ML20072T056: Difference between revisions

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{{Adams
#REDIRECT [[BECO-91-047, Beco Annual Rept 1990, & Securities & Exchange Commission Form 10K]]
| number = ML20072T056
| issue date = 12/31/1990
| title = Beco Annual Rept 1990, & Securities & Exchange Commission Form 10K
| author name = Wagner E
| author affiliation = BOSTON EDISON CO.
| addressee name =
| addressee affiliation = NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
| docket = 05000293
| license number =
| contact person =
| document report number = BECO-91-047, BECO-91-47, NUDOCS 9104170187
| document type = ANNUAL REPORTS (COMPANY-FINANCIAL), TEXT-SAFETY REPORT
| page count = 101
}}
 
=Text=
{{#Wiki_filter:. . . . _ _ . _ . . ~ . . . . . _ _ _ _ _ _ . _ _ _ . _. _ __ _ _ . _ .. _... _ __ _ _ .. _ _..                        . - ._ _....  . .. _ __
10CFR50.71(b) 10CFR140.15(b)(1)
N.
nosronumson 26 Braintree Hdi Ofhce Park                                    ]
Braintree, Massachusetts o2184 l
(h$,g                                                                                      April 10. I991 Nuclear f.ngme6*9                                                                            BECo 91-04y
;                      U.S. Nuclear Regulatory Commission                                                                                              I Document Control Desk Hashington, DC- 20555 License DPR-35              :'
Docket 50-293 Annual financial Statement In-accordance with 10CTR50.71(b) and 10CFR140.15(b)(1), Boston Edison is                                                      i submitting the 1990 Annual Report and the Securities and Exchange Commission (SEC) form 10-K which corresponds to the 1990 Annual Report,
,                      If you have any questions regarding this submittal, please contact our l                      Licensing Division Hanager, John Dietrich, at (617) 849-8948.                                                                  ,
()(A pm.-
                                                                                                                        'E.    . g 3br w_.-
HTL/cic/5652
                      -cc:            Mr. R. Eaton, Project Manager                                                                                  <
OlvisionofReactorProjects-1/11 Office of Nuclear Reactor Regulation Hall Stop 1401 U. S. Nuclear Regulatory Commission 1 White Flint North 11555 Rockville Pike Rockville, MD 20852 U. S. Nuclear Regulatory Commission Region I 475 Allendale Road King of Prussia, PA 19406 i                                      Senior NRC Resident Inspector Pilgrim Nuclear Power Station 1-bk"[E$o$[$0bb$b93                  PDR Mh L....................    . . .        .                                                                                                              .
 
l SECURITIES AND EXCilANGE COMMISSION Washington D.C. 20549 l                                                                                                            FORM 10.K s
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF Ti!E SECURITIES EXCilANGE ACT l                                        OF 1934 [ FEE REQUIRED).
!                                        For the fiscal year ended December 31,1990 OR
[        ] TRANSITION REPORT PURSUANT TO SECTION 13 OR l$(a) OF TiiE SECURITIES EXCIIANGE ACT OF 1934 [NO FEE REQUIRED)
;                                      For the transition period from                                        to 1
Commission file number 12301 IlOSTON EDISON COMPANY (l'.sact name of registrant as specined in its charter)
Massachusetis                                                                            041278N10 (State or other junsdicuan of                                                              (1.R.S. Employer incorjoration or organization)                                                              IdentiGcation No.)
j                                        800 lloylston Street, llosion, Massachusetts                                                                      02199 i
(Address of pnncipal executive olhces)                                                                (Zip Code)
Registranl's telephone number, including area code 617 424 2000 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each clau                                                                                        on which registered 1                        Common Stock                                                                                                Boston Stock Exchange -
(par value 55 per share)                                                                                    New York Stock Exchange Preference Stock:                                                                                          floston Stock Exchange
                          $1.46 Series                                                                                                New York Stock Exchange                    j (par value $1 per share)
!                        Cumulative Preferred Stock,                                                                                New York Stock Exchange 8.88% Series (par value S100 per share)'
First Mangage Bonds:                                                                                        New York Stock Exchange
,                        Series P,91/4% Due 2007 Securities registered purusant to Section 12(g) of the Act None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shoner period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X    NO State the aggregate market value of the voting stock held by non. affiliates of the registrant as of March 1,1991 computed by reference to the last reported sale pnce of the Common Stock,55 par value, of the registrant of the New York Stock Exchange Consolidated Tape on that date: 5787,168,183.
Indicate the number of shares outstanding of each of the registrant's classes of common stcrk, as of the latest practicable date, Clau                                                                                      Outstanding at March 1,1991 Common Stock, $5 par salue                                                                                                39,113,947 shares Documents incorporated by Reference -
Part                                                                          fWument 1,11 and Ill                Portions of Annual Report to Shareholders for Year Ended December 31,1990 t-I!!                  Portions of definitive Proxy Statement dated March 21,1991 for Annual Meeting of Stc(kholders to be held May 2,1991.
Exhibit List appears on page 32.
 
I o.
BOSTON EDISON COMPANY ANNUAL REPORT ON FORM 10-K                                                              _
pftember 31. 1900 PART I                                                                            PAGE Item          1. Business.                                                          2 Item        2. Property and Power Supply.                                        17 Item        3. Legal Proceedings.                                                23 Item        4. Submission of Matters to a Vote of Security Holders.              24 PART II Item        5. Market for the Registrant's Common Stock and Related Stockholder Matters.                                                      28 Item        6. Selected Financial Data.                                          29 Item        7. Management's Discussion and Analysis of Results of Operations      29 and Financial Condition.
Item        8. Consolidated Financial Statements and Supplementary Data.          29 Item      9. Changes in and Disagreements with Accountants on Accounting and financial Disclosure.                                        29 PART III Item 10. Directors and Executive Officers of the Registrant.                    30 Item 11. Executive Compensation.                                            30 Item 12. Security Ownership of Certain Beneficial Owners and Management. 30 Item 13. Certain Relationships and Related Transactions.                    31 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 32
 
i PART I                                      '
Item 1: BUSINESS                                                                                                                                                    i Item 1 (a): GENERAL DEVELOPMENT OF BUSINIS$
Item 1 (a) (1): DESCRIPTION OF BUSINESS Boston Edison Company ("the Company") is an investor-owned re public utility engaged in the energy and energy services business,gulated                                                                            which includes the generation, purchase, transmission, distribution and sale of
            - electric energy and the development and implementation of demand-side management programs. It was incorporated in 1886 under the laws of The                                                                                              '
Commonwealth of Massachusetts.                                                                                  Its principal executive offices-are located at      .
800 Boylston Street, Boston, Massachusetts 02199, and its main telephone number is (617) 424 2000.
Item 1 (b):                                  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company operates solely in the electric utility business.                                                                      In 1989 the Commonwealth of Massachusetts Department of Public Utilities (the "DPU")
granted interim approval for the formation of Harbor Electric Energy Company
("HEEC"),'a wholly owned regulated subsidiary of the Company. The subsidiary                                                                                        >
commenced supplying transmission service to the ".:ssachusetts Water Resource                                                                                        '
Authority in 1990.
Item 1 (r):                                  NARRATIVE DESCRIPTION OF BUSINESS Item 1 (c) (1) (1): PRINCIPAL PRODUCTS AND SERVICES The Company supplies electricity at retail-to an area of approximately 590 square alles within 30 miles of Boston, Massachusetts, encompassing the City of Boston-and-39 surrounding cities and towns. -The population of the territory served with electricity at retail is approximately 1,500,000. At December 31, 1990, the Company served approximately 640,000 customers. The Company also supplies electricity at wholesale for resale to other utilities and municipal electric departments. For information relating to the principal classes of services from which the Company derives its electric revenues, see-selected consolidated sales statistics contained on page 37 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
Item 1 (d (1) (ii):                                                          EXPECTED PLANT EXPENDITURES AND RE'. ll0 FINANCING          y For certain information.concerning the Company's expected plant-expenditures and related financing, see Management's Discussion and Analysis contained on Pages 17 through 18 of the Annual Report to Shareholders for the
          . year ended December 31. 1990, incorporated herein by reference.
                                                                                                                                      - - . _ . _ _ _ . - _ . . _ _ ~ . _ - - - , _ _ _ _ _ , _ _ _ . . - _ _ _ , _ . . _ . . _ _ . - - , - . . - _ _ _ . . , . - _ -  -                          -
 
Plant ExDRditEn.          The Company's most recent estimated plant expenditures, which are subject to continuing review and adjustment, sinking fund requirements and long-term debt maturities for the periods 1991 through 1995 are shown in the following table.
($ in 000's in table and notes to table) 19H      DR                          19B    B14    19M Plant Expenditures (1)              $231,000 $202,000 $182,000 $206,000 $192.000 AFUDC (2)                              8,000  10,000                        8,000  8,000  8,000 First Mortgage Bond Haturities and Sinking Fund Requirements        6,800  21,800                        6,800  6,800  31,800 Debentures                              -            -                        -      -    100,000 Medium-Term Note Haturities            50,000        -                      50,000 50,000    -
Handatory Sinking Fund - 7.27%
Preferred Stock                      -            -                      2,000  2,000  2,000 Stated Rate Auction Preference Stock (3)                            -            -                      -      -      -
(1)  Included in the table are $65,000 of estimated contractual obligations at December 31, 1990 for plant and equipment (including nuclear fuel). This excludes anticipated expenditures for the proposed Edgar Energy Park; see Item 2 " Property and Power Supply", subheading " Planned Facilities".
(2)  Based upon assumed allowance for funds used during construction ("AFUDC")
accrual rates of 7.5% - 8.5%.
(3) See Note 5 of Notes to Consolidated Schedules of Capital Stock and Indebtedness contained on Page 25 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference, for information on potential mandatory redemption requirements on the Company's outstanding Stated Rate Auction Preference Stock commencing November, 1991.
Funds generated internally represented approximately 73%, 62% and 43% of plant expenditures in 1990, 1989 and 1988, respectively. Plant expenditures associated with work at Pilgrim Station approximated $32,000,000 in 1990,
    $30,000,000 in 1989 and $45,000,000 in 1988. The remaining plant expenditures of approximately $224,000,000 in 1990 were primarily related to improvements in the Company's transmission and distribution systems and fossil units. It is expected that a portion of future plant expenditures will be funded internally.
Remand-Side Manaaement Proaram Excenditures. The Company plans to spend significant amounts as part of its energy conservation plan in its retail service area. Included in these expenditures is a portion of the $"'i,000,000 resulting from a Settlement Agreement effective November 1, 1989 wit.. the Commonwealth of Massachusetts Department of Public Utilities (the "DPU Settlement Agreement"), for which the Company will not seek recovery as discussed further in " Rate Proceedings and Pilgrim Nuclear Power Station and Outlook for Future" hereunder. On March 15, 1991, the Company filed with the DPU for pre-approval of all of its demand-side management programs including those covered by the DPU Settlement Agreement. For those demand-side management programs not covered by the Settlement Agreement, the Company is seeking recovery of the cost, and for recovery of lost base revenues associated with the implementation of those demand-side management programs, and an incentive consistent with similar filings of other Hassachusetts electric utilities. The Company has expended approximately $29,000,000 during 1990 for demand-side management programs of which approximately $22,000,000 is
 
associated with the previously discussed DPU Settlement Agreement. See also
      " Rate Proceedings, Pilgrim Nuclear Power Station, and Outlook for future"        -
hereunder.
L_louidity and Horkina Caoital Rtquirements: Financing. The Company's estimate of working capital needs for calendar years 1991 and 1992 is expected to be consistent with historical levels, except for the additional impact of the
      $77,000,000 of expected future cash outlays in 1991-1992 as part of the settlement agreements (of which approximately $54,000,000 are classified as a current liability on the Company's balance sheet). Approximately $68,000,000 of similar payments were made to the settling parties in 1990. The Company meets working capital requirements, as well as the interim financing necessary for its current program of plant expenditures, primarily by internally generated funds, supplemented by the issuance of short-term commercial paper and bank borrowings. The Company currently has short-term borrowing authority from the FERC of $350,000,000, which the Company deems adequate to cover working capital and other liquidity requirements (including the $77,000,000 of remaining future cash outlays as discussed above). As of December 31, 1990, the Company had $153,530,000 of short-term debt outstanding (which excludes
      $56,800,000 of long-term debt due within one year and $21,000,000 of short-term debt issued by the Company's wholly-owned subsidiary). The Company has available a three year $330,000,000 revolving credit facility which expires in Febru&ry, 1993. The Company is reducing this revolving credit            J facility to $200,000,000 as of April 1, 1991. As of December 31, 1990, the Company had not applied to the DPU for regulatory approval to incur long-term debt under this agreement, nor had the Company incurred any short-term debt thereunder. The Company is arranging some committed bank lines for April 1991 and also has arrangements with certain banks to provide additional short-term credit on an uncommitted and as available basis.
In June 1990, the Company issued $100,000,000 of 9 7/8% Debentures due 2020; in December, 1990 the Company issued another $100,000,000 of 8 7/81 Debentures due 1995. In December, 1990 Harbor Electric Energy Company
("HEEC"), a wholly-owned subsidiary of the company, borrowed the proceeds of
    $21,000,000 of short-term Sewage facility Revenue Bonds ("the Bonds") issued for the benefit of HEEC by the Industrial Development financing Authority of the City of Boston, Hassachusetts. The net proceeds of the Bonds were used by HEEC to reimburse the Company for advances extended to pay the costs of acquiring, equipping and installing certain electric transmission facilities owned and operated by HEEC.
In 1990, the Company redeemed both the remaining $6,110,000 of Series V Bonds (12 5/8%) and $10,029,000 of Series i bonds (12 1/4%). The Company's 1990 year-end capitalization ratios were 55% long-term debt, 11% preferred /
preference stock and 34% common equity as compared to 1989 year-end l    capitalization ratios of 52% long-term debt, 12% preferred / preference stock l    and 36% common equity as compared to 1988 year-end levels of 50%,12% and 38%,
l    respectively. The change from the 1988 year-end levels is primarily the result of the net increase in long-term debt securities. In September 1990, l    the Company filed for an additional 2,000,000 shares of common stock with the Securities and Exchange Commission to be issued in accordance with the Company's Dividend Reinvestment and Common Stock Purchase Plan. The Company l    does not expect to be able to satisfy net earning requirements necessary to l    issue additional shares of cumulative preferred stock before the second quarter of 1991. In addition, without approval of the holders of the Company's common stock, the aggregate liquidation value of all outstanding shares of preference stock cannot exceed $100,000,000; following the issuance I ..
of 500,000 shares of Stated Rate Auction Preference Stock in 1988, the Company may not issue additional shares of preference stock having a liquidation value                                                    l in excess of approximately $10,000,000 without obtaining such approval,                                                          j Rate Proceedings. Pilorim Nuclear Power Station. and Outlook for future                                                          l On October 31, 1989, the Commonwealth of Massachusetts Department of                                            <
Public Utilities (the "DPU") approved a Settlement Agreement effective November 1,1989, (the "DPU Settlement Agreement"), relating to certain DPU proceedings involving the Company. On November 5, 1990, the Federal Energy Regulatory Commission (the "FERC") approved the purchased power contract settlement agreements (the " Wholesale Settlement Agreements") relating to claims filed by certain wholesale customers of the Company in conjunction with the 1986-1988 outage at Pilgrim Nuclear Power Station (" Pilgrim Station"). As a result of the DPU Settlement Agreement and the Hholesale Settlement Agreements, the Company recorded in the fourth quarter of 1989 a before-tar charge of $178,650,000, with an after-tax effect of approximately $106,280,000 or $2.78 per share of common stock. This charge was included in the 1989 year-end Statement of Income as a component of "Other Income (Loss)"
consistent with accounting practice and presentation applicable to the electric utility industry.                                            The components associated with this 1989 non-recurring charge to earnings are not recoverable thr 'gh rates from either the Company's retail or wholesale customers.
The non-recurring charge to earnings associated with all of the Settlement Agreements, totaling approximately $178,650,000 before taxes, included approximately $80,000,000 for demand-side management programs,
                                $31,000,000 for certain replacement power costs, $36,000,000 for litigation, regulatory commission and other expenses and the write off of the remaining
                                $31,000,000 of-previously deferred incremental nuclear outage costs incurred prior to 1989. Prior to the October 1989 Settlement Agreements, previously deferred incremental nuclear outage costs were being amortized to expense (as part of normal operating expenses) over a five year period consistent with previous retail rat 6 orders from the DPU and wholesale contract provisions.
                                              -The Company made cash outlays relating to all Settlement Agreements of approximately $8,000,000 in 1989 and approximately $68,070,000 for the year ended December 31, 1990. As of December _ 31, 1990, the Company anticipates making future cash outlays of approximately $77,000,000 as part of these approved settlement agreements (of which approximately $54,000,000 are classified as a current liability on the Company's balance sheet).
In connection with the OPU Settlement Agreement._the Company has agreed to limit its retail revenue increases prior to November 1,1992 to approximately 2% per year, subject to adjustment based on Pilgrim Station's-performance. Accordingly, the Company's ability to maintain or increase earnings through October 31, 1992, will depend primarily on its ability to control costs and increase kilowatthour sales, as well as the efficient operation of Pilgrim Station. During the performance period November 1,1989 -
through October 31, 1990 the Company received approximately $20,000,000 in accordance with the retail revenue increase previously discussed, adjusted for i
5-
 
