ML20136B718
| ML20136B718 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 09/06/1979 |
| From: | Ritsher J PUBLIC SERVICE CO. OF NEW HAMPSHIRE, ROPES & GRAY |
| To: | Rubenstein L Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 7909110426 | |
| Download: ML20136B718 (59) | |
Text
, .
ropes & GRAY '
225 FRANKLIN STREET BOSTON 02110 cag.t aconess'h0PGRALO4 . anta coot 6t? 423 esco it 6t a Oswese t a 940589 September 6, 1979 L. S. Rubenstein, Branch Chief Light Water Reactors, Branch #4 Division of Project Management United States Nuclear Regulatory Commission Washington, D. C. 20555
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Re: Public Service Company of New Hampshire, Docket Nos. 50-443 and 50 444; Staff Request for Additional Financial Informa-tion dated July 17, 1979
Dear Mr. Rubenstein:
On behalf of the Applicants in the above dockets I am forwarding herewith twenty-five copies of the remaining responses to the above request by Montaup Electric Company.
Very truly yours,
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Jo 1 A. Ritsher JAR:vm1 Enclosures cc: Attached List 7 900110 K$r e
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Copies to:
Alan S. Rosenthal, Chairman ~E. Tupper Kinder, Esquire ..
Atomic. Safety and Licensing As'sistant Attorney General Appeal Board -
Environmental Protection Division U.S. Nuclear Regulatory Commission Office of the Attorney General Washington, D.C. 20555 208 State House Annex
- Concord, New Hampshire 0330i Dr. John H. Buck Karin P. Sheldon, Esquire Atomic Safety and Licensing Sheldon Harmon, Roisman & Weiss Appeal Board U.S. Nuclear Regulatory Commission Suite 506 ,
'. 1725 I Street, N.W.
Washington, D.C. 20555 Washington, D.C. 20006 Michael C. Farrar, Esqul.re Atomic Safety and Licensing Dr. Ernest O. Salo Appeal Board Professor of Fisheries Research Institute U.S. Nuclear Regulatory Commission College of Fisheries Washington, D.C. 20555 '
University of Washington Ivan W. Smith, Esquire Seattle, Washington 98195 j
j Atomic Safety and Licensing' Board Panel Dr. Kenneth A. McCollum U.S. Nuclear Regulatory Commission 1107 West Knapp Street i-Stillwater, Oklahoma 74071 l- Washington, D.C. 20555 Joseph F. Tubridy, Esquire Robert A. Backus, Esquire j
N.W. O'Neill Backus Spielman 410.0 Cathedral Washington, Avenue,6 D.C. 2001 116 Lowell Street l '
Manchester, New Hampshire 0310$
. Dr. Marvin M. Mann Laurie Burt, Esquire Atomic Safety and Licensing -
Assistz.at Attorney General
' Board Panel U.S. Nuclear Regulatory Commission one Ashburton Place Boston, Massachusetts 02108 1
! Washington, D.C. 20555 l
Lawrence Brenner, Esquire Office of the Executive Legal '
i ,. ' Director
! U.S. Nuclear Regulatory Commission Washington, D.C. 20555 l .
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, DOCKET NOS. 50-443 & 58-444 SEABROOK STATION, UNITS 1 AND 2 NRC REQUEST FOR i +
ADDITIONAL FINANCIAL INFOPMILTION e
. \,,, RESPONSE OF HONTAUP ELECTRIC COMPANY
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AUGUST 1979 ,
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(MONTAUPELECIRICCC"FANY t
Item 2. (4a.)(A) - STATEMENT OF SOURCES OF FUNDS FOR CONSTRUCTION EXPENDITURES fi , BROCKTON EDISON COMPANY ("EROCKTON")
Assumptions Regarding Sources of Funds Schedule:
(a) Rate of return on average common stock equity: 12.5% which was the most recently allowed rate of return on common equity.
, Company. assumes that this return will be achieved during fore-cast period by means of rate relief.
(b) Preferred stock dividend rate: The dividend rate on preferred stock issues during the forecast period is estimated at 10%.
(c) Long-term and short-term debt interest rates: Interest rates on long-term debt issue's are projected to range from 9% - 10%
during the forecast period.
Interest rates on short-term debt were computed on the basis of an effective interest rate equivalent to prime X125%. The assumed prime rates used were:
1979 - 11.75%
1980 - 11.00%
1981 - 10.50%
1982 - 1985 - 10.00%
(d) Market / Book ratio with respect to projected common stock offerings: all of Brockton's future common stock issues will be sold to its owner company, Eastern Utilities Associates,
'at their par value of $25 per share.
. (e) Target Capital Structure: See' attachment to statement of sources of funds.
(f) Resultant SEC and indenture interest coverages over the period of construction: See attachment to Eastern Utilities Associates.
item (f).
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.' Srurc^n cf Fund 7 f'r ConntC' ion Expcnditurm During Pariod '
- ef Con";truction cf ret Nuclacr Power Plcnt '
(millitna cf d311cra) .
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Construction Years of Subject Nuclear Power Plant
- Security issues and oth r funds Actual Estimated 1977 1978 -
1979 1980 Common stock 1981 1982 Praferred stock 10.3 9.3 8.9 9.4 10.8 -
Long-term debt 20.0 - --
Notes payable 20.0 40.0 30.0 24.5 Oth2r funds 1.5 2.6 (1.7) (6.4)
Total 10.3 9.3 30.4_ 72.0 39.1 18.1 Internal Funds Nic Income 8.2 Leso: pre-ferred dividends 9.7 10.6 11.7 15.6 17.9 1.3 1.3 1.3 1.3 2.5 common dividends 6.2 2.5 6.8 8.5 8.7 8.2 9.4 Retained earnings .7 1.6 D2ferred taxes .8 1.7 4.9 6.0
.4 .2 .1 .1 .1 Investment ~ tax credit .1 .1 Depreciation and amort.-
.3 ( .1) .1 -
2.0 2.'l 2.3 2.5 2.8 2.9 other
(.4)
.1 (3.5) ( .8) (1.0) (2.4) .
AFDC (
Total
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( .2 ) ( .1 ) ( .1 ) y 3.2_ 3.5 ( .2 ) 3.3 b.s o.o -
TOTAL FUNDS
_13 1 g R M 45.9 24.7 Construction Expenditures
- Nuclear power plants - - -
Othar 3.2 3 6.3 5.9 5.1 4.7 Toeal -
3.2 N.5 '~ 6.3 ' Y
- 3. J. 4.I Othcr Capital Requirenents Redagtion of Bonds - -
.15.0 40.0 - -
Redagtion of Preferred Stock -
6.0 - -
Purchase of &ntaup Securities 10.3 9.3 8.9 23.4 40.8 20.0 Total Capital Requirements 13 T R 3D T F 45.9 24 7 frer.shracuxLorsra_ _
f, , Sourena cf Fund 7 f=r Constrr**1on Expendit'r'1 Duri":g P~riod ,-N ,
cf Conntruction cf f et Nucl'~~r Power Plant *
. (milli'A of d211cra)
Construction Years of Subject Nuclear Power Plant S:curity issues and Estimated ' '
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cth:r funds 1983 1984- 1985 Comon stock 11.5 12.4 -
Proferred stock - -
Long-term debt 8.0 14.0 -
N:tes payable - -
6.0 Other funds - - -
Total 14 9 76 4 :' '
6.0 *
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i3 Internal Funda ,' ) '. - '" '
20.7Q.':
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Lacs: preferred dividends 2.5 2.5 S.5 -
comon af vidends 10.7 11.0 l' 0 '
Retainea earnings 7.0 7.2 T;.? 7.5 Deferred taxes - - ' ;- '
Investment tax credit - - '. -
Depreciation and amort. 3.0 3.1' J 3.5 Other (5.4) . (4.8): (I 7) -
AFDC ( -) (
Total 4.6 5.5 ) (T/
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TOTAL FUNDS 24.1 31.9 13.3
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Construction Expenditures
- Nuclear power plants - - -
other 5.6 5.5 7.3 Total M .
99
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Other Capital Requirenents Redspticn of Bonds 2.0 -
6.0 Redsptirn of Preferred - -
Stock -
Purchase of Mmtaup s s Securities 16.5 26.'4. .' . ,
Total Capital Requirenents 74 I - _
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SCHEDULE A Actual Estimated 1977 1978 1979 1980 1981
$ E ' $ E A E $ % 0 1 Capital Structure Long-term debt 85,076 51.1 81,196 46.8 : 86,196 45.8 86,196 40.4 161,196 44.1 Prefstred stock 14,870 8.9 14,870 -
8.6 14,870 7.9 28,870 13.5 28,870 11.1 Common equity 66.528 40.0 77.404 44.6 87.104 46.3 98,204 46.1. 113,904 44.(
166.474 100.0 173.470 100.0 188.170 100.0 213.270 100.0 258,970 100.(
3 Estimated 1982 1983 1984 1985 1 1 1 -
.1 A A A E Long-term debt 140,696 48.6 146,696 46.7 160,696 46.2 154,696 44.3 Preistred stock 28,870 10.0 28,870 9.2 28,870 8.3 28,870 8.3 Common equity J19.904 41.4 138.404 44.1 158.004 45.5 165.504 47.4 ,
189,470 100.0 313,970 100.0 347,750 100.0 349,070 100.0 O
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,. MONTAUP ELECTRIC COMFANY Item 2.(4a.)(A) - STATEMENT OF SOURCES OF FUNDS FOR COMSTRUCTION ETPENDITURES EASTERN' UTILITIES ASSOCIATES ("EUA")
Assumptions Regar' ding Sources of Funds Schedule:
(a) ' Rate of return on average common stock equity: Based on the most recent rate of return on common equity allowed EUA's
. subsidiary conpanies. Such rates range from 11% to 13.5%.
Company assumes that these returns will be achieved during forecast period by means of rata relief.
(b) Preferred stock dividend rate: The dividend rate on Preferred Stock to be issued by EUA's subsidiaries during the forecast period is estimated at 10%.
(c) Long-term and short-term debt interest rates: Interest rates on long-term debt issues are projected to range from 9% - 10k%
during the forecast period.
Interest rates on short-term debt were computed on the basis of an effective interest rate equivalent to prime X125%. The annual prime rates used were:
1979 - 11.75%
1980 - 11.00%
1981 - 10.50%
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1982 - 1985 - 10.00%
(d) Market / Book ratio with respect to projected common stock offerings: It is projected that the Market / Book ratio will range from 88% to 95% during the forecast period.
