together with the Report of Independent Public Accountants, as detailed on page 22 in Item 8 of this Form 10-K, have been incorporated herein by reference to Exhibit A to the Notice of 1992 Annual Meeting, Proxy Statement and 1991 Financial Information dated April 3, 1992. (a) 2. Index to Financial Statement Schedules commonwealth Enercy System and Subsidiary companies Filed herewith at page(s) indicated - Report of Independent Public Accountants on Schedules (page 51). Schedule III - Investments in, Equity in Earnings of, and Divi-dends Received from Related Parties - Years Ended December 31, 1991, 1990 and 1989 (pages 52-54). Echedulo V - Property, Plant and Equipment - Years Ended December 31, 1991, 1990 and 1989 (pages 55-57). Echedule VI - Accumulated Depreciation and Amortizatann of Property, Plant and Equipment - Years ended December 31, 1991, 1990 and 1989 (page 58). Schedule VIII - Valuation and Qualifying Accounts - Years Ended December 31, 1991, 1990 and 1989 (page 59). Schedule IX - Short-Term Borrowings - Years Ended December 31, 1991, 1990 and 1989 (page 60). All other schedules have been omitted because they are not applicable, not required or because the required information is included in the financial statements or notes thereto. Subsidiaries not Consolidated and Fifty-Percent or Less Owned Persons Financial statements of 50% or less owned persons accounted for by the equity method have been omitted because they do not, con-sidered individually or in the aggregate, constitute a significant subsidiary. Form 11-K, Annual Reports of Employee Stock Purchases, Savinos and Similar Plans Pursuant to Rule 15(d)-21 of the Securities and Exchange Act of 1934, the information, financial statements and exhibits required
COMMONWEALTH ENERGY SYSTEM . FORM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) by Form 11-K with respect to the Employees Savings Plan of Cocmon-wealth Energy System and Subsidiary Companies will be filed as an amendmont to this report under cover of Form 8 not later than April 30, 1992. (a) 3. Exhibits: Notes to Exhibits -
- a. Unless otharwise designated, the exhibits listed below are incorporated by reference to the appropriate exhibit numbers and 4 the Securities and Exchange Commission file numbers indicated in I parentheses.
- b. If applicable, as designated by an asterisk, certain documents previously filed by the System or its subsidiary companies have been disposed of by the Commission pursuant to its Records Control Schedule and are hereby being refiled by the appropriate registrant and to the appropriate file number.
- c. During 1981, New Bedford Gas and Edison Light Company sold its gas business and properties to Commonwealth Gas Company and changed its corporate name to commonwealth Electric Company.
- d. The following is a glossary of Commonwealth Energy System and subsidiary companies' acronyms that are used throughout the following Exhibit Indext CES ...................... Commonwealth Energy System CE ....................... Commonwealth Electric Company CEL ...................... Cambridge Electric Light Company CEC ...................... Canal Electric Company CG ....................... Commonwealth Gas Company NBGEL .................... New Bedford Gas and Edison Light Company HOPCO .................... Hopkinton LNG Corp.
Exhibit Index Exhibit 3. Declaration of Trust Commonwealth Enercy System (Recistrant) 3.1.1 Declaration of Trust of CES dated December 31, 1926, as amen-ded by vote of the shareholders and trustees May 7, 1987 (Ex-hibit 1 to the CES Form 10-0 (March 1987), File No. 1-7316).
l l l COMMONWEALTH ENERGY SYSTEM i FORM 10-K DECEMBER 31. 1991 j Item 14. Exhibits. Financial Statement Set 'ules and Reports on Form B-K (Continued) Exhibit 4. Instruments definino the richts of security holders. includino indentures Commonwealth Enercy System (Recistrant) Debt Securities - 1.1.1 CES Note Agreement ($40 Million Privately Placed Senior Notes) dated June 28, 1989 (Exhibit 1 to the CES Form 10-Q (September 1989), File No. 1-7316). Subsidiary comoanies of the Recistrant Cambridae Electric Licht Company Indenture of Trust or Supplemental Indenture of Trust - 4.2.1 Original Indenture on Form S-1 (April, 1949) (Exhibit 7(a), File No. 2-7909) ! i 4.2.2 First Supplemental on Form S-9 (Jan., 1958) (Exhibit 2(b)2, j File No. 2-13783) 4.2.3 Second Supplemental on Form 8-K (Feb., 1962) (Exhibit A, File No. 2-7909) 4.2.4 Third Supplemental on Form 10-K (1984) (Exhibit 1, File No. 2-7909) 4.2.5 Fourth Supplemental on Form 10-K (1984) (Exhibit 2, File No. 2-7909) 4.2.6 Fifth Supplemental on Form 10-K (1983) (Exhibit 1, File No. 2-7909) 4.2.7 Sixth Supplemental on Form 10-Q (June 1989) (Exhibit 1, File No. 2-7909) Canal Electric Company Indenture of Trust and First Mortgage or Supplemental Indenture of Trust and First Mortgage - 4.3.1 Indenture of Trust and First Mortgage with State Street Bank and Trust Company, Trustee, dated October 1, 1968 (Exhibit 4(b) to Form S-1, File No. 2-30057). 4.3.2 First and General Mortgage Indenture with Citibank, N.A., Trustee, dated September 1, 1976 (Exhibit 4(b)2 to Form S-1, File No. 2-56915). 1
COMMONWEALTH ENERGY SYSTEM 70RM 1Q-5 DECEMBER 31. 1991 Item 14. Exhibits. Financial Statement Schedules and Reports on Form 8-K (Continued) Canal electric Company (Continued) 4.3.3 First Supplamental dated October 1, 1968 with State Street Bank and Trust Company, Trustee, dated September 1, 1976 (Exhibit 4(b)3 to Form S-1, File No. 2-56915). 4.3.4 Second Supplemental dated September 1, 1976 with Citibank, N.A., New York, N.Y., Trustee, dated December 1, 1983 (Exhibit 1 to 1983 Form 10-K, File No. 2-30057). 4.3.5 Third Supplemental dated September 1, 1976 with Citibank, N.A., New York, NY, Trustee, dated December 1, 1990 (Exhibit 3 to 1990 Form 10-K, File No. 2-30057). 4.3.6 Fourth Supplemental :Jated September 1, 1976 with Citibank, N.A., New York, NY, Trustee, dated December 1, 1990 (Exhibit 4 to 1990 Form 10-K, File No. 2-30057). Commonwealth Gas Company Indenture of Trust or Supplemental Indenture of Trust - 4.4.1 Original Indenture on Form S-1 (Feb., 1949) (Exhibit 7(a), File No. 2-7820) 4.4.2 First Supplemental on Form S-1 (Mar., 1950) (Exhibit 7(a), File No. 2-8418) 4.4.3 Second and Third Supplemental on Fe:m S-1 (Nov., 1952) (Exhibits 4(a)(2) and 4(a)(3), File No. 2-10445) 4.4.4 Fourth Supplemental on Form S-9 (Oct., 1954) (Exhibit 2(b)(5), File No. 2-15089) 4.4.5 Fifth Supplemental on Form S-9 (Mar., 1956) (Exhibit 2(b)(6), File No. 2-15089) 4.4.6 Sixth Supplemental on Form S-9 (April, 1957) (Exhibit 2(b)(7), File No. 2-15089) 4.4.7 Seventh Supplemental on Form S-9 (June 1959) (Exhibit 2(b)(B), File No. 2-20532) 4.4.8 Eighth Supplemental on Form S-9 (Sept., 1961) (Exhibit 2(b)(9), File No. 2-20532) 4.4.9 Ninth Supplemental on Form 8-K (Aug., 1962) (Exhibit A, File No. 2-1647) 4.4.10 Tenth Supplemental on Form 10-K (1970) (Exhibit 2, File No. 2-1647) l l
f&}QiONWEALTH ENERGY SYSTEM FORM 10-K DECEKBER 31, 1991 : 1
-Item 14. Exhibits. Financial Statement Schedules and Raponts on Form 8-K (Continued)
Commonwealth Gas comoany (Continued) 4.4.11 Eleventh Supplemental on Form S-1 (June, 1972) (Exhibit 4(b)(2), File No. 2-48556) 4.4.12 Twelfth Supplemental on Form S-1 (Aug., 1973) (Exhibit 4(b)(3), File No. 2-48556) 4.4.13 Thirteenth Supplemental on Form 10-K (1980) (Exhibit 3, File No. 2- 1647) 4.4.14 Fourteenth Supplemental on Form 10-K (1990) (Exhibit 1, File No. 2-1647) 4.4.15 Fifteenth Supplemental on Form 10-K (1982) (Exhibit 1, File No. 2-1647) 4.4.16 Sixteenth Supplemental on Form 10-K (1986) (Exhibit 1, File No. 2-1647) 4.4.17 Seventeenth Supplemental on Form 10-K (1990) (Exhibit 2, File No. 2-1647) Commonwealth Electric Company Indenture of Trust or Supplemental Indenture of Trust - 4.5.1 Original Indenture on Form S-1 (Nov., 1948) (Exhibit 7(a), File No. 2-7749) 4.5.2 First Supplamental on Form S-1 (Oct., 1950) (Exhibit 7(a-1), File No. 2-8605) 4.5.3 Second Supplemental on Form 10-K (1984) (Exhibit 1, File No. 2-7749) 4.5.4 Third Supplemental on Form 8-K (Feb., 1962) (Exhibit A, File No. 2-7749) 4.5.5 Fourth Supplemental on Form 10-K (1984) (Exhibit 2, File No. 2-7749) 4.5.6 Fifth supplemental on Form 10-K (1984) (Exhibit 3, File No. 2-7749) 4.5.7 Sixth Supplemental on Form 10-K (1984) (Exhibit 4, File No. 2-7749) 4.5.8 Seventh Supplemental on Form S-1 (Usc., 1975) (Exhibit 4(b)2, File No. 2-54955)
COMMONWEALTH ENERGY SYSTEM FORN 10-K DECEMBER 31, 1991 Item 14. Exhibits. Financial Statement Schedules and Raports on Form 8-K (Continued) Cape & Vineyard Electi*ic Companv** 4.5.9 Original Indenture on Form S-1 (Apr., 1957) (Exhibit 4(b)1, File No. 2-26429) 4.5.10 First Supplemental on Form 10-K (1984) (Exhibit 5, File No. 2-7749) < 4.5.11 Second Supplemental on Form 10-K (1984) (Exhibit 6, File No. 2-7749)
** Merged with Commonwealth Electric Company January 1, 1971.
Fxhibit 10. Material Contracts 10.1 Power contracts. 10.1.1 Power contracts between CEC (Unit 1) and NBGEL and CEL dated December 1, 1965 (Exhibit 13(a)(1-4) to the CEC Form S-1, File No. 2-30057). 10.1.2* Power contract between Yankee Atomic Electric Company (YAEC) and CEL dated June 30, 1959, as amended April 1, 1975 (Refiled as Exhibit 1 to the 1991 CEL Form 10-K, File No. 2-7909). 10.1.2.1 Second, Third and Fourth Amendments to 10.1.2 as amended October 1, 1980, April 1, 1985 and May 6, 1988, respectively (Exhibit 2 to the CEL Form 10-0 (June 1988), File No. 2-7909). 10.1.2.2 Fifth and Sixth Amendments to 10.1.2 as amended June 26, 1989 and July 1, 1989, respectively (Exhibit 1 to the CEL Form 10-Q (September 1989), File No. 2-7909). 10.1.3* Power Contract between YAEC and NBGEL dated June 30, 1959, as amended April 1, 1975 (Refiled as Exhibit 2 o the 1991 CE Form 10-K, File No. 2-7749). 10.1.3.1 Second, Third and Fourth Amendments to 10.1.3 as amended
- October 1, 1980, April 1, 1985 and May 6, 1988, respectively (Exhibit 1 to the CE Form 10-Q (June 1998), File No. 2-7749).