Pilgrim Station performance; during that period Pilgrim Station operated at a          j
;              capacity factor of approximately 68% which was within the neutral zone of            a performance per the DPU Settlement Agreement.      Effective November 1, 1990 annual retail revenues increased an additional $22,500,000, subjectto 3              adjustmentbaseduponPilgrimStation'sperformance. In addition, if the Company would not otherwise achieve retail rates of return of 11.5% in 1991 and 12.0% in 1992, the Company may make certain accounting adjustments (but only to the extent that such adjustments do not result in the Company's exceeding such retail rates of return): 1) by reducing deferred income tax expense Dy up to $13,000,000 in 1991 and up to $23,000,000 in 1992 and (ii) by
;              accelerating the amortization period of certain municipal property tax abatements totaling approximately $37,000,000 from six to three years. During the period November 1, 1992 through October 31, 2000, the Company has agreed to institute a new cost recovery mechanism, which is also tied to Pilgrim Station's performance, for a portion of the Company's investment and costs related to Pilgrim Station. For further discussion of regulatory and other matters concerning Pilgrim Station, please refer to Item 1(e) " Additional              ,
Information", subheading " Nuclear" hereunder.
A large portion of the Company's kWh sales are in the commercial sector as compared to the industrial sector. The New England area is currently experiencing a sluggish economy. Consequently, the Company does not f
anticipate significant growth in retail kWh sales. Future revenues commencing in February and July,_1991 will include annual rate increases of _ $6,800,000
;              and $2.800,000, respectively from certain wholesale customers; such increases are subject to refund pending the outcome of a wholesale rate hearing at FERC. The Company may also experience reduced future growth in base revenues as a result of implementation of demand-side management programs; see
                " Demand-Side Management Program Expenditures" preceding.
Item 1 (c) (1) (iii):    S0_URCES AND AVAILABILITY Of FUEL SUPPLY The Company's generation units, other than Pilgrim Station, are oil or oil and natural gas-fired. Fossil fuel related expenses (excluding net purchased power) accounted for approximately 21%, 241 and 19% of the Company's total electric operating expenses in each of the-years ended December 31, 1990, 1989, and'1988. respectively. The Company's_ generation (excluding net purchased power) by type of fuel since 1986 and the cost of fuels during that period are set forth below:
Percentage of Company                  Average Cost in Cents per Hillion Generation by Source (%)                  BTU's on a Burned Basis (f) 19M M 1H.6        192    12M    19E      M      19.81 1932    121 Oil .... 33.6 53.7 89.8        76.3  81.9    275.72 267.08 228.53 278.8 239.4 Nuclear. 33.1 14.6        --    --  10.4    59.05    56.79    --    --  102.5 Nat. Gas. 33.3 31.7_ 10.2      23.7    7.7    235.15 234.26 212.83 231.1 227.7 For information relating to alternative energy sources and the long-range                          l
.      availability to the Company of purchased power alternatives from Canadian energy resources and/or independent power producers, see Item 2 " Property and Power Supply".
011      The majority of the Company's residual oil purchases involve imported oil acquired primarily from international suppliers. The Company has contracts with major oil companies which can supply most of the Company's estimated requirements, assuming no major disruptions in the oil producing regions of the world. Hithin contract provisions, the Company retains the ability to purchase significant amounts of oil or natural gas in the spot market when it is economical to do so.
liitu tiLI A . The Company has the ability to burn natural gas, oil, or                            ,
both simultaneously (depending upon the ancunt of natural gas available and                                i the difference in price between natural gas and residual oil) at the New Boston generation units and the Hystic Unit #7 gtneration unit. Natural gas                              -
is supplied to the units on an "interruptible" basts; such a contract permits                            1 interruptions in deliveries by the supplier when natural gas pipeline capacity                            '
is needed to refill storage facilities or serve other year-round customers.
Deliveries of natural gas to the Company's generation units from suppliers may also be dependent on the availability of pipeline capacity to the New England region and/or on competitive forces prevailing in the pipeline industry.
Purchased Powert See Item 2 " Property and Power Supply" for information relative to the availability to the Company of purchased energy from other utilities and/or the New England Power Pool (*NEP00L"). Such sources supplied 16.3%, 21.8%, and 39.3% of the Company's total system kWh output in each of the years ended December 31, 1990, 1989 and 1988, respectively. See also Item 2 " Property and Power Supply" hereunder for further information on potential transmission line access issues facing the New England region in the near future, and Company planned future purchases of power from cogenerators and/or independent power producers.
Nuclear. The cycle of production and utilization of nuclear fuel consists of (1) the mining and milling of uranium ore (2) the conversion of uranium concentrate to uranium herafluoride; (3) the enrichment of the uranium hexafluoride; (4) the fabrication of nuclear fuel assemblies; (5) the utilization of the nuclear fuel in the generation station reactor; and (6) the storage and reprocessing or disposal of spent nuclear fuel assemblies.
The Company's contractual entitlements for supplies of uranium concentrates are at the present time sufficient to permit operation of Pilgrim Station through 1998.        The Company has also entered into contracts for other segments of the nuclear fuel supply cycle which will satisfy the requirements of Pilgrim Station with respect to such segments through the approximate dates as follows: conversion - 1991; enrichment - 2001; fabrication - 2004.
For information relating to the Company's spent nuclear fuel storage facilities and disposal of spent nuclear fuel and the impact on the Company of the Nuclear Haste Policy Act of 1982, see Item 1 (c) (1) (xii) " Environmental Matters" hereunder.
                                                                                                            *u Item 1 (c) (1) (iv):      FRANCHISES                                                                        -
The Company by virtue of its charter, which is unlimited in time, has the right to engage in the business of producing and selling electricity, steam and other forms of energy, has powers incidental thereto and is entitled to all the rights and privileges of and subject to the duties imposed upon electric companies under the General Laws of Hassachusetts. The locations in public ways for the Company's electric transmission and distribution lines are obtained from municipal and other Commonwealth authorities which in granting such locations act as agents of the Commonwealth. The action of such authoritiesisinsomecasessubjecttoappealtotheDPU. These locations are unlimited in time, but the rights obtained therefor are not vested and are subject to the action of such authorities and the legislature. See also Item 1(c)(1)(x) '' Competitive Conditions" hereunder.
Item 1 (c) (1) (v):      SEASONAL NATURF OF BUSINESS The number of kilowatthours of electricity sold by the Company in its territory has historically been less in the spring and fall than during winter and summer as sales vary somewhat with weather conditions.                    The Company's electric revenues and operating income are also dependent on a variety of other factcrs, which are not necessarily seasonal, including contract sales of system and unit power to other electric companies, changes in the Company's rates and charges, the extent and nature of transactions involving NEPOOL, and general economic conditions. The Company has been directed by the DPU to bill a " summer surcharge" rate to retail customers during the billing months of July through October, which is usually when the Company has experienced its annual peak load. Accordingly, a significant portion of annual earnings occurs in the Company's third quarter. In addition, the DPU has directed that large commercial and industrial customers be billed throughout the year pursuant to mandatory time-of-use rates. Approximately 150 commercial and industrial customers are transferred to time-of-use rates each year (an estimated 1,800 customers are on time-of-use rates as of the end of 1990).
See Item 2
* Property and Power Supply" for information relative to the Company's 1990-1991 winter and 1990 summer peak loads. For further information on quarterly results, see Selected Consolidated financial Statistics - Supplementary Financial Information, (Unaudited), 1990 and 1989, Quarterly Consolidated financial Data contained on page 38 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
: 1. tem 1 (c) (1) (vi): HORKING CAPITAL PRACTICES The Company has no special practices with respect to working capital that would be considered unusual for the electric utility industry. For information relating to the operation of the Company's retail fuel and purchased power adjustment clause, see Note A.3 of Notes to Consolidated Financial Statements contained on page 27 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
Item 1 (c) (1) (vii): CUSTOMEJ,5 No material part of the business of the Company is dependent upon a single customer.
11cm 1 (c) (1) (viii):      BACKLOG - Not Abolied le Item 1 (c) (1) (ix): GQVERNMENT CONTRACIS No material portion of the Company's business is subject to renegotiation or termination of contracts at the election of the U.S. Government.
Item 1 (c) (1) (v): COMPETITIVE CONDITIONS                                        l i
The Company, like other Hassachusetts electric companies, is protected to the following extent against other utilities offering service to retail customers in any of the municipalities comprising the Company's service area:
first, another electric utility may not extend its service area to include municipalities other than those named in its agreement of association or charter without the authorization of the DPU granted after notice and public hearing; second, another company may not obtain an initial location for its lines in a municipality served by the Company without the approval of the municipal authorities, subject to the right of appeal to the DPU: and third, a municipality may not engage in the electric utility business without complying with statut'es which require (a) in the case of a city, a two-thirds vote of its city council (or a vote of a majority of the connissioners if the city government consists of a commission) passed in each of two consecutive municipal years and thereafter ratified by a majority of the voters at an annual or specific city election and (b) in the case of a town, a two-thirds vote at each of two town meetings held at intervals of not less than two nor more than thirteen months. Such statutes also require the municipality, if the Company elects to sell, to purchase so much of the Company's property within the limits of such municipality as the parties determine by agreement or, if the parties fail to agree, so much of such property as the DPU determines and at prices fixed by the DPU.
In 1987, the Town of Bellingham, MA petitioned the DPU to permit the transfer of electric service currently provided by the Company to another electric utility.        Revenues from Bellingham in 1989 represented less than 1%
of annual total Company revenues. The Bellingham service situation is unusual in that two utilities currently serve different segments of the town. A public hearing was held by the DPU in August 1987. Except for certain correspondence in 1988 between local and Commonwealth of ficials and the DPU, the Company is not aware of any further action by the DP9 to date.
In connection with the generation of electricity and the sale of electricity for resale, the Company competes with other electric utilities, non-utility power plant developers, and Qualifying Cogeneration and Small Power Production Facilities ("QF's") as defined in the Public Utility Regulatory Policies Act of 1978 ("PURPA"), as amended . PURPA requires the Company to purchase electric energy offered for sale by QF's at a price equal to the Company's avoided cost. Amounts of electric energy currently purchased by the Company from 0F's and the amount of kHh sales permanently lost to former customers, including certain hospitals, now utilizing their own generation facilities are not material to the financial statements which are part of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference. See also Item 2 (a) " Property and Power Supply" and (c) " Independent Power Producers /Coger.erators" hereunder.
The Company also competes with natural gas and other energy service                >
companies for market share of new construction in the Company's service territory as it relates to the providing of energy primarily for heating and cooling purposes.
Item 1 (c) (1) (xi):    RESEARCH ACTIVITIES The Company actively participates in several industry-sponsored research activities; however, such amounts incurred for research and development activities were not material to the financial statements which are part of the Annual Report to Shareholders for the year ended December 31, 1990, and are incorporated herein by reference, litm 1 (c) (1) (xii):      ENVIRONMENTAL HATTERS The Company, like other electric utilities, is subject to local roning and similar controls and to developing standard; aaministered by federal, state and local authorities with respect to siting of facilities and air quality, water quality, waste disposal and other environmental considerations. Such standards and controls may require modification of existing facilities or curtallment or cessation of operations at such facilities, may delay construction of new facilities and increase capital and operating costs by substantial amounts, and may in some cases result in the administrative imposition of monetary civil penalties. The Company believes that its operating facilities are in substantial compliance with presently applicable statutory and regulatory requirements relating to such matters.
The Company estimates that its capital expenditures for environmental purposes during the five years 1966 through 1990 totaled approximately
$75,000,000, and such capital expenditures for the period 1991 through 1994 are presently expected to be approximately $154,000,000, including approximately $35,000,000 for the year 1991 and $34,000,000 for 1992.
Substantial additional expenditures may be required as a result of changes in environmental requirements, or any decision to construct new facilities.
    . The Company is subject to regulation by the Hassachusetts Energy facilities Siting Council ("the EFSC"), which mest approve the Company's long-range forecasts with respect to the electric power needs and requirements of the Company's service area. Such forecasts are required to be filed with the EFSC every five years with supplements reautred in intervening years. To approve a long-range forecast or supplement, the EFSC must find, among other things, that plans for certain new generation or transmission facilities are consistent with Massachusetts policies regarding health, environmental protection, and resource use and development. Construction of such generation and transmission facilities is prohibited unless such facilities are approved by the EFSC as consistent with the most recently approved long-range forecast or supplement. The Company's most recent filing with the EFSC of its long-range forecast and resource plan was made in May, 1990. As a part of such filing the Company seeks approval of the Edgar Energy Park Project. For further information concerning this project and the proceedings before the EFSC and other regulatory agencies, see Item 3 " Planned facilities" hereunder.
The Company is subject to regulation by the United States Environmental Protection Agency (" EPA") and the Massachusetts Department of Environmental
 
Protection ("DEP") with respect to discharges of effluent from the Company's power plants into receiving waters. The Federal Clean Water Act and the Hassachusetts Clean Waters Act require dischargers to receive permits limiting discharges in accordance with applicable effluent discharge limitations and water quality standards. The Company has received discharge permits as required by the EPA and the DEP for each of its electric generation plants.
One of those discharge permits had an expiration date during 1988. Action has not been taken by the EPA and DEP to renew such permit. However, the Company has made timely application for renewal of such permit in accordance with applicable regulations and, pending final action on such renewal application, such permit remains in full force and effect.
Pursuant to Massachusetts and Federal air pollution laws, the Company is subject to regulation by the DEP and EPA relative to emissions into the air from the Company's fossil-fired plants, Such regulations require the installation of various emissions controls and, in certain cases, the utilization of low sulfur content fuels. To the extent that regulations limiting the sulfur content of oil burned in generating plaats require the use of more expensive oil, the Company believes that fuel adjustment clauses in its retail the        and increased resulting  wholesalecosts.
rate schedules contirue to provide for recovery of The Company has performed a preliminary analysis of the 1990 Clean Air Act Amendments and believes that it will not be adversely impacted by any requirements of the 1990 Amendments. The preliminary analysis indicates that the Company has emission allowantes under the 1990 Amendments, and it is possible that the Company may have allowances in excess of its needs which may be marketable.
The Company is subject to regulation by the EPA pursuant to the provisions of the Federal Toxic Substances Control Act concerning the use, storage and disposal of polychlorinated biphenyls ("PCDs"). The Company has substantially completed the removal of all PCBs from certain Company facilities in accordance with these regulations.
The Company is subject to various federal, state and local laws and regulations pertaining to the handling and disposal of asbestos-containing materials. At present, a program is being undertaken to systematically remove all asbestos from the Company's generation stations and underground transmission and distribution system. The removal of this material will be performed over an unspecified period and is subject to annual review and authorization.
The Company is subject to various federal, state and local laws and regulations pertaining to the generation, treatment, transport, storage and disposal of certain hazardous substances and to the cican-up of locations where such substances have either been spilled or disposed of. Among such laws of principal importance to the Company's operations are the Federal Resource Conservation and Recovery Act (" RCRA"), the Federal Comprehensive Environmental Response Conservation and Liability Act (" CERCLA"), the Federal Superfund Amendments and Reauthorization Act (" SARA"), the Hassachusetts Hazardous Haste Management Act ("HHHMA"), and the Massachusetts Oil and Hazardous Material Release, Prevention and Response Act ("H0HHRPRA"). Under the requirements of RCRA and HHHMA and applicable regulations adopted thereunder, certain facilities which treat, store or dispose of hazardous wastes    must be requirements    re licensed and the Company is required to meet other applicable of the Company'garding      the generation and handling of hazardous wastes at all s facilities. Pursuant to such requirements, wastewater
 
treatment systems at the Company's Hystic and New Boston Stations which were formerly operated pursuant to interim status regulations under RCRA and HHHMA are now being closed in accordance with those laws and have been replaced by facilities that do not require licensing under such laws,                                                        in addition, the Company has applied for licenses under RCRA and HHWMA for the treatment and storage of mixed wastes at Pilgrim Station. Such treatment and storage has currently received interim stat'Js approval under those laws and regulations.
Under the requirements of CERCLA SARA and h)HMRPRA and applicable regulations adopted thereunder, the Company and others are exposed to potential joint and several liability with respect to the clean-up of sites where hazardous wastes may have been spilled or disposeo of in the past. The Company has had claims asserted against it related to clean-up costs at approximately a dozen such sites in Massachusetts and other states. Such                                                                                                      i sites include Company-owned facilities which have been the location of spills or leakage and which the Company is in the process of cleaning up in the                                                                                                      ;
ordinary course of business. Other such sites include disposal sites with                                                                                                      '
numerous parties and involving complex litigation or negotiations among the parties and with regulatory authorities concerning the scope and cost of clean-up and the sharing of costs among the potentially responsible parties.
At several of the larger of such sites the estimated total clean-up costs for the site is in the range of $50 to $100 million depending upon the remedy                                                                                                      l ultimately selected; however in each such case the Company is but one of many                                                                                                  ,
parties, the Company's alleged percentage share of waste contributed to the                                                                                                    l site is in the range of 1% or less and the Company is an active participant                                                                                                    I with other parties in negotiations with regulatory authorities. While the Company is unable at this time to predict the ultimate total clean-up costs for all of such sites or what its share of costs will be for each such site, on the basis of the information presently available regarding each site, the Company believes it is remote that it would incur any material liability in connection with such sites.
The Company presently disposes of low-level radioactive waste ("LLH")
generated at Pilgrim Station through arrangements for decontamination and disposal with licensed brokers and for disposal with licensed disposal facilities located in Barnwell, South Carolina and Richland, Washington.
Pursuant to the Federal Low-level Radioactive Haste Policy Act of 1980, as amended by the Low-Level Radioactive Haste Policy Amendments Act of 1985, the Company's continued access to such disposal facilities may not be available after December 31, 1992. In the interim, such access is restricted in volume and is conditioned upon the payment of surcharges as well as upon the meeting by the Commonwealth of certain milestones involving the establishment of alternative disposal facilities accessible to Massachusetts waste generators.
Legislation has been enacted in Massachusetts establishing a regulatory scheme for managing the Commonwealth's LLW including the possible siting, licensing and construction of such a facility within the Commonwealth. The States of South Carolina and Washington have recently expressed dissatisfaction with the Commonwealth's progress towards establishment of alternative disposal facilities and have indicated the possibility that access to out of state disposal sites may be denied at an earlier date than 1992. Pending the construction of a disposal facility within the Commonwealth or the adoption by the Commonwealth of some other LLH management scheme, the Company continues to monitor the situation and is investigating options, including options involving on-site storage, which are available to it.
 