(e) Target Capital Structures: See attachment to statement of
. sources of funds.
(f) Resultant SEC and indenture interest coverages over the period ,
of construction: See attached.
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. ,, Item 2. (4a.)(f) - SEC AND INDENTURE COVERAGES OVER PERIOD OF
.[; CONSTRUCTION - EASTERN UTILITIES ASSOCIATES A.c
_BLACKSTONE BROCKTON FALL RIVER 1979 -
2.55 3.86 1980 -
3.00 3.96 1981 2.60 3.46 2.23 1982 2.42 3.54 2.00 1983 2.28 3.78 1.86 1984 2.45 3.52 1.70 1985 2.37 3.45 1.59 O
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- c true:1 ieere er sas.ee menar p r riut s.c.etty toe-os and ace ==t tats ted wher h=de ifR 12 3 1 22.1 1!!! Ift1 c - .m es.ca lo.9 9.o 9.0 ' 9.6 1.1 pier.rved et a . . - 20.0 .
Lams. term este . . 42.5 '40.0 70.0 meses payeble 8.4 (1.4) Is.6 28.2 Os.4) other tende J J - - -
8 1**e1 17 4 !J 22d 22d iLI premet hade met Raceme 7.5 10.3 10.2 14.2 19.1 leses preferred dividende 1.6 1.6 1.6 1.6 2.8 se m dividende _tal .,6 8 _ZJ 8J f.J amtetoed eerstege (.2) 1.9 .9 3.9 6.6 -n Beferred tease 2.9 1.4 .9 1.2 1.0 Investmoet tem eredit (.1) 2.0 .6 (.2) 4 3rpreciatten and ammet. 9.3 9.0 10.0 10.5 11.0 enhet (6.3) ,
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- *1 Suh*ect musteet yleet M M 21d 22d ggg M ,,jd M 3{,d g Other Casttal anestruegggg ass umpties of naturtag amede - 3.9 37.4
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a % tten et Preferred Stock = . . 6.0 .
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- tactuelve of A8BC (A11eunese for hade need hseing cometsmetten).
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l- MONTAUP ELECTRIC COMPANY RESPONSE TO ITEM 5. (4c)
Attachment 1. Eastern Edison Company (formally Brockton Edison Company) - appropriate portions of Indenture relating to interest coverage and bondable property additions.
Attachment 2. Eastern Edison Company (formally Brockton Edison Company) -
calculations of net earnings and interest coverage for twelve months ended June 30, 1979 includ-ing principal amount of bonds which could be issued under various assumed interest rates.
There is no Officer's Certificate provided for Eastern Edison Company (formally Brockton Edison Company) since their las t bond issue was in October, 1975 and was therefor not current.
Eastern Utilities Associatis has $2,437,000 principal amount of
- k. . 3-3/8% Collateral Trust Bonds outstanding which mature on December 1,
-1979. As of that date the Indenture and Deed of Trust dated as of October 1, 1953 will no longer be applicable. For this reason there is no Eastern Utilities Associates information provided.
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( . ('t r* . I 4 1 14 Stcuox 1.27. The term " bondable property" shall mean and comprise property now owned or hereafter acouired by the Company, located in the Commonwealth of Massaebusetts which (except as pro-vided below) is used by or useful to the Company in the business of generating, producing, transmitting, distributing, utilizing or pur-chasing e,lectricity for heat, light, power or other uses, or in any business which is incidental thereto, including, .without limiting the generality of the foregoing, all properties necessary or appropriate for generating, producing, transmitting, distributing, utilizing or pur-chasing electricity, together with betterments, improvements, addi-tions, replacements, or alf erations of, upon and to such property of the Company and equipment and appliances installed as a part of the operating property of the Company; provided that the Com-
" pany under its charter and all alplicable i laws shall be lawfully authorized to own and use such property in the business in connection with wldch the same is used or to be used by it.
Bondable property shall not be deemed to include any property excepted from the lien hereof by paragraphs A to F of Clause VII of the Granting Clauses hereof. y Stenox 1.28. 'The term hpgfygMih" shall mean and comprise ga]y bandaMe_propertv which shall have been constructed % or otherwise acquired (including acquisition by marger or consoli-M ' dation) by the Company subsequent to August 31,1948, the cost of ,7 which is under sound accounting practice properly chargeable to plant V accounts, and shall include property in the process of construction on ij said date in so far as the same is actually constructed subsequent to such date. All property of the character herein described as property
~j additions owned by any successor corporation iramediately prior to the 8
time it shall become such successor corporation as provided in Article. Fourteen which shall have been subjected to the lien of this Indenture as provided in Section 14.04 shall be deemed to be property additions acquired by such successor corporation at the date upon which it became such and for the purposes of Section 1.44 and of Section 2.01 shall be y treated as property used or operated by others in a business similar to "Q that in which it is used or operated by the Company.
- 6. 1 Property additions need not consist of a specific or complete accession, addition or improvement or complete new property but may g._ in,clude construction work in progress if carried in plant accounts in
'9
, .y accordance with sound accounting practice, whether capable of com-
} plcte description and identification or not.
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, Property ' additions may include:
(1) the interest of the Company in wires, poles, towers, cross-
.g arms, conduits, substations and property of a similar character
-i ,
used by or useful to the Company in the transmission and distribu-
,h .
tion of electricity owned jointly with other parties (and the Com-
.[ '
pany's undivided interest in the title thereto shall be deemed title for the purposes ^of this Indenture); and - j (2) paring, grading and other improvements to public high-
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ways, streets and alleys and other public lands required for or in connection with the installation or replacement of overhead, sur-face or underground facilities of the Company and paid for by the Company (notwithstanding the fact that title to such paving, grading and other improvements may not be in the Company).- i Property additions shall not be deemed to include (a) any' plant, fj system or other property in which the Company shall acquire only a
- 6 leasehold interest or, unless the same shall be movable physical prop-
,/
erty and shall constitute personal property, any betterments, exten-
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y sions, improvements or additions used by or useful10 the Company in
, connection with any plant, system or property in which the Company.
Gs shall hold only a leasehold interest; (b) any going concern vaine or T, - good will, or governmental or municipal franchises, permits or similar - 1 rights, as such, separate and distinct from the property operated there. 3.' under, but there shall not be excluded from property additions any equipment or other property of the Company by reason of the fact that it may be located in, upon or under any public highway or custo-mer's premises or other places not owned by the Company; (c) any
' property subject to a lien or encumbrance other than permitted encum-brances; (d) any pioperty to which the Company shall not have title -
except as provided in Subparagraphs (1) and (2) above; or (e) any property acquired to replace similar property the retirement of which - has not been credi$ to plant account or any property the cost of which has been charged th is properly chargeable to repairs, maintenan'ce or other operating expense accounts. Any property additions to be acquired or becoming such concur-rently with the granting of any application may, at the Company's
' option, be treated hereunder as already acquired for the purpose of ,
computing property additions, and available net additions hereunder.
< Bondable property constructed or acquired by the Company after August 31, 1948, subject to any prior lien shall not be deemed to be
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.1 IS property additions unless and until .such prior lien is paid, satisfied or otherwise dischstged or all prior lien debt secured thereby has
' censed to be outstanding as deSned in Section 1.41 and no prior lien debt may then or thereafier be created, nuthenticated, or issued un-der such prior lien.
Wrenos 1.29. The term "Montaup Securitics" shall mean bonds, notes or other evidences of indebtedness, whether secured or unsecure and preferred, con 2 mon or capital stock or other certifi-cates of in est of Montcup Electric Cotepany (a Massac!msetts cor-poration herer sometimes called the "Montaup Company"). Stenox 1.30. I The term "Montaup Contraet" shall mean the agreement, dated Se tember 11,1923, between the 3fontaup Company,
, Fall River Electric Li ht Company, Blackstone Valley Gas and Elec-J tric Company and the ompany as amended and' supplemented by j agreements between the s ne parties dated February 1,1924, Decem-ber 1,1930 (relative to the wthorization of the pledge of Montaup L }a Securities and other matters), May 27,1935 and June 19,1945 and sup-
- k. plemental letters ' dated Novem er 7,1939, August 22, 1941, August 26,1942, and April 1,1948, and a the same may be further changed, 7-x
~ amended or modified from. time to t.q>e, and any agreement substituted therefor, as provided in Section 9.1 of this Indeuture. Said Fall W ' River Electric Light Company and Bla tstone Valley Gas and Electrie j , Company are herein sometimes called the other shareholders com-jl panies". - a 1 - f]y Szenox 1.31. (a) The term " cost" as pplied to property con-structed or acquired by the Company after ugust 31,1948, shall, subject to the specific provisions hereinafter in is Section set forth, , mean the sum of (1) the amount of cash expendit res made or agreed to be made by the Company therefor, (2) the a gregate principal amount of any debt issued or assumed by the Comp. y in respect of the acquisition thereof or subject to which the same h acquired, (3) . the fair value (as of the date of delivery) of any securitlps, other than debt securities of the Company, delivered by the Conr ny as con-4 sideration therefor, (4) the fair value (as of the date of t ansfer) of any property or such part thereof as may be transferr by the Company in payment therefor, (5) with respect to prope ty cont y structed by or for the Company, such allowances or char 3.s for v interest during construction, taxes, engineering, legal expenses, . per-intendence, insurance, casualties and other items during construc (on f 2
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, to the 'esuance by the Company of the Bonds then applied i for, by a.. governmental regulatory Lady or commission at
. the time havl. jurisdiction in the premises, or state that no {.
3 such authorizatio. approval or consent is required; and . g (4) state that th :ssuance of the Bonds, the authentica-tion and delivery of whic' is then applied for, will not cause -
]y the then limit of indebtednu. if any, of the Company per- !
mitted by law, to be exceeded a. 2d the execution, authentica- l tion and delivery of the Bonds ap lied for have been suffi- ! ciently and duly authorized by all necesary corporate action f
' on the part 6f the Company and that sa' Bonds, when ex. g ecuted by the Cornpany and authenticated an i elivered by the 1 Trustee and when issued by the Company, wil e valid and g binding obligations of the Company, entitled to the s 'curity of p this Indenture to the same extent as and on a pa' r ity, as . all of r; the trust estate, with all Bonds theretofore issued and hen outstanding hereunder. }g A
w F. The certificates and other evidence, if any, specified in the 11 opinion of counsel required by the foregoing Subsection E. d A Stenos 5.03. Authentication and Delivery of Bonds on the Basis k of 2vailable Net Adifetions. Upon compliance with the provisions of h Section 5.w, auditional Bonds may from time to time be executed by
. the Company and delivered to the Trustee and shall be authenticated f
C and delivered by the Trustee upon the written order of the Company, Ir i in an aggregate principal amount not exceeding 60% of the amount j of available net additions shown in the certificate of avaihible net addi-
, tions provided for in Subsection A of this Section upon receipt by the l.
