ML20198G080

Hudson Light & Power Dept 1997 Annual Rept

ML20198G080
Person / Time
Site:	Seabrook
Issue date:	12/31/1997
From:	Monteiro A HUDSON LIGHT & POWER DEPT.
To:
Shared Package
ML20198F859	List: ML20198F851 ML20198F951 ML20198G012 ML20198G027 ML20198G035 ML20198G048 ML20198G068 ML20198G080 ML20198G102
References
NUDOCS 9812280290
Download: ML20198G080 (34)

Text

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Hu ds o n Ligh t and Power D ep a r t m e n t

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Contents A Message From the Board...

l A century ago, the Hudson Light and Power Department's truck was a horse-drawn wagon and the very idea ofelectricity and whether or not it would catch on was hotly debated at various town meetings. Today, as we celebrate our l 100* Anniversary, the entire electric utility world is being restructured and competitors are vying to get into a business that was once closed While change can be beneficial, it's good to know that some things stay the same. Pages 2 to 3 i

M a n a g e r's Report...

For the Hudson Light and Power Department,1997 was ayear oflooking back

, at our accomplishments as we celebrated 100 years ofservice, and one of lookingforward to an entirely new way ofdoing business under deregulation in Afassachusetts. Pages 6 through 14 i I

l 1 l Fin a n cial S t a t e m e n t s...  ;

l Definitions Page 16 Comparative Balance Sheet, Assets Page 17 Equity and Liabilities Page 18 Statement ofEquity Page 18 Comparative income Statement, Operating Statement Page 19 Comparative income Statement Expenses Page 24 Income Statement Detail, Operating Revenue Page 22 Statement ofChanges in Financial Position Page23 Footnotes Page 24 Receipts and Expenditures Page 28

Revenuefrom Sale ofElectricity Page 29 Statistics Page 30 Five-Year Comparative Electric Sales Data Page 31 t

Sa fety M essages from Local Studen ts During 1997, the Department launched a new educationalprogramfor third graders in Hudson and Stow. In this report, we sharejust afew of their artistic endeavors. Pages 4, S & I5 P e rs o n n el... Page32 i

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A Message From the Board A century ago, the Hudson Light and Power Department's truck was a horse-drawn wagon and the very idea of electricity and whether or not it would catch on was hotly debated at various town meetings. Today, as we celebrate our 100*

Anniversary, the entire electric utility world is being restructured and competitors are vying to get into a business that was once closed. While change can be inevitable and often beneficial, it's good to know that some things stay the same.

I ilistorically, our customers have enjoyed low rates. We didn't need the State l Legislature to enact deregulation laws to mandate a discount - we've been offering a 10%

early-payment discount all along. During 1997, our customers' average net bills could l range from 8% to 36% lower than those of the closest private utilities. In fact, no private

utility in the State could boast of lower bills. Over the last few years, we've been offering l an additional 5% discount for larger industrial customers who sign contracts pledging to be sersed by the iludson Light and Power Department. This protects all of us from the rate I shock that could result from a large industry buying power elsewhere. We expect to be able to maintain our low prices. -

One of the hallmarks of the liudson Light and Power Department has been its service. Our lineerews take a certain pride in their reputation of being one of the best response teams around. They've repeatedly drawn praise from customers for working around the clock during major storms to make sure power is restored. They're fast and efficient. When our customers have a problem, it's a relief for them to know that it uon't I take long for the familiar yellow bucket trucks to pull up. The vehicles might be a bit more modern than those horse-drawn wagons of old, but the personnel inside are still our j neighbors who care about our comfort and safety.

l Remember the days uhen we could telephone a company and actually have a person answer the phone on the other end, instead of a computer that leads us throuch a my riad of button-punching and confusion? In today's trend of corporate mergers and l computerization, it's easy to lose contact with each other. We're proud that we still offer the human touch that so often gets lost as the world modernizes. No matter what time customers call us,24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day,365 days a year. there's an employee available to help them with their problems.

l 100 Years ofService ~ Page '  !

Electricity came to liudson in the form of a power plant, which was eventually purchased by the Town and moved to Cherry Street. There's a photograph from the Sixties in our archives showing a youngster watching in awe a demonstration at the power plant. The station may look a little different today, but it's still an integral and fascinating part of our community. Not only does it allow us to generate electricity and participate in valuable economy exchanges with the rest of New England, but the station is also the stronghold of our educational efforts. That look on the face of the youngster from the Sixties photograph is seen again and again today w hen local scouting and school groups visit to learn how a diesel engine works. Our doors are not only still open to youths, but j we also go out into the communities to teach our Seniors and students how to use electricity wisely.

l l There's no doubt that the utility world is changing, and we wholeheartedly support any changes that will be beneficial to our customers. We must not, however, allow progiess to usurp the very premise upon which the municipal utility was founded - that we are here to serve. The commitment to excellence must not be tarnished by the race for the t

buck. At the liudson Light and Power Department, we pledge that as we move forward I into the new world of deregulation, we will continue to provide the same things we've been offering for the last 100 years - the most economical rates possible, superb service and community focus. For customers of the lludson Light and Power Department, it's nice to know some things won't change.

l Respectfully submitted,

, Iludson Municipal I.ight Board l

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l Foraccomplishments the liudson as we celebrated Light and 100 years Power of service, Department,1997 and one of looking forward to an entirely new way of doing business under deregulation in Massachusetts.

Restructuring Becomes Law Perhaps one of the most radical changes ever to hit the electric industry came during November when the State enacted deregulation into law. Lack of local federally-funded water power, past prohibitions against constructing low-cost fossil fuel-powered plants, and lack of I

natural resources in the area have been just some of the causes behind New England's high energy costs in comparison with the rest of the nation. State of0cials hope deregulation will bring those costs down and will encourage the State's economy to Courish.

As a municipal light department, the lludson L a and Power is speci0cally exempt from j most aspects of the new law. Customers of private utihues like Massachusetts Electric, however, l will see changes that could bring their bills more in line with the low rates already enjoyed by our customers. By March of 1998, private utilities are required to:

1. "Unbundle"- or split - their rates into the various costs of doing business: distribution, transmission, generatbn, and transition - or w, - <- N stranded investment:

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2. Allow customers to receive the generation portion of their service

} from other companies; and p 3. Provide a 10% rate reduction to customers uho chose not to have another company provide generation. Newspaper reports have uc. der deregulation, cus. revealed a loophole in the discount requirement that allows the tomers win decide who will privates to avoid the 10% reduction if they are unable to maintain a 6%

generate their electricity. rate of return on that portion of the bill.

There are many other requirements in the approximate ll8-page law, such as provisions to protect displaced workers, support conservation programs, create a renewable resource trust and more. There are many complexities involved with deregulating the energy side of the electric businesses. The Department believes it will take considerable One-tuning - and money - before the new world of deregulation runs smoothly. For example, the renewable resource trust requirement will cost the Department's customers about $320,000 annually when we become part of the deregulated world. Due to the uncertainties and costs involved, the Department believes it is more prudent to allow the private utilities to work cut the potentially costly " kinks" before we open our own borders to competition. In the meantime, the Department is studying how to unbundle its own rates and has established a Rate Stabilization Trust to protect ratepayers from expected increased costs associated with deregulation.

A Centennial Year The year 1997 marked the 100* Anniversary of the lludson Light and Power Department.

Begun by a group of citizens in 1885 and purchased by the Town in 1897, the local municipal utility boasts of a colorful histo'v and a long-standing tradition of excellence.

100 l' ears ofService ~ Page 6

in 1885. a group of citizens fermed the privatsly-owned lludson Electric Light Company with a power station in the factory of Bradley and Sayward. Five years later, on December 17, 1890, Iludson Town h.ecting voted % petition the State Legislature for legal authority to purchase the plant and to start their own municipal utility. Two enabling Town Meeting votes were required in order to exercise the authority granted by the State. These came on July 1,1891, with a 30-7 vote; and on September 2,1891, with a 69-11 approval.

Unfortunately, the Town neglected to raise the funds needed to purchase the business.