4
]          ..
l The Company presently has spent nuclear fuel storage capacity at Pilgrim
;                                                  Station sufficient to store spent nuclear fuel generated through the year                        !
1995.                  Pursuant to the Federal Nuclear Haste Policy Act of 1982 (*NHPA"), and i                                                through a contract entered into with the United States Department of Energy 2
(" DOE") in accordance with that Act DOE will be responsible for the ultimate i                                                disposal of spent nuclear fuel generated at Pilgrim Station.                        In accordance with this contract, the Company paid approximately $40,583,000 in June 1985.to j
DOE for disposal of nuclear fuel depleted through April 7,1983 and is paying l                                                DOE on a quarterly basis for the cost of nuclear fuel depleted since that i                                                date. The Company is recovering these costs through its fuel and purchased poweradjustmentclauses. Under the contract, DOE is to take delivery of spent nuclear fuel beginning in 1998. In order to fulfill its obligations, DOE is presently engaged in an effort to construct a repository for such spent nuclear fuel and other high level radioactive waste at Yucca Mountain, Nevada;
,                                                however, such effort has encountered substantial public and political opposition and litigation and DOE has publicly stated that it may be unable to construct such a repository by 1998. In addition DOE has been authorized to construct, following licensing by the NRC, a monitored retrievable storage facility which would provide storage and packaging of spent nuclear fuel and high level radioactive waste prior to shipment to a permanent repository; however, no site has been identified for such a facility. The Company is                          )
unable to predict whether and on what schedule DOE will eventually construct                      ;
such a repository or monitored retrievable storage facility and what will be                      i the effect upon the Company if a delay should occur.                        The Company is investigating all options which may be available to it, including the expansion of existing spent nuclear fuel storage capacity at Pilgrim Station, litm 1 (c) (1)'(xiii):                        NUMBER OF PERSONS EMPLOYED The Company had 4,738 full-time employees as of the end of 1990, 3,078 of the employees are represented by two locals of the Utility Horkers Union of America, AFL-CIO. The current four year labor contract in offect with the locals is scheduled to expire-in May 1994.                          ._
i                                                Item 1 (d):                        FINANCIAL INFOR MTION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES See Item 1 (c)--(1) (1) " Principal Products and Services" for information.
relative to the geographical area served by the Company.
Item 1 (e): ADDITIONAL INFORMATION REGULATION Rates. Accountina and Securities The Company and its wholly owned subsidiary operate primarily under the jurisdiction of the DPU, which jurisdiction includes supervision over retail rates for electricity, accounting, the. issuance of bonds, capital stock and certain other securities, and the investment by the Company in other entitles. The Federal Energy Regulatory Commission ("FERC") has jurisdiction over various phases of the business of the Company including, among other-things, regulation of the system of accouhts,-certain issuances of short-term debt, rates for power sold at wholesale for resale, and facilities used for the. transmission or sale of such power.
i
 
In 1989, the DPU implemented regulations which require electric utilities                                                                                                              l subject to its jurisdiction to obtain pre-approval for both investments in new                                                                                                              ,
generation capacity and for major incremental investments in existing                                                                                                                        l generation capacity.                                                          Under these regulations, prior to making such                                                                  l generation investments the Company must file with the DPU an agreement which                                                                                                                  l defines the revenue amounts associated with the investments which the Company will be allowed to recover through rates. The regulationt require the Company to bear the risk of changes in the majority of project costs.                                                                                                          Rate-payers bear the risk of unantic1 pated demand reductions and fuel price changes.
In 1990, the DPU adopted rules concerning the acquisition of future                                                                                                                    I
                  $Upply and demand resources by Massachusetts electric companies.                                                                                                                    The DPU  l regulations require electric companies to use an all-resource solicitation process to establish a mix of resources to guarantee least-cost, reliable                                                                                                                    ;
service. These regulations also specify the rules by which electric utilities would receive cost-recovery for the resources acquired under the all resource solicitation process.
The Company is recovering through depreciation an annual provision for the cost of decommissioning Pilgrim Station at the end of its useful life, funds collected for decommissioning are restricted in their use; such funds collected in rates are based upon a 1985 estimate ($122,000.000) to decommission the plant (immediate dismantlement method) as approved by the DPU. Securities held in the nuclear decommissioning fund are stated at cost, which approximates market. The Company will request approval of its mst recent estimate of decommissioning ($218,000,000) in its next retail rate case expected in 1992. The Company also collects a provision for the cost of decommissioning Pilgrim Station from contract customers.
The Company is required each year to submit to the DPU performance standards applicable to its generating units and to other units from which the Company purchases power pursuant to long-term contracts.                                                                                                            The Company also provides quarterly progress reports to the DPU with respect to generation unit performance.                                                          The DPU is empowered to conduct a review of such performance and has the right to reduce subsequent fuel clause billings if it finds that the Company has been unreasonable or imprudent in the operation of its generating units or in the procurement of fuel, The Company's most recent generation unit performance program covered the period November 1, 1989 to October 31, 1990. As in prior years, the Company did not meet all the DPU performance goals. On January 25, 1991, the DPU initiated a ninety day investigation of the performance of the Company's units and the other units from which the Company purchased power under long-term contracts during that period. While the Company believes it was prudent in the operation of its generation units, the ultimate resolution of certain replacement power costs already billed to customers cannot be determined by the Company. No provision for any amounts that may be refundable as a result of the foregoing has been made in 1990. However, in the opinion of management such amounts are not expected to be material. Hearings began on February 25, 1991, with an order expected in the spring of 1991.
l
 
                                                ~
h.tlfit The Federal Nuclear Regulatory Commission (SNRC") has broad and a
continuing regulatory jurisdiction over the siting, construction and operation of nuclear reactors with respect to public health and safety, environmental matters and antitrust considerations. A permit or license granted by the NRC may be revoked, suspended or modified by the NRC because of conditions revealed by the application therefor or any report or inspection which would warrant the NRC to refuse to grant a license on an original application or for                                            i failure to construct or operate a facility in accordance with the terms of a                                              1 4                                                            construction permit or license. The Company currently holds an operating license for Pilgrim Station which was issued in 1972. In January, 1991, the NRC extended the expiration date of that license from the year 2008 to 2012, an extension.of approximately three and one-half years.
Evolving NRC regulatory requirements, resulting in part from continuing NRC review of existing regulations and certain operating occurrences at other nuclear plants throughout the country and the world, have periodically resulted in the imposition of additional requirements for all domestic nuclear plants. including Pilgrim Station. NRC inspections and investigations may on occasion result in the issuance of notices of violation of NRC regulatory                                                  ;
requirements. Such notices of violation may, in accordance with the NRC's                                                  ,
4 Enforcement Policy, be accompanied by orders directing that certain actions be                                              '
4 taken or by the imposition of monetary civil penalties. In addition, the Company might undertake certain actions in regard to Pilgrim Station at the
:                                                          request or-su Operations ("ggestion    INP0"), a of                          its insurers voluntary      or of theofInstitute association        nuclearofutilities Nuclear Power to dedicated the promotion of safety and reliability in the operation of nuclear power plants.
On August 4, 1987, the Federal Emergency Management Agency (" FEMA")
released.the results of a review of the adequacy of the offsite emergency preparedness plan for Pilgrim Station. FEMA identified certain deficiencies in the then existing offsite emergency response plan and withdrew its previous
:                                                          interim finding of adequacy. The Company continues to work with the                                                        '
Commonwealth of Massachusetts and local officials and since 1987 has spent more than $15 million in this effort to improve offsite emergency preparedness plans, which are the responsibility of the Commonwealth. On January 30 1991, L                                                          the Commonwealth submitted the Annual n.etter of Certification for Pilgrim Station offsite emergency preparedness program to FEMA pursuant to applicable FEMA guidance.
On October-12 and 13, 1989.-the Company, along with the Commonwealth and                                            i local officials, participated in a full scale emergency preparedness exercise for Pilgrim Station. The exercise was evaluated by the NRC and FEMA. FEMA 4
                                                          . subsequently issued a report-to the Commonwealth idertifying two deficiencies
;                                                          in the Commonwealth's performance during the October drill and directed the state to schedule and successfully complete a remedial drill addressing these
                                                          .dtficiencies. The remedial drill was conducted on May 25, 1990. The subsequent report concerning the remedial-drill indicated that there were no deficiencies, however it identified forty-three areas requiring corrective action (which the Commonwealth and local communities must resolve in future exercises) as well as nine planning issues. The next full participation biennial exercise is tentatively scheduled for August 1991.
L i
l L
 
i                                                                                                    *
]
)                In July 1990, the inspector General of the NRC issued a report which was critical of the NRC's review of the adequacy of the of fsite emergency
:'        preparedness program during the fail of 1988. As a result of the Inspector General's Report, a Congressional hearing was held in Plymouth on October 30,
,          1990andajointNRC/fEKAtaskforcewascreatedforthepurposeofconducting i          an in-depth review of the adequacy of the offsite emergency preparedness i          program. The task force is meeting with local and state officials and the l          Company to determine whether the NRC should reconsider its current finding i          that there is reasonable assurance that the offsite program is adequate. It is not anticipated that the task force will complete these deliberations t
before the second quarter of 1991.
!                While substantial progress has been recognized in emergency preparedness
'          in recent years, formal approval of the offsite emergency plans for Pilgrim Station has not been obtained from any of the necessary parties. The NRC and FEMA are expected to continue to monitor emergency preparedness issues on an ongoing basis.
I                In September 1990, the National Institutes of Health / National Cancer
;          Institute released the results of a two-year study regarding the incidence of
!          cancer in the areas surrounding nuclear power plants in the United States.
The study, which included the area surrounding Pilgrim Station, showed no increased cancer risk to residents of counties where there are nuclear power                    .
plants.
!                In October 1990, the Commonwealth of Massachusetts Department of Public-Health released the results of a three-year case control study conducted for the purpose of investigating adult leukemia incidence rates for certain communities surrounding Pilgrim Station. The report stated that prior to 1984 there was an increased incidence of adult leukemia among persons living near Pilgrim Station as compared to those living in an area more remote from                          ,
l          Pilgrim Station. The study recommended increased monitoring of radiation                        i releases from the plant, stricter air quality requirements in the Commonwealth
,          and a study of childhood leukemia incidences. The Company strongly disputes the findings of the Commonwealth's study. -The results are contrary to a large body of scientific information collected over the past forty years on the health effects of radiation. The Company and the Massachusetts Department of i-        Public Health have jointly proposed a further review of the study in order to
[          resolve open issues.
Nuclear power continues to be a subject of political controversy and public debate which is manifested from-time to time in the form of requests v          for_various kinds of federal, state and local legislative or regulatory action, through direct voter initiatives or referenda, or through the                            '
institution of litigation. The Company cannot-predict the extent, cost or
,          ti_ ming of any modifications to Pilgrim Station which might be required in the F
future as a result of-additional regulatory or other requirements nor can it determine the effect of such future requirements on the continued operation of Pilgrim Station.
l l
 
Item 2: PROPERTY AND P0H.IR SUPPLY
: a. Comoany-owned facilities
[11111na Facilities. The Company's total installed electric generation capability as of January 1, 1991 is as follows:
Installed Capactty                    Year Unit              Lccation              (KH)        lygg      in11 tiled Pilgrim Nuclear        Plymouth, MA          678,000      Nuclear      1972 Power Station New Boston Station      South Boston, MA      717,740      Fossil      1965-1967 Units 1 and 2 Hystic Station          Everett, MA Units 4-5-6                                468,750      Fossil    1957-1961 Unit 7                                      617,040      Fossil      1975 Combustion Turbine      Various              238,944      Fossil    1966-1971 Generators (ten)
The Company participates as a 5.8887. joint owner (36,462 kW) in H. F.
Hyr.an Unit #4, a 619,250 kW (NEPOOL year-end maximum capacity) oil-fired unit which commenced operations in 1978 and is operated by Central Maine Power Company, located in Yarmouth, Maine, as discussed further in Note F of Notes to Consolidated Financial Statements contained on pages 28 through 30 of the Annual keport to Shareholders for the Year Ended December 31, 1990 incorporated herein by reference.
All of the Company's fossil-fired electric generation units are located at tide water and have access to ample fuel oli storage (and/or natural gas or oil pipelines from nearby suppliers) and condensing water. Additional electric generation capacity is available to the Company as a result of its contractual arrangements with other utilities and its participation in NEP00L, which are described below. For additional information regarding jointly-owned electric plant and long-term power contracts, see Note F of Notes to Consolidated Financial Statements contained on pages 28 through 30 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
As of December 31, 1990 the Co.npany's transmission system comprised approximately 361 miles of overhead circuits operating at 115,000, 230,000 and 345,003 volts and approximately 154 miles of underground circuits operating at 115,000 and 345.000 volts. The substations fed by these lines consisted of 38 transmission or combined transmission and distribution substations with a transformer capacity of 9.335 HVA, 64 distribution substations with a transformer capacity of 1,165 HVA and 19 primary network units with 83 HVA capacity. In addition, high tension service was delivered to 240 customers' substations. The overhead distribution system covered approximately 4,633 miles of streets and the underground distribution system extended through approximately 879 miles of streets.
 
The important items of property comprising the Company's electric generation stations, substations, and certain service centers are generally located on land owned by the Company, with certain exceptions as set forth in the Company's First Mortgage Bond Indenture or Supplements theretc.      The
'ompany's high-tension transmission lines are generally located on land either cwned by the Company or subject to an easement in its favor, with crossings of public ways, tide waters and water courses, railroads and public domain when encountered. The Company's low-tension distribution lines and fossil fuci pipelines are located principally in public streets and ways under permission granted by municipal or Commonwealth authorities. They are, however, also located to some extent in private ways and on private property pursuant to easements, leases, licenses or permits. See also Item 1 (c) (1) (iv)
" Franchises".
Planned Facilities.
On May 1, 1990, the Company filed its Long-Range Forecast of Electric Power Needs and Requirements for the years 1990-2014 with the Commonwealth of Massachusetts Energy facilities Siting Council (the "EFSC"). Included with this filing was a request for approval of the Edgar Energy Park project, which is a proposed 300 MH combined cycle generating station which the Company plans to construct on the Company-owned site of the retired Edgar Generating station located in Heymouth, Massachusetts. On August 1, 1990, the Company filed additional requests at the DPU seeking 1) approval to form a wholly-owned subsidiary to construct and operate the 300 MH generating unit at the Edgar Energy Park; 2) approval to make an equity investment up to $90,000,000 in the subsidiary; and 3) approval of a contract between the Company and the subsidiary under which the Company would purchase the energy and capacity of the generating unit for 20 years. OPU hearings on approval to form the subsidiary and to make an initial investment in the subsidiary connenced in late 1990. Hearings on the Company's filing before the EFSC ccmmenced in February 1991. On January 31, 1991, the Company filed for FERC approval of the power purchase contract between the Company and its subsidiary.
In addition to proceedings before the DPU, EFSC and FERC, the Company has also commenced applications for other required permits and approvals, i eluding in particular many environmental permits, before a number of other fEcral, state and local agencies. Receipt of all the various permits and re M atory approvals is not expected until the second half of 1991. Assuming the successful early completion of per;nitting activities and receipt of regulatory approvals, it is snticipated that construction of this facility by the subsidiary cculd start by the end of 1991. The Company has currently expended approximately $3,000,000 on this project which is included in construction work in progress. See also Item 1 (e) " Additional Information",
subhaading " Regulation" preceding with respect to newly promulgated DPU regulations requiring pre-approval of new investments in generation capacity,
: b. Purchased oower/ contract sales aareementj The Company owns 9.57. of the common stock of both Yankee Atomic Electric Company and Connecticut Yankee Atomic Power Company, which operate r,r .ar generation units located in Rowe, MA and Haddam, CT, respectively, o u net capabilities of 173,050 kW and 591,000 kW (NEPOOL year-end maximum l
 
capability), respectively- Until the expiration of the power contracts
. relating to these units (July 2000 and June 2007, respectively), the Company is entitled to receive 9.5% of the output of each unit and is obligated to pay to each company 9.5% of such amount as will provide such company with operating revenues and other income from all sources (including power revenues) equal to its total operating expenses plus an annual return on investment.        These contract billing rates include a provision for the ultimate decommissioning of the units and spent nuclear fuel disposal costs. In each case, other New England electric utility companies with varying percentages of participation have made similar arrangements.
The Company has entered into a contract pursuant to which the Company, a subsidiary of Commonwealth Energy System and two other utilities are sharing in four equal parts the output of a 569,170 kW (NEP00L year-end maximum capability), oil-fired electric generation plant located at the Cape Cod Canal in Sandwich, Massachusetts. The unit is owned by a wholly-owned subsidiary of Commonwealth Energy System and went into commercial operation in July 1968, at which time the Company became obligated to pay over a period of thirty-three and one-third yee.rs 25% of the unit's fixed and operating costs.
The Company has entered into agreements with Honthup Electric Company, a subsidiary of Eastern Utilities Associates, and with Commonwealth Electric Company, a subsidiary of Commonwealth Energy System, under which Hontaup and Commonwealth each purchase 11% of the capacity and corresponding energy of Pilgrim Nuclear Power Station, and pay 11% of the Unit's fixed and operating costs, Honuup and Commonwealth have also agreed to indemnify the Company to the extent of 11% each of all loss, liability or damage (not covered by insurance) arising out of the operation, condemnation, shutdown or retirement of the Unit. The Company has similar agreements with certain municipal electric companies for a total of 3.7% of the capacity and corresponding energy of the Pilgrim Nuclear Power Station. The term of the original agreements with Montaup, Coamonwealth and the municipal electric companies extended until the year 2000. The Company signed ad amendment to the original agreement with Montaup on Jhnuary 1, 1985 which extends the term of the Pilgrim Unit Contract from twenty-eight years to a period equal to the full operational life of the Pilgrim Unit and makes certain other revisions. The agreement has been accepted by the FERC.                In November 1990, the FERC approved, as part of a settlement agreement, extending the term of the agreement with Commonwealth to the life of Pligrim Station. For information with respect to settlement of litigation concerning these agreements, see " Rate Proceedings and Pilgrim Huclear Power Station" preceding, See also Note F.3 of Notes to Consolidated Financial Statements contained on page 30 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
The Company has entered into an agreement to purchase 100 HW of capacity and energy from the New Brunswick Electric Power Commission's 640 MH Point Lepreau Huclear Power Station. The Company's entitlement commenced on February 1, 1983. Under notice duly given pursuant to the contract's terms, the contract (as amended) will expire on October 31, 1991.
On June 1, 1986 an agreement between the Company and the Massachusetts Bay Transportation Authority ("HBTA") was implemented whereby the MBTA's 35.5 MH jet turbine at 0 Street, South Boston, MA was made available for Company dispatch through the year 2005. The MBTA retains the right to start up the jet for its own emergency use and for testing purposes, but the Company retains NEP00L credit for its capacity and output.
 