4 Trustee of the following:
.f A. A certificate of available net additions. ~
i i o B. An earnings certificate. { ccnos 5.04. Authentication and Delivery of Bdnds on the Basis of seiLaffash. Upon compliance with the provisions of Sec- ! tion 5.02, additional B'oirl : v from time to time be executed by the g Company and delivered to the Trustee m. shall be authenticated and V. delivered by the Trustee upon the written on e of e Company, in I an aggregate principal amount not exceeding the amoun ash l k . e
r (4 tw STF -( .. Al t* S3 i
, to tiMesuance by the Company of the Bonds then applied f h overnmental regulatory body or commission at for, by an, b
. the time havi jurisdiction in the premises, or state that no 9 such authorizat approval or consent is required; and j (4) state that the i ssuance of tlle Bonds, the authentica- ,fi
]
tion and delivery of whic'_ is then applied for, will not cause the then limit of indebtednu, if any, of the Company per- j mitted by law, to be exceeded 4. d the execution, authentica- t tion and delivery of the ~ Bonds al lied for have been suffi- ! ciently and duly authorized by all neccsary corporate action [
' on the part of the Company and that sa' Bonds, when ex- 1 ecuted by the Company and authenticated an( i elivered by the l Trustee and when issued by the Company, wil e valid and binding obligations of the Company, entitled to.the = scurity of [
p this Indenture to the same extent as and on a parity, as . all of i the trust estate, with all Bonds theretofore issued and hen outstanding hereunder. j. F. The certificates and other evidence, if any, specified in the it it opinion of counsel required by the foregoing Subsection E. d 1 Szcnos 5.03. Authentication and Delivery of Bonds on the Basis
~
b of Available Net Additions. Upon compliance with the provisions of h. Section a.02, auditional Bonds may from time to time be executed by the Company and delivered to the Trustee and shall be authenticated p% and delivered by the Trustee upon the written order of the Company, h in an aggregate principal amount not exceeding 60% of the amount of available net additions shown in the certificate of availaole net addi-j.
, tions provided for in Subsectio'n A of this Section upon receipt by the Trustee of the following:
l) A. A certificate of available net additions. , Li o B. An earnings certificate. [ cnos 5.04. Authentication and Delivery of B6nds on the Basis of ? Cash. Upon compliance with the provisions of Sec- 1 tion 5.02, additional oi u from time to time be executed by the j Company and delivered to the Trustee . shall be authenticated and 4' delivered by the Trustee upon the written ort e o e Company, in P an aggregate principal amount not exceeding the amoun cash d 3 4
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. 26
.mpany may hereafter acquire, any terms, conditions, agree-
;: men 4s, covenants, exceptions :nd reservations expressed or pro-videc ' the deeds or other instruments, respectively, under and by virtue c which the Company shall bereafter acquire the same, none of ch, in the opinion of counsel, will materially adversely affect the tr t estate or the operation thereof by the Company; and (9) The libn of this Indenture. ,
f Stenos 1.43. The erm " title", for the purpose of any provision bereof requiring an opin\'io of counsel that the Companyhas title to any
- k. property, shall mcan goo and marketable title and, in respect to JTM <
real estate, in fee simple, su j t to permitted encumbrances, except 2 '
~
as to transmission line propert d distribution line property, prop-gi erty held under lease, rights of way sements, riparian rights, flowage 91 rights and property of a similar ch eter, in which event the term
" title" shall be deemed to mean such ti , whether fairly deducible of
. I record or based on prescriptive right, as, i the opinion of counsel, is y satisfactory and is sufficient for the needs an operations of the Com-pany in its business, and counsel in giving such 4 ) inion may disregard d... , irregularities or deficiencies in the record eviden . of title which, in u1 tbc opinion of such co'unsel, can be cured by prece ;ngs within the power of the Company or which,in the opinion of coun. are not of a
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- serious nature under the facts and circumstances of the co e, and may E,gj base such opinion on his own investigation and/or upon davits, ;p. f certificates, statements atid/or investigations made by persons i whom .Sf [ he has confidence and/or upon examination of a certificate or guara tee FM of title or a p'olicy of title insurance in which he has confidence. . M. n.,? --
Qig Srcnox 3.44. The term .'ign;aLngs.miificate" shall mean an - 77;f officers' certificate (which, unless one of the ofIicers signing tbc same is
/~ an accountant, and shall so state, shall also be signed by an accountant),
/ ;j dated subsequent to the last previous date upon which any Bonds have j.1,] been authenticated and delivered hereunder (other than in connection GJ.H. with any transfer, exchange or substitution of outstanding Bonds),
Of ' containing the statements required by Section 2.0S and setting forth C in reasonable detail: Ky 3.t. y . (1)_ The net earnings of the Company available for interest,
~
' 70 computed as b~ereinafter provided, for a peabod of 12 consecutive calendar months within the 15 calendar months immediately pre-Li .
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ceding the calendar month in which the application for authentica-tion and deliverv of Bonds is made; (2) The " annual interest ebarges on bonded indebtedness", which term shall mean the aggregate annualinterest cl.arges on - r (a) all Bonds outstantling hereunder at the date of said
] certiSeate; --
(b) all Bonds whose autbentication and delivery are ap, plied for in such application or in any other pending applica-
- tion; and 4
(c) all prior lien indebtedness outstanding at the date of said certiScate;
, excluding, however, from such computation the annual interest charges on any Bond or p.rior lien indebtedness which is to be ,
x_ paid, redeemed or otherwise retired or provision for the retire-
- ment of which is to be made, so that the same vill cease to be out-
. ;- standing as herein defined, prior to 'or concurrently with the . .g authentication and delivery of the Bonds applied for; 4
(3) That such net earnings available for interest are at least [A f..: g.; }j twice the aggregate of such annual interest charge, on bonded. indebtedness; and EI (4) That such net earnings available for interest have been O[ computed as provided in this'Section. , If the aggregate principal amount of Bonds b' eing applied for plus g the aggregate principal amount of Bonds authenticated and delivered since the commencement of the then current calendar year (other than - Bonds with respect to which an earnings certiScate is not required or with respect to which an earnings certificate signed by an independent public accountant has been previously furnished) is 10% or more of the aggregate principal amount of the Bonds at the time outstanding - hereunder, and if the 12 months' period in respect of which the net earnings are being calculated is a period with respect to which an an-
. , nual report is required to be filed by the Company pursuant to Section ,
_. 11.03, then such earnings certificate shall be signed by an independent public accountant, in addition to being signed as hereinabove required.
;. Net earnings available for interest shall be computed in accord-ance with sound accounting practice (a) by deducting, from the total
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( ( s 2S operating revenues of the Company for the period in question derived from ibe trust estate, (includi.ng income from 3fontaup Securities), an tc.nount equal to the total operating expenses applic::ble to the trust estnie for :-ueh period, including (i) all inxes other than incon:e, excess prc!!ts and o'her taxes imposed on or mensured by income or undistrib-i uf ed earnings or income; (ii) rentals, insurance, current repairs sud n niatenance; and (iii) appropriation for depreciation and retire-fi ments (which shall not be less than the minimum provision for deprecia-i tion as defir.ed in Section 1.35), but excluding any charges on account j of intcrest on indebtedness, on account of sinking or rep!acement or ! analogous funds established hereby or pursuant hereto, on account of smortization of plant accounts or amounts transferred therefrom, or on account of debt discount and expense; and (b) by adding or deduct-ing (if there is a loss) net income or loss from the operation of property not included in the trust estate and any other income received by the Company, provided that the amount to be added shall in no event exceed 10% of the total of net earnings available for interest, including such income so added. Profits or losses from the sale, aban-donment, amortization, retirement or other disposition of capital cesets or from the reacquisition of any securities of the Company or ( taxes in respect of any such profits or any amortization or elimina-x tion of intangibles or adjustment accounts shall not be taken into ac-count in determining net earnings available for interest. In case any item of income or. expense is not segregated on the books of the Company as between the operation of property which is and property which is not a part of the trust estate, the Company may allocate such expense or income in any reasonable manner. If the Company shall have acquired, within or after the period for which net earnings available for interest is being determined, or will acquire in coms stion with the issuance of the Bonds being applied for, properties which within six months prior to such acquisi-tion were used or operated in a business similar to that in which they are or are to be used or operated by the Company, and if, the earnings of such properties can be separately determined in accordance with sound accounting practice, then, in computing net earnings available for interest, the net earnings of such properties for the whole of such period shall be included as if such properties had been owned by the Company during the whole of such period; and if, within or after said period, any substantial portion of the properties of tbc Company shall have been disposed of by the Company, or will be disposed of in con-a = 9 e===e. on .
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nection cith the iesuance of the hds being appliod for, and if the entnings of r:ch propertiu can be sep::::e?y determined in cceordnce with sound accounting practice, then in computing not earnings avail-nbie for interest, the net earnings of such properties for the whola of
., such period shr.!1 he <aeluded.
} [
.A RTIC ;E TWO.
Car.ux Gzstr..u. Provmoss .ts to Acnox Uxrsu rnr IxurxTer.r.
' Srevox 2.01. -Vcthod of Evida;cing Acpisi!!cn of Property Jdditions. In order to evidence the acquisitian of property additions i, - ;. the Company may at any time or from time to time file with the
~ j, Trustee the follu cing instrun:ents, herein sometimes collectively re-ferred to as a " gross additions certiScate", namely, A. An oficers' certiSente .(which, unless one of the baicers
[ sigidng the same is an accountant and shall so state, shall, as to ibe statements required by clauses (1), (2), (3), (4) and (7) below, also be subscribed by an accoustant, and which as to the state-f- ments therein contained respecting'the fair value of the property
- l. " additions therein described shall also be subscribed by an engineer, containing the' statements r'equired by Sectio 9 2.0S and stating in substance: -
;, (1) That the Company has purebased, construcigd or otherwise acquired, or will acquire prio~r to or contempora-
'
- neously with the granting'of an application in connection with which such onicers' certificate is then being delivered to the Trustee, pror>erty additions, which shall be briefly described
-1 ; in the certificate or in an exhibit attached thereto; -
a (2) The latest date as of which any of such property additions has been or will be charged to the Company's plant [ accounts; "
. ,( ,
(3) That none of such property additions have been pre-t viously included in any gross additions certiScate or funded;
. (4) That all of such property additions constitute prop-erty additions as said term is defined in Section 1.28; (5) Whether any of the property additions described in
( said certificato consists of any property acquired or being l. acquired as an entirety which, within sir months prior to the j 4 N. .