During thase days, not all homes could boast of electric lighting. The issue of electricity and its future were hotly debated and finally landed the Town in Court during 1895. It wasn't until December 21,1896, that voters finally earmarked $20,000 to buy the company. l l

On January 15, 1897, the Town took possession of the business and public power was i established in lludson with 22 customers. By then, the Bradley and Sayward plant in the old factory I had become obsolete, and the Town decided to build a new modern power station on Cherry Street.

On August 8,1897, the Cherry Street power plant began generating electricity for the Town. By 1928, diesel engines were installed at the station. The historic Cherry Street station remains a i valuable asset, not only in the power it is able to generate, but also in the way it allows us to participate in economy exchanges in the New England Power Pool (NEPOOL).

The Light Department was governed by a Municipal Light Board until 1909, when it came under the authority of the Commissioners of Public Works. When the Town's first ilome Rule Charter was established in 1971, the Municipal Light Board again became the policy maker.

Major storms have long caused problems for utilities, and the Department has had its share.

In 1938, a hurricane knocked out power to the entire distribution system. Restoration effbrts lasted about a month. In 1985,11urricane Gloria visited with 80-mile per hour winds that dealt damages i requiring five days of restoration work. Not every disaster impacted liudson. No outages were j reported during the Blizzard of 1978. In 1965, Iludson, with its own power station, stayed bright when the Northeast experienced the great blackout.

With about 10,400 customers, the Department has grown in leaps and bounds, yet still offers rates lower than any private utility in the State. Our service standards has e draw n praise from Town Boards and consumers alike. The Department celebrated its 100* Anniversary in the same manner in which it has operated over the past 100 years - with service. Customers were invited to visit us during Community Fest Days in May to sign up for a free energy audit or to take home energy conservation information. The Department also gave away mementos of the occasion in the form of pens, jar openers and emergency message magnets.

SJCSupports Ratepayers The Department received the support of the Massachusetts Supreme Judicial Court (SJC) in its efforts to protect its customers from any adverse impact of Stow leaving the system when the SJC agreed that fludson could collect " stranded investment costs." The Town of Stow has been considering leaving the liudson The SJC said municipais Hke the HL&PD Light and Power Department, and establishing its own can conect stranded investment costs.

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~w., n .n., - - ~ .e4 When the Department and the Stow Municipal Electric Department (SMED) were unable to negotiate the price that Stow would pay Hudson to sever its ties, the matter was sent to the Massachusetts Department of Public Utilities (DPU). Last February, the DPU determined that Stow should pay approximately $2.5 million for the Department's equipment located in that town, but needed to pay no money for stranded investment costs. Both the Hudson Light and Power Department and Stow appealed this decision to the SJC.

On December 30*, the SJC handed down a two-part decision in the dispute that basically said:

1. The DPU's refural to allow the Hudson Light and Power Department to collect stranded investment costs from Stow was unfair. The SJC ordered the DPU to calculate these costs with an eye towards protecting "all ratepayers, not just departing customers."

2. The approximate $2.5 million price tag that the DPU set on Department's poles, transformers and other equipment in Stow was fair. The Department thought that price was too low, while Stow argued that the cost was too high.

As the Department entered its 101" year of municipal service in 1998, no word had been received from the SMED as to whether or not the SJC decision will affect Stow's decision to create its own utility. The Hudson Light and Power Department has provided a near-century of quality service to our valued customers in Stow, a tradition of excellence which the Department would be pleased to continue.

Q Stable Rates Expected h Customers' net bills increased about 4% in March in connection with the highly-disputed transmission bills of the New England Power Company NEP). Hudson and other utilities across the State appealed to the Federal

([h[~ %(Energy and Regulatory Commission (FERC) over NEP's hefty i y{$ "

charges to " ship" electricity to local substations. Many feared that NEP was hiking costs to other utilities in order to prepare for industry restructuring.

aeepc d in 1998 son saw a jump d ahd M mMon pu year. M of Oc end M N, or 1999. FERC had made no decision on the utilties' complaint.

In addition to the NEP rate hike, the Massachusetts Municipal Wholesale Electric Company (MMWEC) began billing the Department about $800,000 for stranded investment during 1997. Despite these two cost increases and a 3.5% decrease in sales, we were able to remain competitive with our rates. At the end of 1997, our net bills could range from 8% to 36% less than Massachusetts Electric and Boston Edison, the area's two closest private utilities.

The outlook for rates is one of stability. In anticipation of deregulation, the Department established a rate stabilization fund during 1997 to protect ratepayers from the increased costs expected to be passed onto us as a result of the new rules. Monies were transferred from the  ;

insurance escrow reserve into the new fund. Despite cost increases during 1998, no rate changes are anticipated. During 1999, we expect a load growth that will enable the Department to continue to maintain its rates. I 100 l' ears ofService ~ Page 8

An April Fool's Snowstorm Mother Nature hit New England with an April Fool's surprise during 1997, but she could not get the better of the lludson Light and Power Department. March 31" ushered in a spring blinard of record proportions, dumping more than two feet of snow on the area, blasting us with rale-force winds, and leaving hundreds of thousands without power across the State.

Despite the State of Emergency declared by the Governor and media predictions i of State-wide power outages lasting throughout the week, all fludson Light and see, snow and wind Power Depanment customers um wim ehic power by Tuesday mning combined for a April F spring bitrzard of The performance of the 11udson Light and Power Department field crews is -

record proportions.

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impossible weather conditions, including ice-covered trucks, bucket lifts constantly filling with snow, unplowed roads, arcing wires, falling trees and limbs, and poor mibility in their commitment to restore service to their customers. While the blizzard raged on and most residents had not even attempted to shovel out, office and power station employees braved the elements in order to staff emergency phone lines.

A particularly difficult area during the storm was Murphy Road in iludson. Two utility poles were sheared in half when trees came down. The street was closed off by Safety Officials while new poles were set. With 110 customers impacted, Iludson Light and Power Department crews worked diligently, despite vehicles covered with ice and snow, and were finally able to aestore power to the area by noon on Tuesday.

Trees were a major problem during the storm, bringing down wires on Route 85 in Bolton, causing dangerous arcing by the Fire Academy in Stow, and knocking out partial power in the River Road area in liudson. Despite this, outages were kept to a relative minimum, with about 500 customers system-wide impacted by the storm.

The performance earned employees a commendation from the lludson Municipal Light Board and written thanks from numerous customers. Following arejust a few.

From Stow:

" Keep up the good work. Stow was lucky to have HLP after this last storm. "

"Just had to let yoa know that we think you did a greatjob during the Bli::ard. . Keep up the good work. "

"Thank youfor allyour hard work during the storm. "

From Boxboro:

"Thank youfor continuous power throughout yesterday's storm. "

From iludson:

"Congrats on a goodjob during the bli::ard "

"Just a note to thank youfor your quick and efficient response to our most recent power outage. h was greatly appreciated. "

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100 Years ofService ~ Page 9

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Office Report The Office worked on making the Department more " user-friendir during 1997. Perhaps the most visible improvement we were able ',o make was the installation of the access ramp and automatic door in the front of our Forest Avenue office. Previously, the main office had been wheelchair accessible at the back entrance. Completion of the project took longer than expected, due to the UPS strike. Now that it is done, our front as well as rear entrances are able to accommodate those w ho are physically challenged.

The Department joined The Department joined the World Wide Web when we launched the World Wide Web our new flomepage during 1997. Located at www.ultranet.com/~hudsontp, with a homepage.

the page is updated monthly and provides a wealth of information, including:

O General /n/ormation: Addresses, Paying the Bill, llours, Security Deposits, Hudson Municipal Light Board, Signing for Service, Management, Telephone and Massachusetts Sales Tax 0 Calendar: Meter Reading Start Dates. Discount Deadline, Board Meeting, Payment Closing Date, Bill Printed and Mailed Dates and IIolidays.

O Conservation: Conservation tips and programs offered by the Department, including Mass-Save energy audits and our own appliance test meter program.