10.1.3.2 Fifth and Sixth Amendments to 10.1.3 as amended June 26, 1989 and July 1, 1989, respectively (Exhibit 3 to the CE Form 10-Q (September 1989), File No. 2-7749). 10.1.4 Power Contract between Connecticut Yankee Atomic Power Company (CYAPC) and CEL dated July 1, 1964 (Exhibit 13-K1 to the System's Form S-1, (April 1967) File No. 2-25597). 10.1.4.1 Additional Power Contract providing for extension on contract term between CYAPC and CEL dated April 30, 1984 (Exhibit 5 to the CEL Form 10-0 (June 1984), File No. 2-7909). l l t
COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, l'991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 9-K (Continued) 10.1.4.2 Second Supplementary Power Contract providing for decommis-sioning financing between CYAPC and CEL dated April 30, 1984 (Exhibit 6 to the CEL Form 10-Q (June 1984), File No. 2-7909). 10.1.5 Pcuer contract between Vermont Yankee Nuclear Power Corporation (VYNPC) and CEL dated February 1, 1968 (Exhibit 3 to the CEL 1984 Form 10-K, File No. 2-7909). 10.1.5.1 Firzt Amendment dated June 1, 1972 (Section 7) and Second Amendment dated April 15, 1983 (decommissioning financing) to 10.1.5 (Exhibits 1 and 2, respectively, to the CEL Form 10-0 (June 1984), File No. 2-7909). 10.1.5.2 Third Amendment dated April 1, 1985 and Fourth Amendment dated June 1, 1985 to 10.1.5 (Exhibits 1 and 2, respectively, to the CEL Form 10-0 (June 1986), File No. 2-7909). 10.1.5.3 Fifth and Sixth Amendments to 10.1.5 dated February 1, 1968, both as amended May 6, 1988 (Exhibit 1 to the CEL Form 10-0 (June 1988), File No. 2-7909). 10.1.5.4 Seventh Amendment to 10.1.5 dated February 1, 1968, as amended June 15, 1989 (Exhibit 2 to the CEL Form 10-0 (September 1989), File No. 2-7909). 10.1.5.5 Additional Power Contract dated February 1, 1984 between CEL and VYNPC providing for decommissioning financing ar.d contract extension (Exhibit 2 to CEL 1983 Form 10-K, File No. 2-7909).
- 10.1.6 Power contract between Maine Yankee Atomic Power Company (MYAPC) and CEL dated May 20, 1968 (Exhibit 5 to the System's Form S-7, File No. 2-38372).
10.1.6.1 First Amendment dated March 1, 1984 (decommissioning financing) and S,.cond Amendment dated January 1, 1984 (supplementary payments) to 10.1.6 (Exhibits 3 and 4 to the CEL Form 10-Q (June 1984), Filo No. 2-7909). 10.1.6.2 Third Amendment to 10.1.6 dated October 1, 1984 (Exhibit 1 to the CEL Form 10-0 (September 1984), File No. 2-7909). 10.1.7 Agreement between NBGEL and Boston Edison Company (BECO) for the purchase of electricity from BECO's Pilgrim Unit No. 1 dated August 1, 1972 (Exhibit 7 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.7.1 Service Agreement between NBGEL and BECO for purchase of stand-by power for BECO's Pilgrim Station dated August 16, 1978 (Exhibit 1 to the CE 1988 Form 10-K, File No. 2-7749). 10.1.7.2 System Power Sales Agreement by and between CE and BECO dated July 12, 1984 (Exhibit 1 to the CE Form 10-0 (September 1984), File No. 2-7749). I
COMMONWEALTH ENERGY SYSTEM FORM 10-K EFCEMBER 31, 1991
. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K -
(Continued) 10.1.7.3 Power Exchange Agreement by and between BECO and CE dated l December 1, 1984 (Exhibit 16 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.7.4 Power Exchange Agreement by and between BECO and CEL dated i December 1,1984 (Exhibit 5 to the CEL 1984 Form 10-K, File No. 2-7909). 10.1.7.3 Service Agreement for Non-Firm Transmission Service between BECO and CEL dated July 5, 1984 (Exhibit 4 to the CEL 1984 Form 10-K, File No. 2-7909). 10.1.8 Agreement for Joint-Ownership. Construction and Operation of New Hampshire Nuclear Units (Seabrook) dated May 1, 1973 (Exhibit No. 13 2-49013(N) to the NBGEL Form S-1 dated October 1973, File and as amended below: 10.1.8.1 First through Fifth Amendments to 10.1.8 as amended May 24, 1974, June 21, 1974, September 25, 1974, October 25, 1974 and January 31, 1975, respectively (Exhibit 13(m) to the NBGEL Form S-1 (November 7, 1975), File No. 2-54995). 10.1.8.2 Sixth through Eleventh Amendments to 10.1.8.as amended April 18, 1979, April 25, 1979, June 8, 1979, October 11, 1979 and December 15, 1979, respectively (Refiled as Exhibit 1 to the CEC 1989 Form 10-K, File No. 2-30057). 10.1.8.3 Twelfth through Fourteenth Amendments to 10.1.8 as amended May 16, 1980, December 31, 1980 and June 1, 1982, respectively (Exhibits 1, 2, and 3 to the CE Form 10-0 (June 1982), File No. 2-7749). 10.1.8.4 Fifteenth and Sixteenth Amendments to 10.1.8 as amended April 27, 1984 and June 15, 1984, respectively (Exhibit 1 to the CEC Form 10-Q (June 1984), File No. 2-30057), 10.1.8.5 Seventeenth Amendment to 10.1.8 as amended March 8, 1985 (Ex-hibit 1 to the CEC Form 10-Q (March 1985), File No. 2-30057). 10.1.8.6 Eighteenth Amendment to 10.1.8 as amended March 14, 1986 (Ex-hibit 1 to the CEC Form 10-0 (March 1986), File No. 2-30057). 10.1.8.7 Nineteenth Amendment to 10.1.8 as amended May 1, 1986 (Exhibit 1 to the CEC Form 10-Q (June 1986), File No. 2-30057). 10.1.8.8 Twentieth Amendment to 10.1.8 as amended September 19, 1986 (Exhibit 1 to the CEC 1986 Form 10-K, File No. 2-30057). 10.1.8.9 Twenty-First Amendment to 10.1.8 as amended November 12, 1987 (Exhibit 1 to the CEC 1987 Form 10-K, File No. 2-30057).
COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31. 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.1.8.10 Settlement Agreement and Twenty-Second Amendment to 10.1.0, I both dated January 13, 1989 (Exhibit 4 to the CEC 1988 Form l 10-K, File No. 2-30057). 10.1.9 Interim Agreement to Preserve and Protect the Assets of and Investment in the New Hampshire Nuclear Units dated April 27, 1984 (Exhibit 2 to the CEC Form 10-Q (June 1984), File No. 2-30057). 10.1.10 Resolutions proposed by Merrill Lynch Capital Markets and adopted by t3e Joint-Owners of the Seabrook Nuclear Project regarding Project financing, dated May 14, 1984 (Exhibit 1 to the CEC Form 10-Q (March 1984), File No. 2-30057). 10.1.11 Agreement for Seabrook Project Disbursing Agent establishing YAEC as the disbursing agent under the Joint-Ownership Agreement, dated May 23, 1984 (Exhibit 4 to the CEC Form 10-Q (June 1984), File No. 2-30057). 10.1.11.1 First Amendnent to 10.1.11 as amended March 8, 1985 (Exhibit 2 to the CEC Form 10-Q (March 1985), File No. 2-30057). 10.1.11.2 Second through Fifth Amendments to 10.1.11 as amended May 20, 1985, June 18, 1985, January 2, 1986 and November 12, 1987, respectively (Exhibit 4 to the CEC 1987 Form 10-K, File No. 2-30057). 10.1.12 Agreement to Share Certain Costs Associated with the Tewksbury-Seabrook Transmission Line dated May 8, 1986 (Exhibit 2 to the CEC 1986 Form 10-K, File No. 2-30057). 10.1.13 Purchase and Sale Agreement together with an implementing Addendum dated December 31, 1981, between CE and CEC, for the purchase and sale of the CE 3.52% joint-ownership interest in the Seabrook units, dated January 2, 1981 (Exhibit I to the CEC and CE Form 8-K (January 13, 1982), File Nca. 2-30057 and 2-7749). 10.1.14* Agreement to transfer ownership, construction and operational interest in the Seabrook Units 1 and 2 from CE to CEC dated January 2, 1981 (Refiled as Exhibit 3 to the 1991 CE Form 10-K, File No. 2-7749). 10.1.15 Termination Supplement between CEC, CE and CEL for Seabrook Unit 2, dated December 8,1986 (Exhibit 3 to the CEC 1986 Form 10-K, File No. 2-30057). 10.1.16 Power Contract, as amended to Februar; 59, 1990, superceding the Power Contract dated September 1, . "J6 and amendment dated June 1, 1988, between CEC (seller) and CE and CEL (purchasers) for seller's entire share of the Net Unit Capability of Seabrook 1 and related energy (Exhibit I to the CEC Form 10-0 (Mat"ch 1990), File No. 2-30057).
COMMOWEALTH ENERGY SYSTEM - FORM 10-K DECEMBER 31, 1991 Item 14. Exhibits. Financial Statement Schedules and Reports on Form 8-K (Continued) 10.1.17 Agreement between NBGEL and Central Maine Power Company (CMP), for the joint-ownership, constrtiction and operation of William F. Wyman Unit No. 4 dated November 1, 1974 together with Amendment No. I dated June 30, 1975 (Exhibit 13(N) to the NBGEL Form S-1, File No. 2-54955). 10.1.37.1 Amendments No. 2 and 3 to 10.1.17 as amended August 16, 1976 and December 31, 1978 (Exhibit 5(a) 14 to the System's Form S-16 (June 1979), rile No. 2-64731). 10.1.18 Agreement between the registrant and Montaup Electric Company (MEC) for use of common facilities at Canal Units I and 11 and for allocation of related costs, executed October 14, 1975 (Exhibit 1 to the CEC 1985 Form 10-K, File No. 2-30057). 10.1.18.1 Agreement between the registrant and MEC for joint-ownership of Canal Unit II, executed October 14, 1975 (Exhibit 2 to the CEC 1985 Form 10-K, File No. 2-30057). 10.1.18.2 Agreement between the registrant and MEC for lease relating to Canal Unit II, executed October 14, 1975 (Exhibit 3 to the CEC 1985 Form 10-K, File No. 2-30057). 10.1.19 Contract between CEC and NBGEL and CEL, affiliated companies, for the sale of specified amounts of electricity from Canal Unit 2 dated January 12, 1976 (Exhibit 7 to the System's 1985 Form 10-K, File No. 1-7316). 10.1.20* Capacity Acquisition Agreement between CEC,CEL and CE dated September 25, 1980 (Refiled as Exhibit I to the 1991 CEC Form 10-K, File No. 2-30057), 10.1.20.1
- Supplement to 10.1.20 consisting of three capacity Acquisition Commitments each dated May 7, 1987, concerning Phases I and II of the Hydro-Quebec Project and 71ectricity acquired from Connecticut Light and Power Company CL&P) (Exhibit 1 to the l CEC Form 10-0 (September 1987), File No. 2-30057).