Effective November 1, 1986, and terminating October 31, 1991, the Company has agreed to purchase on a unit contract basis 25.4065% (currently 125 MH) of the combined capacities of Northeast Utilities' (NU) Hontville Units 5 and 6, and 16.4474% (currently 125 MW) of the combined capacities of their Middletown Units 2, 3, and 4. Montville 5 is capable of burning both gas and oil, and the other four units burn oil exclusively. Middletown 3 is a base-load unit, and the other four units are intermediate duty generation units. The Company had previously reported a three-year purchase of 150 MW of NU's gas turbine capacity that was to expire on October 31, 1990. Under notice duly given pursuant to the contract's terms, NU reduced the contract to 16.7 MH effective May 1, 1989 through its expiration on October 31, 1990.
The Company has entered a series of agreements with NU which provide for the purchase of a mix of NU unit entitlements known as a " base / pumped storage slice of system'', and transmission access to NU's New York tie lines as follows:
Base / Pumped Storage Contract Term            Slice of System Purchase                                                    Transmission 11/1/89 - 10/31/90              100 MH                                                                    100 MH 11/1/90 - 10/31/91              200 MH                                                                    -
11/1/91 - 10/31/93              300 MH                                                                    -
Effective August 1, 1990 and terminating October 31, 1992, the Company has agreed to purchase unit entitlements from United Illuminating Company (Connecticut) of 18.34451 (currently 82 MW) Unit 1 in New Haven Harbor and 1.5371% (cur rently 18 MH) in Hillstone Unit 3.
Effective December 31, 1990 through 2010, the Company has agreed to purchase approximately 120 MH from the Ocean State Power combined cycle project located in Burrillville, Rhode Island.      The Company's entitlement of this unit represents approximately 47% of the output and would obligate the Company to pay that proportion of the operating costs. This consists of an entitlement of 47% of the first unit until the second unit goes into commercial operation currently expected by the end of the 1991. Thereafter, the Company's entitlement will be 23.5% of each of the two units.
The Company has entered into other agreements with several other utilities for varying periods for purchases of system and unit power, for sales of Company system and unit power, and for transmission services. The Company's rates and charges under certain of these contracts are the subject of proceedings before the FERC. See also Note F of Notes to Consolidated Financial Statements contained on pages 28 and 29 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference,
: c.      Non-Utility Generation The Company continues to pursue purchases of electricity from QF's.
During 1990, the Company completed contract negotiations with Masspower to purchase approximately 100 HH of capacity and associated electric energy from Masspower's planned 235 MW gas-fired combined cycle facility to be located in Springfield, HA. The Masspower project was selected through the Company's
 
competitive bidding program which periodically solicits bids from non-utility
-    power producers.                The Masspower contract was approved by the Department of Public Utilities which entitles the Company to recover all costs associated with such purchase compliance.
Currently, the Company has signed contracts with non-utility generators representing 548 HH of capacity and sevan (7) different projects, four of these projects, with a combined capacity of 141 HH, are operational at this time, the largest of which (approximately 120 HH) commenced commercial operations in December 1990. Of the remaining three projects, one (248 MH) is under construction and is expected to be completed in late 1991 and the other two (159 HH) are under development.
: d. Demand-Side Manaaement Proarams The Company is pursuing the installation of demand-side management programs ("DSH") which have an estimated impact of reducing demand by 152 megawatts and saving 251,494 megawatthours during 1991. The implementation of DSM programs has the potential of reducing the summer peak by 477 megawatts and saving 906,249 megawatthours by the year 2000. During 1990, 126,479 megawatthours were saved and the summer peak was reduced by 96.7 megawatts.
See also Item 1(c)(1)(ii) " Expected Plant Expenditures and Related financing" subparagraph " Demand-Side Management Program Expenditures" preceding,
: e. NEPEX In June 1970, the Company and other utilities activated a computer controlled dispatch center for New England (New England Power Exchange -
      "NEPEX"). Also, the major utilities in New England, including the Company, and certain municipal and cooperative utilities executed a New England Power Pool ("NEP00L") Agreement (dated September 1971) which provides for the joint planning and operation of generation and transmission facilities and also incorporates generation capacity obligations and provisions regarding the use of major transmission lines and payment for such use.
As a result of its participation in NEP00L, the Company's operating revenues and costs are affected to some extent by the operations of other participants in those arrangements. The table below sets forth certain information as of the date of the Company's 1990 summer and 1990-1991 winter peak loads:
January 22, 1991          July 20, 1990 (Hinter 1990-91)        (1990 Summer)
NEPEX utilities installed capacity (basonal Max rating):              ....      25,660 MH            24,045 MW (Seasonal Normal rating):              . . 25,220 MW            23,635 HH NEPEX peak load . . . . . . . . .                18,659 HH            19,131 HH Company adjusted territory peak load              2,361 MH              2,582 MH Neither of the winter or summer peak loads noted above were all-time seasonal peaks. The Company's net capability i.t its summer peak was 3,506 HH, and its net capability at its winter peak was 3,634 HW. Its corresponding NEPOOL capacity obligations were estimated to be 3,393 MH and 3,351 HH, respectively.
 
The New England region's previously tight energy supply situation                                                                                            -
moderated significantly during 1990 due to the commercial operation of Seabrook Nuclear Power-Station located in New Hampshire, and several.new non-utility generators.                                                          Lower peak loads and good unit availability over both seasonal peaks added to NEP00L's reserve margins. The regional ~ supply situation is expected to remain good through 1991 into 1992.
As a result or these 1990 additions to New England generating capacity, the dispatching of Company-owned generating facilities by NEPEX may be affected. While the Company is monitoring the situation closely, it currently does not expect any material adverse effect upon the calculation of the revenue increases as permitted by the DPU Settlement Agreement (to the extent such increases / decreases are adjusted based upon the performance of Pilgrim Nuclear Power Station.
In March 1983, NEP00L participants signed an agreement with Hydro-Quebec of Canada. The arrangement, which is designated Phase I, is designed to provide up to three billion kilowatthours of-electricity (hydro-electric) annually to NEPOOL from Hydro-Quebec (a 690 MH interconnection), and includes an eleven year (1986-1997) energy purchase arrangement and energy banking agreement. Construction of transmission and conversion facilities required to transmit the power under the terms of this agreement were completed in 1986, and power deliveries to NEPOOL under Phase I commenced in October 1986.                                                                                    Due to low water levels in certain Canadian provinces. Hydro-Quebec has not been able to deliver to NEP00L previously projected levels of electricity since 1988.
In' October 1985, an agreement was finalized between NEP00L and Hydro-Quebec to provide an additional seven billion kilow Gthours of hydro-electric power annually for ten years. The Company will receive capacity credit through NEP00L for approximately-eleven percent of the generation equivalent of the total Hydro-Quebec Interconnection. In the first five years, the price of energy will be set based upon 80 percent of the average New England cost of fossil fuel in the previous year. In the second five years, the price will be set based upon 95 percent of the average New
. England fossil fuel cost in the previous year. This' agreement, designated ~
Phase II, required expansion of-existing 690 MH Phase I interconnection.
The Company, along with other New England electric utilities, entered into an agreement to expand the 690 HV Interconnection with the Hydro - Quebec system of Canada to 2000 mw. the phase II facilities began commercial operation, up to the 1200 MH level, on November 1,1990, with full operation up to the 2000 MW level expected in July, 1991.
The Company has approximately an 117. equity ownership interest in the two companies which constructed the Phase II facilities. This is included in the accompanying financial statements. All equity participants are required to guarantee, in addition to their own share, the total obligations of those participants not meeting certain credit criteria. The equity participants are compensated accordingly. Amounts so guarantead by the Company are approximately $25,000,000 at December 31, 1990.
 
9 i
  . f. Transmission Line Access to the New Enoland Recion In 1989, another New England electric utility became the apparent successful bidder for the ownership of Public Service of New Hampshire, an electric utility serving a large portion of the State of New Hampshire. While completion of the transaction is subject to various regulatory approvals, preliminary approvals for this merger were granted in December,1990. The Company and other utilities are requesting the FERC to impose conditions on this takeover on the basis that the new combined entity would control most of the excess generating capacity in New England and most of the available electric transmission facilities entering the Southeastern New England region,
: g.      Insurance The federal Price-Anderson Act, as amended by the Price-Anderson Amendment Act of 1988, provides that liability from a single nuclear related accident at a U.S. nuclear power plant shall not exceed approximately $7.8 billion. The first $200 million of nuclear liability will be covered by the maximum provided by commercial insurance. Additional nuclear liability insurance up to $7.2 billion is provided by a retrospective assessment of up to $63 million per incident which can be levied on each of the 115 units licensed to operate in the United States, subject to a maximum assessment of
      $10 million per reactor per accident in any year. This additional nuclear liability insurance amount of approximately $7.2 billion is subject to change as new commercial nuclear units are licensed and existing units give up their license. In addition to the nuclear liability retrospective assessments discussed above, if the sum of all public liability claims and legal costs arising from any nuclear accident exceeds the maximum amount of available financial protection, each licensee can be assessed an additional 5% of the maximum retrospective assessment ($3.15 million).
Insurance has been purchased from Nuclear Electric Insurance Limited (NEIL) to cover certain costs incurred in obtaining replacement power during a prolonged accidental outage at Pilgrim Station and the cost of repair, replacement decontamination or decommissioning of utility property resulting from insured occurrences at Pilgrim Station. The maximum potential assessments against the Company with respect to losses arising during current policy years are approximately $4,563,000 under the replacement power policy and $7,000,000 under the excess property damage, decontamination and decommissioning policy. All companies insured with NEIL are subject to retroactive assessments if losses exceed the accumulated funds available to NEIL. While assessments may also be made for losses in certain prior policy years, the Company is not aware of any losses in such years which it believes are likely to result in an assessment.
Item 3:    LEGAL PROCEEDINGS Although the DPU Settlement Agreement and Wholesale Settlement Agreements have removed certain major uncertainties facing the Company, other uncertainties remain as discussed in Item 1(c)(1)(li) preceding (see also "Hanagement's Discussion and Analysis" and in Notes G and H of Notes to Consolidated Financial Statements contained on pages 14 through 19 and pages 30 through 31, respectively of the Annual Report to Shareholders for the year ended December 31, 1990 incorporated by reference).
 
For further information concerning other Company legal and rate proceedings, see also Item I (c) (1) (xii) " Environmental Matters" in this form 10-K and Notes A.3. and H of Notes to Consolidated Financial Statements contained on page 27 and pages 30 through 31, respectively of the Annual Report to Shareholders for the year ended December 31, 1990 incorporated herein by reference.
On February 10, 1982 the Boston Housing Authority (" BHA") filed an action against the Company in the Massachusetts Superior Court seeking approximately
  $10,000,000 in damages for alleged overcharges for electricity and steam furnished over a six-year period, together with a claim for treble damages pursuant to H.G.L. c. 93A. On December 15, 1983 the Massachusetts Supreme Judicial Court affirmed an order of the Massachusetts Superior Court dismissing the BHA's claim of unconstitutional and unfair electric rate discrimination and remanded the claim for steam overcharges (approximately
  $4,000,000) to the Superior Court for completion of the pleadings and trial.
On July 24, 1987, the Towns of Concord, MA and Wellesley, MA (the
  " Customers") filed a complaint against the Company in the United States District Court for the District of Massachusetts alleging violations of the federal antitrust laws. The Company supplies substantially all of the electric power requirements of the Customers. The Customers' complaint included allegations of price discrimination, anticompetitive restrictions and price squeeze. In May 1989, a jury determined that the Company had violated federal antitrust laws and awarded damages of $13,100,000, which results in a total judgment of $39,300,000 when trebled under antitrust law, plus interest. On September 21, 1990, the United States Court of Appeals for the first Circuit reversed the $39,300,000 judgment against the Comp U. On January 22, 1991, the Customers petitioned the United States Svpreme Court for a writ of certiorari seeking to restore the jury verdict. On March 18, 1991, the United States Supreme Court denied the Customers' pctition for a writ of certiorari. Accordingly, the United States Supreme Court let stand the decision of the U. S. Court of Appeals for the First Circuit that the Company did not violate the federal antitrust laws in its sales of electricity to the Customers.
On March 8,1991, the Company was named in a lawsuit brought in the United States District Court for the District of Massachusetts alleging discriminatory employment practices under the Age Discrimination in Employment Act of 1967 concerning forty-six employees affected by the Company's 1988 reduction in force. Damages being sought have not been quantified in the complaint. The Company and legal counsel are currently analyzing the allegations made in these actions and intend to defend the Company vigorously.
Item 4 - SUBHISSION OF HATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of 1990.
 
1      EXECUTIVE OFFICERS OF THE REGISTRANT The names, ages, positions and business experience during the last five years of all the executive officers of Boston Edison Company and Harbor Electric Energy Company (the Company's wholly owned subsidiary) as of March 1,1991 are listed below. There are no family relationships between any of the officers of the' Company, nor any arrangement or understanding between any Company officer and ar.other person pursuant to which he/she was elected as an
          . officer. The expiration of each term of office is the next annual meeting and when successors are duly elected and qualified, I
Business Experience Name. Ace and Position                      Durina Past Five Years Bernard H. Reznicek, 54                    Elected Chief Executive Officer President and Chief                        effective December 1, 1990.
Executive Officer                          Elected President ar.d Chief Operating Officer effective October 1987.
Director since 1987. Has President and Chief Executive Officer of the Omaha Public Power District from 1981-1987. President and. Director of Harbor Electric Energy Company since 1989.
Thomas J. Hay, 43                            Elected Executive Vice President Executive Vice President                    effective December 1,1990.
Elected Senior Vice President effective June 1987. Has responsibility for financial, accounting and information services.
Assumed added responsibilities for energy planning and business planning effective February 1989 and resource and_ corporate planning, customer service, marketing and human resources, effective December 1990.
Had responsibility for customer service from June 1987 to February 1989. Has Vice President (from 1983-1987) and Treasurer (from 1983 to February 1988). Treasurer and Director of Harbor Electric Energy Company since 1989.
 
Business Experience Name. Ace and Position                                    Durina Past Five Years                                -
Ralph G. Bird, 57                                        Elected Executive Vice President Executive Vice President                                  effective December 1, 1990.
Elected Senior Vice President-Nuclear effective January 1987. Since February 1987, has responsibility for all nuclear activities, and since December 1, 1990 responsible for all operations, in 1985-1986 served as consultant to Westinghouse Electric Corporation and Advanced Science &
Technology Associates, Inc.
William D. Harrington, 60                                Elected Senior Vice President in Senior Vice President                                    1982. Has responsibility for Power Delivery, effective July 1986, and Stores and Service since March, 1988. Had responsibility for Power Production (fossil) from July 1986 to February 1989. Had responsibility for all Nuclear activities from 1982 to June 1986.
Cameron H. Daley, 45                                      Elected Senior Vice President Senior Vice President                                    effective February 1989. Has responsibility for power supply.
Prior to February 1989, was Vice President - Power Production.
Elected Vice President in 1982.
l.. Carlisle Gustin, 47                                    Elected Senior Vice President Senior Vice President                                    effective February 1989. Has responsibility for marketing, customer services and corporate relations. Prior to election was Vice President - Corporate Relations since September 1986. On special assignment - Member, Executive Review Group on Nuclear in 1986. Prior to 1986, was Manager of the Public Information Department.
 