O Directions: Driving directions and maps to the Town of Hudson, Light and t'ower Department's main office and truck routes.

O Emergencies: What to do w hen the lights go out.

O E-3/ ail: A new way to get in touch with us.

O Forms: Dongstic Service Application, General Nen n e Application (Commercial, industrial, Landlord Common Areas etc.), Yard L tu <\pplication, Service Problem, Yard Light Out, ST-12 and ST-13 Tax Exempt Fe ms and Landlord Automatic and Telephone Transfer Forms.

O News: Local news and the current and two previously mued Customer Newslines.

i 0 Power: What happens when power shortages are predwted, terms used when power shortages are predicted and how to join our Voluntary Imad Curtailment / Notification program.

O Rates: Rates, charges, policies.

O Services: 24-Hour Dispatch, Industrial Spreadsheets, All-Electric Budgets, Medical Alert, Appliance Efficiency Component Newslines, Appliance Test Meters, Payment l

Plans, Automatic Transfers, Public Power, Bilingual Assistance, Meter Reading, CPR, Radio Alert, Direct Payment, Rate Analysis, Disputing a Bill, Senior Citizen Safety, ,

Estimated Lien Bills, Station Tours, Forms, Street Light Patrol, Gift Certificates, j Student Safety, llandicap Accessibility, Survey Plus, llistories and Voluntary 1 Curtailment.

The Department launched a new School Safety Educational Program for third graders in ,

iludson and Stow during 1997. Youngsters were taught how to lise and play safely around l electricity. In appreciation, many of the third graders sent the Department posters on electrical safety and a thank-you message. Samples of their artistic and educational endeavors are shown throughout this Annual Report.

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Information on e lectricity and safety was offered during Public Power Week when we held our second annual Senior Safety Program in liudson and Stow. This year, the program featured a film on electrical safety, along with a short discussion on how Seniors can protect themselves around electricity, both indoors and out. The program was held at Plantation Apartments in Stow and the liudsori Senior Center in liudson.

The preliminary work was begun that will enable the employees at the Department's main office on Forest Avenue to begin accepting cash payments. By the beginning of 1998, a trial program was launched. Ilistorically, cash was only accepted at the lludson Town Collector's Office. Now, we are able to accommodate customers who wish to pay by cash directly to the Office, in keeping with our intentions to expand payment options for customers, Department personnel attended a seminar on utility payment options during 1997 in order to investigate the how-tos of oiTering additional direct payment methods to its customers. We have already begun a direct payment program with the Community National Bank. Expanding our electronic payment options remains on our 5 ish list for the near future.

Distribution Report Constant maintenance and upgrading of the system by the Linecrews ensure that service is provided on the most reliable basis possible. Following is a summary of the activities of the Linecrews during 1997:

Poles, wires and transfonners were upgraded in liudson on Chapin Road, River Street, Brigham Street, Central Street, Main Street, liigh Street, Laurel Drive, Pleasant Street, Cottage Street, Municipal Drive, Technology Drive, Walnut Street, lloughton Street and at the concession stand and bus stop at fludson liigh School; in Bolton on Century Mill Road; in Berlin on River l Road, Marlboro Road and Dudley Road; and in Stow on Great Road, White Pond Road, liigh l Street, Boon Road, Randall Road, liarvard Road, Taylor Road, Samuel Prescott Drive, Red Acre Road, Sudbury Road, liartley Road and liiley Brook Road.

... . . . - New three-phase transformer banks were installed or upgraded 1

in liudson at Test Devices on Loring Street, the Fab Shop Inc. on School

/ Street, Cablevision on Main Street, Kane Perkins on Main Street, 7 Iludson Catholic fligh School on liigh Street, liudson Department of j f Public Works on Municipal Drive, l. Foulds Company on Cherry Street and A.C.T. Manufacturing Company on Technology Drive; and in Stow

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eep the d ri at Wedgewood Country Club on liarvard Road, the monitoring well in system running smcethly, the Star Market parHng lot at Samuel Prescott Drive and at the new Star Market on Great Road.

I New housing projects involved both the Engineering and Distribution Departments during l 1997. Engineering Department laid out undergroumi electrical circuits for ongoing and future subdivisions, while the linecrews performed the a tual work in the field. New and ongoing underground developments in liudson include Danforth Woods off of Laurel Drive, Comtland Drive off of Ilosmer Street, The Pasture off of Alan Road and Brigham liill 11 off of liarriman Road; and in Stow include Deerfield Lane, IIeritage Estates off of White Pond Road, Maple Street, Russet Lane, Wetherbee Lane and Windmill Estates.

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.- -. ~ .- .- . . ~.  : . .-. -.- _. J l The Department completed the voltage conversion in lludson from 4,160 volts to 13,800 volts on liigh Street, Cross Street, and on Manning Street to pole #1 o, Main Street. An extensive upgrade from 4,160 volts to 13,800 volts was completed for Feed River Road, Marlboro Road and Dudley Road in Berlin. The voltage conversion not only upgrades the system, but also stabilizes voltage in the area.

Our meter reading was upgraded during 1997 with state-of-the-art electronic handheld  !

devices. For over a decade, meter reading has been done using handheld devices that interact with our mainframe computer. This cuts down on paperwork and data entry. During our Centennial Year, we upgraded the handhelds with w hat is basically a miniature personal computer. These interact with the personal computers in the Office, which in turn upload to our mainframe computer. The newer devices reduce the amount of paperwork required, substantially increase reliability and speed up the information transfer to the mainframe computer.

Power With five of New England's major power plants shut down during 1997, the Northeast faced tight power supplies during the summer. Four of Northeast Utilities' (NU) plants in Connecticut were shut down, and Maine Yankee was closed for repairs. NEPOOL, which was renamed .

2 Independent System Operator (ISO) in preparation for deregulation, predicted the possibility of rolling blackouts across New England, especially during periods of extended hot and humid days.

To deal with the power supply situation, the Dgpartment established a fax notification program during 1997 to keep Voluntary Load Reduction customers updated on power supply situations. Through this pregram, local businesses and municipal departments agreed to voluntarily cut back on their electric consumption when notified in order to save the region from more drastic ,

measures. Several times, local businesses and municipal governments reduced their electric  ;

consumption to assist the Northeast. The Department is sincerely grateful to the following participants: ifssabet Machine Corporation, Boyd Coating, Chase-Walton. Comnnmity Chamber of Commerce, Comnumity National Bank, Digital Equipment Corporation, Foursto. Connections, Hudson Fire Department, Hudson Police Department, Hudson Town Hall. Hypertronics, Price Choppers, R.R. Donnelly, Silver King Broadcasting, Speciali:ed Plastics, Stow Fire Department, Stow Police Department, Stow Town Hall and Test Devices. We also appreciate WSRO's assistance in keeping our customers immediately updated when " Conservation Days" were called and New England's residents were urged to conserve electricity. ,

in related business, MMWEC joined eight other utilities in filing suit against NU, demanding  !

compensation and charging negligence in connection with the shutdown of its Millstone ill power plant. The Department is contracted to buy power from Millstone ill through MMWEC. The power ,

plant, however, is but a small portion of our power supply. In addition to our own generating plant f on Cherry Street and our participation in ISO, the Department purchases electric power from the following sources:

O Oil-Fired Units - W. F. Wyman, located in Yarmouth, Maine and operated by Central Maine Power.

O Oil and Gas-Fired Units - Cleary No. 9 located in Taunton, Massachusetts and operated by the Taunton Municipal Light Plant; and Peabody Municipal Lighting Plant located in i

Peabody, Massachusetts.

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1 0 /&dro-Electric Units - Niagara River, located in Niagara Falls, New York and operated by the Power Authority of the State of New York; and llydro Quebec, located in Quebec, Canada and operated by llydro Quebec.