10.1.20.2 Supplements to 10.1.20 consisting of two Capacity Acquisition Commitments each dated October 31, 1988, concerning electricity acquired from Western Massachusetts electric Company and/or CL&P for periods ranging from November 1, 1988 to October 31, 1994 (Exhibit 2 to the CEC Form 10-Q (September 1989), File No. 2-30057). 10.1.21 Phase 1 Vermont Transmission Line Support Agreement and Amendment No. 1 thereto between Vermont Electric Transmission Company, Inc. and certain other New England utilities, dated December 1, 1981 and June 1, 1982, respectively (Exhibits 1 and 2 to the CE 1982 Form 10-K, File No. 2-7749).
i 1 1 1 COMMOJWEALTH ENERGY SYSTEM l TORM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.1.21.1 Amendment No. 2 to 10.1.21 as amended November 1, 1982 (Exhibit 5 to the CE Form 10-Q (June 1984), File No. 2-7749). l 10.1.21.2 Amendment No. 3 to 10.1.21 as amended January 1, 1986 (Exhibit l I 2 to the CE 1986 Form 10-K, File No. 2-7749). 10.1.22 Transmission Contract between Maine Electric Power Company i (MEPCO) and CE dated November 1, 1988 for terms and conditions l l MEPCO wheels CE's entitlement in Point Lepreau Unit I (Exhibit l 2 to the CE Form 10-Q (September 1989), File No. 2-7749). t i l 10.1.23 Transmission Service Agreement between CMP and CE dated , November 1, 1988 for terms and conditions CMP wheels CE's l entitlement in Point Lepreau Unit 1 (Exhibit 1 to CE Form 10-0 i (September 1989), File No. 2-7749). l l 10.1.23.1 First Amendment to 10.1.23 dated November 1, 1988, as amended ; j June 1, 1991 (Exhibit 1 to CE Form 10-Q (September 1991), File , No. 2-7749). l 10.1.24 Participation Agreement between MEPCO and CEL and/or NBGEL i dated June 20, 1969 for construction of a 345 KV transmission line between Wiscasset, Maine and Mactaquac, New Brunswick, Canada and for the purchase of base and peaking capacity from the NBEPC (Exhibit 13 to the CES 1984 Form 10-K, File No. 1-7316). 10.1.24.1 Supplement Amending 10.1.24 as amended June 24, 1970 (Exhibit 8 to the CES Form S-7, Amendment No. 1, File No. 2-38372). 10.1.25 Power Purchase Agreement between Weweantic Hydro Associates and CE for the purchase of available hydro-electric energy produced by a facility located in Wareham, Massachusetts, dated December 13, 1982 (Exhibit I to the CE.1983 Form 10-K, File No. 2-7749). 10.1.26 Power Purchase Agreement between Pioneer Hydropower, Inc. and CE for the purchase of available hydro-electric energy produced by a facility located in Ware, Massachusetts, dated September 1, 1983 (Exhibit 2 to the CE 1983 Form 10-K, File
- No. 2-7749).
10.1.27 Power Purchase Agreement between Corporation Investments, Inc. (CI),_ar.d CE for the purchase of available hydro-electric energy produced by a facility located in Lowell, Massachusetts, dated January 10, 1983 (Exhibit 3 to the CE 1983 Form 10-K, File No. 2-7749). 10.1.27.1 Amendment-to 10.1.27 between CI and Boott Hydropower, Inc., an assignee therefrom, and CE, as amended March 6, 1985 (Exhibit 8 to the CE 1984 Form 10-K, File No. 2-7749). l l <
COMMONWEALTH ENERGY SYSTEM FORM 10-K QECEMBER 31, 1991 l Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) , 10.1.28 Phase 1 Terminal Facility Support Agreement dated December 1, 1981, Amendment No. I dated June 1, 1982 and Amendment No. 2 l dated November 1, 1982, between New England Electric Transmis-sion Corporation (NEET), other New England utilities and CE (Exhibit 1 to the CE Form 10-0 (June 1984 ), File No. 2-7749). 10.1.28.1 Amendment (June 1986),No. File3 No. to 10.1.28 2-7749). (Exhibit 2 to the CE Form 10-Q , 10.1.29 Preliminary Quebec interconnection Support Agreement dated May 1, 1981, Amendment No. 1 dated September 1, 1981, i Amendment No. 2 dated June 1, 1982, Amendment No. 3 dated November 1, 1982, Amendment No. 4 dated March 1, 1983 and Amendment No. 5 dated June 1, 1983 among certain New England Power (June 1984), Pool (NEPOOL) File No. 2-7749). utilities (Exhibit 2 to the CE Form 10-Q 10.1.30 Agreement with Respect to Use of Quebec Interconnection dated December 1, 1981, Amendment No. I dated May 1, 1982 and Amend-ment No. 2 dated November 1, 1982 among certain NEPOOL utili-ties (Exhibit 3 to the CE Form 10-Q (June 1984), File No. 2-7749). 10.1.30.1 Amendatory Agreement No. 3 to 10.1.30 as amended June 1,-1990, among certain NEPOOL utilities (Exhibit 1 to the CEC Form 10-0 (September 1990), File No. 2-30057). 10.1.31 Phase I New Hampshire Transmission Line Support Agreement between NEET and certain other New England Utilities dated December 1, 1981 (Exhibit 4 to the CE Form 10-Q (June 1984), File No. 2-7749). ; 10.1.32 Agreement, dated Septemoer 1, 1985, with Respect To Amendment of Agreement With Respect To Use Of Quebec Interconnection, dated December 1, 1981, among certain NEPOOL utilities to i include Phase II facilities in the definition of " Project * (Exhibit 1 to the CEC Form 10-0 (September 1985), File No. 2-30057). 10.1.33 Agreement to Preliminary Quebec Interconnection Support Agree-ment - Phase II among Public Service Company of New Hampshire (PSNH), New England Power Co. (NEP), BECO bnd CEC whereby PSNH assigns a portion of its interests under the original Agreement to the other three parties, dated october 1, 1987 (Exhibit 2 to the CEC 1987 Form 10-K, File No. 2-30057). ' 10.1.34 Preliminary Quebec Interconnection Support Agreement - Phase II among certain New England electric utilities dated June 1, 1984 (Exhibit 6 to the CE Form 10-Q (June 1984), File No. 2-7749). l - 3 F. -
COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form B-K (Continued) 10.1.34.1 First, Second and Third Amendments to 10.1.34 as amended March 1, 1985, January 1, 1986 and March 1, 1987, respectively (Ex-hibit 1 to the CEC Form 10-0 (March 1987), File No. 2-30057'. , 10.1.34.2 Fifth, Sigth and Seventh Amendments to 10.1.34 as amended October 15, 1987, December 15, 1987 and March 1, 1988, respectively (Exhibit 1 to the CEC Form 10-0 (June 1988), File No. 2-30057). 10.1.34.3 Fourth and Eighth Amendments to 10.1.34 as amended July 1, 1907 and August 1, 1988, respectively (Exhibit 3 to the CEC Form 10-0 (September 1988), File No. 2-30057). 10.1.34.4 Ninth and Tenth Amendments to 10.1.34 as amended November 1, 1988 and January 15, 1989, respectively (Exhibit 2 to the CEC 1988 Form 10-K, File No. 2-30057). 10.1.34.5 Eleventh Amendment to 10.1.34 as amended November 1, 1989 (Exhibit 4 to the CEC 1989 Form 10-K, File No. 2-30057). 10.1.34.6 Twelfth Amendment to 10.1.34 as amended April 1, 1990 (Exhibit 1 to the CEC Form 10-Q (June 1990), File No. 2-30057). 10.1.35 Phase II Equity Funding Agreement for New England Hydro-Transmission Electric Company, Inc. (New England Hydro) (Massachusetts), dated June 1, 1985, between New England Hydro and certain NEPOOL utilities (Exhibit 2 to the CEC Form 10-Q (September 1985), File No. 2-30057). 10.1.36 Phase II Massachusetts Transmission Facilities Support Agreement dated June 1, 1985, reflied as a single agreement incorporating Amendments 1 through 7 dated May 1, 1986 through January 1, 1989, respectively, between New England Hydro and certain NEPOOL utilities (Exhibit 2 to the CEC Form 10-0 (September 1990), File No. 2-30057). 10.1.37 Phase II New Hampshire Transmission Facilities Support Agreement dated June 1, 1985, refiled as a single agreement i incorporating Amendments 1 through 8 dated May 1, 1986 through January 1, 1990, respectively, between New England Hydro-Transmission Corporation (New Hampshire Hydro) and certain NEPOOL utilities (Exhibit 3 to the CEC Form .10-Q (SeptJeber 1990), File No. 2-30057). l i 10.1.38 Phase II Equity Funding Agreement for New Hampshire Hydro, dated June 1, 1985, between New Hampshire Hydro and certain NEPOOL utilities (Exhibit 3 to the CEC Form 10-0 (September 1985), File No. 2-30057), i l 10.1.38.1 Amendment No. 1 to 10.1.38 dated May 1, 1986 (Exhibit 6 to the l CEC Form 10-Q (March 1987), File No. 2-30057).
l COMMONWEALTN ENERGY SYSTEM - ' FORM 10-K DECEMSER 31. 1991
) Item 14. Exhibits, Financial Statyment Schedules and Reports on Form 8-K (Continued) e 10.1.38.2 Amendment No. 2 to 10.1.38 as amended September 1, '
- 1987 (Exhibit 3 to the CEC Form 10-Q (September 1987), File No. 2- ;
30057). ' 10.1.39 Phase II New England Power AC Facilities Support Agreement, dated June 1, 1985, between NEP and certain NEPOOL utilities (Exhibit 6 to the CEC Form 10-Q (September 1985), File No. 2-30057). 10.1.39.1 Onendments Nos. I and 2 to 10.1.39 as amended May 1, 1986 and TC.raary 1, 1987, respectively (Exhibit 5.to the CEC Form 10-0 (narch 1987), File No. 2-30057). 10.1.39.2 Amendments Nos. 3 and 4 to 10.1.39 as amended June 1, 1987 and September 1, 1987, respectivel. (Exhibit 5 to the CEC Form 10-Q (September 1987), File No. 2-30057). 10.1.40 Phase II Boston Edison AC Facilities Support Agreement, dated June 1, 1985, between BECO and certain NEPOOL utilities (Exhibit 7 to the CEC Form 10-0 (September 1985), File No. 2-30057). 10.1.40.1 Amendments Nos. 1 and 2 to 10.1.40 as amended May 1, 1986 and February 1, 1987, respectively (Exhibit 2 to the CEC Form 10-0 (March 1987), File No. 2-30057). 10.1.40.2 Amendments Nos. 3 and 4 to 10.1.40 as emended June 1, 1987 and Septe.nber 1, 1987, respectively (Exhibit 4 to the CEC Form 10-Q (September 1987), File No. 2-30057). 10.1.41 Agreement Authorizing Execution of Phase II Firm Energy Contract, dated September 1, 1985, among certain NEPOOL utilities in regard to participation in the purchase _of power from Hydro-Rusbec (Exhibit 8 to the CEC Form 10-Q (September 1985), File No. 2-30057). 10.1.42 System Power Sales Agreement by and between CE, as seller, and Central Vermont Public Service Corporation (CVPS), as buyer, dated September 15, 1984 (Exhibit 2 to the CE Form 10-0 (September 1984), File No. 2-7749). 10.1.42.1 System Sales Agreement by CVPS, as seller,.and CE, as buyer, dated September 15, 1984 (Exhibit 9 to the CE 1984 Form 10-K, = File No. 2-7749). 10.1.42.2 System Sales and Exchange Agreement by and between CVPS and CE on energy transactions, dated September 15, 1984 (Exhibit 10 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.42.3 System Exchange Agreement by and between CE and CVPS for the exchange of-capacity and associated energy, dated September 3, 1985 (Exhibit 1 to the CE 1985 Form 10-K, File No. 2-7749).