Business Experience
  .z              llame. Ace and Position                    Durina Past Five Years John J. Higgins, 58                        Elected Senior Vice President Senior Vice President                      effective December 1,1990.
Elected Vice President effective July-1988. Prior to joining.the Company was Director of Construction for the Massachusetts Water Resource Authority in 1988. Prior to that was Senior Vice President - Personnel and Industrial Relations, for the Eastern Associated Coal Corporation.
                                                                                                    )
George H. Davis, Jr., 57                  Elected Senior Vice President -
Senior Vice President - Nuclear            Nuclear effective December 1, 1990.
Elected Vice President effective September 1989. Prior to election was Commander Naval Surface Force, Pacific 1985-88.
John J. Desmond, III. 57-                  Elected Vice President and General Vice President and General Counsel        Counsel in April 1985. General Counsel of Harbor Electric Energy Company.
Marc S. Alpert, 46                        Elected Treasurer of the Company Vice President and Treasurer              effective March 1988, in addition to his previous position as Vice President. Head of the Treasury Organization effective March 1, 1988.- Has Vice President - Rates from 1983 to'1988.
Robert J. Heafer. Jr., 44                  Elected Vice President
,                Vice President, Controller and Chief      effective February 1,1991.
Accounting Officer                        Designated Chief Accounting Officer in April 1988 while holding the-position of-Controller. Assumed responsibility for Purchasing Department in April 1988.
Controller and Department Head, Accounting, Budgeting and Control Department since 1985.
Theodora S. Convisser, 43                Elected Clerk of the Corporation-Clerk of the Corporation                  effective September 1986. Assistant General Counsel since 1985. Clerk of Harbor Electric Energy Company since 1990.
PART II Item 5 - MARKET FOR THE REGISTRANT'S COMHON STOCK AND RELATED STOCKHOLDER MATTERS
: a.                            MARKET INFORMATIQH, The Company's common stock is listed on the New York Stock Exchange and the Boston Stock Exchange.
See Consolidated Financial Statistics (Unaudited) - Quarterly Stock Data contained on Page 35 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference, b,                            HOLDERS.
As of December 31, 1990, the Company had 45,826 holders of record of its Common Stock (actual count of record holders).
: c.                            DIVIDENDS.
For information as to the frequency and amount of cash dividends declared per common share during the past two fiscal years, see Consolidated financial Statistics (Unaudited) - Quarterly Stock Data, contained on Page 35 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
 
l Item 6 - SELECTED FINANCIAL DATA The following table summarizes five years of selected consolidated financial data of the Company.
($ in 000's. exceot for Der share data) 1910          19E            19M        19H              1M Operating Revenues          $1,258,546    $1,269,345    $1,202,655  $1,181,097  $1,105,367 Income /(Loss) from Continuing Electric Operations            $95,440* $(16,135)**        $84,212    $86,721      $110,015 Earnings /(Loss)
Per Common Share from Continuing Electric Operations              $2.01*        $(0.88)**      $1.86        $1.97                                  $2.68 Total Assets        $3,014.123    $2,878,271    $2,817,050  $2.702,960  $2,361,998 Long-Term Debt $1,074,025            $948,839      $966,534    $822,659            $728,909 Redeemable Preferred /
Preference Stock $100,000          $100,000      $100,000      $50,000                  $35,188 Cash Dividends Declared Per Common Share          $1.535        $1.745          $1.82      $1.80                                  $1.75
* Includes $0.41 per common share for an accounting change; See Note I of Notes to Consolidated Financial Statements included in the Annual Report to Shareholders for the Year Ended December 31, 1990, incorporated herein by reference.
        ** See Item 1(c)(1)(ii): " Expected Plant Expenditures and Related financing" subheading " Rate Proceedings, Pilgrim Nuclear Power Station and Outlook for Future" preceding.
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION See Management's Discussion and Analysis contained on pages 14 through 19 of the Annual Report to Shareholders for the year ended December 31, 1990, incorporated herein by reference.
Item 8 - CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See list of Consolidated Financial Statements contained in Part IV, Item 14 incorporated herein by reference.
Item 9 - CHANGES IN AND DISAGREEMENTS HITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
 
PART III Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) IDENTIFICATION OF DIRECTORS, See " Election of Directors - Information about Nominees and Incumbent Directors" - contained on pages 3 through 7 of the definitive Proxy Statement dated March 21, 1991 incorporated herein by reference.
(b) IDENTIFICATION OF EXECUTIVE OFFICERS The information required by this item is set forth at the end of Part I of this Form 10-K under the caption " Executive Officers of the Registrant",
pursuant to instruction 3 of paragraph (b) of Item 401 of Regulation S-K.
(c) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES - NOT APPLICABLE.
(d) FAMILY RELATIONSHIPS - NOT APPLICABLE, (e) BUSINESS EXPERIENCE For information relating to the business experience during the past five years and other directorships (of companies subject to certain SEC requirements) held by each person nominated to be a director, see " Election of Directors - Information about Nominees and Incumbent Directors" contained on pages 3 through 7 of the definitive Proxy Statement dated March 21, 1991, incorporated herein by reference.
For information relating to the business experience during the past five years of each person who is an executive officer, see Part I " Executive Officers of the Registrant".
(f)    INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS - NOT APPLICABLE.
(g) PROMOTERS AND CONTROL PERSONS - NOT APPLICABLE.
Item 11 - EXECUTIVE COMPENSATION See paragraphs entitled " Director Compensation", " Executive Compensation", " Pension Plans", " Key Executive Benefit Plan", " Recognition and Retention Program", " Incentive Compensation Plans", and " Deferred Compensation Agreements", contained on pages 8 through 11 of the definitive Proxy Statement dated March 21, 1991, incorporated herein by reference.
Item 12 - SECURITY OHNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
See page 7 " Beneficial Ownership of Securities" of the definitive Proxy Statement dated March 21, 1991, incorporated herein by reference.
 
(b) SECURITY OWNERSHIP OF MANAGEMENT, See " Election of Ottectors - Information about Nominees and Incumbent Directors" contained on pages 3 through 7 of the definitive Proxy Statement dated March 21, 1991, incorporated herein by reference, (c) CHANGES IN CONTROL - NOT APPLICABLE Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable.
 
PART IV                                                                < '
Item 14:- EXHIBITS. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K i
PJLati Annuci Shareholders ReDort            form 10-K Item 14(a):                    Exhibits and Consolidated Financial Statement Schedules:
Consolidated Statements of Income for each of the Three Years in the Period Ended December 31, 1990                                                    20 Consolidated Statements of Cash Flows for each of the Three Years in the Period Ended December 31, 1990                                      21-Consolidated Balance Sheets as of December 31, 1990 and 1989 22 Consolidated Statements of Retained Earnings for each of the Three Years in the Period Ended December 31, 1990                                          23
                    -Consolidated Schedules of Capital Stock, as of                                                  23 December 31, 1990 and 1989 Consolidated Schedules of Indebtedness, as of                                                  24 December - 31, 1990 and 1989 Notes-to Consolidated Schedules of Capital Stock End Indebtedness                                                                              25-26 Notes to Consolidated Financial Statements.                                                    27-33 Report of Independent Certified Public Accountants                                                            46 Selected Consolidated-Quarterly Financial Data (Unaudited)                                      35 Selteted Consolidated Statistics (Unaudited)                                                    36-38 Schedules for Years Ended December 31, 1990, 1989 and 1968 V          -  Property, PlantLand Equipment                                                            S-1 to S-3 VI          -  Reserves _for Depreciation and Amortization of Property, Plant and-Equipment                                                        S-4 to S-6 VII        -
Guarantees of Securities of Other Issuers                                                S-7 IX          -  Short-Term Borrowings                                                                  S-8 X          -- Supplementary Income Statement Information                                              S-9 All other schedules are omitted since they are not required, not applicable, or contain only information which is otherwise provided in the financial statements orenotes-thereto listed above.
I
 
Exhibit    SEC Docket Exhibit 3      Articles of Incorporation and By-Laws Incorporated herein by reference:
3.1    Restated Articles of Organization      2(a)4      2-58587 3.1.1  Amendment to Restated Articles of      2.4      2-64975 Organization dated May 5, 1977 3.1.2  Amendment to Restated Articles of      3.31      1-2301 Organization filed May 26, 1978                  Form 10-K for the Year Ended December 31, 1981 3.1.3  Amendment to Restated Articles of      3.32      1-2301 Organization filed May 6, 1980                    Form 10-K for the Year        i Ended        l December 31, 1981 3.1.4  Amendment to Restated Articles of                              i Organization filed May 4, 1983          3.1      1-2301      l form 10-Q    l for the      !
Quarter Ended March 31, 1983 3.1.5  Amendment to Restated Articles of        3.1      1-2301 Organization filed April 28, 1986                  Form 10-0 for the Quarter Ended March 31, 1986 3.1.6  Amendment to Restated Articles of        3.5      1-2301 Organization filed August 27, 1986                Form 10-K for the Year Ended December 31, 1986
 
Exhibit  SEC Docket 3.1.7  Amendment to Restated Articles of      3.1    1-2301 Organization filed February 19, 1987          Form 10-0 for the Quarter Ended March 31, 1987 3.1.8  Amendment to Restated Articles of    3.1.8  1-2301 Organization flied May S, 1987              Form 10-K for the Year Ended December 31, 1987 3.1.9  Amendment to Restated Articles of    4.1    33-24271 Organization as filed May 27, 1988          Registration Statement dated September 22, 1988 3.1.10 Certificate of Vote of Directors    4.2    1-2301 Establishing a Series of a Class of          form 10-Q Stock, filed March 9, 1987                  for the Quarter Ended September 30, 1988 3.1.11 Certificate of Vote of Directors    4.3    1-2301 Establishing a Series of a Class of          Form 10-Q Stock, filed October 4,1988                  for the Quarter Ended September 30, 1988 L 3.2    Boston Edison Company Bylaws        3.2    1-2301 l        April 19, 1977, as amended January          Form 10-K 22, 1987, January 28, 1988 and              for the May 24, 1988                                Year Ended l                                                    December 31, l                                                    1988.
3.3    Boston Edison Company Bylaws        3.1    1-2301 April 19, 1977, as amended                  Form 10-Q January 22, 1987, January 28, 1988,          for the May 24, 1988 and November 22, 1989          Quarter Ended June l                                                    30, 1990
 
Exhibit SEC Docket 3.4      By-Laws of Harbor Electric Energy        3.4    1-2301 Company                                          Form 10-K for the Year Ended December 31, 1989 3.5      Articles of Organization of Harbor      3.3    1-2301 Electric Energy Company                        form 10-K for the Year Ended December 31, 1989 Filed Herewith:
3.6      Articles of Organization of Harbor      -                    -
Electric Energy Company December 22, 1989, as amended December 13, 1990 Exhibit 4          Instruments Defining the Rights of Security Holders, Including Indentures Incorporated herein by reference:
4.i      Indenture of Trust and First Mortgage    B-2    2-4564 dated December 1, 1940 with State Street Trust Company 4.1.1    Tenth supplemental indenture dated        7.5      2-8349 April 1, 1950 4.1.2    Twelfth supplemental indenture dated      4.2      2-80748 November 15, 1951 Filed Herewith:
4.1.3    Twenty-fourth supplemental indenture      -                    -
dated June 1, 1962 4.1.4    Twenty-seventh supplemental indenture    -                    -
dated November 1, 1965 4.1.5    Twenty-ninth supplemental indenture      -                    -
dated June 1, 1967 4.1.6    Thirtieth supplemental indenture          -                      -
dated November 1, 1968 4.1.7    Thirty-first supplemental indenture        -                    -
dated December 1, 1969
* Refiled pursuant to SEC record retention rules.
 
Exhibit SEC Docket 4.1.8    Thirty-second supplemental indenture      -        -
dated July 1,1970 4.1.9    Thirty-third supplemental indenture      -        -
dated May 15, 1971 Incorporated Herein By
 
==Reference:==
 
4.1.10  Thirty-fifth supplemental indenture    4.1.10  1-2301 dated April 15, 1977                            Form 10-K for the Year Ended December 31, 1989.
4.1.11  Thirty-sixth supplemental indenture    4.1.11  1-2301 dated December 15, 1978                        Form 10-K for the Year Ended December 31, 1989.
4.1.12  Thirty-seventh supplemental indenture  4.1.12  1-2301 dated October 31, 1979                          Form 10-K for the Year Ended December 31, 1989 4.1.13  Thirty-eight supplemental indenture    4.1.16  1-2301 dated January 1, 1982                          Form 10-K for the Year Ended December 31, 1981
* Refiled pursuant to SEC record ret'ntion rules.
Exhibit SEC Docket 4.1.14  Thirty-ninth supplemental indenture  4.1          1-2301 dated April 15, 1983                              form 10-0 for the Quarter Ended March 31, 1983 4.1.15  Fortieth supplemental indentura      4.1          1-2301 dated April 1, 1984                                Form 10-Q for the Quarter Ended March 31, 1984 4.1.16  Forty-first supplemental indenture    4.1            1-2301 dated April 1, 1985                                  form 10-Q for the Quarter Ended March 31, 1985 4.1.17  Forty-second supplemental indenture  4.1            1-2301 dated July 15, 1986                                  Form 10-Q for the Quarter Ended June 30, 1986 4.1.16  Forty-third supplemental indenture    4.1            1-2301 dated September 15, 1987                              Form 10-Q for the Quarter Ended September 30, 1987 4.1.19  Revolving Credit Agreement dated      4.1              1-2301 as of May 25, 1988                                    Form 10-Q for the Quarter Ended June 30, 1988 4.1.20  Amendment to Revolving                4.1.20          1-2301 Credit Agreement, effective                            Form 10-K Harch 10, 1990                                          for the Year Ended December 31, 1989.
1
 
_  . _ . .        .. _ _ _ _ _ _ . _ _ . .                _  _ . _ . _    _ _ _ . -    ~ . _ _ _ _ _          _ _ _ . _ _ . .
Exhibit SEC Docket 4-l.21 Medium Term-Notes-Series A - Indenture 4.1                    1-2301 dated as of September 1, 1988, between                        Form 10-Q Boston Edison Company and Bank of                            for the                        -l Montreal Trust Company                                        Quarter Ended September 30, 1988 4.1.22                  Series B Hedium Term                        1.1              1-2301-Notes Distribution Agreement                                  form 10-0 for the Quarter ended March 31, 1990                        ;
4.1.23                  First Supplemental Indenture              4.1                1-2301 dated as of-June 1,1990 to                                    form 8-K Indenture dated as of September 1                            dated 1988 with Bank of Montreal Trust                              June 28, 1990 Company - 9 7/8% Debentures Cue
                                          . June 1, 2020.
Filed Herewith:
4.1.24                  Letter of Credit and Reimbursement            -                    -
Agreement between Harbor Electric Energy Company and Citibank N.A.
dated as of December 21, 1990.
              -HQII:        (Other Supplemental Indentures are not filed herewith since they.
constitute only conveyances of additional property to-the Trustee under the Indenture and do not amend the Indenture or relate to-outstanding series of First Mortgage Bonds.)
HQlE:        (The registrant agrees to furnish to the Securities and Exchange Commission, upon request, a copy of any other. instrument with respect to long-term debt of the registrant. Such other debt.
instruments are not filed herewith since they do not relate to authorized debt in an amount greater than 10% of registrant's total assets.)
Exhibit 10                            Material Contracts Incorporated herein by reference:-
10.1.1                  Form of Deferred Compensation Agreement, as Amended April 26, 1984        10.1.1            1-2301 Form 10-K                        .
for the Year Ended December 31, 1984 l
i 1
l'
 
Exhibit SEC Docket 10.1.2  form of Deferred Compensation        10.1.2              1-230)
Agreement, as Amended November 27                        Form 10-K 1985                                                      for the Year Ended December 31, 1985 10.1.3    Form of Deferred Compensation        10.1.3 1-2301 Agreement, as Amended                                      form 10-K November 27, 1986                                          for the Year Ended December 31, 1989.
10.2.1  Form of Deferred Fee Agreement, as  10.2.1                  1-2301 Amended April 26, 1984                                      Form 10-K for the Year Ended December 31, 1984 10.2.2    Form of Deferred Fee Agreement      10.2.2                  1-2301 as Amended November 27, 1985                                Form 10-K for the Year Ended December 31, 1985 10.2.3  Form of Deferred fee Agreement,      10.2.3                  1-2301 as Amended November 27, 1986                                Form 10-K for the Year Ended December 31, 1989.
10.3    Key Executive Benefit Plan          10.4                    1-2301 Form 10-K for the Year Ended December 31, 1981 l
 
                                                                          ~
Exhibit SEC Docket 10.3.1 Amendment to Key Executive Benefit      10.4.1    1-2301 Plan dated February 1, 1986                        Form 10-K for the Year Ended December 31, 1985 10.3.2 Amendments to Key Executive Benefit      10.1      1-2301 plan dated May 9, 1986                            for the Quarter                l Ended                l June 30,              l 1986 l
10.3.3  Key Executive Benefit Plan Agreement    10.4.3    1-2301 dated as of January 1, 1987 for                    form 10-K Ralph G. Bird                                      for the Year Ended December 31, 1987 10.3.4  Amendment to Key Executive Benefit      10.4.4  1-2301 Plan dated July 13, 1987 and Hanager              Form 10-K Transition Benefits Agreements for                for the James H. Lydon                                    Year Ended December 31, 1987 10.3.5  Amendment to Key Executive Benefit      10.4.5    1-2301 Plan dated August 20, 1987 and Manager            form 10-K Transition Benefits Agreement for                for the Joseph P. Tyrrell                                Year Ended December 31, 1987 10.3.6  Key Executive Benefit Plan Agreement    10.4.6    1-2301 dated as of October 1,1987 for                    Form 10-K Bernard H. Reznicek                              for the      '
Year Ended December 31, 1987 10.4    Description of Supplemental Fee        10.5      1-2301 Arrangement for Certain Directors                Form 10-K for the Year Ended December 31, 1983 Exhibit SEC Docket 10.5    Executive Annual Incentive                                              10.5      1-2301 Compensation Plan                                                                  Form 10-K for the Year Ended December 31, 1988.
                '10.5.1  Executive Long-Term incentive                                          10.5.1    1-2301 Compensation Plan                                                                Form 10-K for the Year Ended December 31, 1988.            -
10.6    Description of Nuclear Restart and                                      10.6    1-2301-Management Continuity Plan, effective                                            Form 10-K' January 26, 1989 - Ralph G. Bird                                                  for the            ,
Year Ended December 31, 1988.
10,7    Recognition and Retention Program                                        10.7    1-2301 form 10-K-for the Year Ended-December 31, 1989 Filed herewith:
110.8-  Deferred Compensation Plan                                                -            -
Exhibt't 12      Computation of Ratio of Earnings to Fixed Charges Incorporated herein by reference:                                                                                ,
12.1~  Computation of Ratio of Earnings to                                    12.1      1-2301 Fixed Charges for the year ended                                                  Form 10-K
,                        -December.31, 1989..                                                              for the Year Ended December 31, 1989 Exhibit 13        Annual Report to Shareholders filed herewith:
13.1    Boston Edison Company Annual Report to Shareholders for the Year Ended December 31, 1990, which, except for those portions thereof which are expressly incorporated by-reference herein, is furnished for the information of the Securities and Exchange Commission and is not deemed to be " filed" as part of this report.
Exhibit SEC Docket 4
Exhibit 18                      Letter re: Change in Accounting Principle Incorporated herein by reference:
18.1                    Letter of Independent Certified                                                          18.1    1-2301 Pubitt Accountants                                                                                Form 10-Q for the Quarter ended March 31, 1990 Exhibit 22                      Subsidiaries of the Registrant                                                            -      -
22.1                    Harbor Electric Energy Company (incorporated in Hassachusetts) is a wholly-owned subsidiary of Boston Edison Company.
Exhibit 24                      Consent of Independent Accountants.
Filed herewith:
24.1                    Consent of Independent Accountants to incorporate, by reference, their opinion included with this form 10-K, in the form S-3 Registration Statements filed by the Company on November 18, 1985 (File No. 33-01614), July 15, 1986 (File No. 33-07103), July 2, 1990 (File No. 33-35588), September 14, 1990 (File No.
33-36824), and in the form S-8 Registration Statements filed by the Company on October 10, 1985 (File No. 33-00810) July 28, 1986 (File No. 33-7558) and December 31, 1990 (file No.
33-38434).
Exhibit 28                      Other Exhibits Incorporated herein by reference:
28.1                    DPU Settlement Agreement with                                                              28.1  1-2301 Boston Edison Company dated                                                                      Form 8-K October 3, 1989                                                                                    dated October 3, 1989 28.2                    Settlement Agreement between Boston                                                        28.1  1-2301 Edison Company and Commonwealth                                                                  Form 8-K Electric Company, Montaup Electric                                                                dated Company and the Municipal                                                                        December Light Department of the Town of                                                                  21, 1989 Reading, Massachusetts, dated January 5, 1990.
 
l i
Exhibit SEC Docket 28.3    Pligrim Outage Case Settlement between    28.2        1-2301 Boston Edison Company and Reading                    Form 8-K Hunicipal Light Department regarding                  dated Contract Demand Rate, dated December                  December 21, 1989,                                            21, 1989 28.4      Settlement Agreement Between Boston      28.2          1-2301 Edison Company and City of Holyoke                    form 10-0 Gas and Electric Department et. al.,                    for the dated April 26, 1990.                                Quarter Ended March 31, 1990 Item 14(bh  REPORTS ON FORM 8-K There were no form 8-K's filed by the Company in the fourth quarter of 1990.
A Form 8-K was filed by the Company January 9,1991, with the Securities and Exchange Commission. This report contained information under Item 5 - Other Events, which included amendments to the rules governing Form S-8 under the Securities Act of 1933.
 