-.. . ~....-.-....~...e.,.
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. EASTERN EDISON COMPANY CQ4PUTATION OF INDENTURE COVERAGE TEST 12 Months Ended June 30, 1979 i Net Earnings Available For Interest Operating Revenues $ 91,961,357 Dividends.from Montaup Securities 6,948,000 Interest from Montaup Securities 6,687,514 Total Income -
$105,596,871 Operating Expenses Operation $ 73,396,968 lbintenance 1,979,379
~
Depreciation 2,905,403 5,958,199 General Taxes (other than Income) Total Operating Expense 84,239,949 Income Available from Operations 21,356,922 1,241,257 Other Income - Net (max.1/9th of line 11) $ 22,598,179 Earnings Available for Coverage (as defined) ("' Annual Interest on Bonded Debt
$ 6,800,000 p.a. due 1983 @, 3-3/4% $ 255.000 5,000,000 p.a. due 1983 @ 7-3/8% 368,750 6,000,000 p.a. due 1985 @ 3-3/8% 202,500 19,800,000 p.a. due 1985 @ 12% 2,376,000 3,000,000 p.a. due 1987 @ 5/8% 138,750 3,000,000 p.a. due 1988 @ 4-3/8% 131,250 5,000,000 p.a. due 1993 @ 4-1/2% 225,000 5,000,000 p.a. due 1999 @ 8-3/8% 418,750 8,000,000 p.a. due 2002 @ 7-7/8% 630,000 10,000,000 p.a. due 2003 @ 8-3/8% 837,500 2,196,000 p.a. due 1983 @ 4-1/8% 90,585 7,000,000 p.a. due 1987 @ 6-1/2% 455,000 15,000,000 p.a. Notes Payable due 1985 1,880,250
$ 8,009,335 Total Annualized Interest TLmes Interest Earned 2.82 x Principal Amount of Additional Bonds Which Could be Issued at:
10 %' $32,800,000 10-1/4% 32,000,000 10-1/2% 31,300,000 10-3/4% 30,600,000 ,
,, 11 % 29,900,000 (I
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{ M0!;TAl'P ELECTRIC COMPA!N (,', Response to Item 6(4d.) ( Issuance of short-term debt by Eastern Utilities Associates, Fall River Electric Company and Brockton Edison Company is subject to approval by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 as well as availability of bank lines of credit. Short-term borrowings in excess of 5% of total capital by any company within the
' holding company system is subject to specific authorization. All borrowings made by the EUA system are on the basis of a prime rate with a 20% compen-sating balance or at an effective rate equivalent to prime plus a 20%
compensating balance. The amount of outstanding short-term bank loans and available lines of credit at July 31, 1979 are as follows: Bank Lines of Loans Credit Eastern Utilities $ $ Brockton Edison 2,200,000 4,000,000 Fall River Electric 5,450,000 6,500,000 4-j
\
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(.. (ll .' MONTAUP ELECTRIC COMPANY RESPONSE TO ITEM 7. (4e) Attachment 1. Eastern Edison Company (formally Brockton Edison Company) Articles of Organization regarding preferred stock coverage requirement. Attachment 2. Eastern Edison Company (formally Brockton Edison Company) Calcula tions o f preferred stock coverage for twelve months ended June 30, 1979 including additional amount of preferred stock ~which could be issued under various assumed dividend rates. No preferred stock information is included for Eastern Utilities Associates or Fall River. Electric Light . since neither company has any preferred stock outstanding. N: e e e 0 b e 4 (,'6 - i kw e S
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rea of.any such prior class of otock (except upon conversion
)
h . pursu t to (b) above) more than twelve rnonths af ter the Corpora-I, ,
~
tion was povered to create er authorize such atock; , (ii) Am d , chanSe, alter or repent any of ..he c.xpress rights, preferences or pcs rs of the Preferred Stock outsta'nding in;any rinner so as to affee adversely any such rights, preferences or povers of the holders the of, except th'a t , if'such amendment, f ects' adversely the rights, pre-q ' change, citeration or repeal ferences or powers of the holder of one or more, but not all. l..
- i the time outstand'ing only V the classes' of the Preferred Stock a ,
the consent ofthehold'ersoftwothirdsi,nvotibgpowerofthe eted shall be re-7 -- total number of shares of all classes so af J( 9 Y quired; pro'vided , however, that on amendment to *ncrease or de-crease the authorized but unissued cmount of Prefer ed Stock, , Stock as or of any. class of stock ranking equal to the Proferre g- s. to dividend's or asseto, shall not be deemed to affect adve oly
~
f the rights, preferences or powers of the holders of any class V Preferred Stock, or . J Issue shoren of Preferred Stock in nddition,to the 30',000
~
, (iii)
- s.
ohnres authorized in Section 2.01, or any shares of any other class of ,,
~ stock ranking equal to the Preferred Stock as to dividends or assets, for any purposes other than to refinance an equel par amount or 4 r .
~
stated valpe of Preferred S,tock or stock ranking' prior to or equal - the time out-
'~
to the Preferred Stock as to dividendo or assots' at
'I .
stonding, or reinouc any reocquired shares of'Pr'eferred Stock or.
\-
~ ~ - '
O of any class of stock ranking equal to the Prefa.rred Stock.as afore-S i said, unicas - l -
. ; 'T . ..
- 13
(- (a) . the " Gross Incorne avai al ble for payrnent of interest ' charges on the Corporatton's indebtedness" for any period 'of tuelve (12) consecutive calendar months with-fif teen (15) calendar months in: mediately preceding ,
- in the the month within which such additional shares are to.be .
d one-half (1-1/2)
. issued, shall have been at least one an . .
times the aggregate annual intere.ts charges on indebtedness
~
of'the Corporation and the annual dividend requirements - m -
- upon all shares of Preferred Stock and :.
on all shares of *
~
~
any other c1' ass of stock ranking as to dividends or assets . . m . equal t'o or prior to the Preferred Stock to be outstanding ' . . V ! immediately af ter the issue of any such * - additional shares, and . t the Junior Stock Equity shall be not lesa then the sum of (b (
..the ggregate amounts payable upon involuntary liquidation, a
or' winding up of the Cc.4poration to the holders m* dissolut
',- j.
i ock and to the holders r*f any other class
~
of Preferred -
*i. .
... . . *3 . .
of stock, if any, nking as to div'idends or assets equal V...'.y - red Stock-of the Corporation, to to or prior to the Pre be out' standing after giving f fect to such issue, excluding in connection with such all shares thereof to be re' tire . propor.ed issue; ,
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. f tsailit.: s tio:. sr.y e :nei sur-lu el the k rpere tion in such cu .ve.t tts y
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( . (. AP.TICLE h* STOCK PROVISIONS 2
- w. , Section 1
< . l s Definitions on 1.01. The term " Preferred Stock" when referred to c ollectively sh 1 mean the classes of Preferred Stock now or hereafte
-described in Section and additional classes of stock created or per-mitted by Section 3 vith espect to which all dividends and amounts pa q
able upon any liquidation, di. olution or vinding up of the Corp or atiot shall'be pay able on a parity with nd in proportion to the amounts pay ( j on outstanding classes of. Preferred S ek , notwithstanding that such additional classes, of Preferred Stock may ave par value's, dividend rates, redemption pri ces , amounts payable the con upon liquidation, (' - .
. dissolution or vinding up , sinking or purchase fu as , voting rights and other terms and provisions varying from thos e of he outstanding Preferred Stock , and each class of Preferred Stock when ferred to p
s eparately shall be designated by including in its title the annual dividend rate or such other dis tinguishing term as may be adopt a at j , the time of original authorization of such class. , Section 1.02. The term " Gross Income available for payment of interest charces on the Corporation's indebtedness" shall mean the
- The provisions inserted in the Artic1'es of Organization as Article k are identical with the provisions contained in Article XX of the p
By-lavs of the , Corporation except as follows: (a) Sections 2.01, 2.02 and 2.03 of Article XX of the By-lavs,
./ . which relate to three clas s es of Prefe'rred Stock called for redemp-tion and redeemed on or before November 6, i963 and no longer out-l fe' standing, have been omitted from s aid Article h as no longer releva (b) Section 2.0h of Article XX of the By-lavs has been renus-bered as Section 2.01 of Article h.
l t' (c) Sec' tion 2.02 of s aid Article L is new. (d) Section 5 01 of Article XX o'r the 3y-laws r e f ers i n two places to the "A5reement of Association"; Section 5 01,of Article b changes " A c t,e e m e n t of' Association" to "Ar ti cl es of Organization."