COMMONWEALTH ENERGY SYSTEM : FORM 10-K DECEMBER 31, 1991 I
, Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continuad) 10.1.42.4 Purchase Agreement by and between CEC and CVPS for the pur-chase of capacity from CEC for the term March 1, 1991 to October 31, 1995, dated March 1, 1991 (Exhibit I to CEC Form 10-Q (June 1991), File No. 2-30057).
10.1.42.5 Power Sale Agreement by and between CEC and CVPS for the pur-chase of 50 MW of capacity from CVPS's units (25 MW from ver-mont Yankee and 25 MW from Merrimack 2) for the term of March 1, 1991 to October 31, 1995, dated March 1, 1991 (Exhibit 2 to CEC Form 10-Q (June 1991), File No. 2-30057). 10.1.43 Agreements by and between Swift River Company and CE for the l purchase of available hydro-electric energy to be produced by I units located in Chicopee and North Willbraham, acssachusetts, both dated September 1, 1983 (Exhibits 11 and 12 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.43.1 Transmission Service Agreement between Northeast Utilities' companies (NU) - The Connecticut Light and Power Company (CL&P) and Wertern Massachusetts Electric Company (WMECO), and CE for NU companies to transmit power purchased from Swift River Company's Chicopee Units to CE, dated October 1, 1984 (Exhibit 14 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.43.2 Transformation Agreement between WHICO and CE Whereby WMECO is to transform power to CE from the Chicopee Units, dated December 1, 1984 (Exhroit 15 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.44 System Power Sales Agreement by and between CL&P and WMECO, as buyers, and CE, as seller, dated January 13, 1984 (Exhibit 13 to the CE 1984 Form 10-K, File No. 2-7749). 10.1.45 System Power Sales Agreement by and between CL&P, WFECO, as sellers, and CEL, as buyer, of power in excess of firm power customer requirements from the electric systems of the NU Companies, dated June 1, 1984, as effective October 25, 1985 (Exhibit 1 to CEL 1985 Form 10-K, File No. 2-7909). 10.1.46 Power Purchase Agreement with Respect to South Meadow Unit Nos. 11, 12, 13, and 14 of the NU system company of CL&P (seller) and CE (buyer), dated November 1, 1985.(Exhibit 1 to the CE Form 10-0 (June 1986), File No. 2-7749). 10.1.47 Power Purchase Agreement by and between SEMASS Partnership, as seller, to construct, operate and own a solid waste disposal facility at its site in Rochester, Massachusetts and CE, os buyer of electric energy and capacity, dated September 8, 1981 (Exhibit 17 to the CE 1984 Fona 10-K, File No. 2-7749). 10.1.47.1 Power Sales Agreement to 10.1.47 for all capacity and related energy produced dated October 31, 1985 (Exhibit 2 to the CE 1985 Form 10-K, File No. 2-7749). i
COMMONWEALTH ENERGY SYSTEM ' TORM 10-K PECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.1.47.2 Amendment to 10.1.47 for all additional electric capacity and
- related energy to be produced by an addition to the Original Unit, dated March 14, 1990 (Exhibit 1 to the CE Fort 10-Q (June 1990), File No. 2-7749).
10.1.47.3 Amendment to 10.1.47 for all additional electric capacity and related energy to be produced by an addition to the Original Unit, dated May 24, 1991 (Exhibit 1 to CE Form 10-Q (June 1991), File No. 2-7749). 10.1.48 System Power isles Agreement by and between CE (seller) and NEP (buyer), dated January 6, 1984 (Exhibit 1 to the CE Form y 10-Q (June 1985), File No. 2-7749). 10.1.49 Service Agreement by and between CE and NEP dated March 24, id 1984, whereas CE agrees to purchase short-term power ij applicable to NEP'S FERC Electric Tariff Number 5 (Exhibit 1 M to the CE Form 10-Q (June 1987), File No. 2-7749). I 10.1.50 Power Sale Agreement by and between CE (buyer) and Northeast O Energy Associated, Ltd. (NEA) (seller) of electric energy and capacity, dated November 26, 1986 (Exhibit I to the CE Form 10-Q (K7.rch 19 87 ) , File No. 2-774 9) . 10.1.50.1 First Amendment to 10.1.50 as amended August 15, 1988 (Exhibit 1 to the CE Form 10-Q (September 1988), File No. 2-7749). 10.1.50.2 Second Amendment to 10.1.50 as amended January 1, 1989
~
(Exhibit 2 to the CE 1988 Form 10-K, File No. 2-7749). 10.1.50.3 Fower Sale Agreement dated August 15, 1988 between NEA and CE ' for the purchase of 21 MW of electricity (Exhibit 2 to the CE Form 10-Q (September 1988), File No. 2-7749). ' 10.1.50.4 Amendment to 10.1.50.3 as amended January 1, 1989 (Exhibit 3 to the CE 1988 Form 10-K, File No. 2-7749). 10.1.51 Power Sale Agreement by and between CE (buyer) and CPC Lowell Cogeneration produced, datedCorp.(seller) September 29,of all capacity and related energy 1986 (Exhibit 2 to the CE Form 10-Q (March 1987), File No. 2-7749). 10.1.51.1 Restatement of 10.1.51 as restated March 30, 1987 (Exhibit 2 to the CE Form 10-Q (June 1987), File No. 2-7749). 10.1.52 Power Sale Agreement by and between CE (buyer) and Pepperell Power Associates Limited Partnership (seller) of all electri-city produced from a 38 KW generating unit, dated April 13, 1987 (Enhibit 3 to the CE Form 10-0 (March 1987), File No. 2-7749). l
s . COMMONWEALTH ENERGY SYSTEM FORN 10-K OECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.1.53 Power Sale Agreement by and between CE (buyer) and Tondu Energy Systems, Inc. (Tondu) (seller) of all of the electricity produced at a unit to be constructed at a site in Lee, MA, Lee Mills Cogeneration Project, dated April 28, 1987 (Exhibit 3 to CE Form 10-Q (June 1987), File No. 2-7749). 10.1.53.1 Assignment and Assumption Agreement by and between Lee Mills Cogeneration Co. whereby Tondu conv(LMC) eyed itsandrights Tondu in andthe as consented Lee Mills to by CE, Cogenera-tion Project to LMC, dated June 11, 1987 (Exhibit 4 to the CE Form 10-0 (June 1987), File No. 2-7749). 10.1.54 Power Contract between CEC (seller) and CE and CEL (purchas-era) dated August 14, 1989 whereby purchasers agree to purchase the capacity and energy from seller's
- Slice-of-System" entitlement from CL&P for the term of November 1, 1989 to October 31, 1994 (Exhibit 1 to the CEC Form 10-Q (September 1989), File No. 2-30057).
10.1.54.1 Power Sale Agreement dated November 1, 1988, by and between CEC (buyer) and CL&P (seller), whereby buyer will purchase generating capacity totaling 250 MW from various seller's units (" Slice of System") for the term. November 1, 1989 to October 31, 1994 (Exhibit 3 to the CEC 1988 Form 10-K, File No. 2-30057). 10.1.55 Power Contract between CEC (seller) and CE and CEL (buyers) to resell and purchase, respectively, varying amounts of capacity and energy equal to buyer's share from certain units owned by CL&P and WMECO for the term May 1, 1987 to April 30, 1993, dated May 1, 1987 (Exhibit S to the CEC 1988 Form 10-K, File No. 2-30057). 10.1.55.1 Sales Agreement with Respect to the Retirement Package dated May 1, 1987 between Northeast Utilities Service Company (NUSC), acting as agent for CL&P and WMEC and CEC whereby CEC will purchase capacity and energy from certain fossil steam and gas turbine units for the term May 1, 1987 to April 30, 1993 (Exhibit 3 to the CEC Form 10-0 (September 1989), File No. 2-30057). 10.1.56 Unit Sales Agreement between CL&P and CEC from CL&P's Middle-town Units 3 and 4 through April 30, 1993, dated August 26, 1991 (Exhibit 1 to CEC Form 10-Q (September 1991): File No. 2-30057). 10.1.56.1 Power Contract between CEC, CEL and CE for CEC's entitlement in CL&P's Middletown Units 3 and 4 through April 30, 1993, dated August 27, 1991 (Exhibit 2 to CEC Form 10-0 (September 1991), File No. 2-30057).
- - - . - -= .
COMMONWEALTH ENERGY SYSTEM
- FORM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.1.57 Power Contract between CEC (seller) and CE and CEL (buyers to resell and purchase, respectively, varying amounts of capac)ity and energy equal to buyer's share from certain units owned by the CL&P and WMECO for the term November 1, 1988 to April 30, 1993, dated November 1, 1988 (Exhibit I to the CEC 1988 Form 10-K, File No. 2-30057). ,
10.1.57.1 Supplemental sales Agreement with Respect to Retirement Package dated November 1, 1988 between NUSC, acting as agent for the CL&P and WMEC, and CEC whereby CEC will purchase
- capacity and energy from certain fossil steam and gas turbine units for the term November 1, 1988 to April 30, 1993 (Exhibit 4 to the CEC Form 10-Q (September 1989), File No. 2-30057).