SIGNATURES 4
      =      . Pursuant to the requirements of Section 13 or IS(d) of the Securities Exchange Act of 1934, the registrant has duly caused +his report to be signed on its behalf by the undersigned, thereunto duly authorized.
BOSTON EDISON COMPANY By /s/      Thomas 3. Hav-Thomas J. Hay                        i Executive Vice President Date: March 28, 1991 Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below b.v the following persons on behalf of.the registrant and in the capacities-indicated on the 28th day of March, 1991.
        /s/ Berna'rd H. Reznicek-                        President, Chief Executive Bernard H. Reznicek                      Officer and Director
        /s/ Thomas J. Hav                                Executive Vice President Thomas J. Hay                              (Principal Financial Officer)
        /s/ Robert'J. Heafer. Jr.                      Vice President, Controller and Robert J. Heafer, Jr.                    Chief Accounting'0fficer
        /s/ Steohen J. Sweeney                          Chairman and Director Stephen J. Sweeney
        /s/ Helene R. Cahners-Kaolan                    Director Helene R. Cahners-Kaplan-
        /s/ Hilliam F. Connell                          Director Hilliam F. Connell
        /s/- Gary L. Countryman                        Director-Gary L. Countryman l'
u  ..,      _
 
Director Thomas G. Dignan, Jr.
        /s/ Charles K. Gifford                  Director Charles K. Gifford
        /s/ Nelson S. Gifford                  Director Nelson S. Gifford
        /s/ Kenneth I. Guscott                  Director Kenneth I. Guscott
        /s/ Hatina S. Horner                    Director Matina S. Horner
        /s/ Hilliam D. Hanly                    Director Hilliam D. Hanly
        /s/ Sherry H. Pennev                  Director Sherry H. Penney
        /s/ Lerbert Roth. Jr.                  Director Herbert Roth, Jr.
        /J/ Paul E. Tsonaas                    Director Paul f. Tsongas
        /s/ Charles A. ?raket                  Director Charles A. Zraket
 
                                                  .-              __        -    =-
C003ers                              * * * * " "
8d.y)fanCl                                                                              -
1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Stockholders and Directors of Boston Edison Company                                                                          j t
We have audited the consolidated financial statements of                            l as of December            !
Doston 31, 1990Edison  company and 1989      and and for  subsidian each          (the Cospany)in of the threo          years          the period            !
ended December 31, 1990 which financial statements are included on pages 20 through 33 of the 1990 Annual Report to shareholders of                                '
Boston Edison company and incorporated by reference herein.                        We            l have Liso audited the financial statement schedules listed in Item 14 (a) of this Form 10-K. These consolidated financial statements                                !
and financial statement schedules are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules                                i based on our audits.
We conducted odr audits in accordance with generally accepted auditing standards. Those standards require that we plan and pcrform the audit to obtain reasonable assurance about whether the financial statements are free of asterial misstatement.
audit includes examining on a test basis, evidence supporting An                  the amounts and disclosures In the financial statements. An audit also includes assessing the accounting principles used and significant estimates mada by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly in all material respects the consolidated financial position o,f Boston Fdison company an,d subsidiary as of December 31, 1990 and 1989, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31        19            in conformity with generallyacceptedaccountingprinciples.90,In addition, in our opinion, the consolidated financial statement schedules referred to above, when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material respects, the information req,uired to be included therein.
As discussed in Note I of " Notes to consolidated Financial Statements," in 1990 the Company changed to the unbilled method of recognizing revenues.
ftWA
                                                                                #7484v4.-
Boston, Massachusetts                        COOPERS & LYBRAND
; January 22, 1991 46
 
IOS10N EDIDON COMPANY                                      6CHl:DULE Y IEOPI:RTY, PLANT AND EQUllWENT DECixitER 31, 1990 (IN Til005 ANDS)
Column A                                                                                                            Column F halance at close of terlod Electric Plants Land and Rights of Way                                                                                                  $38,326 Generating Station and Bubstation Dulldings and Nise. Structures                                                                                                  388,804 Electric Generating Equipment                                                                            1,363,937 Transsission Distribution, Street Lighting and Other Ut!!!sation Equipment                                                                                  1,602,641 Transmission and Distribution-Ilarbor Electric Energy Ccepany                                                                                            23,032 Total Electric Plant                                                                                  3,316,740 Nuclear } bel                                                                                                            248,696 Non Utility property                                                                                                                                      966 Construction Work in Progress                                                                                            142,211 Construction Work in Progress-Ilarbor Electric Energy Company                                                                                                                                22 Total                                                                            $3,708,524 sesssseses Notes (000's)
(1) The information called for by columns B, C, D and E for 1990 la ositted na neither the total additions nor the total retirements during the year exceed 10% of the balance at the end of 1990. Total additions and retiresents, at cost, were $243,884 and $27,181, respectively.
(2) Physical property (electria) was depreciated on a straight-line basis at various rates ranging from 2.841 to 4.691 in 1990.
For further inforsation relating to the Company's policies regarding depreciation and amortisation, reference Note A. "Sunnary of Significant Accounting Policles" of Notes to Consolidated Financial Statements, incorporated herein by reference ( Annual Report to Shareholders for the year ended December 31, 1990, page 27).
(3) Approximately $107.000 of additions, at oost, in 1990 related to various modifications sade to the Onspany's transsission and distribution syntes during the year, approximately $68,000 represents an increase in construction work In progress, and the remainder includes additions to generating station,                                                                                      ,
electric generating equipaert and other.
(4) See Note B. " Bate Proceedings and Pilgris Nuclear Power Station" of Notes to Consolidated Financial Statements, incorporated herein by reference ( Annual Report to Shareholders for the year ended Decesber 31, 1990, pages 27 through 20).
* Reference is made to Note E, " Allowance for Funds Used During Construction" of " Notes to Consolidated Financial Statements", on page 28 of the 1990 Annual Report to Sharebolders, incorporated herein by reference.
B-1
 
                                                                                                  --                  - ~ . - - -
BOSTON EDISON COMPANY            SCHEDUL5 Y          ..
PROPERTY, PLANT AND EQUIPMENT DECEMBER 31, 1989                                    4 (IN THOUSANDS)                                        ,
Column A                                                                                    Column F Balance at close of period Electric Plant Land and Rights of Way                                                                        837,666 Generating Station and Substation Buildings and Misc. Structures                                                                        360,447 Electric Generating Egulpeent                                                            1,343,837 Transmission, Distribution, Street Lighting and Other Ut111:ation Equipment                                                                  1,439,236 Total Electric Plant                                                                    3,171,176 Nuclear Fuel                                                                                  236,862 Non Utility property                                                                                      966 Ccostruction Work in Progress                                                                    83,827 Total                                                                  83,491,821 assesses s Notes (000's)
(1) The information called for by columns B, C, D and E for 1989 is ositted as neither the total additions nor the total retirements during the year exceed 10% of the balance at the end of 1989. Total additions and retirements, at costt, were $234,128 and $14.043, respectively.
(2) Physical property (electric) was depreciated on a straight-line basis at various rates ranging from 2.841 to 4.591 in 1989.
For further information relating to the Company's policies regarding depreciation and amortisation, reference Note A. " Summary of Significant Accounting Policies" of Notes to Consolidated Financial Statements, incorporated herein by reference (Annual Report to Shareholders for the year ended December 31, 1990, page 27).
              .(3) Approximately $176,000 of additions, at cost, in 1989 related to
!                    various modifications made to the Company's transsission and distribution syntes during the year.
(4) Included in construction work in progress is $9,490 relating to Harbor Electric Energy Company, a wholly owned regulated subsidiary of the Company.
($) See Note B. " Rate Proceedings and Pilgria Nuclear Power Station" of Notes to Financial Statements, incorporated herein by reference ( Annual Report to Shareholders for the year ended December 31, 1990, pages 27 through 28).
e Reference is made to Note E, " Allowance for Funds Used During Construction" of " Notes to Consolidated Financial Statements", on page 26 of the 1990 Annual Report to Shareholders, incorporated herein by reference.
S-2
 
I '                                                              DOSTON EDISON COMPANY            SCHEDULE V PROPERTY, PLANT AND EQUIPMENT DECEMBER 31, 1988 (IN THOUSANDS)
Column F Column A                                                                        ..........
Balance at Close of period Electric Plant                                                                    837,120 Land and Rights of Way Generating Station and Substation Buildings 331,134 and Misc. Structures                                            1,299,883 Electric Generating Equipment Transmission Distribution, Street Lighting and Other                                      1,270,373 Utilization Equipment                                        ..........
2,938,510 Total Electric Plant 233.508 Nuclear Fuel                                                          1,064 Non Utility property 98,055 construction 'sork in Progress                                  ..........
                                                                                              $3,271,737 Total                                                4838883333 Notes (000's)
(1) The information called for by columns B, C, D and E for 1988 is omitted as neither the total additions nor the total retirements during the year exceed 10% of the balance at the end of 1988. Total additions and reticements, at cost *, were $266.165 and $12,134 respectively.
(2) Physical property (electric) was depreciated on a straight-line basis at various rates ranging from 2.84% to 4.59% in 1988.
For further inforsation relating to the Company's policies regarding depreciation and amortization, reference Note A. " Summary of Significant Accounting Policies" of Notes to Consolidated Financial Statements, incorporated herein by reference (Annual Report to Shareholders for the year ended December 31, 1990, page 27).
(3) Approximately $247,000 of additions, at cost, in 1988 related to various modifications made at Pilgrim Nuclear Power Station during the year.
* Reference is made to Note E, " Allowance for Funds Used During Construction" of " Notes to Consolidated Financial Statements", on page 28 of the 1990 Annual Report to Shareholders, incorporated herein by reference.
S-3
 
80ston Edison Coppeny                                                                                                            Schedute V1 Acew utatad Deprecietion, Deptetion and Amortiration of Property, P1 ant and Eosiparet 1990 t
(in thousands)
Col e A                                              Coluwt 8                                                  Colm C                                                                              Cotum O                      Coluwt E            Column F          Cei m G
                              .........                                    ........... . . . . . . . . . . . . . ~ . . . . . . . . . . . . . . . . . . ~                                                        .._................~.~ _.......... ........_.. ...........
Additions
                                                                                                                    ..~...........______.........
Charged to Other Accomts Batence Charlestown Batence inyty-Satw Balance            Charge to                                                          value of Retiremmt Cost of                                                          et Close AqJisition at Close Beginning Profit and                                  Adjustments                        Property terwwels ervi Removal                                                    of Period Adjustemt Of Period Description                                      of Period                          Lost                                                    Rettred Rept ocemmts                                                                                                                        ,
_ .........._                                ........... ..__.......                                    ...._ ....                __..~.__.. ..__ ...... .....~.... ......_..._ ........... .......__._                                                                                ,
Depreciation Reserve:
Electric Plant:                                                                                                                                                                                                                                                                      !
Production -fossit                              5244,252                    523,311                              SO                                                S23            53,901              59,283          5254,402                      SO      S254,4c2
                                                                - mucteer            248,063                      36,852 (A)                      (5,737)                                                    (2)          1,557              1,633            275,986                        0      275,986 0ther                  15,672                    1,730                                0                                                    0              689                    0          16,713                      0      16,713
                                                                            ........__. ...........                                  .~ .......                ........... ........... ........... ........... ...._.... _ ..........
Total Production                                507,987                      61,893                          (5, 73 7)                                                  21            6,147            10,916            547,1Gi                        0      547,101        l Transmission                                            100,908                      10,219                                0                                                430              1,128                    60          110,369                        0      110,369        '
Distribution                                              305,153                      31,410                                0                                      1,900                    17,734                7,926            312,833                    405        313,208        l Generat                                                    36,250                    10,672 (8)                          124                                                (39)              2,152                  219            44,636                        0      44,636        i Marbor Electric Energy Ccepony                                        0                    462 (C)                          0                                                    0                  0                  0                462                    0          462        )
Totet Electric                                            950,298                    114,656 (D)                    (5,613)(G)                                  2,312                      27,161              19,121        1,015,371                      405      1,015,776 Accuputeted Amortiration                                                                                                                                                                                                                      C of mucteer Fuet (D)                              142,023                      25,914                        (4,243)(F)                                                  0                  0                  0          1e3,694                      0      163,694
                                                                          ........... ........__.                                  ....__.....                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _ _                                        -.... ........... ... ~....._
Totet                                            $1,092,321                        5140,570                          (59,856)                              52,312                          S27,161            S19,121 51,179,065                            S405 S1,179,470 t
notes (000's)                                                                                                                                                                                                                                                                              I (A) Emetudes $4,319 of nutteer dacopuwissioning costs.
(B) includes 56,945 for amortiration of teeschotd igrovemmts, comuter sof tware and tood a,-u program costs.
(C) Includes 311 of other amortiration.                                                                                                                                                                                                                                                    i (D) This amomt differs from " Depreciation" and "Other amortization" in the Consolidated Stateamt cf Cash flews by 55,925 which represents amortiration of previously incurred costs that do not af fect the reserve.
(E) Fer information relating to the amortiration policy for ructeer fuel, reference motes A aruf f of the #ctes                                                                                                                                                                            ,
to Consolidated Financist Statements ort peges 27 and 33, respactively, cf the 1990 Amust Report to Shareholders, incorporated herein by reference.
(F) Payments to the Department of Energy for pest April 1983 nutteer furt disposal.
(G) Adjustwemt of deprecILtion bitted to certain whotesale customers based upon revisions to contracts.
(M) See Note 8, " Rete Proceedings and Pilgrim Wucteer Power Station" of Notes to Consolidated Financist State =umts, incorporated herein by reference (Annual Report to Shareholders for the year ended Dece=ber 31,1990, pegas 27 through 28).
5-4 l
                                                                                                                                                                                                                                                                                                                    # n
                                                                                                                                                                                                                                                                                                              . d
.-s,=- --.--n_;=m,-==--._-
              -              r--...      --.w-=r,---h.--_w==n_-                -+-"            -    " - - - - -
 