. n
( _ a_ C , g cross revenues o f 9.h e Corporation and other revenue (including interes and dividends received from Montaup E1cetric Company) from all sources 3 less all proper deductions for operating expens es , taxes (including U income, excess proi'i ts , and other taxes bas ed on or measured by income or undistributed earnings or income) and other appropriate items, ine] ing provisions for maintenance, retirements, depreciation and obsolesc
.(but ' in respect of retirements, depreciation and obs olesc enc e th e amour thereof shall not be less than the minimum provision therefor required C' by the terms of any indenture or agreement securing any outstanding
, j indebtedness of the Corporation), determined in accordance with such V syst.em of accounting as may at the time be prescribed by governmental authorities having jurisdiction in th e premises or in the absence theal in accordance with sound accounting practice; provided, however,'that deduction or adjustment shall be made for or in respact of profits or
) .
losses from sales of utility property.or other capital assets, or fro! the reacquisition of any securities of the Corporation, or taxes on i, or in respect of any such profits.. Skti on 1.0 3. The term " Net Income of the Corporation available Junior Stock D1 ends" shall mean th e " Gross Income available for pa; ment of. interest charges the Corporation's i n d eb te d n e s s" , as defin. Section 1.02, reduced by interes nd amorti:ntion ch arge s and other 4 come deductions and dividends paid or a rued on all shares of th e Pf? ferred Stock and on any class of stock rankin as to dividends equal prior to the Preferred Stock; provided, however,no duction or adjuo,
.[
shall be made for or in respect of (i) expenses in conne tion with tlh f-is suance of capital stock or redemption or retirement of any eecurita e 9 e # e
i
, o
( 9 EASTERN EDISON COMPANY 4 k; PROFORMA COMPUTATION OF PREFERRED STOCK COVERAGE 12 Months Ended June 30, 1979 Gross Income Available for Interest and Preferred Stock Dividends Income Before Interest Charges . $18,108,354 Annual Interest on Indebtedness Notes Payable - Long-Term $ 2,482,850 Notes Payable - Other 683,375 Bonds: - 6,800,000 p.a. due 1983'@ 3-3/4% 255,000 5,000,000 p.a. due 1983 @ 7-3/8% 368,750 6,000,000 p.a. due 1985 @ 3-3/8% 202,500 19,800,000 p.a. due 1985 @ 12% 2.376,000 3,000,000 p.m. due 1987 @ 4-5/8% .138,750 3,000,000 p.a. due 1988 @ 4-3/8% 131,250 5,000,000 p.a. d'ue 1993 @ 4-1/2% 225,,000 5,000,000 p.m. due 1999 @ 8-3/8% 418,750 8,000,000 p.m. due 2002 @ 7-7/8% 630,000 { 10,000,000 p.a. due 2003 @ 8-3/8%s 837,500 x; . 2,196,000 p.s. due 1983 0 4-1/8% 90,585
.7,000,000 p.a. due 1987 @ 6-1/2% 455.000 Total Interest $ 9.295,310 Annual Preferred Dividend Requirement "
$6,000,000 @ 4.64% '$ 278,400 3,000,000 @ 8.32% 249,600 -
6,000,000 0 13.60% 816,000 Total Preferred Dividends $ 1,344,000 Total Interest & Preferred Dividends $10,639,310 Times Interest & Preferred Dividend Earned 1.70 x Additional Amount of Preferred Stock Which Could be Issued at: j 10 % $21,100,000 j 10-1/4% 20,600,000 10-1/2% 20,100,000
- 10-3/4% 19,600,000 11 % 19,200,000 1
J p > , - - n -+ + -- --e,. , - - , - , . , , - - -
- - - - - - _ ., - - , - . , -,-w-- .- - - - , , - - - , ,. -...--,, ,
5 ( ( MONTAUP ELECTRIC COMPANY RESPONSE TO ITEF. NO. 8. (4f.) RATE DEVELOPMENTS Electric Gas Steam Granted - Brockton Edison Company Test year utilized 6/30/78 Annual amount of revenue increase requested-test year basis (000's) $2,100 Date petition filed 12/15/78 Annual amount of revenue increase allowed-test year basis (000's) $ Percent increase in revenues allowed 0% Date of final order 6/28/79 Effective date 7/1/79 Rate base finding (000's) $44,000 Construction work in progress included in Rate base (000's) $ Rate of return on rate base authorized 10.60% Rate of return on common equity authorized 12.50% Revenue Effect (000's)
.( Amount received in year granted $ ( '
Amount received in subsequent year (If not available, annualize amounts
' received in year granted)
Pending Requests NONE Test year utilized Amount (000's) P.ercent increase Date petition filed Date by which decision must be issued Rate of return on rate base requested 1 Rate of return on common equity requested l Amount of rate base requested l Amount of construction work in progress requested for inclusion in rate base
~
REGULATORY ENVIR0hN.ENT Brockton Edison Company and Fall River Electric Light Company are subject to the Massachusetts Department of Public Utilities with respect to rates. The Nbssachusetts Commission utilizes an historical test year, original cost rate base (average), does not allow construction work in progress in rate base and recognizes the normalization of deferred taxes, investment credit and tax
/ benefit of AFUDC.
(. I 1 l
.-n. .
( (
~
~ A gip OImummifuralfl] of cEassarljuseffs ww=ava - hu s -R "f' 4pih , DEPARTMENT OF PUBLIC UTILITES
. g(( - June 28, 1. 9 7..9. ._
. ~ . . . . . . . . . . .. . . . . . . . . ..
r, . . . U . 19841 Investigation by the Department on its own motion as to the propriety of the rates and charges set forth in the following schedules: - M.D.P.U. NO. 191 Residential Service d 192. Residential Space Heating Service 193 General Service - Small 194 General Service - Large 195 Separately Metered Space
. Heating Service 196 . Off Peak Heat Storage or Water Beating' Service 197 Private Lighting Rate 61
- 2. 198 Underground Street
(. , Lighting Rate 71 199 overhead Street Lighting Rate
. 81 filed with the Department on December 15, 1978 to become effective January 1, 1979 by Brockton Edison Company.
APPEARANCES: Sullivan &' Worcester (By: David A. Fazzone, Esq. and Robert G. Bleakney , Jr. , Esq.) 100 Federal Street
' Boston, Massachusetts -
FOR: Brockton Edison-Company - Francis X. Bellotti Attorney General of the Commonwealth of ' Massachusetts (By: James Meehan, Esq.) One Ashburton Place . Boston, Massachusetts - FOR: The Attorney General f'? ( Sharon Cannon, Esq. -
- . 100 Cambridge. Street, --
. Boston, Massachusetts FORi The Staff of the Department of'
, Public Utilities
On. December 15, 19[ Brockton Edison Compan(T ("Brockton" or tho " Company") filed with the Department of Public Utilities
'" Department") new schedules of rates and charges to become effective
[
' " January 1, 1978. These new rates were designed to produce an additional S2,099,481 in the Company's electric revenues. By Order dated December 21, 1978, the Department suspended the filing until July 1, 1979. The Attorney General of the Commonwealth (" Attorney General") and the Staf f of the Department of Public Utilities (" Staff")
1/ were granted leave to intervene as full parties in interest. On January 25, 1979, a hearing was held"in Brockton, Massachui setts at which the Commission heard comments from the public regarding the proposed rate increase. Thereafter, a total of twelve days of hearings were conducted at the Department's offices in Boston, Massachu- . s o tts'.- The Company presented five witnesses in support of its proposed
~
v '
- rate change.
C. J. .McCarthy, Vice President of Reis & Chandler, Inc. testified as to the Company's cost' of capital. Reginald R. Bird, Vice President of Stone and Webster Management Consultants, Inc. recommended an increase in the Company's composite depreciation rcte. Allen Zamansky, Assistant Treasurer and Assistant Clerk of the Company, testified on transactions between the Company and its of filiates within the Eastern Utilities Associates System ("EUA"). Richard M. Burns, Treasurer of the Company, testified as to the Comp'any's cost of service and revenue deficiency. Finally, William R. Hopkins, Assistant Vice President of Stone & Webster Management Consultants, Inc.', testified on the results of an embedded cost of .
- service study and ' recommended changes in the Company's rate structure.
A 17 Hereinaf ter the Attorney General and the Staff are referred , to collectively as the "7nterveno,rs". e 9
{~ ( [
.g.
On February 5, 1979, the'Intervenors filed a Motion to Sever s that part of the Company's prefiled testimony relating to the
- establishment of synthetic time of use rates. On February 20, 1979, the Department received oral argument on the Intervenors' motion, and on March 6, 1979, the motion was granted. . The Commission found that the issues of synthetic time of use rates as proposed bp'the Company in this case were more properly the subject matter of a proceeding commenced pursuant to D.P.U. 18810.
Cost of Service _
- The testimony and exhibits prefiled by sthe Company in conjunction with its new tariff indicated a revenue deficiency of $2,099,481 using an adjusted twelve months ending June 30, 1978. During the course of hearings in this matter, the' Company and the Intervenors agreed to the treatment of a number of cost of service items with the result that the Company's proposed revenue deficiency has been 2/
reduced to $1,822,6337 We accept all the adjustments agreed to by the parties. This leaves us with only four contested cost of service issues. Wage Increase The Company has proposed an adjustment to cost of service to reflect a 6.9% wage increase for employees of Brockton and the
.2/ The Company filed an original cost of service and two /, subsequent' revisions, the last of which indicated a total revenue deficiency of $1,883,728. Later, the Company stip-( ulated to the removal of certain expenses associated with an employee stock ownership plan amounting to $61,095 including associated taxes. .
~ (
, EUA Service Corporation-("EUASC") which the Company claimed was to have become effective on June 1, 1979. The effect of this adjusthent is to increase test year operating and maintenance expenses 3 /. ~
by $274,297. The Intervenors object on the ground that it is not a known ' and measurable change to test year expenses, and therefore not cognizable for rate making purposes. _ In support of their contention, they point to the fact that there is no union contract or similar legal obligation requiring Brockton or EUASC to grant this wage increase. The Company responds that the EUA System has a long-standing policy of tracking the wage increases granted to Montaup's union employees. The Company has submitted the Montaup union contract which provides for a 6.9% wage increase effective July 16,
, .979. Mr. Burns testified that the employees of Brockton and EUASC, none of whom are represented by a " union, are reviewed annually on June 1 and the ef fective wage increase for Montaup's union personnel io applied at that time.
In Brockton Edison Company, D.P.U. 18340 (1976), the Commission ellowed. an identical adjustment to wage and salary expense, and we will follow that ruling here. We find the Company's testimony that it has been and remains Brockton's normal procedure to give ita employees the same wage increase as that negotiated between - 3/
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Operating wage expense increase: S196,573 Maintenance wag *e expense increase: 41,442 Increase in EUASC salary billed the Company: 36,282 .
$274,297 ,n e
h O
(.. t Montaup and its employees is sufficient to establish this adjust-
.ent as a known and. measurable ' change. The Intervenors reliance on Dedham Water Company, D.P.U. 19578 (1979) and Boston Edison Company, _
19300 (1978) is somewhat misplaced. In both of those cases, D.P.U. , the Commission found that the companies had not established with suf ficient' certainty that management wage increases would', in fact, perallel those negotiated with union per'sonnel. Such is not the case 4/ here. Accordingly, the Company's adjustment to wage expense is allowed!
- Rate Case Expense The Company currently expenses its regulatory costs in the same yaar they are incurred. The Intervenors correctly observe that this practice is not in accordance with the Department's long established 5/
convention of amor'tizing rate case expense over a three-year period!