10.1.58 Transmission Agreement dated November 1, 1988 by and between CE and PSNH whereby power purchased by CE from the New Brunswick Electric Commission is egreed to be routed through the transmission facilities of PSNH for the term November 1, 1988 through October 31, 1991 (Exhibit 1 to the CE 1989 Form 10-K, Filo No. 2-7749). 10.1.59 Exchange of Power Agreement between Montaup Electric Company and CE dated January 17, 1991 (Exhibit 2 to CE Form 10-0 (September 1991) File No. 2-7749). 10.2 Natural gas purchase contracts. 10.2.1 Natural gas purchase contracts between Algonquin Gas Trans-mission Company (AGT) and the gas subsidiaries of the System: Firm Service contracts dated October 28, 1969 and July 10, 1972; Winter Service contracts dated August 14, 1968 and July 10, 1972 (Exhibits 1, 2, 3, and 4, respectively, to the CG 1984 Form 10-K, File No. 2-1547). 10.2.2 Service Agreement Applicable to Rate Schedule F-1 between AGT and CG for Firm natural gas services, cated January 28, 1981 (Exhibit 1 to the CG Form 10-0 (March 1987), File No. 2-1647). 10.2.3 Service Agreement Applicable to Rate Schedule F-2 between AGT and CG for the purchase of certain quantities of natural gas acquired by AGT from CGS, dated April 11, 1985 (Exhibit 2 to the CG Form 10-0 (March 1987), File No. 2-1647). 10.2.4 Service Agreement Applicable to Rate Schedule F-3 between AGT and CG for the purchase of certain quantities of natural gas acquired by AGT from National Fuel Gas Supply Corporation, dated April 11, 1985 (Exhibit 3 to the CG Form 10-0 (March 1987), File No. 1-1647). I COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31. 1991
, Item 14. Exhibits. Financial Statement Schedules and Reports on Form 8-K (Continued) 10.2.5 Service Agreement Applicable to Rate Schedule F-4 between AGT and CG for the purchase of certain quantities of natural gas acquired by AGT from Texas Eastern Transmission Company, dated December 26, 1985 (Exhibit 4 to tha CG Form 10-0 (Harch 1987),
File No. 2-1647). 10.2.6 Gas Service Contract between HOPKO and NBGEL for the performance of liquefaction, storage and vaporization service and the operation and maintenance of an LNG facility located at Acushnet, MA dated September 1, 1971 (Exhibit 8 to the CG 1984 Form 10-K, File No. 2-1647). 10.2.6.1 Gas Service Contract between HOPKO and CG for the performance of liquefaction, storage and vaporization services and the operation of LNG facilities located in Hopkinton, MA dated September 1, 1971 (Exhibit 9 to the CG 1984 Form 10-K, File No. 2-1647). 10.2.6.2 Amendments to 10.2.6 and 10.2.6.1 as amended December 1, 1976 (Exhibits 2 and 3 to the CG 1986 Form 10-K, File No. 2-1647). 10.2.6.3 Supplement 1 to Gas Service Contract between HOPKO and NBGEL dated September 1, 1973 and September 14, 1977 (Exhibic 5(c)5 to the CES Form S-16 (June 1979), File No. 2-64731). 10.2.6.4 Supplement 1 to 10.2.6.1 dated September 14, 1977 (Exhibit 5(c)6 to the CG Form S-16 (June 1979), File No. 2-64731). 10.2.6.5 Supplement 2 to 10.2.6.1 dated September 30, 1982 (Extibit 2 to the CG 1982 Form 10-K, File No. 2-1647). . 10.2.6.6 1986 Consolidating Supplement to CG Service Contract and NBGEL Service Contract by and between CG and HOPKO dated December 31, 1986 amending and consolidating the CG Service Contract and the NBGEL Service Contract both as amended December 1, 1976 and supplemented September 14, 1977 (Exhibit 2 to CG Form 10-Q (March 1988), File No. 2-1647). 10.2.7 Operating Agreement between Air Products and Chemicals, Inc., (APC) and HOPKO, dated as of September 1, 1971, as supplemen-ted by Supplements No. 1, No. 2 and No. 3 dated as of July 1, 1974, August 1, 1975 and January 1,.1985, respectively, with respect to the operation and maintenance by APC of HOPKO's liquefied natural gas facilities located at Hopkinton, MA (Exhibit 11 to the CES 1984 Form 10-K, File No. 1-7316). 10.2.7.1 Engineering and Prime Contracting Agreement between APC and HOPKO for performance of engineering bervices and capital project construction at LNG facility in Hopkinton, MA (Exhibit 12 to the CES 1984 Form 10-K, File No. 1-7316).
)
_ _ _ _ . _ _ _ _ _ . _ _ _ - - _ . _ _ _ . _ _ - . _ . _ _ _ _ ~ __ COMMONWEAT.,TH ENERGY SYSTEM FORM 10-K DECEMBER 31. 1991 Item 14. Exhibits, Finencial Statement Schedules gnd Reports on Form 8-K (Continued) 10.2.8 Firm Storage Service Transportation Contract by and between
-- TGP and CG providing for firm transportation of natural gas from CGT, dated December 15, 1985 (Exhibit 1 to the CG 1985 Form 10-K, File No. 2-1647).
10.2.9 Agency Agreement for certain Tr ' .rtation Arrangements by and between CG and Citizens Resources Corporation (CRC) whereby CRC arranges for a third party transportation of natural gas acquired by CG, dated April 14, 1986 (Exhibit 1 to the CG Form 10-Q (June 1986), File No. 2-1647). 10.2.9.1 Natural Gas Sales Agreement between CG and CRC, dated April l 14, 1986 (Exhibit 2 to CG Form 10-0 (June 1986), File No. 2-1647). 10.2.10 Gas Sales Agreement by and between Enron Gas Marketing, Inc. and CG relating to the sale and purchase of natural gas on an interruptible basis, dated June 17, 1986 (Exhibit 3 to the CG Form 10-Q (June 1986), File No. 2-1647). l 10.2.11 Agency Agreement for Certain Transportation Arrangements, dated June 18, 1985 and Gas Purchase and Sales Agreement dated j August 6, 1985 by and between CG and Tenngasco Corporation and l l other related entities (Exhibit 4 to the CG Form 10-Q (June 1986), File No. 2-1647). 10.2.12 Service Agreement dated December 14, 1985 and an amendment thereto dated May 15, 1986 by and between Texas Eastern Transmission Corporation (TET) and CG to receive, transport and deliver to points of delivery natural gas for the account of CG, dated December 14, 1985 (Exhibit 5 to the CG Form 10-Q (June 1986), File No. 2-1647). 10.2.13 Gas Transportation Agreement by and between TET and CG to receive, transport and deliver on an interruptible basis, certain quantities of natural gas for the account of CG, datef January 31, 1986 (Exhibit 6 to the CG Form 10-Q (June 1986), File No. 2-1647). 10.2.14 Service Agreement dated May 19, 1988, by and between TET and CG, whereby TET agrees to receive, transport and deliver j t natural gas to CG (Exhibit I to the CG Form 10-Q (September 1988), File No. 2-1647). 10.2.15 Gas Sales Agreement by and between Texha Eastern Gas Trading Company and CG providing for the sale of certain quantities of natural gas to CG, dated May 15, 1986 (Exhibit 7 to the CG
- Form 10-0 (June 1986), File No. 2-1647).
I i 10.2.16 Service Agreement applicable to Rate Schedule TS-3 between TET i and CG for Firm natural gas service, dated April 16, 1987 (Exhibit I to the CG Form 10-Q (June 1987), File No. 2-1647). l
1 COMMONWEALTH ENERGY SYSTEM TORM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Raports on Form B-K (Continued) 10.2.17 Natural Gas Sales Agreement between Summit Pipeline and Producing Company and CG, dated April 16, 1987 (Exhibit 2,to the CG Form 10-Q (June 1987), File No. 2-1647). 10.2.18 Natural Gas Sales Agreement between Natural Gas Supply Company and CG, dated May 12, 1987 (Exhibit 3 to the CG Form 10-Q ' (June 1987), File No. 2-1647). 10.2.19 Natural Gas Sales Agreement between Stellar Gas Company and CG, dated April 15, 1988 (Exhibit 1 to the CG Form 10-Q (March 1988), File No. 2-1647). 10.2.20 Natural Gas Sales Agreement between Amalgamated Gas Pipeline Company and CG dated April 5, 1988 (Exhibit 1 to the CG Form 10-Q (June 1988), File No. 2-1647). 10.2.21 Natural Gas Sales Agreement between Gulf Ohio Pipeline Corporation and CG dated May 18, 1988 (Exhibit 2 to the CG Form 10-0 (June 1988), File No. 2-1647). 10.2.22 Natural Gas Sales Agreement between Phillips Petroleum Company and CG dated May 18, 1988 (Exhibit 3 to the CG Form 10-Q (June 1988), File No. 2-1647). 10.2.23 Natural Gas Sales Agreement between TXO Gas Marketing Corp. and CG dated April 25, 1988 (Exhibit 1 to the CG 1988 Form 10-K, File No. 2-1647). 10.2.24 Gas Transportation Agreement by and between AGT and CG to receive, transport and deliver certain quantities of natural gas on a firm basis for the account of CG dated December 1, 1988 (Exhibit 2 to the CG 1988 Form 10-K, File No. 2-1647). 10.2.25 Natural Gas Sales Agreement between Enermark Gas Gathering Corporation and CG dated January 6, 1989 (Exhibit 3 to the CG 1988 Form 10-K, File No. 2-1647). 10.2.26 Gas Sales Agreement between BP Gas Inc. (seller) and CG (purchaser) for the purchase of spot market gas, dated March 31, 1989 with a contract term of at least one year (Exhibit 1 to the CG Form 10-Q (March 1989), File No. 2-1647). 10.2.27 Gas Sales Agreement between Tejas Power Corporation (seller) and CG (purchaser) for the purchase of spot market gas, dated February 21, 1989 with a contract term of at least one year (Exhibit 2 to the CG Form 10-Q (March 1989), File No. 2-1647). 10.2.28 Gas Sales Agreement between Catamount Natural Gas, Inc. (seller) and CG (purchaser) for the purchase of spot market gas, dated April 5, 1988, with a contract term of at least one year (Exhibit 1 to the CG Form 10-Q (June 1989), File No. 2-1647). 1
COMMONWEALTH ENERGY SYSTEM - FORM 10-K DECEMBER 31. 1991 Item 14__ Exhibits. Financial Statement Schedules and Reports on Form 8-K (Continued) 10.2.29 Gas Sales Agreement between Transco Energy Marketing Company (seller) and CG (purchaser) for the purchane of spot market gas, dated March 1, 1989, with a contract term of at least one year (Exhibit 2 to the CG Form 10-0 (June 1989), File No. 2-1647). 10.2.30 Gas Sales Agreement between V.H.C. Gas Systems, L.P. (seller) and CG (purchaser) for the purchase of spot market gas, dated June 2, 1989, with a contract term of at least one year (Exhibit 3 to the CG Form 10-Q (June 1989), File No. 2-1647). 10.2.31 Gas Sales Agres3ent between End-Users Supply System (seller) ~ and CG (purchaser) for the purchase of spot market gas, dated June 29, 1989, with a contract term of at least one year (Exhibit 1 to the CG Form 10-Q (September 1989), File No. 2-1647). 10.2.32 Gas Sales Agreement between Entrade Corporation (seller) and CG (purchaser) for the purchase of spot market gas, dated August 14, 1989, with a contract term of at least one year (Exhibit 2 to the CG Form 10-0 (September 1989), File No. 2-1647). 10.2.33 Gas Sales Agreement between Fina Oil and Chemical Company (seller) and CG (purchaser) for the purchase of spot market gas, dated July 10, 1989, with a contract term of at least one year (Exhibit 3 to the CG Form 10-Q (September 1989), File No. 2-1647). 10.2.34 Gas Sales Agreement between Mobil Natural Gas Inc. (seller) and CG (purchaser) for the purchass of spot market gas, dated - August 14, 1989, with a contract term of at least one year (Exhibit 4 to the CG Form 10-0 (September 1989), File No. 2-1647). 10.2.35 Gas Storage Agreement between Steuben Gas Storage Company (Steuben) and CG (customer) for the storage and delivery of customer's natural gas to and from underground gas storage facilities, dated May 23, 1989, with a contract term of at least one year (Exhibit 4 to the CG Form 10-0 (June 1989), File No. 2-1647). 10.2.35.1 Amendment, dated August 28, 1989, to 10.2.35 dated May 23, 1989 (Exhibit 5 to the CG Form 10-Q (September 1989), File No. 2-1647). 10.2.36 Gas Sales Agreement between PSI, Inc. (seller) and CG (pur-chaser) for the purchase of spot market gas, dated September
- 25. 1989, with a term of at least one year (Exhibit 1 to the CG 1989 Form 10-K, File No. 2-1647).