O Trash-Fired Units - Refuse Fuels, located in Lawrence, Massachusetts and operated by l Refuse Fuels Associates. i 0 Uranium-Fueled Units - Maine Yankee, located in Weiscasset, Maine and operated by Maine Yankee; Millstone 111, located in Waterford, Connecticut and operated by North Atlantic Energy Service Corporation; Pilgrim I, located in Plymouth, Massachasetts and ,

operated by Boston Edison; and Vermont Yankee, located in Vernon, Vermont and '

operated by Vermont Yankee.

Our own power station remains a vital part of the Department's power supply mix. Its existence allows us to participate in ISO's economy exchange. As a member, we only need to run our own engines when all lesser expensive sources of power in New England are exhausted. As a result, the local engines are valuable even when they are not running. For that reason, constant maintenance is performed on the engines to ensure that they run in top condition. Following is a summay of the work performed on the engines during 1997: i 0 #7 Engine: Station employees pulled the head and piston on the #4 cylinder, and six broken compression rings were replaced. All the fuel nozzles were tested. The lower liner gland water leak on the #6 cylinder was repaired.

0 #8 Engine: The head and piston on the #8 cylinder was pu' led, and two broken compression rings on the piston were replaced. Lower liner gland water leaks on the #3 and #8 cylinders were repaired. The piston cooling temperature gauges were removed ,

and calibrated.

O #9 Engine: The bearings on the oil puriGer motor were repaired. The voltage regulator was repaired and cleaned. The connecting rods and wrist pin from the #6 cylinder was 1 removed and repaired ,

O #10 Engine: Station employees rebuilt the governor gas piston assembly, the engine air  !

compressor, and the engine gas valves. The engine governor motor with spare was replaced.

0 #11 Engine: The governor gas piston assembly was rebuilt, along with the engine gas valves. Water leaks in the gas valve adapters on five cylinders were repaired.

0 #12 Engine: The engine keep-warm pump was rebuilt with new bearings and a water seal.

The engine articulating rod bushings and pins were inspected.

l 0 Miscellaneous Engines: The opacity monitors were tested monthly on engines #7, #8 and

1. 12. The crankcase pressure monitors on engines #7, #8, #9, #10 and #11 were checked.

The tube oil Glters were changed on all engines, and tube oil samples were sent out for analysis. All engines had their pumps and motors serviced, and their fuel timings checked.

In our attempt to be as environmemally conscientious as possible, the Department hired i Techna Test Inc. to test the day tanks of engines #1 and #2 and all underground fuel and lube oil lines.  !

3 All of the equipment passed the testing. Oil samples from all transformers at the power plant were i'

! also tested and passed In addition, Station employees scraped and painted the 20,000-gallon fuel 4 tank and 7,000-gallon tube oil tank at the station. They also cleaned and painted the top of the l lL 800,000-gallon fuel oil tank.

. - _ - - ~ ~ . . - . - .,L _ . ~ , , . - -- .- .A 1001' ears ofService ~ Page 13 i

I

l

, 4 ,m ...m__ .. . _ . _ . . . . _ . , . ..-t, ._ ,.s l

In other action at the Power Station during 1997:

0 The standby batteries at the Forest Avenue substation and Cherry Street power plant were serviced monthly.

O Amperage readings were taken on all plant electric motors and put on Gle.

l 0 Commonwealth Gas installed new pulse metering on all existing gas meters to allow for l the purchase of natural gas on the open market.

l The Power Station continues to be a draw for area youths. School classes and scouting ,

groups received guided educational tours of the Station during 1997. The tours are tailor-made to the size of the group and age of the youths. In many instances, children are able to view the start-up of the engines. A favorite stop is electronic circuit maps, where the tour participants are able to decide what circuits to turn off and on during imaginary power outages.

During 1997, the Department wished a happy and healthy retirement to Power Plant Superintendent Russell Carlson. Hired in 1968, M- Carlson worked in the various positions of maintenance, foreman and superintendent. Long-time employee Daniel Murphy was appointed as the new Power Plant Superintendent. Emmanuel Chaves was named Plant Foreman.

A PersonalNote On behalf of the Department, I would like to express our condolences to the family of former employee James J. Higgins, who passed away during 1997. I would also like to take this j

opportunity to thank the men and women of the Hudson Light and Power Department. Their skill l

and commitment to the ratepayers has continued the Department's long-standing tradition of l ofibring unparalleled service. My appreciation is also extended to the Hudson Municipal I.ight l Board for their continued guidance a,d support. In the following pages are the 1997 Financial l Statistics of the Hudson Light and Power Department.

• j Respectfully submitted, Sn/Yonff.$dfonA'th), Ynafer  ;

i l

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talk to us ocout electrical so'e+v. Here Mehsso - I like-d when we got to feel the

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Chnstopher - when he showed the wire.

Joanie - I hcNe the chicken pox. Sorry.

Daniel - I hke the movte.

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Chios I kked h .<. rrovie. Brett - When he showed us the electnc p - .l ,

%8 Jack - I hked the movie, stuff.

Brendon I l#ked to learn the safety Jarrue The movie.

rules. JocYn I hked d when you showed us Christine Sl/ra - Mulready School Edmund Iliked the inforrrxton. the stuft.

Il#dWM Whitney - 1 om in Disney world Sorry. Thank you ogain!

stepnen - I hked when tne kids stoned Ptease come back next year.

to work together. Mrs. Kilcommins St. MichaelSchool, fludson 100 l' ears ofService ~ Page IS

1

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Fin a n cial S ta tem en ts D e fin itio n s >

l Under the Cash Basis of Accounting, revenue is recognized only when cash is received;  !

expenses are recorded only when they are paid in cash. Under this method the determination of income rests upon the collection of revenues for services or products rendered. Expenses are incurred upon the actual payment of cash for products or services received. This type of accounting is seldom found in ,

practice and financial statements which could be prepared on this basis do not reflect the financial position or operating results of a business in conformity with generally accepted accounting principles.

Under the Acerual Basis of Accounting, revenue is recognized when it is realized and expenses are recognized when incurred, without regard to the time of receip: of payment. The focus of accrual accounting is on the realization of revenue, the incurrence of costs, and the matching of revenue with costs incurred. This " matching" concept requires that the cost incurred to create revenues be accounted _ for at the same time. Consequently, if revenue is accounted fer during a period, the

" matching" costs must be accounted for even ifit requires an estimation of these costs.

Halance Sheet: A Balance Sheet is a concise statement of the assets, liabilities and equity of a ,

business as of a given date.

Assets: Anything owned that has money value or utility is an Asset. Assets are divided into plant or Property Assets, Current Assets, or Other Assets. Property Assets are buildings, generation equipment, transmission equipment, distribution equipment, etc. in use. Construction Work in Progress is Plant Under Construction which has not been completed as of the date of the statement. Current Assets are cash, receivables, inventories of generation fuel, gasoline, lube oil, poles, etc., prepayments, i unbilled utility revenues and other miscellaneous assets. Deferred Assets represents expenditures for preliminary surveys, plans, investigations made for the purpose of determining the feasibility of utility projects under consideration.

Liabilities: Liabilities consist of debts outstanding (unpaid bills) and in the process of accruing.

They are usually classified as to Current Liabilities, Deferred Liabilities, or Long Term Debt.

Current Liabilities are Short Term Liabilities: They generally consist of obligations which are to be liquidated within a year from the balance sheet date and include amounts accrued to date or those liabilities which accumulate from day to day. The most common Current Liabilities are accounts j payable (bills owed as of a specific date), accrued salaries and wages, accrued interest, etc. j I

Deferred Liabilities: Advance billings for services rendered, etc. l Long Term Debt: Debts incurred through borrowing such as bonds and notes or other financial obligations which are payable over a long peria I of time.

Equit3: The amounts paid on loans over the Department's existence, moneys invested by the Town in the Departmot, the earnings retained in the Department as represented by property.

Incor- -u wnt: An income Statement is a report in summary form of the revenue earned by a particular e .ess during a specified period, together with the related costs and expenses and the ,

1 losses for that sa.ne period and the resulting net income (or net loss).