'he Company responds that the amount of its regulatory expense is
\ -
'likely to continue at the same annual lev'el, and therefore the amort-ization is not appropriate. While we agree that the Company's annual regulatory expenses exclusive of rate case costs are likely to re-occur at similar levels, experience has indicated that the filing 4/ Since we have found that this proposed adjustment represents a
~
known and measurable change to test year expenses, we need not reach the Attorney General's argument on a future test year. In light of the fact that the wage increase was to ha've become effective June 1, 1979, the Company is directed to notify the Department to verify that the increase was in fact granted. 5/ The Intervenors take two slightly different approaches to this issue. The Staf f argues that . the expenses associated with the
~
Company'.s last rate case, D.P.U. 19258 (1978) should be amortized;' the Attorney General, on the other hand, appears.to argue that the Company's entire test year regulatory expense
. should be a'mortized. The Staff's position more correctly
- i. represents the Department's convention in this matter. ,
e
- i
( (
\ l
. 1 1
Thus, we of a rate case is not necessarily an annual event. g cannot treat the expenses associated with the Company's last rate case as reoccurring.'
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The Company's cost of service includ'es S124,178 for regu-latory expenses of which $80,902 represents the costs from D.P.U. 19258. Amortizing the rate case expense over three years will reduce the Company's cost of service by $53,935.
- Depreciation of Easements The Company has included an adjustment to cost of service of $18,076 for the depreciation of easements. The Attorney General o ects, arguing that this Department ilas consistently disallowed such adjustments. We agree. The Company has presented no evidence i
which would lead us to reverse our longstanding precedent on this y question. See: Boston Edison Company, D.P.U. 19300 (1978) and cases cited. Tax Deduction of Interest Expense Brockton is a subsidiary of Eastern Utilities Associates, . a registered utility holding Company subject to the jurisdiction . of the Securities and Exchange Commission pursuant to the Public Utility Holding Company Act. There are three distribution companies in the EUA System, Brockton and Fall River Electric Light Company both of which operate in Passachusetts and BlacNstone Valley Electric Company operating in Rhode Island. Montaup Electric - ,(/- I Company ("Montaup") is the system's generating subs-idiary
\
providing wholesale power to the three distribution companies. 1 ( ( B[ochton owns approxirt.ately .901 of Montaup and since 1974 has functioned as its sole source of capital. Thus, Brockton's jpitalization supports both itself and Montaup. This fact v presents some unique problems in ratemaking, particularly in
~
the calculation of income tax. The Commission has consistently utilized an income tax calculation for ratemaking purposes which would approximate as closely as possible the petitioning company's actual tax expense. Thus, the Commission has recognized income tax savings flowing from the filing of a consolidated tax return, a fact which tha Company has incorporated in its cost of service calculations.
.Lowell Gas Company, D.P.U. 19666 (1979) at.16. In addition, the Commission has als'o recognized short-term interest as a deduction for 6/
income tax purposes! Id. at 20. We see no reason to change this {x. .)ng established and well reasoned policy. The Company in its calcu-1ction of income tax expense utilized an interest deduction of
$1,949,380 which represents the product of its embedded cost of long-term debt (4.43%) times the valuation of rate base. However, ito actual test year long-term interest expense amounted to $6,930,183.
Thus, to follow the Company's methodology would r~eguire its customers to bear a tax expense which the Company will never incur.
-6/- Although Brockton has a test year short-term interest expense of $163,758, the Intervenors have raised no issue as to the treatment of this item. Since there is a question as to whether short-term debt also supports the company's Montaup investment, we will not include short-term interest in the tax calculations. However, in its next rate case, .
the Company shall be prepared to demonstrate the appropriate , ness of its present treatment of short-term debt in this respect.
/
I Y .
- .. (
7be dif ficulty we face in determining the appropriate
' ' nterest deduction arises from the fact that Brockton's invest-
.5
- ment-in Montaup has been excluded for ratemaking purposes. ,
Thus, wa must develop a methodology for allocating long-term interest expense to Brockton's jurisdictional operations. In the Company's last rate case, D.P.U. 19258 (1978), the Commission recognized that Brockton's capitalization was used to support two income producing entities, i.e. itself and Montaup. As a result, the Commission' allocated Brockton's long-term interest expense on the basis of the ratio of Brockton's pre-tax -income to that of Brockton and Montaup taken together. Such a methodology recognizes that the capitalization of a utility company necessarily supports more than its rate base. The Company has presented no reasonable alternative. T.ts adherence to the so-called regulations of the Department is mis-T
\ placed.
- These regulations in question were promulgated solely for the purpose of prescribing the format. of rate filings. They did not prescribe a ratemaking methodology.,
We find that the methodology employed by the Commission in D.P.U. 19258 will be applied to the record of this proceeding. . Accordingly,. the interest expense deduction for income tax purposes ic $3,122,047.-7/ , Rate Base There are no rate base issues in contention in this proceeding. W2 have made adjustments to working capital to- reflect our findings .
. on cost of service.
... 7/ 45.05% x S6,930,183 ,
4 9
( l Mcwever, there is one rate base item which arose in the course of the proceedings which we feel requires discussion at
.this time. In response to questions by the Intervenors, Mr. Burns a
I testified that he had not made an adjustment to the Reserve For Deferred - Taxes- (Account 268) to reflect the change in the Company's composite depreciation rate. According to the witness' testimony,
,this was due to the fact that the Company's tax deferrals are based upon the difference between straight line tax depreciation and i
accelerated tax depreciation. We find this response problematical, because this Department has consistently required that the deferrals
; in Account 268 be based upon the difference between book depreciation
.and accelerated tax depreciation. ,Thus, in every rate case in ,
which a . change in composite depreciation was allowed, a con-LI, .omitant ad'justment to the reserve for deferred taxes was also - made. The Company,shall be prepared in its next rate case to justify its treatment of this item. The' Company is also directed to communicate with the Department's Accounting Division as to th2 appropriate treatment of this account. - 1 Accordingly, we find the Company's rate base to be as follows: i 1 e i . h J E. 1 . s.
( (: . Total Utility Plant , ( Av g) $ 56,'019,963 Less: ~ Reserve for Le,o'reciation (Avg) 11,150,835_ c,.. Net Utility Plant (Avg) S 44,869,128_ Add: Materials & Supplies S 1,102,430 Unamortized Pro, motional Allowances (Avg) 311,919 Working Capital 1,130,967 Prepayments (Avg) 103,835 Deduct: . Customers Deposits (Avg) 517,790 Reserve . i'or Deferred FIT (Avg) 2,775,652 Accum. Def. ITC 222,127 s
. [ Rate Base ( AV.9) $ 44,002,710 E Rate of Return
- f' Cost of Equity The Company has requested an increase in its allowed return on equity from 12. 5 % - to 14. 25 %. In. support of its request, the Company pres'ented C. J. McCarthy, Vice President of' Reis & Chandler, Inc.,
a firm of investment advisors and consultants specializing in public - utility matters. Mr. McCa'rthy testified that the Company's cost of equity capital fell within a range of not less than 14.0% dp-to 14.5%.
.Mr. McC'arthy is ne stranger to the Department, having testified previously in a number of proceedings including the Company's last rate case, D.P. U. 19258 (1978).. Mr. McCarthy's testimony in the instant proceeding bears a marked similarity to Chat presented many . ,~ times before. , He begins with an earnings analysis of twb groups
( .
\-.of utilities. The first is Moody's 24 utilitics an'd the second
(' (' is a group which the witness assembled and which he' believes
. .;o be comparable to the Company. The next step in his methodology is to Perform two discounted cash flow ("DCF") analyses,
~
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one on EUA as a proxy for Brockton and the other' on a selected . subset of .the comparison group frcxn the earnings analysis. Mr. McCarthy offers no explanation of his choice of Moody's a 24 utilities for a determination of a fair return on equity fo'r) B ckton other than to indicate that information on the group is readily available. He presents no information tending to establish the comparability of the group, and, therefore the relevance of its use. Our responsibility in determining a fair return on equity for this Company is to establish a rate which is " commensurate with returns on investments in other enterprises N 1aving similar risks." Federal Power Commission v. Hope Natural (" In ad'dition, the returns Gas Co., 320 U.S. 591, 603 (1944). should be sufficie'nt to assure Jor fidence in the financial integrity of the enterprise so as to Aa 0,t; .1 it's credit and to attract-capital." Id. at 603. Mr. McCarthy's use ' of the Moody's group does not advance our effort to determine the return on comparable - investments because the diversity of this group cannot be held-to be comparable to any single company. The Commission hastoften held that large diverse groups are inappropriate in determining return on equity,and.we so hold here. Boston Edison Company, D.P.U. 19300 (1978).
~
Mr. McCarthy'_s second comparison group consists of eleven f stility companies whose stock is publicly traded. This group (
--. - . . _.. = .. -
( (.
. i t - .
represents all such companies with annual revenues between $25
/ illion and $150 million, and which derive 95% of their operating ~
revenues from electric sales. Mr. McCarthy analyzed the earnings ) i history of .this group and the Hoody's group from 1960 thro. ugh ! 1978. The earnings analysis eliminated two companies from the second group for 1973 'dde to what the witness characterized as
" deficit" earnings. The Commission has commented in the past
~
on this witness' practice of modifying historic data to suit a particular purpose. Brockton Edison Co'mpany, D.P.U.,19258 (1978). We find it inappropriate here. The earnings experience data indicated that since 1974 the coEsposite stock of both groups has been selling at a market price beloN book value. Mr. McCarthy concluded that the composite market b
$ rice 'for both groups was too lowfor ' determining an appropriate q .
~ return on equity for Brockten. Accordingly, he adjusted the 1978 market price to a-level equivalent to_ a 1.2:1 market to book ratio and 'ree' a lbulated the return for that year maintaining the price /
earnings ratio and dividend payout ratio at the 1978 level. As a
~
' result the actual return of the comparison group was increased from 12.97% to 16.5% while the return of the Moody's group went from 10.75% to 15.7%. Mr. McCarthy's conclusion as to a fair return on e'guity, ins'ofar as it is based on the earnings analysis, is based dolely on the 1978 adjusted figures.
In our opinion, the witness' earnings analysis is so simplistic as s to be unramble. If, as the witn'ess argues, the comparison group . is comparable to the Company, the groups' actual return should be - i .,
- relevant in the determination of a return on equity'. Mr. McCarthy e
O 4 e.
.* _11_
- ~ _ . - .