- _ - _ _ - - _ _ - _ _ _ _ _ _ _ _ _. ._ - --- ----- -- --- - A
COMMONWEALTH ENERGY SYSTEf. FORM 10-K DECEMBER 31. 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.2.37 Gas Sales Agreement between Hadson Gas Systems (seller) and CG { purchaser) for the purchase of firm gas, dated August 15, 1990, with a contract term of at least six years (Exhibit 1 to the CG Form 10-0 (September 1990), File No. 2-1647). 10.2.38 Gas Sales Agreement between Odeco Oil Company (seller) and CG (purchaser) for the purchase of firm gas, dated August 15, 1990, with a contract term of at least five years (Exhibit 2 to the CG Form 10-Q (September 1990), File No. 2-1647). 10.2.39 Operating Agreement between AGT, CG and Distrigas of Massachusetts Corporation in connection with the deliveries of regasified liquified natural gas into the Algonquin J-system, dated August 1, 1990 (Exhibit 3 to the CG Form 10-0 (September 1990), File No.2-1647). l 10.2.40 Gas Sales Agreement between TEX / CON Marketing Gas Company (seller) and CG (purchaser) for the purchase of firm gas, l dated September 12, 1990, with a contract term of five years (Exhibit 3 to the CG 1990 Form 10-K, File No. 2-1647). 10.2.41 Transportation Agreement between AGT and CG to provide for firm transportation of natural gas on a daily basis, dated December 1, 1988 (Exhibit 3 to the CG 1991 Form 10-K, File No. I 2-1647). I 10.2.42 Transportation Assignment Agreement between AGT and CG regarding Rate Schedule ATAP Agreement No. 9020016 which , provides for the assignment, on an interruptible basis, of firm service rights on TET's system under Rate Schedule FT~1, dated January 3, 1990, for a term ending October 31, 1999 (Exhibit 4 to the CG 1991 Form 10-K, File No. 2-1647). 10.2.43 Gas Sales Agreement between AFT and CG to reduce the volume of Rate Schedule F-1, dated October 15, 1990 (Exhibit 5 to the CG 1991 Form 10-K, File No. 2-1647). 10.2.44 Transportation Agreement between AFT and CG for Rate Schedule AFT-1, dated November 1, Agreement No. 90103, 1990 (Exhibit 6 to the CG 1991 Form 10-K, File No. 2-1647). 10.2.45 Transportation Assignment Agreement between AFT and CG regard-ing Rate Schedule ATAP Agreement No. 90202, which provides for the assignment, on a firm basis, of firm service rights on TET's system under Rate Schedule FT-1 dated November 1, 1990 t (Exhibit 7 to the CG 1991 Form 10-K, File No. 2-1647). I 10.2.46 Gas Sales Agreement between TGP and CG under TGP's CD-6 Rate Schedules dated September 1, 1991 (Exhibit 8 to the CG 1991 Form 10-K, File No. 2-1647). 1 L EQM ONWEALTH ENERGY SYSTEM *
- TORM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.2.47 Transportation Agreement between TGP and CG dated September 1, 1991 (Exhibit 9 to the CG 1991 Form 10-K, File No. 2-1647).
10.2.48 Transportation Agreement between CNG and CG to provide for transportation of natural gas on a daily basis from Steuben Gas Storage Company to TGP (Exhibit 10 to the CG 1991 Form 10-K, File No. 2-1647). 10.3 Other agreements. 10.3.1 Pension Plan for Employees of CES and Subsidiary Companies as amended January 1, 1989 (Exhibit 1 to CES Form 10-Q (June 1991), File No. 1-7316). 10.3.2 Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies restated as of January 1, 1989 (Exhibit 1 to the CES Form 10-0 (June 1989), File No. 1-7316). 10.3.3 New England Power Pool Agreement (NEPOOL) dated September 1, 1971 as amended through August 1, 1977, between NEGEA Service Corporation, as agent for CEL, CEC, NBGEL, and various other electric utilities operating in New England together with mmendments dated August 15, 1978, January 31, 1979 and Febru-ary 1, 1980. (Exhibit 5(c)13 to New England Gas and Electric Association's Form S-16 (April 1980), File No. 2-64731). 10.3.3.1* Thirteenth Amendment to 10.3.3 as amended September 1, 1981 (Refiled herewith as Exhibit 3 at page 138). 10.3.3.2 Fourteenth through Twentieth Amendments to 10.3.3 as amended December 1, 1981, June 1, 1982, June 15, 1983, October 1, 1983, August 1, 1985, August 15, 1985 and September 1, 1985, respectively (Exhibit 4 to the CES Form 10-Q (September 1985), File No. 1-7316). 10.3.3.3 Twenty-first Amendment to 10.3.3 as amended to January 1, 1986 (Exhibit 1 to the CES Form 10-0 (March 1986), File No. 1-7316). 10.3.3.4 Twenty-second Amendment to 10.3.3 as amended to September 1, 1986 (Exhibit 1 to the CES Form 10-0 (September 1986), File No. 1-7316). 10.3.3.5 Twenty-third Amendment to 10.3.3 as amended to April 30, 1987 (Exhibit 1 to the CES Form 10-Q (June 1987), File No. 1-7316). 10.3.3.6 Twenty-fourth Amendment to 10.3.3 as amended March 1, 1988 (Exhibit 1 to the CES Form 10-0 (March 1989), File No. I-7316). 10.3.3.7 Twenty-fifth Amendment to 10.3.3. as amended to May 1, 1988 (Exhibit 1 to the CES Form 10-Q (March 1988), File No. 1-7316). l
i
<e l COMMONWEALTM ENERGY SYSTEM l 70RM 10-K DECEMBER 31, 1991 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) 10.3.3.8 Twenty-sixth Agreement to 10.3.3 as amended March 15, 1989 (Exhibit 1 to the CES Form 10-Q (March 1989), File No. 1-7316).
10.3.3.9 Twenty-seventh Agreament to 10.3.3 as amended October 1, 1990 (Exhibit 3 to the CES 1990 Form 10-K, File No. 1-7316) 10.3.4 Facilities Lease and Operating Agreement between CE and Global Petroleum Corporation, dated November 12, 1983, covering CE's lease of & New Bedford oil terminal to Global for Global to operate and maintain for the joint benefit of the companies (Exhibit 1 to the CE Form 10-Q (June 1989), File No. 2-7749). ( 10.3.5 Fuel Supply, Facilities Lease and Operating Contract by and between, on the one side, ESCO (Massachusetts), Inc. and Energy Supply and Credit Corporation, and on the other side, CEC, dated as of February 1, 1995 (Exhibit 1 to the CEC 1984 Form 10-K, File No. 2-30057 10.3.5.1 Amendments Nos. 1 and 2 to 10.3.5 as amended July 1, 1986 and November 15, 1989, respectively (Exhibit 3 to the CEC 1989 Form 10-K, File No. 2-30057). 10.3.6 Assignment and Sublease Agreement and Canal's Consent of Assignment thereto whereby ESCO-Mass assigns its rights and obligations under Part II of the Resupply Agreement dated February 1, 1985 to ESCO Terminals Inc., dated June 4, 1985 (Exhibit 4 to CEC Form 10-0 (June 1985), File No. 2-30057). 10.3.7 Oil Supply Contract by and between CEC (buyer) and Coastal Oil - New England, Inc. (sAller) for a portion of CEC's requirements of No. 6 residual fuel oil, dated July 1, 1991 (Exhibit 3 to CEC Form 10-Q (June 1991), File No. 2-30057). 10.3.7.1 Assignment Agreement between CEC and ESCO (Massachusetts), Inc. (ESCO-Mass) and Energy Supply and Credit Corporation whereby CEC assigns to ESCO-Mass rights and obligations under 10.3.7 (above) dated July 1, 1991 (Exhibit 4 to CEC Form 10-0 (June 1991), File No. 2-30057). 10.3.8 Guarantee Agreement by CEL (as guarantor) and MYA Fuel Company (as initial lender) covering the unconditional guarantee of a portion of the payment obligations of Maine Yankee Atomic Power Company under a loan agreement and note initially between Maine Yankee and MYA Fuel Company (Exhibit 3 to the CEL Form 10-K for 1985, File No. 2-7909). 10.3.9 Stock Purchase Agreement by and among Texas Eastern Corpor-ation (purchaser) and Eastern Gas and Fuel Associates, Common-wealth Energy System and Providence Energy Corporation (sel-lers) for the purchase and sale of ownership interests in Algonquin Energy, Inc., dated June 10, 1986 (Exhibit 1 to the i CEC Form 10-Q (June 1986), File No. 1-7316). '
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COMMONWEALTH ENERGY SYSTEM , FORM 10-K DECEMBER 31. 1991 * , Jtem 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (Continued) Exhibit 13. Annual Report To Security Holders l Filed herewith as Exhibit 1 is the 1991 Summary Annual Report of l Commonwealth Energy System (page 64). Exhibit 22. Subsidiaries of the Recistrant Incorporated by reference to Exhibit 2 (page 101) to the System's 1988 Annual Report on Form 10-K, File No. 1-7316. Exhibit 28. Additional Exhibit Filed herewith as Exhibit 2 is a copy of the Notice of 1992 Annual Meeting, Proxy Statement and 1991 Financial Information dated April 3, 1992 (page 92). (b) Reports on Form 8-K A report on Form 8-K was filed with the Commission on December 24, 1991, relating to issuance of an initial ruling by an Administrative Law l Judge affirming the prudence of Canal Electric Company's oversight of emergency response planning for the Seabrook nuclear power plant. Also disclosed was the FERC approval of a settlement agreement on November I 13, 1991 which resolved all Seabrook cost-of-service issues and the filing of a settlement proposal with FERC on Canal's rate of return on equity for its Seabrook investment. A second report on Form 8-K was filed with the Commission on January 24, 1992 relating to the System's decision to write down its investment in the Freetown Energy Park project. l l l l 1 i
-REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES To Commonwealth Energy Systems
- We have' audited in accordance with generally accepted auditing standards, the consolidated financial statements of Commonwealth Energy System appearing in Exhibit A to the proxy statament for the 1992 annual meeting of shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 26, 1992.
Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Part IV, Item 14 of this Form 10-K are the responsibility of the System and subsidiary companies' management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not par' of the basic financial statements. These schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statementc taken as a whole. ARTHUR ANDERSEN & CO. Boston, Massachusetts, February 26, 1992. ) l l l l
- 99 '
llO' COMWONWEALTH ENERQY SYSTEM AND SUBSIDIARY COWPANIES INVESTWENTS IN. EQUffY IN EARNIHgS OF. AND DIVIEENDS. RECEIVED FROM RELATED PARTIES H-FOR THE YEAR ENDED DECEWBER 31. 1991 N' H. (Dollere In Thousande) Belence et Selence et __Ramjnnina of Year Additlene Daduettone End of Year Number Equity Number Notee of in Distribution of Receivable Shores Investment Earninae of Earninas_ Other theres Investment _ (A) SUS $1 DIARIES CONSOLIDATED: (All leaves are common stock) Cambridge Electric Light Company 304 800 3 37 972 3 4 039 8 4 088 8- 304 800 2 37 945 S 655 COW / Energy Steen Company 25 500 2 708 1 125 727 - 25 500 3 los - Cenel Electric Company 1 523 200 108 848 18 978 18 755 - 1 523 200 109 089 2 570 Commonwealth Geo Company 2 407 000 85 228 3 120 5 418 - 2 407 000 82 930 3 725 Dervel Roalty Trust 28 1 307 380 110 - 28 1 557 - (n COW / Energy.Freeteen Realty 1 478 (15,795) - - 1 (15 317) - h3 COW / Energy Research Park Realty 1 790 450 - - 1 1 240 - a COW / Energy Cembridge Realty 1 90 (8) - - 1 82 - COM/ Energy Acushnet Reelty 1 488 70 - - 1 558 - COW / Energy Servle e Company 3 250 325 49 37 - 3 250 337 - Commonwealth Electric Company 1 808 472 125 457 9 SE7 7 952 - 1 808 472 127 382 5 950 i Hephleten LNQ Corp. 5 000 3 747 548 - - 5 000 4 295 - 8385 434 822 793 SSE 083 3- 9353 184 512 900 OTHER INVESTWENTS: , (Accounted for by the equity method) l Hueleer Electric Power Componise 52 854 8 9 475 8 1 504 31330 92O(8) 52 454 8 9 829 l Hydro-quebec Phase II 137 442 3 458 1 195 278 - 137 442 4 372 l Other Invoetmente - 713 f885) - - - 28 ! S 13 641 8 2 014 3 1 808 S20 3 14 029 NOTES: (A) Notes are written for eleven months and twenty-nine days. Interest le et the prime Interest rete end le adjusted for changee le the rate during the term of the notes. . [ t (B) In 1991, Verr.ent Venhoe repurchseed 2N of its common stock at $150 per share from Cambridge Electric. " Cambridge Electric's original cost one $100 per share. As of December 31, 1991, Cambridge Electric held - 9,801 shares in Vermont Yankee. There eere no other changes la the number of shores held during the three-year perl a 4 ending December 31, 1991.
I i I COWWONWEALTi :CY SYSTEM,1ND SUBSIDIARY COMPANIES INYF11MENTS IN. EQUITY IN EARNINGS OF. Af>> DIVIDENDS RECEIVED FRDW RELATED PARTIES j FOR THE YEAR ENDED DECEWBER 31. 199Q (Dollare in Thousande) Bolence et Bolence et Deduetlene End of Year Bealnnina of J . a r_ Additions Notes Equity Number Number in Dietributlen of Receivable of of Earninas_ Shares Investment (A)
$ hares Investment Earninas Q3hin l SUBSIDIARIES CONSOLIDATED:
(All leaves are common eteck) 3 as 424 8 1 984 3 - S 2 438 304 600 3 37 972 8 1 275 Cambridge Electric Light Company 304 600 2 219 1 098 - 1 607 25 500 2 708 - C03/ Energy Steam Company 25 500 i 18 907 - 27 790 1 523 200 106 848 350 Ceaal Electric Company 1 523 200 117 837 23 OOO(B) 1 733 2 407 000 85 226 - 3 Commonwealth Ces Company 1 832 000 68 501 (2 542) l 28 1 291 480 - 4S4 28 1 207 - m Dervel Roalty Trust 550 (72) - - 1 473 - b8 COS/ Energy Freeteen Realty 1 515 1 700 - 790 515 - t COU/ Energy Research Park Reelty 1 1 90 - COW / Energy Cambridge Reelty 1 95 (5) - - 74 - 74 1 498 - Co3/ Energy Acushnet Realty 1 488 325 49 - 49 3 250 325 - C03/ Energy Services Company 3 250 8 182 - 3 048 1 806 472 125 457 - Commonweelth Electric Company 1 808 472 127 343 543 544 5 000 3 747 - Hephinton LNG Corp. 5 000 3 711 - S 1 625 3380 6OS S25 096 323 000 843 268 S365 434 OTHER INVESTHENTS: (Accounted for by the equity method) 81 341 52 654 9 9 475 Nuclear Electric Peeer Compenlos 52 854 8 9 384 3 1 432 3 - 3 359 94 - - 137 442 3 453 Hydre-Quebec Phase II 137 442 (347) - - - 713 g Other Investmente
- 1 060 8 1 241 3 13 641 O S 13 803 2 1 179 S - IC t1 O
Interest le et the prime laterest rete and le h NOTES: (A) Notes are written for eleven months and twenty-nine doye. edjusted for changes in the rate du-Ing the term of the notes. H g (B) Additlenal levoetment. s
8e O' CokMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES INVESTWENTS IN. EQUITY IN EARNINGS OF.'AND DIVIDENDS RECEIVED FRDW RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31._1999 H (Dollere In Thousande) - Belence et Defence et BenInnina of Year Additlene _Deductione End of Year Number Equity Number Notes
.of in Distributlen of Recolvable Sharea Investment Earnines Other of Earnisee__ Sharea Investment (A)
SUBSIDIARIES CONSOLIDATED:
'(All leaves are common steck)
Cambridge Electric Light Company 200 000 8.25 417 8 1 911 813 000(B) 81 904 COW / Energy Steen Company 304 800 8 38 424 S - 25.500 3 211 1 053 - 1 045 25 500 3 219 - Canal Electric Company. 1 523 200 los 987 13 eso Commonwealth See Company 1 523 200 117 337 7 900-
, 1 832 000 se 939 12 See -
12 824 1 est 000 Dervel Realty Trust se 501 - 28 1 ees 411 - als to 1 291 -
$ECOW/EnergyFeeetownRealty 2 e4e (98) - -
1 550 -
, COW /Cr egy Research Park Realty 1 7s7 473 -
470 1 790 - COW / Energy Cambridge Realty 1' es 29 - 1 95 - COW / Energy Acushnet Realty 1 487 74 - 53 1 des - COM/ Energy Services Company 3 250 325 49 - 49 3 250 325 - Commonwealth Electric Company 1 10e 472 e5 878 11 214 40 000(8) Hephleton LNG Corp. 9 549 1 804 472l 127 343 - 5 000' 3 878 815 - 550 8 000 3 743 - 8292 999 S41 999 953 000 827 282 8340 soe- S7 900 OTMER INVESTWENTS: (Accewnted for by the equity method) Nucicer Electric Power Companlos 52 854 8 9 42e 8 1 387 8 - 8 1 409 52 e54 Hydre-quebec Phoe. II 8 9 Se4 3 359(C) - 137 442 3 359 Other Investmente - 1 409 (2491 - - - 1 Geo S 10 835 8 1 018 93 359 8 1 409 8 13 e03 NOTES: (A) Notes are written for eleven months and twent-y-nine days. Interest le et the prlee laterest rete end le adjusted for changes la the rete durIng the term of the notes. (B) Additlenal Investment. ' (C) Initlel Investment. -
o COMMONWEALTH ENERGY' SYSTEM AND SUSSIDIARY.COMPANIE1 PROPERTY. PLANT AND ESUIPMENT (A) FOR THE YEAR ENDED DECEMBER 31. 1991 I Bolence Retiremente polence Deginning :Additlene Charmed to gloselflention
.End of of Year _et Cost Reserve Other Treenfore Year (Dollere In Thousande)
, ELECTRIC Intenglble plant 3 2 208 S' 179 S - S - S - 3 2 337 Land and rlghts of way 9 947 12 - 1 183 10 121 Structures and leasehold leprovemente 333 438 875 (18) - (50) 134 077 Productlen equipment 310 4f4 3 081 1 054 Tranentesten equipment (75) 313 Its 103 488 3 157 338 - 1 108 208 Dietrlbutlen equipment 383 720 31 233 4 123 Nuclear fuel in reactor (28) 3 DO 310 S 599 4 192 - - - 12 790 - : , General equipment, vehicles, and other 11 434 472 _.. 233 - f41 ' 11 884 Total plant in service 943 281 43 771 5 735 1 7 901 323 Cenetructlen work in progrees 10 823 1 211 Nuclear, fuel in prec*ss (95) 11 73g g E SEE f3 3411 - - 247 2 531 g, Total electric 9E9 559 41 941 E 735 1 159 ' 995 822 tn AA1 , , Intangible plant 1 392 - - - - 1 392 Land end rights of way 979 - - - - 979 : Structures and leasehold leprovemente 12 483 598 171 - 1 12 931 l Productlen equipment - - - - - - . Distributies equipment 253 021 18 804 1 772 - General equlpment and vehletes 287 SEE 1 918 72 120 - (1) 1 agg Tetel plant in service 289 773. 17 278 2 023 - - 205 028 Constreetten work la progrees 873 fles) - -
$13 Tetel see 270 451 17 111 _2 023 - -
2e5 539 OTHER Steen heatlng egulpment 4 727 305 8 - - 5 028 Gee llquefectlen facility 34 112 1 Oss 50 - - 35 180 Miscelleneeve physical property (8) 35 321 891 18 Total plent in service 9 _121 991) 14 204 74 180 2 294 74 9 (21 981) 54 390 Constructisn work la prenross 271 (28) - - - 243 Ut i Total other 74 431 2 281 74 9 O I f21 981) 54 833 Total Property, Plant and Equipment 81 304 441 8 el 01s 87 832 8 to ! 8f 21_ 822) (C) 31 335 795 g (1 (A) Refer to Note 1 of Notes to Flnenclel Statemente for deprocletlen mothed and entes. (B) Principally real setste. , (C) Freetown project write-down.