100 Years ofService ~ Page 16

. 67 e # h h Compara tive Bala nce Sh ee t Assets Increase Electric Utility Plant (Net).., 1997 1996 (Decrease)

Intangible Plant $ 3,879.76 $ 3,879.76 $ 0.00 Production Plant in Senice 1,996,543.01 2,203,348.10 (206,805.09)

Nuclear Fuel 53,538.12 64,201.37 (10,663.25) l Transmission Plant in Service 199,518.39 215,918.88 (16,400.49) )

Distribution Plant in Service 3,107,402.98 3,245,873.11 (138,470.13)

General Plant in Service 604,385.60 596.116.93 8.268.67 Total Utility Plant In Senice $ 5,965,267.86 $ 6,329,338.15 $ (364,070.29) l Other Property & Investments. l Investm:nts in Assoc. Companies $ 131,453.25 $ 141,510.08 $ (10,056.83)

Other investments 0.00 0.00

$ 131,453.25 $ 141,510.08 $ (10,056.83)

Cash Assets... ,

Operation Cash $ 2,761,232.58 , $ 2,205,854.31 $ 555,378.27 l Miscellaneous Cash 221,634.26 862,945.75 (641,311.49)

Depreciation Fund 212,554.06 7,428.34 205,125.72 Depreciation Fund Investment 3,036,068.74 2,822,809.52 213,259.22 )

Insurance Escrow Reserve 0.00 8,947,416.38 (8,947,416.38) l Escrow Reserve Maine Yankee 92,791.00 0.00 92,791.00 Petty Cash 500.00 500.00 0.00 Deposit interest Account i15,334.39 95,616.17 19,718.22 Customer Deposits Account 271,585.86 254,468.06 17,117.80 Total Cash Balances $ 6,711,700.89 $ 15,197,038.53 $ (8,485,337.64)

O'.her Current and Accrued Assets...

Customer Account Receivables $ 2,766,591.62 $ 2,735,242.38 $ 31,349.24 Other Accounts Receivables 195,337.44 31,170.92 164,166.52 Material and Supplies 1,000,290.83 980,054.69 20,236.14 Prepayments 2,042,844.51 1,909,562.88 133,281.63 Int. & Dividends Receivable 4.598.45 42,448.97 (32,850.52)

Accrued Utility Revenues 412,169.25 0.00 412,169.25 Misc. Current & Accrued Assets 0.00 0.00 0.00 Total Other Current $ 6,426,832.10 $ 5,698,479.84 $ 728,352.26

& Accrued Assets Deferred Assets...

l Preliminary Survey Charges $ 0.00 $ 0.00 $ 0.00 Misc. Deferred Debits 0.00 0.00 0.00 Total Deferred Assets $ 0.00 $ 0.00 $ 0.00 Total Assets $ 19,215,25410 $ 27,366.366.60 $_ (8,131,112.50) 1001* ears ofService Page 17

t Eq uity a n d Lia bilities I

Increase Eq uity... 1997 1996 (Decrease)

Loans Repayment $ 1,925,000.00 $ 1,925,000.00 $ 0.00 Invested by Town 20,093.39 20,093.39 0.00 Retained Earnings 14.473.237.49 23.125,367.01 (8,652,129.52)

Total $ 16,418,330.88 $ 25,070,460.40 $ (8,652,129.52)

I Current & Accrued Liabilities...

Accounts Payable $ 1,365,609.52 $ 832,546.68 $ 533,062.84 Customer Deposits 271,585.86 254,468.06 17,117.80 Customer Deposits-Interest i14,571.26 95,616.17 18,955.09 Tax Collections Payable 16,465.15 14,584.97 1,880.18 Misc. Current & Accrued Liabilities 29,744.97 58,801.59 (29,056.62)

Customer Advances for Construction 2.100.00 2,100.00 0.00 Total Current & Accrued Liabilities $ 1,800,076.76 $ 1,258,117.47 $ 541,959.27 Deferred Credits...

Misc. Deferred Credits $ 2,792.73 $ 2,792.73 $ 0.00 Deferred Credit-Fuel Charge 0.00 20,942.27 (20,942.27)

Total Deferred Credits $ 2,742.73 $ 23,735.00 $ (20,942.27)

Rescrws...

Injuries and Damages Reserve _$_ 005,394.41 $ 605,394.41 $ 0.00 Total Reserves $ 605,394.41 $ 605,394.41 $ 0.00 Contributions in aid of Construction... $ 408.659.32 $ 408,659.32 $ 0.00

$ 408,659.32 $ 408,659.32 $ 0.00 Total Equity & Liabilities $ 19,235,254.10 $ 27,366.366.60 $ (8,131.112.501 0 Sta temen t of Equity Retained Eamings at Janna y 1,1997 $ 23,125,367.01 Net Ineome or(Loss) 459,760.31 Miscellaneous Credits to Surplus 200,664.28 Total $ 23,785,791.60 Appropriation of Retained Earnings Returned to Town $ 225,000.00 l

Miscellaneous Debits to Retained Earnings 9,087,554. I I Total $ 9,312,554.11 Total Retained Earnings at December 31,1997 $ 14,473.237.49 100 l' ears ofService ~ Page 18

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Compara tive incom e S ta temen t Opera ting S ta tem en t increase 1997 1996 (Decrease)

Operating Resenue $ 27,752,130,70 $ 26,431,189.55 $ 1,320,941.15 Operating Expense...

Production $ 645,572.80 $ 604,639.49 $ 40,933.31 Purchased Power Expense 22,760,781.36 21,415,235.10 1,345,546.26 Transmission Expenses 1,508,227.53 1,273,430.95 234,796.58 Distribution Expenses 586,277.00 454,356.72 131,920.28 General Expenses 1,496,057.71 1,443,646.55 52,411.16 Depreciation 596,991.67 579,987.55 17,004.12 Taxes 26,498.00 26,759.16 (261.16)

Total Operating Expenses $ 27,620,406.07 $ 25,798,055.52 $ 1,822,350.55 Net Operating Revenues $ 131,724.63 $ 633,134.03 $ (501,409.40)

Other Income...

Income From Contract Work $ $ 0.00 $ 0.00 Interest & Dividend Income 318,659.15 669,219.37 (350,560.22)

Misc. Nonoperating income 9,610.10 162,674.88 (l53,064.78)

Total Other Ineome $ 328,269.25 $ 831,894.25 $ (503,625.00)

Miscellaneous Income Deductions...

Other Income Deductions $ 145.51 $ 65.21 $ 80.30 Total Income Deductions $ 145.51 $ 65.21 5 80.30 Inc. Before Interest Charges $ 459,848.37 $ 1,464,963.07 $ (1,005.114.70)

Interest Charges...

Other Interest Expense $ 88.06 $ 243,648.06 $ (243,560.00)

Total Interest Charges $ 88.06 $ 243,648.06 $ (243,560.00)

Net income Before Return to Town $ 459,760.31 $ 1,221,315.01 $ (761,554.70)

Less Return to Town 225,000.00 225,000.00 0.00 Net income (Loss) $ 234,760.31 $ 996,315.01 $ (761.554.70) i 100 l' ears ofService ~ Page 19

l i

in co m e S ta tem e n t D e tail Expenses January 1,1997 to December 31,1997  !

Production  ;

Nuclear Power Generation Operation Supervision $ 16,010.85 Fuel 29,472.23 Coolants and Water 1,730.36 Steam Expenses 12,079.57 Electric Expenses 3,743.48 Miscellaneous Nuclear Power Expenses 28,708.76 Maintenance Supervision 15,297.81 Maintenance of Structures 3,988.82 Maintenance of Reactor Plant Equipment 17,101.97 Maintenance of Electric Plant 14,871.03 Maintenance of Miscellaneous Nuclear Power 586.11 Total Nuclear Power Production Expenses $ 143,590.99 Other Power Generation...

Operation Supervision $ 27,588.34 Fuel Oil 50,561.28 Fuel Natural Gas 73,855.56 Generation Expense 80,536.31 Generation Expense-Lube 6,838.84 Miscellaneous Other Power Generation Expenses 64,040.72 Maintenance Supervision 27,595.10 Maintenance of Structures 84,442.20 Maintenance of Generation and Electric Plant 86,459.71 Maintenance of Miscellaneous Generation Plant 63.75 Total Other Production Expenses $ 501,981.81 Purchased Power Expenses...