- - .. . ~ - . - , . , , - . . , -. - _. ------ - ,%-- - - ..--
( > cpparently does not agree. By adjusting the historic information, fc ^ the witness 'has removed the group from the realities of the market
'"' place, even though~it is the market which determines the return on investments of comparabl'e risks. Mr. McCarthy does not explain ,
~
this contradiction. Similarly the use of data from a single year provides an insufficient basis for such an important determination. The Commission has commented frequently on the inappropriateness of'the use of market to book ratios in determining return on equity for a wholly owned distribution subsidiary. Massachusetts Electric. Company D.P.U. 19376 (1978) and Brockton Edison Company, D.P.U. 19258 (1978). Even if such considerations were appropriate, we are under no requirement to set an equity return so as to sustain any
' Company's stock at price above book level except to the extent absolutely necessary to maintain sufficient investor confidence i _.'to allow the business to continue as~ usual.
s Boston Edison Company
- v. Department of Public Utilities, Mass. Adv. Sh. (1978) 932 at 948.
I There is nothing in this record to indicate that such an adjustment is necessary,and we decline to do so. In fact the record clearly establishes that during 1978, the Company's return on equity closely approximated its-allowed rate.' The next stage in Mr. McCarthy's analysis is his - two DCF's. The first uses EUA as a proxy for Brockton and the other uses the comparison group of electric utilities. The Commission has ciready commented on the inappropriateness of using EUA'as a proxy for BrocXton in' determining return on equity. Brockton Edison . Company, D.P.U.'19258. Nothing in this record leads us to change (( that ruling. The analysis of the comparison group eliminates
- five companies because they have not been the subject of reports
~
- eu f
pdblishe'd by the invest (. $t service to which the' witness sub-
-scribes. The witness presented no information as to the likely
'fects of including these companies in his analysis. Further-
['
- moro, th,e growth figures used by Mr. McCarthy are, Value Line projections and not his own. -
The Commission has always stressed the use of historic growth figures in DCFs as a reasonable representation of what is likely to occur in the future. In this case the witness used growth projections mnda by a third party. The actual assumptions which entered into the projections were not presented for our examination. Accordingly, . thsy will not be relied upon. This Commission is sensitive to the capital requirements lof c11 public utilities, and we are willing to seriously consider well reasoned and well presented testimon'y on cost of equity. However, f ' So companies clearly bear the burden of proof in this m'atter, a ( Burden which has not been borne here. Therefore, we find:that the Company's return on equity will b2 maintained at its current allowed. lev.el of 12.5%. Capital Structure There is no issue as to the Company's capital structure. Accordingly, the rate of return is as follows: Amount- Proportion . Cost
-($000) of Total Cost Component Long-term Debt $86,196 48.3% 9.17 4.43%
Preferred Stock $15,000 8.4% 9.06 0.76% Common Equity $77,274 '43.3% 12.50 5.41%
$178,470 300.t 10.60% .
Revenue Deficiency I
\. . Based upon the foregoimg, we find the Company'has no revenue ddficiency and in fact has a revenue surplus as follows:
g - - - , - - - - . - , - .
(
/'
s Cost of Service Operation Expense- S 7,745,484 / Maintenance Expense 1,427,911
\" Purchased Power 43,121,77,0 Total O & M Expense . $52,295,165
, Depreciation 1,895,034 Taxes Other Than Income Taxes 3,742,908 Massachusetts Franchise Tax 180,657
.Tederal Income Tax . 599,901 Provision For Deferred Income Tax 137,924 Inc. Tax Deferred in Prior Yea'rs (44,849 Amort. of ITC (74,495:
Return on Rate Base ($44,002,710 x 10.60%) 4,664,287 Total Cost of Service $63,396,532
& Operating Revenues Sales $63,234,034 Other Operating Revenues . 242,450 Total Operating Revenues $63,476,484 Revenue Surplus S 79,952
- k. .
In light of the rather small amount of the calculated reven-surplus,'we will hold the Company to its present rate level and not order a roll back. In so doing, we are cognizant of the fac that neither Intervenor has requested such action, although both have calculated a revenue surplus in their respective briefs. Accordingly, after due notice, hearing, investigation and
. consideration, it is ORDERED: That MDPU No. 191 Residential Service; No. 192 Residential Space Heating Service; No. 193 General Service - Sma No. 194 General Service - Large; No. 195 Separately Metered Spac Heating Service; No. 196 Off Peak Heat Storage - Water Heating Service; No. 197 Private Lighting Rate 61; No. 198 Underground
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a. Street Lighting Eate 71; No. 199 Overhead Street Lighting Eate 81 [, , be and hereby are disallowed. N.
.. By Order of the Department, r
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g _ . DORIS R. POTE' hi.b-5 :.$'N1 2 Doris R. Potd, Chairman ti8.f.E.f!IdMf.f
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-sp;;pe,4..2ee -% Jon N. Bonsall, Commissioner
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/s/ . GEORGE R. SPRAGUE .
George R. Sprague, Commissioner e
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Attest: .
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Chairman , e O o 6 9 9 e , 9 6 0 e 9 e 4 e O O O e
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peal as to matters of law f. om any final decision, ( *er or ruling of the n.miss'on may be taken to tl Supreme Judicial Court by an aggrieved party , interest by the filing of a written petition praying that the order of L e Co: mission be modified or set aside in whole or in part. c( ttition for appeal shall be' filed with the Secretary of the Commission thi.i twenty days af ter the date of service of the decision, order or ruling ' tha Commission, or within such further time as the Commission may allow jon. request filed prior to the expiration of the twenty days after the date service of said decision, order or ruling. Within ten days af ter such tition has been filed, the appealing party shall enter the appeal in the prems Judicial Court sitting in Suffolk County by filing a copy thereof th the clerk of said court. (Sec. 5, Chapter 25, G. L. Ter. Ed. , as most cently amended by Chapter 485 of the Acts of 1971) . 6 h e e e F-
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* - MONTAUP ELECTRIC COMPANY f
(- i RESPONSE TO ITEM 9.(4g.) ECA CON!7!11;C710N 5On1ARY
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31.ACK57tNE det 334 3.230 1,381 796 aos 388 Tr easeleelen 4,33e 3,722 3,879 4,203 3,tS9 3,963 3,948 D etrfktaan 4es SM 470 366 345 421 441 Ge neral Total Espendtsures 4,0$s 4,s73 6,180 3,335 S.168 4.717 5,113 180 193 204 4M 146 et 130 AFUDC is Total 8,043 Cash Baguirement 3,958 ,4.400 5.549 8,141 4,9M 4,835
. BROCETGE ses 41 44 di 81 31 1,398 Transeles 3,951 3,553 1,9M 4,003 4. M9 4,e34 5.450 Detrftstasa
- 1,343 2.581 1,233 168 814 set oss Gemaral 4,400 s,248 S,351 4,808 S,798 5.448 7.3e5 Total Espendinares 350 373 109 84 139 333 m
. AT1FDC Am Tsaal ,
s,3 ne s s72 s,14 4,144 s,ss8 s ess 7,3ss Cash Reentrement FA1.1.RTVER . e e e e e e s Transmiesten 2,935 DistrIbetian 1,est 4,000 3,ess 3.171 2 set 2.Se4 ses 283 21s Iss $se med ses
. ceneret 4,2s2 3,est 3,4es 3,081 2.ses 3,321 Yetal Expreditures 2.oM .
as- 22s sa at 3s se er ATUDC la 7stal 3,ses 2,028 4,1ss 3,s28 3,355 3,oss 2.see Cash Reuiremana 7 t M43ffA11
- s_%
27,03s 48,MS 44.sts . 44,see 4 0,03s 4(ses 32,9e5 -
. ' J. c. rafte 333 See 331 3'248 298 304 313 Saanam Praderties 1,281 348 228 33s 485 2,3e0 see Transaleelen 38 31 m 73 34 31 38 Gameral
- 31,s33 50,234 45,131 - 4' , 329. 40,877 43.734 33 ,1 5 TWal twp==elteres 8,379 11.038 15.551 20,193 19,242 30,533 27,331 .
ATUDC an Teent Chah Requirement 35,244 39,196 29,544 25.027 21,638 33,331 15;t38 EUA Serv 6ce Corporation 250 St 58
- S4 , et . es et leam-UtAlty Property Tenni Expendituree 250 53 && S0 si es et e e e e e e e .
ATL'DC as Tesal es e 3SS 52 S4 48 SS Cneh 3tequirement EUA 5Ys7E38 SUMMART 37,039 41644 44.St& 44,649 , 40,058 41.385 31,905 J. O l'alte 313 323 200 231 3,300 296 See steen Fredvetles 1,311 2 See 3,494 1,906 413 1,499 3,644 Transmisolen Dietributsen 5,3M 11.541 31, N9 11,033 11.S95 31.S38 12.tes ' *
'3, MS 3,390 3,829 ledet 3.124 , 2,4St 3,3e8 General es og St SS S8 83 Mee-Utility Praperty att Total tspetuittures 65,444 81.111 89,117 54 , 914 ' 57,138 48. see 44.3M 17, 64s AIVDC an 7esal s,ss? 11,720 16,001 20 ;93 19,505 30 ,a:5 M,7G4 4s,118 38,328 33,20e 36,2 5 31,238 Ceeh mequirement 37.139 . .
J
. 7 JEP/esme ,
Auswet 1,1979 Rev, SAS/?9 . ,. ..y .