                                                                                                                                                                                                                                                                                              +
toston Edison CMuny                                                                                                                                          Scheiste VI Acessestated Depreciation, Ceptetion and Amortiration of Property, Plant arvj Equipmmt 1989 (in theusands)
Coltsm A                                Coltsm 8                                      Cettse C                                                      Coltse O              Coltse C Coltse F                                                          Coltse C Adjitions Chargad to Other Accounts
                                                                                      - - - . - - - - - - . - - - . ~ . - ~ ~
Bete re Charlestown Balance                                                                                        ;
Salence              Charge to                                    Inwt y-Sal v        Retireamt                Cost of          et Ctese Aqsisition et C1ese                                                                                        i Segiming Profit ard Adjustaents value of Prep Wenewats and Bee == ret                                                            of Peried Adjustment Cf Period Description                            of Period                    Loss                                      Retired        Rept ocemmts Depreciation Reserve:
Electric Pter t:
i Proabetion -Fossit                  $228,742                522,845                        SO                      S3                  13,340        S3,923        52&&,252                                                            SO                        S2&&,252
                    - mucteer                  207,675                  40,998 (A)                      0                      2                      478          134            248,063                                                              0                  2&8,063
                    -Cther                      14,108                  1,673                        0                      0                      109            0                    75,6 72                                                      0                    75,672 Totat Prodxtion                        450,525                  65,516                          0                      5                    3.927        4,132            507.987                                                              0                  507,957 TransmissIen                                  92,379                    8.T&O                        O                    14                      122          103              100,908                                                              0                  100,905 i Distritart ion                              290,678                  29,230                          0                1,502                    8,348        7,900            305,753                                                405                              305,558 General                                      28,775                    9,032 (B)                    0                    30                    1,579            8                    36,250                                                        0                    36,250
;                                      ......__... ...~ ..... ...........                                      ...... ... ........... ........... -                                                  ... ......                                                                  --
Total Electric                              862,297                112,518 (C)                      0                1,551                    13.916        12,752            950,298                                                405                                950,703 Acessnuteted amo-tiretton                                                                                                                                                                                                                                                                      l of nucleor fuet (D)                    133,118                  10,613                (1,708)(E)                    0                          0            0            142,C23                                                              0                    142,023 Totet                                    1995,41*>              S123,131                (11,708)                    St,551                  S13,916    S12,752 S1,092,321                                                    S405 S1,092,T26 uotes (000*s)
(A) Emetu1*s S5,354 of nuclear dactuanissioning costs.
(s) includes $5,791 for amortiretten of teeschold iv -                                      as, c*smuter sof twere and toad %.                              -
program costs.
(C) This emotsit differs from "Daprecletion" and ")ther amortiration" in the ConsetIdeted Statammt ef Cash Flews
;        ty 56,368 *Alch represents newwt tretion of prevleusly incurred costs thet do not ef fect the reserve.
(D) for Informatien relating to the anortiretion policy for nutteer fuel, reference notes A and L ef the notes to Censolidated Financist Statewnts en peges 27 and 33, respactively, of the 1990 Amust tapert to sharehold rs, 4
incorporated herein ty reference.
(E) Payamte to the Deportsent of Enargy for post spril 1953 cutteer fuel disposat.
i (F) See Note B, Mete Proce= dings and Pilgele mucteer Power Station" of Wotes to Conselldated Financist Statownts, incorporeted berein tsy reference (Artsnet Report to Shareholders for the year ended Dece=ter 31,1990, pages 27 through 28).
5-5 4
 
i                                                                                                                                                                                                                                                                                                  I i
'                                                                                                                                                                                                                                                                                                  t l
i j'                                                                                                                          Boston Edison Company                                                                                                                                S &- ble V1
:                                                                                                    Acetnutsted Depreeiation, Deptetion and j                                                                                                    Amortiration of Property, Plant and Egsigenmt 3                                                                                                      .... ... ..................... . .......
,                                                                                                                                    1988 4                                                                                                                                    ..... .
(in thousarufs) e Colum A                                Colum 8                                        Cotten C                                                                  Colum D                                    Cotum E                      Colism F              Cotter
* G Ad$ltions Charged to Other Accotatts
                                                                                                      . . . . . . . . . . . . . . ~ . . _ _ _ .
Batacee Charlestoism Satance 8atence                    Charge to                                Inwty-Satw                      #etiremmt                        Cost of                        at Close Assisition at Close Begiming ' Profit and Adjustments Yalue of Prop Senewats and Remowat                                                                                                  of Period Adjustwent Of Period Description                          of Period                        Loss                                  . Retired                    Rept scemmts
                                                                                                                                                              . . . . . . . . . . . . . . . . . . . - . . _                                              ........... ...~......
Depreciation Reserve:
Electric.Ptant:
Production -Fossit                  1208,969                    S21.E39                        SO                    (S110)                          $7t1                    51,225                  S228,742                                SO      S223,742
                                          - muctear            173,390                    32,095 (A)                      0                    2,261                                60                            11            5207,675                                  0      207,675
                                          -ether                  12,652                  1,598                          0                              0                        141                                1              514,108                                0        14.104 Total Prod 4ction                      395,011                    55,532                          0                    2,151                              932                      1,237                5450,525                                  0      450,525 Transmission                                  86,142                    6,664                          0                          (1)                        391                              35                392.379                                0        92,379 Distribution                                275,300                    27,289                          0                    2.322                        9,159                        5,t44                  5290,678                              405        291,083 Generet                                        22,793                    7,416 (8)                      0                              0                  1,494                                    0              S28,715                                0        28,715 Totat Electric                              779,246                    96,901 (C)                      0                    4.4 72                      12,006                          6,316                    862.297                            405        862,702 Accteuteted Anortiration
:                      of nuclear Fuet (0)                    130,429                    2.689                          0                              0                            0                              0              133,115                                0      133,118 1                                                    ........... ........... ...........                                        ........... ........... ........ . ........... ........ . . ........
Totat                                    S909,675                    599,590                        SO                  S4,4 72                    512,006                          S6,316                  S995.413                            S405        1995,820 motes (000's)
( A) Emetudes S5,354 of nuclear decommissioning costs.
(8) Inctudes S4,585 for amortiration of Iessehetd iw                                      as, comuter sof twere and Ioed -, ~4 progre cests.
(C) This arount dif fers f rom "Degreciation" and "Other amortiration" in the Consolidated Stateammt of Cases Flows t'y S6,779, which represents amortiration of previously incurred costs that do cot affect t% reserve.
(D) For information relating to the amortiration policy for tutteer fuel, reference notes A and I, of the notes to Consolidated Financist Statements en pages 27 and 33, respectively, of the 1990 Arruel Report to Share
* elders, incorporated herein by reference.
S-6 i
f 3
i s
.I 1
9 e d
3                                                                                                                                                                    _
 
l, i
i l
i e
Boston Edison Conceny                                                Scha6;te ir!!
December 31, T990 l                                                                                    Guarantees of Securities of Other fesuers 1
a
    =___________ = = __________._____________________________________________________________________________________________________________________________
Cot m n A                      Cotten B                  Cottsm C              Coltsm D            Cottavt E          Celtsm F                      Cottsm G carge of issuer                    Title of issua          Totat enemt              Anomts owwd aucunt in treasury            nature of                  esture of dafault of securities                                              guerenteed and          by Cogeny (b) of issuer of                p;erentee                by issuer 3
outstanding                              securities tamrantead (b)                            paerantead (b)
(in thousands)
Comectictrt Yankee Atmic Power Cowpeny        Series A #ote-due 1996                    S1,500                                              principet and irterest Yankee Atomic Electric Coppeny: 530 Miliion Revolvirg Credit Facility-espires 1993-1995                    2,850                                            principal and interest S25 Mittion aevolving Credit Facility-e gires 1991                          600                                            principet and interest Cew Engiand Mydro-        5300 Mittist Revetving Credit
!      Transmission Corp.(a)      Facility-empires 1993                        9,900                                            princiset end interest new England Mydro-Transmission          $300 Mittien Revolving Credit Electric Co. Inc.te)      Facility-e vires 1998                      15,200                                              principet eruf interest Yotet                          530,050
  ' motes: (a) As port of Mydro-cuabec Phase !!, the Comony and other tew Engtarvi electric utilities becamme equity owrwes in tMse cogenies and have agreed to guerentee severally, their proportlenete shore of the borrowings outstanding of both new Engteruf Pydro-Tranentission Cergerstlen j                and New Engtend Mydro-Transmissiers Electric Comony, Inc., pursuant to e shared 1300,000,000 revolving credit facility. Also, 1
incita$ed in the amounts gueronteed, the Cogeny and other equity porticipants guarantee their proportionate share of tha total etdigetiert of the participants not meeting certain credit criterie.
j (b) mone of the securities were emed by Sosten Edism Coppeny; none avere beld in t%e treesury of the issuer; and none were in default.
i                                                                                            S-7 1
Y 1
i
 
                                                                                                                                                                                                              ..        i r
Boston Edison Company                                                                                                Schedule IX        .
p                                                                              Short-Ters Borrowings Year ended December 31,
,                                                                                    (in thousands)
Column A              Column B                                Column C              Column D                                          Column E                                Column F Maximus                                                Average                        Weighted Category of                                                      December 31                      Amount                                                    Amount                    Average Aggregate                      Balance                            Weighted        Outstanding                    Outstanding Interest Rate                                                        l Short-Ters at Close                                                    Average          During the                            During the                                          During the          i' Borrowings of Period Interest Rate                                                              Period                      Period (2)                                          Period (2) 1990            (1)                  $174,630                                      8.961          8302,900                                          6221,626                                      8.6%
1989            (1)                  8213,840                                      8.91%          $233,276                                          $169,377                                        9.4%
1988            (1)                  $114,680                                      9.44%          $340,706                                          $212,344                                        7.6%
(1) Borrowings under:                                                                                                    . Year Ended December 31, 1990                                                                    1989          1988
          -Lines of credit                                                                                      $72,600                                                $39,000                                  40
;          commercial Paper                                                                                          81,030                                            174,840                          114,680 Sewage Facility Revenue Bonds                                                                            21,000                                                                        0                0 i          Total                                                                                              4174,630                                          $213,840                                $114,680
:::::: =                                          :::::::=                                ::::::::
(8) See Note 8 of Notes to Consolidated Schedules of Capital Stock and Indebtedness on page 26 of the 1990 Annual Report to Shareholders, incorporated herein by reference.
i l                                                                                      S-8 I
a .        ,4.s    ,w  m---w., g- ,-- .,,,w.4-m,m,    we.w.,.,,v%,a.ww-e.ame              ---: --  .-        ---w    - , ,    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
 
  ** t                            Boston Edicon Co: piny                                                                                                        Schedule X Supplementary Income Statement Information Year ended December 31, (in thousands)
Column A                                                                        Column B Charged to Costs Iten                                                    and Expenses 1990                                      1989                                            1988
: 1. Maintenance and repairs                                          8102,459 891,326 8107,325
::::::                    :::::: =======
: 3. Taxes other than payroll and income taxes:
Municipal property                                              $41,787 $45,017 $49,851
::::: =                  :::::= :::::::
The above amounts are net of capitalized expenses.
For information relating to Ites 2 " Amortization of Deferred Cost of Cancelled Nuclear Unit" and " Amortization of Deferred Nuclear Outage Costs", see " Consolidated Statements of Income" for the years ended December 31, 1990, 1989 and 1988 on page 20 of the 1990 Annual Report to Shareholders, incorporated herein by reference.
S-9
 
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                          .-re..,:                                                                                              ww..e--,-..--.*                                                                                  e-,.,---.                        --          -
 
Boston Edison Company Annual Report 1990 1                                                                                                                                                        4
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                    ~
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                                  .'                  A                                                                                                                                                                    Ml w;;$isi g
                                                                                                                                                                                      .'                          hgypd 6,.____
                      =            .-                      y                                                    ae                                ~ . .            .
      /
                        'I        ,w                          $                                                                                                                        ,..                                    .~,
m                                                                                                                                                                                        ..w An Energy and Energy Services Company i
 
Boston Edison is an operating public utility engaged principally in the generation, purchase, transmission, distribution and sale of electric energy, it was incorporated in 1886. The Company supplies electricity at retail to an area of approximately 500 square rniles within .
30 miles of Iloston, encompassing the City of Iloston and 39 surrounding cities and towns.
The population of the territory serwd at retail is approximately 1,500fXX).
Boston Edison also supplies electricity to other utilities and municipal electrie departments at wholesale for resale. Atmut 89 percent of the Company's revenues are derived fmm retail electric sales, nine percent from u holesale electric sales and two per-cent from other sources.
ON THE COVER:
Boston Edison Employees - The Company's perfomiance in 1990 is due mainly to the skill, hard work, ingenuity and commitment of our 4,740 employees. Our employees recognize their responsibilities, as individuals and as a team, for the Company's future.
FINANClAl. HIGHLIGHTS Yea's ended December 31 1930                  1989 *              % Change Operating revenues (000)                            51,258.546      $1.?69.345                  -
09%
Income ava,lable for common stock (000)                $77,788        ($33.788)                  + 330 2%
Common shares outstanding - weighted average (000)      38.779            38.246                4    14%
Common stock data Eamings 00ss) per share                            $2 01            ($0 88)                + 328 4 %
Dividencs declared per share                      $1535              51 745                -
12 0 %
Payout rato                                        76 %
Book vaiue per share                              $17 20              $16 71                +    29%
Retum on a/erage common equity                        11 82 %              (4 6%)                +  357 0 %
Faed cnarge coverage (SEC)                              213x                0.52x              +  309 6 %
w n:ws v ane uwwge o s u m nr ce s2 Me cvsmcr w em w e en ww me~em I
 
DEAR SHAREHOLDER:
Escr> body benefits w hen a company perfonns well. Customers receive greatet value for the price and better quality products and services.
Employees receive a clear, positise message that they are doing a good job and can take pride in their work. And you, our shareholders, earn a better return on your imestment and, therefore, are provided a greater
                                                                ,                  incentive to invest in the Company. This, in turn, creates more opportu-
                                        ; cu.tomer. )                              nity to strengthen our performance.
a p**%                                          As )our new chief esecutise officer, I'm pleased to report that
                                #["
                            &heepholders y4 (mpl es the Boston Edison Company is perfonning well and that despite a slug-Y
                                \t1                                              gish econorny, we did increase the value of )our insestment during
: e. g
* 1990. Our financial progrew was the result of excellent ruanagement of our resources and strict adherence to the Operating Plan we established MISSION STATEMLNT at the twginning of last year.
Energy and energy services os                s pns    ompany          mprod Unancial mength include an increase in the common dividend, and the fact that Boston are the reason we cre in business To estabhsh and                            Edison's common stock prosided a higher return on imestment than the maintain the lasting conf;.                        electric utility industry aserage. Out                      a to increase the value of your dence of all the publics we                        im estment during the 1940's will be cc..itantly challenged, however, by serve. our mission must be                        outside competition from independent power producers and ahernative to provide energy and ener-                        sources of energy and by climbing costs for fuel, purchased power and gy services in a safe, envi-                      providing reliable service to customers.
ronmentally sound.                                                    To prepare for the decade ahead and beyond, we have undertaken competitively priced and                          a Company wide program of quality improsement known as Operational reliable manner.
Excel ence it is the application of all employees' skills, imagination and creativity to reducing our operating costs and imprming efficiency.
Rising standards of excel-Operational Excellence builds on our success over the past three lence will guide us in years to improve our information systems, make us more competitive achieving our mission.                                                                  .      .
among N,ew E,ngland util. .ities and become adaptable.to changing market conditions. For instance, since 1988 we have decreased the aserage annu-al total amount of time our customers' service is interrupted by more than 35 percent, we hase decreased the operating and maintenance costs at our two fossil-fueled generating stations by 34 percent and our largest fossil-fueled generating units operated at record levels mer the past two years, establishing records for availability and consecutive days of operation.
1
 
1 i
i                                        Credit for these improvements and many more goes to our
;                              employees, who identined and seized opportunities for improvement and followed them through to implementation. That's imponant treause our l
;                              future success depends heavily on their full and willing panicipation in our business. Through expanded training and deselopment programs, good wages and benefits and open communications, we will offer our employ-ces more opponunities to excel and make Boston Edison a better company.
These improvements are also good examples of the Company's efforts to improve planning, control costs, increase productis ity and iden-l tify indicators against which we can measure our success. The results we have achieved to date are not an end, but rather the beginning of an effon g''
[
to increase the value of our core business and your investment.
The new competitise businew ensitonment in which Boston                                    -J Edison now operates also requires that we create new business opportu-                                --,,
nities. Therefore, the Company will pursue new subsidiaries, such as the                                                        _
Ilarbor Electric Energy Company and Edgar Electric Energy Company, both are good projects for our service area's economic and enerev future.                          C~~              .
te, You will read more about these business sentures later in this Annual
;                                Report. Allow me to make the point here, howeser, that all new busi-                                                            .
I                              ness opportunities we pursue, like these two projects, will be related to our core energy business.                                                                                        ,,
Boston Edison will also be an actise panicipant in the rejusenation l
of the Mawachusetts economy. To that end, we have established a new Eco-i nomic Iksclopment ikpanment that will work directly with business leaders to identify new business opponunities for our state as well as the Comp my.
in summary, we are deseloping strategies to address increasing competition, we base a strong management team, and we will pursue Oper-l ational Excellence in esery depanment, division and Company k>eation.
I                                To succeed, we must have a clear vision of w here we are going that is easi.
l                                ly understoal by every one. That vision, quite simply, is that Boston Edison w ill be an energy and energy sen ices company that seeks to provide top quality customer sen ice, become a premier employer and increase shareholder salue. We are in business for our shareholders, customers and i                                employees, and we will balance the needs of these three imponant constituencies in everything we do.
i                                          With correct information, thoughtful planning and careful execution, we will take control of our future. We cannot afford to w ait for the economy to stabilire or for other events to forge our destiny. We must create our future.
To conclude my first letter to you, I wouki like to recognize and thank Stephen J. Sweeney for 2
 
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                                                                  =~
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                                                                                                                                                                      ''f m ; .1 1
                                                                                                                                  'p 11  l      i i.ii l  l M      .
l                                                                                          .    :o.,'
7                                                                                                              ,
                                                                      , , , . . . . . . . . . m.                                                                .....
i ..,
successfully guiding Iloston Edison through some very difficult years. lie retired from his position as Chief Executive Officer on December I,1990 and remains as the Chainnan of the floard. It has tven my pleasure to work with Steve since I joined the Company as president in 1987, and I w ish him well in his retirement.
[
                                                                                                /
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[ Benlard W. Retnicek
                                                                                                                ' DrIident & Chief Executive Officer 3
 