Purchased Power-Entitlement $ 21,730,513.31 Purchased Power.Nepex 994,640.44 System Control and Load Dispersion 15,881.00 Other Expenses Purchase Power 10.746.61 Total Purchased Power $ 22,760,781.36 Distribution Expenses... j

! Operation Supervision and Engineering $ 27,591.50 Station Expenses 108.864.06 l

Overhead Line Expenses 10,597.60

. Underground Line Expenses 999.94 1

100 Years ofService ~ Page 20

l l

l  ;

.. 7. .

- - - . a In c o m e S ta te m e n t D e tail Expenses l January 1,1997 to December 31,1997

! Distribution Expenses (continued) l

! Street Lighting & Signal Expenses 13,288.58 Meter Expenses 65,713.15 l Customer Installation Expense 5,174.34 l Miscellaneous Distribution Expenses 6,122.68 l Maintenance of Supervision and Engineering 29,381.43 Maintenance of Station Equipment 690.10 Maintenance of Overhead Lines 255,543.16

! Maintenance of Underground Line 39,483.20 Maintenance of Line Transformer 19,186.93 Maintenance of Street Lighting 6,138.51 Maintenance of Meters 1,411.36 Maintenance of Miscellaneous Distribution Plant (3,909.54)

Total Distribution Expenses $ 586,277.00 l Transmission Expense $ 1,508,227.53 General...

Supervision $ 12,385.30 l Meter Reader Expenses 54,187.83 Customer Records and Collection Expenses 245,614.66 Advertising Expense 2,772.09 Miscellaneous Sales Expense (RCS) 10,922.65 Administrative and General Salaries 317,043.70 Office Supplies and Expenses 18,493.51 ,

Administrative Expenses Transferred (6.93)

Outside Services Employed 210,337.78 Property Insurance 73,881.76 injuries and Damages 36,878.51 Employee Pension and Benefis 369,466.36 Regulatory Commission Expenses 4.59 General Advertising Expense 3,547.53 Miscellaneous General Expenses 47,171.43 Maintenance of General Plant 49,816.27 Transportation Expenses 43,540.67 j Depreciation Expense 596,991.67  !

f l Total General and Depreciation Expenses $ 2,093,049.38 l l

Real Estate and Other Taxes $ 26,498.00 Total Operation Expenses $ 27,620,406.07 i

1001' ears ofService ~ Page 21 l

l

. m._ . . . , . _ _ _ _ - m.~ .. 1 - . ..,-~ m.m... .m ._. m - m... .. ) ._,... _ . d in c o m e S ta te m e n t D e tail Opera ting Reven ue January 1,1997 to December 31,1997 Sales to Residential Consumers 5 6,334,133.84 Sales to Commercial Consumers 1,460,896.02 Sales to Power Consumers 12,638,848.51 Private Property Lighting Sales 77,770.73 Municipal Sales...

Iludson Street Lights 93,236.74 Iludson Municipal Buildings 63,783.79 liudson Municipal Power 330,082.74 All Electric Municipal Buildings 443,003.15 Stow & Berlin Street Lights 5,894.75 Stow, Maynard & Other Municipal Senice 97,721.08 Sales for Resale Total Revenue from Sales of Electricity $ 21,545,371.35 Power Adjustment Charges...

Residential Sales $ 856,244.01 Commercial Sales 291,203.60 Power Sales 4,374,901.85 Private Property Lighting 12,704.92 Municipal Power Adjustment Charges..

Street Lighting Stow et al 821.55 Municipal Power liudson 89,836.35 Municipal Commercial Iludson 12,982.63 Municipal Power Stow et al 21,448.52 Municipal Commercial Stow et al 2,927.66 Municipal All Electric 70,226.58 Miscellaneous Electric Sales 433.111.52 Total Power Adjustment Charges $ 6,166,409.19 Other Income..

Other Electric Revenues (RCS, etc.) $ 40,350.16 Total Income $ 27.752,130.70 I

I 100 Years ofService ~ Page 22

"m  %,, a 9 9-4 4 A.

Statement of Changes in Fin a n cial Positio n Funds were provided from . . .

Operations . . .

Net income $ 459,760.31 Miscellaneous Credits to Surplus 200,664.28 Return ofInvestment 10.056.83 l Total Funds Provided $ 670,481.42 Funds were used for . . .

Increase (Decrease) to Utility Plant $ (364,070.29)

Establish Rate Stabilization Trust Fund 9,087,554,11 Return to Town ofIludson 225,000.00 Decrease (Increase) in Deferred Credits 20,942.27 l

Total $ 8,969,426.09 l 1nercase (Decrease) in Working Capital $ (8,298,944.67) l Increase (Decrease) in Working Capital Represented by . . .

Cash $ (8,521,410.53) i Receivables 195,515.76 l Materials and Supplies 20,236.14 Prepayments 133,281.63 Interest Receivable (32,850.52)

Accrued Utility Revenues 412,169.25 Miscellaneous Deferred Debits 0.00 Miscellaneous Accrued Liabilities 29,056.62 Accounta Payable (533,062.84)

Taxes Payable (1,880.18)

Total $ (8,298.944.67) l l

l l

100 Years ofService ~ Page 23

c . . . + . . - - - , ._ ,

Foo tn o te to Finan cial Sta tem en ts The lludson Light and Power Department's accounting policies are in conformity with generally accepted accounting principals and conform to the uniform system of accounts prescribed for Public Utilities by the Federal Energy Regulatory Commission as modified by the Massachusetts Department of Public Utilities for muniipal owned lighting plants.

Revenues are computed on the basis of monthly billings to customers. Unbilled revenues from the sale of energy are not accrued as of the end of the calendar year. Miscellaneous electric sales adjustment is for overbilled or underbilled power adjustment charges.

Electric Utility Plant Assets are stated at cost. The provision for depreciation is determined by the straight-line method based on a 3% annual depreciation rate. The cost of maintenance and repairs is expensed as incurred; renewals, replacements and betterments are capitalized.

Preliminary Survey Charges (Deferred Assets) incurred for proposed projects through MMWEC are deferred pending bonding of the proposed facility. Funds relating to MMWEC projects are refunded to the Department after bonding. Charges relating to projects which are undertaken by the Department are transferred to construction work in progress and eventually to utility plant on completion.

Projects abandoned by MMWEC or the Department are charged to expense.

Projects started but not completed are charged to Construction Work in Progress. Any project abandoned is charged directly to retained earnings.

Investments of the Depreciation Fund are in Certificates of Deposit in the State banking system as prescribed by law. Further, interest earned on these funds can only be used in the same manner as depreciation funds as prescribed by the Massachusetts General Laws.

Inventories: Cost of materials and supplies are valued at average cost on the First-In, First-Out basis (FIFO). Cost of fuel is based on average cost.

Segregated Funds: The Depreciation Fund is restricted to additions and replacements of plant, property and equipment under the General Laws of the Commonwealth of Massachusetts and regulations of state agencies.

During 1984 the Department set up an Insurance Escrow Account to self-insure for conditions that the Department may encounter in its day to day operations.

Pensions: The Department's employees are members of the Middlesex County Retirement System. The Municipal Light Board has established the Hudson Municipal Light Department Em-playee's Retirement Trust to reimburse the Town of Hudson for retirement costs ofits employees. This fund is maintained by the transfer of funds from the Department to the Trust based on actuarial studies performed by a professional actuarial consultant. An amount equal to $95,669.18 was transferred to the fund.

Rate Stabilization Trust: The Municipal Light Board has established this Trust to fund future l power supply costs for which the Department is presently obligated to make under Power Supply Agreements, so as to eliminate or reduce power supply costs and other presently ascertainable obliga- 1 tions, in order to remain competitive within the electric industry and for other pow er supply-related issues which the Trustees designate by vote. An amount equal to 59,087,554.1 I was transferred to the fund, of )

which $284,256.60 was transferred to operations cash during 1997.  !