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- BROCKTON EDISON COMPANY
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o. .i Title Type of Feetlity _ Date _1979 1980 1981 1982 1983 1984 1985
! ?.te}nr l'rojecta l 1:a ston Substauos
- Dietribuuos Substation 1979 908 0 0 0 0 0 0
- 1 .
i i SCADA llemote contro18tauon substellon Equipment -1980 349 338 0 0 0 0 0
. . o Auburn St. Substauos Distributlos substallom 1984 0 0 'O , 38 4 183 198 0 0
i Parkview Substatloa Distributlos Substatloa - 1988
- 0 0 0 0 0 280 880 Dupont Subetellen Distribution Substauca . 1981 0 103 , 813 0 ,
O *0 0 Reconductor S-0 Line Tresemleelos 1979 187 0 0 0 0 0 . O i Purchase 191 Llae Transelselos . 1988 0 0 0 , 0 0 0 1,000 l ! Reconductor 87-13 Tie Llae Distributlos . 1980 78 . 98 0 0 0 0 0 \ . n. Communications Rebut!d Dietribuuoa r,quipuneet 1980 97 118 0 0 0 0 0 13.B kV Conversione ,, Distributtos ,
.- O' 438 480, 498 838 880 828 i
i Computer Graphies Operatione 1984 349 ' 333 ISO 14 6 108 100 0 l niulberry St. Distribuuos Center Operatione 1980 1,440 1,883 0 0 0 0 0 , j Satellite Distribuuon Center Operatione . 1981 0- 8 803 0 0 0 0 i 4 nis.cellaneous niinor Protecte 7'83 441 478 813 883 898 845 litenket itenuisitione , 3,383 3,943 3,183 8,401 3,887 3, 864 4,198 Toi.i n,oa. C.astr euea 8, *0 8,uS 8, ul 4, 80 8 8,ni 8,a 8 ,, su - l
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( n' ' ( MONIAUF ELECTRIC C0!'.PANY L RESPONSE TO ITE NO. 10(4h.) FINANCIAL STATISTICS ir EASTERN UTILITIES ASSOCIATES (CONSOLIDATED) 4 ( T 12 months ended June 30,1979 1978 1977 1976 3 (dollars in millions) Earnings available to con: mon equity $ 8.1 $ 8.6 $ 5.9 $ 7.0 Average comon equity 82.0 80.9 70.2 60.3 1
- j. Rate of return on average common equity 10.1 10.6 8.4 11.6 I Times total interest earned before FIT:
h Gross income (incl.JJDC) + current and
, deferred' FIT + total interest charges +
.acortization of debt discount and expense 1.68 1.92 1.81 2.06 Times long-term interest earned before FIT:
Gross income (incl. AFDC) + current and 4 deferred FIT + long-term interest charges
+ amortization of debt discount and expense 2.67 2.95 2.51 3.75
$ . Bond ratings (and of period)
~ Standard and Poor's ' WA ata NA NA Moody's NA MA NA NA t
. Times interest and preferred dividends earned
, after FIT:
jj Gross Income (incl. AFDC) + total interest w:. charges + amortization of debt discount and
, expense + preferred dividends . 1,54 1.78~ 1.29 1.47 l APUDC $ 5.1 $ 3.9 $ 2.2 4 1.7 Net income after preferred dividends $ 8.1 $ 8.6 $ 5.9 $ 7.0 2 63% ' 45% 37% 24% !
) ,
- i. Market price of common $ 14.25 $ 15.25 $ 16.50 $ 18.0 '
- Book value of common $ 17.95 $ 17.85 $ 17.82 $ 18.03 Market-book ratio (and of period)* 79% 85% 92.6%- 99.8% ,
Earnings avail. for common less AFDC + + depreciation and amortization,' deferred 4 taxes, and invest. tax credit adjust.- 4~ deferred $ 16.9 $ 20.3 $ 16.9 $ 21.1 C:mmon dividends $ 7.2 $ 6.7 $ 6.3 $ 5.0 ! Ratio - 42.6% 33.0% 37.3% 23.7%
- 4 i Short-tera debt
; Bank loans *
$ 56.5 $ 50.4 $ 51.8 4 43.4 Cosmarcial paper $ $ $ $ .
C pitalization (Amount _& Percent) (See Attached)
, '
- If subsidiary company, use parent's data I
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. ,,. _.--,-._-_,,__~--.-.e-,_.. .--,..wm,---,.--_.,ce...,--- ,, m e-
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( 12 conths ended
- _ June 30, 1979 1978 1977 1976 (dollars in tillions) _.
Capitalization (Anount & Percent) Long-terc debt $123.2 53.3% $ 97.6 47.7% $118.4 55.1% $122.6 58.8% Prcferred stock 21.0 9.1 21.0 10.2 21.0 9.8 21.0 10.1 Coccon equity 86.8 37.6 86.3 42.1 75.4 35.1 64.9 31.1
$231.0 100.0% $204.9 100.0% $214.8 100.0% $208.5 100.0%
, =
=
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( ( MONTAUP ELECTRIC CO 7/d,Y RESPOSSE TO ITEM NO. 10(4h.) FINANCIAL SIATISTICS
, BROCETON EDISON COMPANY 12 months ended June 30, 1979 1978 1977 1976 (dollars in millions)
E:rnings available to common equity $ 9.3 $ 8.4 $ 6.9 $ 6.4 Av:r:ge common equity $ 72.3 $ 71.8 $ 60.8 $ 49.3 Rate of return on average cocmon equity 12.9 11.7 11.3 12.9 Tim:0 total interest earned before FIT: Gr:ss income (incl. AFDC) + current and d ferred FIT + total interest charges + am:rtization of debt discount and expense 2.48 2.51 2.39 2.74 Ticca long-term interest earned before FIT: Cr ss income (incl. AFDC) + current and d:ferred FIT + long-term interest charges
+ amortization of debt discount and expense 2.60 2.62 2.44 2.87 Bond ratings (end of period)
Stcndard and Poor's BBB BBB A- A-11oody's Baa Baa Baa Eaa f i es interest and preferred dividends earned citar FIT: Gross income (incl. AFDC) + total interest
- charges + amortization of debt discount and expense + preferred dividends 1.99 1.94 1.82 1.91
~
AFUDC .04 N:t income after preferred dividends
$ $ .02 $ .04 $ .03
$ 9.3 $ 8.4 $ 6.9 $ 6.4
.4% .2% .6% .5%
!! ark t price of common SEE EASTERN UTILITIES ASSOCIATES FINANCIA1 Book value of common STATISTICS
}brket-book ratio (end of period)*
Earnings avail. for common less AFDC + d:preciation and amortization, deferred tax:s, and invest. tax credit adjust-d:fstred Common dividends
$ 12.7 $ 9.4 $ 11.9 $ 9.9 7.6 6.8 6.1 4.5 Ratio , 59.8% 72.3% 51.3% 45.5%
Sh rt-term debt B:nk loans $ $ 4.0 $ 1.6 $ 1.6 Commercial paper $ $ $ $
.tclization (Amount & Percent) , (See Attached) 0 If subsidiary company, use parent's data
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C -::..I'r a'ica (!r. cunt 6 7ercent)
?.'.[ $,'.'..'E.7 '(g'y t $ 86.0 48.1% $ 66.2 41.8% $ 81.2 49.9% $ 85.1 54.8%
c.. f-g ~~_ _ . .,.T " '" .'" g 15.0 8.4 15.0 9.5 15.0 9.2 15.0 9.7 77.8 43.5 77.2 48.7 66.4 40.9 55.3 35.5
$178.8 100.0% $158.4 100.0% $162.6 100.0% $155.4 100.0%
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, MONTAUP ELECTRIC C0t!PANY RESPONSE TO ITD! NO.10(4h.)
, FINANCIAL STATISTICS FALL RIVER ELECTRIC LIGHT COMPANY
~
12 months ended June 30, 1979 1978 1977 1976 (dollars in millions) Earnings available to common equity $ 1.0 $ 1.7 $ 1.4 $ 1.7 Avsrage.commen equity $ 13.1 $ 12.8 $ 12.9 $ 12.9 Rate of return on average connon equity 7.6 13.3 10.9 13.2 T1003 total interest earned before FIT: Crcss income (incl. AFDC) + current and dGferred FIT + total interest charges + am rtization of debt discount and expense 1.76 2.84 2.87 2.89 Tizcs long-term interest earned before FIT: Cr:ss income (incl. AFDC) + current and d3ferred FIT + long-term interest charges
+ amortization. of debt discount and expense 3.13 4.65 4.15 4.55 Bond ratings (and of period)
Stcndard & Poor's BBB BBB BBB BBB Moody's Baa Baa Baa Baa Ticas interest and preferred dividends earned / ir FIT:
.0-s income (incl. AFDC) + total interest,
("chrges+amortizationofdebtdiscountand expense + preferred dividends 1.76 2.38 2.29 2.47 AFUDC N:t income after preferred dividends
$ .01 $ .01 $ .01 $ .01
'$ 1. 0 ' $ 1.7 $ 1.4 $ 1.7 1% .62 .7% .62 Market price of common SEE EASTERN UTII,ITIES ASSOCIATES FINANCIAL Book value of common STATISTICS .
Market-book ratio (and of period)* Earnings avail. for common less AFDC + d:preciation and amortization, deferred taxes, and invest. tax credit adjust.- datcrred $ 1.9 $ 2.3 $ 2.7 $ 2.7 Common' dividends $ 1.6 .$ 1.6 Ratio $ 1.4 $ 1.3 84.2% 69.62 51.9% 48.11 Sh rt-term debt - ' Bank loans $ 4.9 $ 4.8 4 4.8 i 4.2 Connercial paper $ $ $ $ C;pitclization (Araount & Percent) (See Attached) t . u If subsidiary company, use parent's data
.8s ( (
12 cenths eded i . June 30, 1979 197E 1977 1976 _(dollars in millions) Capitalization (1 count & Percent)' ' Long-term debt Pr ferred stock $ 14.8 53.6% $14.8 53.6% $14.8 53.6% $14.8 53.2% Comon equity 12.8 46.4 12.8 - 46.4 12.8' 46.4 _13.0 46.8
. $ 27.6 100.0% $27.6 100.0% $27.6 100.0% $27.8 100.0%
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N MONTAUP ELECTRIC COMPANY RESPOSSE TO ITEM NO.11(4h.) s FINANCIAL STATISTICS i* } 12 months ended June 30, 1979 , (dollars in millions) E:rnings available to common equity $ 8.1 i Aver:ga common equity $ 63.5 Rata of return on average common equity 12.8 Tim:0 total interest earned before FIT: Cr:s3 income (incl. AFDC) + current and d forred FIT + total interest charges + am:rtization of debt discount and expense 2.22 Times long-teca interest earned before FIT: Grcss income (incl. AFDC) + current and
- d
- fctred FIT + long-term interest charges i
+ amortization of debt discount and expense 2.67 ,
. Bond rctings (end of period) Strndard and Poor's blA Moody's NA i T. interest and preferred dividends earned lci FIT: Grcco income (incl. AFDC) 4 total interest , charg:s + amortization of debt discount and cxpenre 4 preferred dividends 2.13
.AFUDC lN t income after preferred dividends
$ 5.0
$ 8.1 62%
Market price of common SEE EASTERN UTILITIES ASSOCIATES FINANCIAL ' Book value of. common STATISTICS Mark:t-book ratio,(end of period)* .
- Earnings avail. for common less AFDC +
d:preciation and amortization, deferred tax:3, and invest. tax credit adjust.- d:fcrred. $ 8.6 Gommon dividends $ 6.9 f Ratio 80.2%
- Sh:rt-tarn debt $ 25.7 Bank loans $ 25.7 Commercial paper $ .-
Cg' tization (Acount & Percent) . ,. ,-term debt .
$ 74.8 53.3% *
! Pr:fctred stock 1.5 1.1 , Commoa equity 64.1 45.6
$140.4 100.0%
hIf subsidiary company, use parent's data
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