h OB ' COtMHH0 WEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES PROPERTY. PLANT IND EOUIPMENT'(A): O* FOR THE YEAR EteED DECruarR 21. 1990 . i ) Balance- Retiremente gelence q 8eginning Additlene Charmed to End of A Closelficetten of Year et Cent Reserve Othec Transfere Year- "I
. (Del l ere in Thousande)' f ELECTRIC Intengible plant' 2'200
. Land'endlrighte'ef way S. -
S. S, - S L- S - 3 't 20e' 255 9 489 - 1 4 9 947 Structures and leesehold leprovemente 57 476 78 259 507.- - 9 133 43s Production egelpment 155 183 154 975 1 853 Tronomleelen egulpment (21) 310 4e4 De ft7 s e43 133. - 139- los 4ee Distributlen-equipment' 334 292 SS 593 7 030 Nucleer' fuel la reacter (127) 943'729 [
-. S 599 - - -
3 593l i General egulpment, vehicles, and other S 430 a 095 81 - 'I 11 434-
'Tetel plant in service set 867 290 SIE 9'404 1 4 943 281 -
Cenetruetten work la progrees 252 209 (241 598) - - - 10 823 i Nuclear fuel'In process -
' E e51 - - -
E e55 I tn Total electrie 914 07s 54 se4 e 404 4
"' 1_ e5s 553 [
AAA i 8 Intengible plant - 1 392 - - - 1 392 Land end righte'of way 979 - - - - 979 ; Structures and loosehold leprovemente 12 003 444 44 - i 12 443 Productlen equipment 357 - 357 - - [ Distributlen' equipment- 228 219 27.275 2 473 - - 253 021 I General egulpment and vehicles 1 892 182 ine - 1 313 Total plant Fr service 243 510 29 27s 3 010 - - 289 773 Cemetractlen werk la progrees 2 see ft 210) - - - e7e ; Total geo 24e see 27 osa a 010 - - 27o 451 .f OTHER ! l Steam heating eqvlpeent_ 4 524 244 41 - - 4 727 [ Gee ligeefectlen feelllty 33 117 1 407 492 - I 34 112 Miscelleneews phyelcel property (S) as 452 2 Osa as 107 f41 35 221' ! Tetet plant la servlee 71 093 3 794 els '107 (4). 74 too [ } Cenetruetten eerk In progrees fa) 274 - - - 271' Total other; 71 090 4 osa f e18 107 f41 74 431 Total Property, Plant end Equipment l 1 31 231 see S se oss 313 030 9 toe 3 - 31 304 441 t l l ! ! . i l (A) Refer to Note 1 of Notes'te Finenetel Statemente for deproeletten mothed end rates. ' (B) Principally real. estate. .
-[
6
..{
COMMONWEALTH ENERGY SYSTEM Ale SUSSIDIARY CDitPANIE3 PROPENTY. PLANT Ate'ESUIPtAENT (A) ! FOR THE-YEAR ENDED DECEMBER 31. late ' llelence Retiremente gegenen-t' Beginning Additlene Charmed to Closelfleetlen End of: I ~ of Year _et Cost Reserve O ther. Trenefore Year !- . ELECTRIC' (Dollers In Theveende) i Land and' rights of.way 8 9 528 9 144 S - -9 i
- S 19 8' 9 633 '
Structures and leseohold leprovemente 50 728. 7 046 98 - - Producklen equipment 57 874 154 257 1 145 239 - - 155 163
~
- Tronomleelen egulpment ~ 80 009' 28 798 223 -
as
- Dletributlen equipment se el?
199 741 30 841. 4 057 - (93):
- , . General equipment,. vehicles, and other 334 292 ;
7 e12 851 31 - (2) Total plant in servico a 430 ' 500 073 76 425 -4 e48 - 17 "Cenetructlen work in progrees est se7 252 517_ f act). - - - 252 poet ! Total electric. e42 590 78 117 4 e4e - 17 el4 07s IAI ; Land and rights of way
' 979 - - - -
373 I Structures and leseehold leprovemente 9 158 2 933 28 - - 12 003
$ Productlen egulpment 357 - - - ' -
357 l Distributlen equipment 207 513
' 22 342 1 eso - -
228 219 General equipment end vekleles 1 70s 21e 30 - - Tetel plant In servlee 1 est 219 713- 25 491 1 E94 - - Cenetrucklen work in progrees 243 510 . 3 990 - f1 1021 - 2 ese [ Tetel see 223 703 24 See 1 e94 - - 24s See ; OTHER Steen heating equipment 4 248 319 41 - - i Gee liquefecklen feellity 4 524 i 42 518 003 2 - - Wiecellaneous phyeleet property (8) 33 117 f 30 703 2 e59 as 7 Totel plant in service (17) '33'452 47 445 3 781 129 7 Cenetruction work la progrese' (17) 71 Osa I s (12) - - - fa) [ Tetel other 87 474 3 799 129 7 I (17) 71 ogo "Tetel Property, Plant end Egulpment $1 133 787 8104 275 Se 471 8 7 8 - 31 231 584 l l tn t il M ce (A) Refer to Mete l'et Notes to FInonclel Statemente for deproeletion'mothed and rates. U (B) Principally real estate. h Ps t 4 [ t t
?
, _ _ - . . . _. _ . . ~ . -- .
Da . U' COMMONWEALTil ENERGY $YSTEM AND SOSIDIARY CsMPANIES - se ACCUMULATED DEPRECIAT10M ABS AMORTIIATION OF PROPERTY. P1. ANT AND feUIPMENT F0ft_THE YEARS ENDED DECEMBER s1. 1991. 1990 AND 1M1 (Dollere in Themeende) Prewlalom Clearles Selence et Nocleer Accounto aged Amortinellen of Selene. Beslanine of Chereed.to- Feel Other Leeeebefd Remove! et End Clanalficatten ___ Year Deerattent Emmenas facene Imerevements Rattrementa Coat Salvane of Year YEAR ENDED DECEMBER ft. 199i Electric s2s1 742 est see $s 82s s- e del as 7ss es 4se s 270 steo 011 See so 72o 7 91o 83s Cther 2 ots I oe4 31 es see is 5s2 _ 1 171 - _soo - 74 ___ . 40 s - 26 set Tetel Asevauleted 3 Sepreeletlen end m Amortinetten same osa set est en era snoo si sie s7 est e4 ore s 301 m es72 eer
, YEna EmoEn nECsueEn st. 1990 Electrie star 407 see sto as ast s- a sto e e 4c4 sa ser as see erst 74:
coe sr 744 7 34o - - oos s clo 1 91e (44) so 720 other ss att __ L9tt - 22.1 - 611 s7s - ts s92 Total Aeewmeleted Depreeletlen and Amortlaa%len este 007 es4 e4e et tsi site e 027 s1s oso se 120 es set esse 054 YEAR ENDED DECFMeER al. 1989 Efoetric st17 os7 att ots s - e is a s9 e4 e4e as oss el o24 sist 4o7 one sa see e ese - - 4eo 1 e94 1 see (es) s7 744 Gther 24 971 1 OGo - _172 - _. .. 12 9 .. 210 - 25 ts8 Tetel Accumulated Depreeletlen en4 Amortisetlen s?os 874 829 fee s - sto? 8 400 se 471 84 elo e ese esta 007 _ __.___m_ _- _ . _
SOEDULE VIII CQ9DMEAIHH DERGY SYSTEM ND SIESIDIARY CO@ANIES VAUATIOf NO CIALIFYDG ACUXNTS TOR 'DE TEARS DCED DDIMBER 31,1991,1990 ND 1989 Additions Palarce Provision IXatactions Balance Beginning 0 arged to 1ccounts at End Description of Year _ _ Cterations Pocoveries Written-Off of Year AlloweJ:e for Doulmful A m ts Year Endad Decutter 31, 1991
$4 506 $10 943 $2 042 S12 258 $5 233 Year Ended Drmber 31, 1990
$4 278 $ 8 823 $1 256 S 9 851 $4 506 Yosr Enckd Dece ber 31, 1989 S2 455 S 7 506 $1753 $ 7 436 $4 278
. - - . ~ . . ~.- -,- . . . - - - . - . . . - . . _ . - - . - - . _ . - - -
r
- SCHEIU Z IX CD9CNNEAIHH ENERIY SYSTEM NO SUBSIDIARY CIMPANIES SKRT-TERM BCEIOQGS(A)
FCR 'DE YEARS Dan Mtw 31, 1991, 1990 and 1989 (Dollars in ' thousands) i Weighted Average Navf=n Average Weighted Catepry of Interest Ancunt Amount Average Aggregate Rate Outstanding Outstanding Interest Short-Tam Balance at at End- During During the Rate During Ibrrowinos End of Period of Period the Period Period (B) the Period (C) Notes Payable to Banks Year Ended De:mber 31, ?"41_,
$145 800 5.5% S150 875 S120 567 6.3%
Year Ended ti l a- 31, 1990
$118 425 8.9% S194 650 $162 563 8.5%
Year Ended December 31, 1989
$153 275 9.3% S213 275 $186 360 9.6%
.(A) Refer to Note 5 of Natas to Financial Statements filed under Itau 8 of this report for the general tems of ~rctas payable to banks.
(B). 'the average micunt outstanding during the period is detemined by averaging the level of nonth-end principal balances outstanding using a rolling thirteen-month
. period through Decetter 31.
(C) 'Jhe weighted average interest rate during the period is detamined by averaging the interest rates in effect on all loans transacted for the twelve-nonth period ended h ':+r 31. s COMMONWEALTH ENERGY SYSTEM 1 FORM 10-K DECEMBER 31_, 1991 51.qNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COMMONWEALTH ENERGY SYSTEM (Registrant) By: WILLIAM G. POIST William G. Poist, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Principal Executive Officer: WILLIAM G. POIST March 26, 1992 William G. Poist, President and Chief Executive Officer Principal Financial Officer R. D. WRIGHT March 26, 1992 Russell D. Wright, Financial Vice President and Treasurer l Principal Accounting Officer: l JOHN A. WHALEN March 26, 1992 John A. Whalen, Comptroller A majority of the Board of Trustoes: R. E. SIEGFRIED March 26, 1992 Robert E. Siegfried, Chairman of the Board WILLIAM G. POIST March 26, 1992 William G. Poist, Trustee l B. L. FRANCIS March 26, 1992 Betty L. Francis, Trustee
~ ._. . - - . .
COMMONWEALTH ENERGY SYSTEM FORM 10-K DECEMBER 31, 1991 SIGNATURES g (Continued) HENRY DORMITZER March 26, 1992 Henry Dormitzer, Trustee SHELDON A. BUCKLER March 26, 1992 Sheldon A. Buckler, Trustee FRANKLIN M. HUNDLEY March 26, 1992 Franklin M. Hundley, Trustee CALVIN SIEGAL March 26, 1992 Calvin Siegal, Trustee SINCLAIR WEEKS, JR. March 26, 1992 Sinclair Weeks, Jr., Trustee G. L. WILSON March 26, 1992 Gerald L. Wilson, Trustee
s e7 4 g I CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the
- incorporation by reference'in this Form 10-K of our report dated February 26, 1992 appearing in Exhibit A to the proxy statement for ~
the 1992 annual meeting of shareholders and the incorporation of our reports included and incorporated by reference in this Form 10-K into the System's previously filed Registration Statements on Form S-8 File No. 33-28435 and on Form S-3 File No. 33-44161. ARTHUR ANDERSEN & CO. Boston, Massachusetts, March 27, 1992. _ _ _ _ - _ _ ___ _ _ _ _ _ _ _ _ _ _ _ - _ __ _ _ _ -}}