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100 l' ears ofService ~ Page 24 i

Commitments and Contingencies: The Hudson Light and Power Departmen; has purchase contracts with the following sponsor companies and receives kilowatt-hour amounts from the entitle-ments listed:

Yearly Energy Cost kWh Pasny- Niagara River $ 210,965.50 18,476,415 Vermont Yankee- Yankee Atomic 192,493.59 4,744,754 Maine Yankee- Yankee Atomic 358,764.06 0 Central Maine Power- Wyman 185,074.69 2,740,460 Boston Edison- Pilgrim #1 1,275,993.12 16,083,511 New England Power System 2,172,719.69 67,847,320 MMWEC- Canal 286.76 0 MMWEC - Nuclear Mix #1 572,162.29 439,529 MMWEC -Millstone #3 386,260.41 0 MMWEC- Seabrook #4 1,227,691.67 14,563,077 MMWEC- Seabrook #5 153,249.61 1,622,000 MMWEC- Seabrook #6 12,669,126.82 110,278,017 Central Vermont Public Services 1,150,023.25 37,927,000 Taunton - Cleary #9 561,608.06 6,184,315 RFA- Refuse Fuel 664,340.44 7,001,537 Enron Power Marketing Inc. 33,626.25 860,900 Peabody Municipal Light Plant 44,094.59 370,899 Conn . Municipal Electric Energy Coop. 185,689.50 5,799,000

$ 22,044,170.30 294,938,734 New England Power Exchange $ 994,640.44 29,925,270 Total $ 23,038.810.74 324.864.004 Hudson obtains 890 kW of Seabrook Unit #1 on a direct ownership basis, for which the Department uses 100% equity financing. Hudson's ownership share of Seabrook Unit #1 is 0.07737%.

On June 30,1990, Seabrook was declared operational. Under the Joint Ownership Agreement, the joint owners are obligated to pay their pro rata share of Seabrook's operating cost. In addition, should any otherjoint owner fail to make any payment, the other owners may be required to increase their payments and correspondingly their equivalent percentage ownership of Seabrook capacity.

The Town of Hudson, acting through its Light Department, is a Participant in certain Projects of the Massachusetts Municipal Wholesale Electric Company (MMWEC).

. . - - - . _ . ~ . . _ ~ . . . - . - ~ .~. - .- _ - - - . . .- - <

100 Years ofSerrke ~ Page 25

1

=. -;'_s .

. ' l ' .

^

l MMWEC is a public corporation and political subdivision of the Commonwealth of Mas-sachusetts created as a means to develop bulk power supply for its Members and other utilities.

MMWEC is authorized to construct, own or purchase ownership interests in, and to issue revenue bonds to finance electric facilities (Projects). MMWEC has acquired ownership interests in electric facilities operated by other utilities and also owns and operates its own electric facilities. MMWEC sells all of the capability of each of its Projects to its Members and other utilities (Project Participants) under Power Sales Agreements (PSAs). Among other things, the PSAs require each Project Participant to pay its pro j rata share of MMWEC's costs related to the Project, which costs include debt service on bonds issued by MMWEC to finance the Project, plus 10% of MMWEC's debt service to be paid into a Reserve and {

Contingency Fund. In addition, should any Project Participant fail to make any payment, other Project i Participants may be required to increase (step-up) their payments and correspondingly their Participants' share of Project Capability to an additional amount not to exceed 25% of their original Participants' share of the Project Capability. Project Participants have covenanted to fix, revise and collect rates at least sufficient to meet their obligations under the PSAs.

MMWEC also contracts to purchase power from third parties, which is resold to Members and other utilities under agreements known as Power Purchase Agreements (PPAs).

The payments required to be made to MMWEC under the PSAs and the PPAs are payable solely from Light Department revenues. Under the PSAs, each Participant is unconditionally obligated to make payments due to MMWEC whether or not the Project (s)is completed or operating and notwithstanding the suspension or interruption of the output of the Project (s).

MMWEC operates the Stony Brook Intermediate Project and Stony Brook Peaking Project 3 fossil-fueled power plants. MMWEC has a 22.7 MW interest in the Wy man #4 plant, operated by Central Maine Power Company.

MMWEC's 11.6% ownership in the Seabrook Station nuclear generating unit represents a substantial portion of its plant investment and financing programs. In addition, MMWEC has a 4.8% i ownership interest in the Millstone 111 nuclear unit. Millstone Unit til was taken out of service on March 31,1996 and will remain shut down pending a comprehensive Nuclear Regulatory Commission review '

and approval of a start-up plan.

The MMWEC Seabrook and Millstone Project Participants, per the PSAs, are liable for their proportionate share of the cost of a nuclear incident at those nuclear power plants as outlined in the Price-Andersen Act. The Project Participants are also liable for the decommissioning expenses which are being funded through monthly Project billings.

l In November 1997, the Commonwealth of Massachusetts enacted legislation to restructure the electric utility industry. MMWEC and municipal light departments are not specifically subjected to the legislation. Ilowever, it is MMWEC's belief that industry restructuring and customer choice promulgated within the legislation, will have an effect on MMWEC and the Participant's operations.

MMWEC is involved in various legal actions. In the opinion of MMWEC's management, the outcome of such litigation or claims will not have a material effect on the financial position of the company.

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As of December 31, 1907, total capital expenditures amounted to $1,475,312,000, of which

$ 161,540,000 represents the amount associated with the Department's Project Capability. MMWEC's debt outstanding for the Projects included Power Supply System Revenue Bonds totaling

$1,264,050,000, of which $132,302,000 is associated with the Department's share of Project Capabili:y.

As of December 31,1997, MMWEC's total future debt service req >2irement on outstanding Bonds issued I for Projects under construction is $2,025,095,000, of which $225,498,000 will be billed to the Depart-ment.

Hudson's Light Department has entered into power purchase contracts or PSAs with MMWEC.

Under these agreements, the Department is required to make capacity or debt service payments to MMWEC. The aggregate amount of such required payments, exclusive of Reserve and Contingency j Fund billings, on Bonds outstanding and significant power purchase contracts through MMWEC as of I December 31,1997, is shown following:  !

Annual Cost  ;

For years ending December 31, 1998 $ 11,318,000 1999 11,337,000 2000 11,347,000 2001 11,349,000 ,

2002 11,350,000 I Later fiscal years 168.795.000 Total $225,496,000 in addition, the Depanment is required to pay its share of the operation and maintenance (O&M) costs of the units in which they participate. The Department's total O&M costs including debt service under the agreements were $17,573,000 and $17,439,000 for the years ending December 31,1997 and 1996, respectively.

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Cash Balance - January 1,1997 S 15,197,038.53 i

l- Received Receipts...

Residential Sales $ 7,163,852.27 Commercial Sales 1,765,518.59 Industrial Sales 17,205,416.96 Street Lighting 94,267.19 Yard Lighting 98,150.28 Municipal Sales 1,119,485.25 Consumer Deposits 98,065.00 Int. on Consumers' Deposits 19,718.22 Int.on Invested Funds 309,251.88 Rate Stabilization Trust 284,256.60 Sundry Revenues 2.644.685.33 Total Receipts $ 30,802,667.57 Paid Out Expenditures...

Returned to Town $ .225,000.00 Consumers' Deposits Refunded 80,947.20 Consumers' Deposits Interest Paid 4,051.46 Payrolls 1,526,304.47 inv. for Supplies, Serv., etc. 28,268.064.02 Rate Stabilization Trust 9,087,554.11 Employees' Retirement Trust 96.083.95 Total Expenditures 5 39,288,005.21 Cash Balance -- December 31,1997 $ 6.711.700.89 i

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Re ven u e from Sales o f Elec tricity January 1,1997 to December 31,1997 IIUDSON STOW OTilER TOTAL Res. Service "A" $ 3,015,398.75 $ 1,084,092.30 $ 50,006.11 $ 4,149,497.16 Res. Wtr. Ileater "E" 555,439.23 361,852.21 21,800.91 939,092.35

, A11 Elec. Service "F" 912,276.51 323,199.44 10,068.38 1,245,544.33 Com litg. & Air Cond. 3,072.06 1,582.78 0.00 4,654.84 l Com. Service "C" 1,087,002.64 362,497.21 6,741.33 1,456,241.18 l

Large Power "D" 11,779,628.44 859,220.07 0.00 12,638,848.51  !

Municipal All Elec. 103,323.70 0.00 339,679.45 443,003.15 l Municipal Service "C" 63,783.79 10.696.73 0.00 74,480.52 Municipal Power "D" 330,082.74 87,024.35 0.00 417,107.09 Street Lighting 93,236.74 5,826.85 67.90 99,131.49 Yard Lighting 67,141.28 9,839.83 789.62 77,770.73 Power Adjustment Charges...

Res. Service "A" $ 388,093.08 $ 142,469.86 $ 6.545.64 $ 537,108.58 Res. Wtr, lleater "E" 76,876.61 50,988.37 3,077.48 130,942.46 All Elec. Service "F" 137,754.90 48,913.27 1,524.80 188,192.97

, Com. litg. & Air Cond. 734.41 383.95 0.00 1,118.36 ,

I Com. Service "C" 217,064.31 71,697.53 1,323.40 290,085.24 i Large Power "D" 4,155,779.04 219.122.81 0.00 4,374,901.85 l

Municipal All Elec. 16,420.90 0.00 53,805.68 70,226.58 i Municipal Service "C" 12,982.63 2,927.66 0.00 15,910.29 l Municipal Power "D" 89,836.35 21,448.52 0.00 111,284.87 l Street Lighting 0.00 813.79 7.76 821.55 Yard Lighting 10.087.93 1.605.38 I i 1.61 12.704.92 l Total Rev. Each Zone $ 23,116,916.04 $ 3,666,202.91 $ 495,550.07 $ 27,278,669.02 l Misc. Electric Sales $ 433,111.52 Total Revenue from Sale of Electricity $ 27,711,780.54 Res. Service "A" $ 4,686,605.74 Res. Service "E" Wtr litr 1,070,034.81  ;

All Elec. Service "F" 1,433,737.30 Com. litr. & Air. Cond 5,773.20 Com. Service "C 1,746,326.42 Large Power "D" 17,013,750.36 Municipal All Elec. 513,229.73 j Municipal Service "C" 90,390.81 l- Municipal Power "D" 528,391.96 Street Lighting 99,953.04 Yard Lighting 90,475.65 Total $ 27,278,669.02 1

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1. ca se .# % a tWmm,1 +.va 5>W.v5%-hv u.st,.d4 m d aa+vesse + e ve m4 r eA+a M e ak>W '4* amew s w C h sm i s- *:n A 'edw eh haus sk uto wwase-. wes *4 -4%.-yem ee w *r4he.,rMe w u.4thh&b S ta tis tics l Kilo wa t t-h o urs G en era te d, Purch a s e d, Sold and Used January 1,1997 to December 31,1997 1

Kilowatt-hours Generated 9,570,263 .

Kilowatt-hours Purchased 324,864,004 )

Total Generated & Purchased 334,434,267 OTIIER IIUDSON STOW AREAS Kilowatt-hours Sold...

l Residence Service "A" 32,787,050 12,034,870 552,838 j Service "E" (wtr htr) 6,492,938 4,306,441 259,926 All Electric Service "F" 11,634,756 4,131,182 128,782 l

litg. and Air Cond. for Business 36,762 19,220 0 Commercial Service "C" 3,588,979 10,868,858 66,245 l Large Power "D" 208,033,613 10,968,758 0 l Departmental Usage 267,507 0 0 Municipal All Electric 1,386,900 0 4,544,400 l Municipal Service "C" 649,874 146,549 0 l' Municipal Power "D" 4,496,990 1,073,660 0 Street Lighting 1,157,881 40,436 388 >

l l Yard Lighting 550,058 80,699 5,584 l Total Kilowatt-hours Each Zone 278,363,187 36,390,794 5,558,163 Total Kilowatt-hours distributed 320,312,144 l Kilowatt-hours sold for resale 0 Kilowatt-hours used at Station and misc. 1,584,426 Kilowatt-hours lost in Station & Transmission 2,056,367 Kilowatt-hours lost in Distribution Lines 10,481,330 Total 334,434,267 Percent lost in Distribution Lines 3.1340 %

Percent lost in Station and Transmission Lines 0.6419 %

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J yg 9 Five- Ye a r C o m p a ra tive Ele c tric Sales Da ta 1997 1996 1995 1994 1993 Cmtaners.

Residential 9103 9052 8,986 8,939 8,666 Camutial 1010 995 1,003 973 1,102 i fixlustrial 165 173 1M 174 189 )

Niinicipd 93 92 91 92 89 Otlus 183 IM 174 167 161 Total 10,554 10,4 % 10,418 10,345 10,207 Kilowatt-hour Saks Residential 72328783 72355738 70,357,575 70,167,817 67,593,087 Camucial 145800M 13185284 12,507,528 11,979,034 11,747,838 lixtustrial 219002371 230279236 222,450,581 210,469,687 163,787,225 hkinicipd 13497078 13405465 13,115,187 13,363,742 13,290,623 Other 636341 631523 599,900 577,213 5.M M9 Total 320G44637 329857246 319,030,771 306,557,493 256,973,422 lbrnuts illksi.

Residential- $ 7,190,377.85 $ 6,789,140.00 $ 6/02,188.07 $ 6,400,309.94 $ 7,391,178.23 Camurial 1,752,099.62 1,525,M2.13 1,491,902.26 1,484,858.75 1,7Gif)01.18 Irx!ustrial 17,013,750.36 16.980,407.00 17,234,592.86 17,237,5 %.% 17,097,789.02 hiinicipd 1,231,965.54 1,174,029.34 1,167,060.57 1,193,990.80 1,406,281,43  !

Other 90,475_gg, 86,085.49 80,715.29 70.364.57 75,630.22 Total * $ 27,278,669.02 $ 26,555,303. % $ 26,576,459.05 $ 26,387,121.02 $ 27,674,880.08

• lks 1M nflat cxunattitrg cnfaMnentsforpt>n tr'c)trullc!L 100 l' ears ofService ~ Page 31 j

._ ._..__.~._..._____._--._____._.__a Pa rs o n n el Hudwn blunicipalLight Board Weedon G. Parris, Jr., Chairman Roland L. Plante, Member llorst Iluehmer, Clerk Staff Anthony J. Monteiro Scott M. Baker David Bianco l l

Robert A. Booth Paul J. Buteau Charles J. Charbonneau l Emanuel J. Chaves Ronald Chiasson, Jr.

Karen A. Corbin Walter G. Farquharson William D. Gould Carolyn A. Ilanson Michael J. Hope Joan L. Jennette Frank E. Kelley Gregg R. Kenyon Mary Ann Kenyon Kevin E. Kittredge Yakov D. Levin llelena M. Marshall David M. Mega Daniel J. Murphy Mark R. Parker Ricky C. Peck Joseph M. Perry Eduino M. Rego W. Jerry Roosa Joseph J. Ressley, Jr.

Judith A. Salser Karca F. Sawyer Karl M. Siniawski Richard L. Veo Jason Wardwell hiain Office: 49 Forest Avenue,iludson,3fA 01749 l Power Station: 59 Cherry Street, fludson,31A 01749 l Office flours: Afonday through Friday (excluding holidays),8:00 a.m. to 4:30 p.rn.

i Office Telephone Number: (978) 568-8736; Fax: (978) 562-1389 Emergency After-flour Telephone Number: (978) 562-2368 100 Years ofService ~ Page 32 k

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. PAID PERMIT No. 42 III'DSON, MA e'

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Hudson Light & Power Departnient I 49 Forest Avenue ' Hudson, Massachusetts 01749 (978) 568-8736 E

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