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c FINANCIAL PROGRESS IN 1990 Operating revenues exceeded $1.25 billion of which approximately $20 inswo To nenovt inilli n were received from the three year settlement agreement, reached nisutys in 1989 with the Massachusetts Department of Public Utilities (MDPU).
Initi ettorts to become                            Earnings per share increased to 52.01, including 41 cents per conunon a premier employer,                                share from a change in accounting principle. The Comp tny increased the Boston tdison is launch-                          common dividend by four percent in December, and, during 1989 and ing a major training and                            1990, the Company's common stock provided investors with annual development program,                                returns of 34.4 percent and 8.4 percent offwing employees                                  respectively, lloston Edison common stock opportunities to craft                            performed well against the average annual        ,5 their technicat, praise-                          retums of the electrie utility industry aver-h alonal supervisoryand                                      age, which were 27.4 percent in 1989 and N penwelwork skills. By                      pT ,y            minus 0.7 percent in 1990.                        i.
8        Imoming a premier                                                  For the second consecutive year, h                                                            '
9 employer,theCompany da              retail electricity sales increased by less than
      ' willbe able to retain and I"]
one percent as the Massachusetts unem-          .6
:      ettract a skilled, motl-                          ployment rate climbed to 8.6 percent in Jan-y 'vated and sstisfied
{ workforce. With the h(j              uary 1991 and the commercial space vacancy rate approached 24 percent. With
                                                                                                                          , a er u a e a best people, we can pro- qq                                this economic downturn, the real credit for          EARNINGS Ptn SHARE our positive financial perfonnance belongs j[ duce the best remits.
Nuciew training at the d]                to our managers and employees, who held operating and maintenance costs $11 mil-ternings increased 11c due in part to a change in Chilton* Training cen-          k]1              lion under original budget and capital              accounting principle j ter hasbeen key to the p]              expenditures $9 million under plan,                which was othet by an incteese in O&M and net kyi percentof successfullicensingof100 thelastfive u
f(4 ;                          financing costs.
d consecut}ve classes of                  IxR
                                              ~
u, tw.s res swud <aw a                                                                                                                    nuvw w m i                                        M Corking safelyisimpor i tant too as safetyis a prominent element of the Electric Equipment Training Site on Mas-O yi Sachusetts Avenuein f Boston.
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                                                                                                                                                                                                ,t            y,[,t    ,/_.'  -
OPERATIONS AND SERVICE                                                                                                                y ? " l 3 'f H p
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Operations at the Pilgrim Nuclear "ower Station returned to nonnat dur-ing 1990,its first full year since returning to service, The station's oper-f_4""(*."
k'                  ,
ation saved more than 5 million barrels of oil that would have been                                                                              1 needed to produce an equivalent amount of power. Based on its most                                                      f[,7"                        '
recent Systematic Assessment of Licensee Performance (SALP), Pil-                                                      p                        '
grim is considered a better than average plant by the Nuclear Regulatory                                              E                          i Commission.                                                                                                                                        !'
With excellent production performances from Pilgrim Station and our Mystic and New iloston fossil fueled stations, we generated 84 percent of the power needed to meet our customers' demand in 1990, as compared to 78 percent in 1989. Mystic Unit 7 set an operating record for availabili-ty of 863 percent, while New Boston Unit 2 finished the year with a unit                                              maes equivalent availability factor of 88.8 percent. Even better news is that                                              7 despite increases in fuel prices brought about by the crisis in the Persian                                          P Gulf, our prices charged to customers remained stable during the year,                                                hG                    W thanks mainly to a diverse energy mis, including natural gas, nuclear and                                            F?
oil and a fuel purchasing policy that provides greater security of npply and price, especially during periods of wide market Ductuation.
Always searching for ways to improve service to our customers, we initiated a new " drive by" meter reading technology to enhance our ability to provide accurate bills to customers who have inaccessible                                                                            ,      ,
electric meters, and we continued development of ServiceNet, a high-speed, two way communications network i
1I ET    a E
                                                                                                  ., @h                    that allows direct transmission of informa-                          ? J ''
Jil7"..              W@f      tion between our customers and the Com-C  '
* pany's billing, information and energy                                                                      .
4              *d  management systems. By reformatting our p["                                  .
bills, and through new, more flexible cus.
tomer service procedures that empower our                            p g'                                                                                                        ,,
representatives to negotiate payment b
FUEL MIX ty in paying their electric bills, we have significantly reduced the number of customer calls to the Massachusetts Department of Public Utilities, and we have placed problem solving m4 V where it belongs...between the customer and Boston Edison.
w.mun e A measure of our success at satisfying customers, a market research survey conducted in late 1990, found that 829 of our customers                                                                      WQ    .hp hold favorable or very favorable opinions of Boston Edison.
d 6
 
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                                                                          - =='"*'Mfb              %ggq yJ L                                                                        W
                                                                                                                                        . y gg gdg. .qfe=J;y m}},,, To improve its generat-
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                                                                                                                                            +            - .
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iq'                                                                                            g g pggg Q ,                                                          %p                                                                      overhaul of Unit I at u~
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                                                                                                                                                                                      ***NR K C/      1 New Boston Station in Q"qylgg@ ^ ~d;t4.w)
                                                                                                                                                                                                                                                                  ,4 completed New Boston ug pw gpg Ag:                    g %g hgan 4.c& ,1];                                                                            J. ,j L . W Unit 2 set aere"                                                          new rec m ,.                  ..
                                                                                                                                                    ?R .
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ks g$ .1 j g_ g E ,y                            ,
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y%          ;M; J'              .;      [    3,          g
                                                                                                                                                                                    .h    '                                      '
ous days of operation, k                                                                                .c n                                                                                  rg~          .              ,
[/ 3-3-5 ff 3[y,w-c.1 k                                                                                                                                          135 consecutne days, t
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                                                                                                    -                                  w[          D        --                                                                  .y a
with an equaalent avail-(N ' )M,r          , ,,,                        , ,,
e                                                                                                                              abihty Iactor of 99 3*.                )l      .
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                                                                                                                                      -s/v gdN. w
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                        }p        -
n2                                                          w                              O'                                                                                                                                                ''
7$                                        .nf d          fMhp                    N.g h_ . .i                            m. v,a                Mj:ww.ngw                    4"                          ating procedures have w' 4 ;g + g y g/ ' tj,D]-n                                i          fp .. $gy]d 9                                                                  _
:;0 increased the efficiency W .T
                                                                                                                                                                                                                                                                                                .y bE                                                                        '                                                                                                                        and competitiveness of h
                                  %pk
                            /                                  M9A                                                                                                                                                                                                                            ,f d)/,/ >                          f d x%)hpNh [A O Y $ jD k 2k hYl' M((l#                                                                                                        lk , YY      3Q 'd , < j[ Mystic                              New          Boston in Everett as well a M, / ke ME%
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                                                                                                                                                                                                                                                                                          . 4 hyQ h
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                                    . p (; ji'                    s M(:              -w'km ,y..I
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Of significance to our
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    ,g,,.,.$,e                      43,. ee ;gw)MM            p      -
                                                                                                      ~~ " W*6e Jk*g,/f,t
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r f.jp %                                *y / t 4;i,                              . U for New Boston Station J N,
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to reduce ground level                  AJ
      \%yy  . , @f              W pkmyppj    upgw% [ .
                                                              , t-
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jf V H-                    5:                            e                                            9%
                                                                                                                                                                                                      -1                                      Q concentrations of pollu- g.g hkh                    '
h&      < dte                                                                                                      ' s A '*"at,qua          '"nty                                a hl
          ]..
m        ggm/
y,, 7m 4 Qp m, t ev-                                      g
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g-      : y g. 4
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                                                                                                            %.l ;j./ ~ . i N;,t                          .j [ 'c                ga q ' Q f '              I 4,@je' gk                  ,;.                                                                              T                                        %                                                                            st                  n                    '9.]
g k .- :                                                                                          .dh                                                                                                .                                                        , ~
gg,.g i      #
                                                                                                                                                                                                                        ^              T            ,.,,          J          i
                                                                                                                                                                                                                                                                          .O't'  1  5      o 1
                  %h( ''                                                                                                                                          j                                                                        , ,    iU          i m,
w            W MaPy
                                                                                                                                                                                                                                                                                    +
                                                                                                                          , , ,p. d-{l'
                                                                                                                                                                                                                    .a    .
 
l                  e                                          .g                                                                  ..                                              !                                                  -                ,
D, e E 3,
l,,%m              i x$y;hl,                                                                                                                                                                                                  ,yl' awo L.V,h,,                                          b jfh YYM                                            W.na    SYY' '* ^a ,Y                                    Y              '
c;1 f 3 ve ;!f *t y 7.y*y+dp 9 ; .'. nAy y. . ,g
                                                              .    . nu                                    .
                                                                                                                    ;%/ m
: .O+g.: , d M * " - e* * * ''. .
m,w:
l m a....w.n
.llO{AQ;YgQ:?,                                          $Q l: 0 g ; jf Q .y sj,g%pg gy. .p ,3 ..                                                            ,
: f. fhf.h                              Up Y ,.y h                          ,
kh$f fhf$                                                          ,y. y                                              * 'N ~ '*.
A            m4.pgnghe    M  s!wpru                        % n&nm%m                                                              74u#nw  .g= am          g            ,: m,owwwg                                                    w lA~ m                                          q %am.m                                    g                                                                                    -
w ,.                  .
mM4                                                                                                w
                                                                                                                                                            .-3
                - kf* 2Y$b$N%WN
              $wh;;h                                                                          Y. I%NN'AO Y g. l;                                                                                                    l-lNgh i .c
: w. u p c ,j y t enwt                    +                -                                .Q ,          t                                  ,, N,m    (
y Myh,%                L.C'l $hd      N. ?
Q-hfi,,;g7'
                                                          , y y'J.,d    %pt,c g M.y.11%(  ,
L h@ m, M{, %.s m# M,.irGWS %. ji,M''.,.G,c,2jh t'Sj /                                                                                ' ' '
f M                                                                                                                                  .g khhhh[h,bhbh,k                                                                                                                                                                                                              '
g.wpp                y ~'e"~W 9 ,6wg@h
                                                                                                                                  %" ,                                                                      /                                              s=
  ,4ff J ** e
  'g. 4 gh j g p* * $
vv fo# j "Ih              e, me      f,,, ei,
                                                                                                              'N        w te P,
                                                                                                                                      , n,
                                                                                                                                                              ,p
                                                                                                                                                                                  ** 4 m..,;{ gy*,*-.ma g **** ,
                                                                                                                                                                                  $'fo p *.* ~..~. f , * $. ,,',f
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a,n,'                *''
                                                                                                                                                                                                                                                                  - ;e :+
N;#=*ww.                                                                                                ,.%
hgj$k [{.Y                                            %
                                                                                                                                                                      ,,                  N" i                                        5'$                        q.
gS, 1
                                                  --- %                Nwwp      % q R                                                              c 1
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JtR Qg%r ,
                                                                                                                                                !I p);!jc,j                  . cffg$s W e
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l                                qp;iy,q
                                                                                                                                                                    .                                                  y                        vg g # 7 %y p p                                                                            g,] wy. g y g u '..Qig                                                                                                      a N            c?s'                                                                                                                                                                                  )%4                    ,j~
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                      %    + %. A              -
4oi# n g@.-
9 4    1 3
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                                                                                                                } , + ,/ e : - . .ii
                                                                                                                                                    . y.. q @LM
                                                                                                                                                              .p
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w}ir ,.
6 f ? gM"um)p$w og L i
                                                                                                                                                                                                        .. *i
                                                                                                                                                                                                            . -e5 0                                                                          h ' ,.
4e .e o a.
6                                                                                                                                                                    ,        .
: i. ,
g, 4;, gh  ,                                  >%g                          M                                ..
wnus          m                  '
                                                            ' N g w e,,gf@                                                        pjiMd  .,T g s" 3 w <y o . .4 .WgnY,f.O p ' ' ,;                                                                    W '
1,                y      .
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        , M.4                                                                                  ,
i ip. lly  oig. -,, l' [e  g} } }Yg*      *y1
: m.                                          ,                  <              i                                                                        e+-            <      w.            ,-
mftyg ',                    i ~. 3 - 7                                        i
                                                                                                                                                                                              ,* f,(I  k
: 5. I-~_                                                  I                                                .-i                              '
* N}N [ '!N'M
[.f                                                                      '>#                                                                                                                        "'
["k ''                                                .
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I          )                                .~ k . -                            s i
                                                                                                                                                                                                                                                        -hw
                  @kdh.dd '7                /                .                                    .
m        7                                  9              E"'                                                            dh&,
7, m$sa ,ggg      3                            h          i  m                /          k          '            Q        h        N yQ            h          h      %            g.            %p        F.
g ,d[g                Nhk      pk.+a p
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ww y.
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a-yr%  ,      j=~nn: u n( a wn,p
[                -
                                                                                                                                                                                ,      ) jI
                                                                                                                                                                                            .-                w.
y i
w          &ny,        p F            c                                                                                        ~= f                                  y[(
                      +                              ,          .
                                                                                                                                        ~~                                                                          s--
 
m'  .
NTEMN NEW SUSINESS OPPORTUNITIES
                                                ]
  .-'n; OI' N        I                                                                "
4 PLANNING FOR THE attributable to sales of electricity and the provision of basic services. Ily 1995, our goal is to earn from 10 to 15 Ivrcent of total revenues from 1 ME      the Edgw Deetric Enway                            new business opportunities that are related to our core business, such as
] Company,e proposed                      p                the llarbor F.lectric linergy Company, the I!dgar I!lectric linergy Com-
- wholly owned subsidiwy,                                  pany and our demand side management program %
j of Boston Edison,ls 30 f                                              lhe llarbor filectric linergy Company is a wholly-owned sub-
  } exciting.newbuWness >                                  sidiary of Boston Ex!ison, formed to supply power to the hiawadiusetts
+= opportunitythatcould                        ]j          water Resources Authority's new wastewa-9enerate millions of dol-          :1          ter treatment facilities being built on Deer                                                  4 lorsin onnuelstate end ,
l        Island. By forming a subsidiary for this
      = toceltensandhundreds M                              project, we are able to obtain more favor-
          ''c*a$truction jobs fw          pj                able rates of financing for this project,                                                    "
    ; Messachusettsresidents i i
        ,                                                    which could sase m.llions                                        i            of dollars. The "
ilapproved;the new first phase of the project went into service g pidnt      willieeture state .                                                                  .
4 g ,,3,,ign e,,, _                              during 1990 and is already providing annual 4
          'trolequhnt andits                                revenues of $5 million.                                                                        ,
primwy Eelwillbe"                                          The lklgar lilectric linergy Compa-ny is a proposed wholly-owned subsidiary                                                      s natue,e, m.gi.                n                                                                                                                    ,, ,, ,, , , ,
j the sher genwetion                                    of Iloston lidison. Again, the subsidiary
{ equipmentwiltreduce                                    approach will allow us to obtain more                                                          RETURN ON EQUITY Tj constructiontimeandbe T{                              favorable rates of Snancing as well as pro-the most efficient tech-    k                teet lloston tidison from some of the risks                                                    Return on equity grew 21 f nologyavailable.                      E              associated with building new power plants                                                      percent over las9's ievel l              and make us more competitive with non-                                                              ,,        ,.,,,,
                                                                                                                                                              ,T    ~ ~-
N H*'bm uect* Engy j                          utility generators. We believe in the funda-Conipenywa prom                              mental soundness of this proposal, alliiough
          ;''""" *'*"" O                                      the downtum in the economy and a dif0 cult pemlitting process do pose
            -weentresimentleemtws s
                                              *        ;      challenges to us. Ikigar . .is important to offering a reliable future energy tobebuttby theMas-                                                                                                                            .
supply to our customers and adding value to your imestment in lloston y ,,                                              Exlison. Our plans are now being reviewed by the Federal linergy Regula-whichsonWbumw the h up d Bosen Q                tory Commission (Ff!RC), the hiassachusetts Department of Public Utili-ties (hiDPU) and the hiassachusetts linergy Facilities Siting Council.
n.bw,
                                          . fjh, u
                                        .k'a$n&    J lM N/?
3 :.
1 I
t 9
 
7 D                                  7 e - -
1                                                                                                                                I
: y.                                -
W
                                                                                                                                  ~
DEMAND SIDE MANAGEMENT AND THE ENVIRONMENT                                                                                    ,        u As we progress into the 1990\, demand side management (DSM) pra                                        5                    ,m~ ,
9Q
                                                                                                                                                      ^
grams will play an increasingly larger role in our business. 'ihese energy.                                                                                    p    7; M g,j[
sasing progrann are critical during periods of peak demand, and, by 1995,                                                          7 j
it is our goal that they reduce our sununer                                                                U u                                                      peak demand b) some 14 percent Of                95d g p
                          ..                                                    imponance io aosion naison is mating                            ~
i                        le i
nshi pmni m nerin n s n, u eaum ef 1991, we will file a request with the hlDPU                      s 3
                                                                                                                                                          %C x          #a-g 4          ,      ;,1
(
hb- gJ,                Q,[
y for a fair incentise system for marketing                                                                      Yg l  osM and to recoser our program expenses                  ?
and lost ba,e resenues. We anticipate sue-        /                                \[- 4 /
                                                                                                                                                                                                          }
n cess since the MDPU has already approved            b Q1/ 8 st                    u
                                                                                                                                              --                        +i neen!se an re(oseIf IeQuesks oI otber                                                                        9      +
y n y ,.,          ,a  Massachusetts utilities.
The resuhs one secona phase oi y'
* y /h ?/
TOTAL RETURN TO              the Er.ergy Collaboralise Plan, a pannership                                                                  TeMe w i
                                                    $HARIHOLDrR$                among noston Edison, the Conservation laiw        l Foundation, the Massachusetts Attorney            i For the last two years,      Generals otnce, the Mawichusetts Disision b
Boston [ dison's total      of Energy Resources alhi the MaWIChlbetts          il ]
f eturn has esteeded          EubliC lnterest NesearCh broup, weIe              j                                      .
e, that of the overaH stoco      announced in March 1940. A goal of the            ,
ne et and the electne        Plan is to reduce our customers' electricit)                                            " dh          m uimir industry .ege          usage by I billion kilowatthours annually          !,f.
f,              6, >1                    J, through the replacement of inel6cient licht-      #4                            7 fAg4 ing, heating, cooling and other equipment in existing homes and businedes.
nemand side managemeniis just one of the iools ansion Edison employs to protect our state's environmental resources. Other inethods                                !< %D b-include burning low sulfur fuel oils and natural gas at our power sta-                                                      ;
gr+ jhp iions, upporting the research and descionmeni of cicaner fucis una empeiy m _ gie - aaed h m ,d _ _ m c _ p                                              feuy            w#.h4,                                                      ,
aware that esery power source, be it oil, gas, wind, solar or hydro, has an environmental impact, We will pay close attention to air and water quality as well as I[.
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the aesthetic and health impacts our facilities have or, our neighbors.                            E                                                    ' Ji@c y'              '
ew stay c ose to resca ch on electromagnetic fields (EMF) and the                  y-                                        ,
Greenhouse Effect. And, as a consumer, we are recycling paper and                                17 esy                                              '3]$w$
other products and, in fact, printing this report on recycled paper. Our                        h h,*1
                                                                                                                                                          *'M.
poal is to achieve balance between serving a basic need for electricity and protecting the environment.
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A(1o
        ''            ; g-                                        ;.          ,                                                            4%                                          l t                  . , , ,
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                    *[x                                                                        ;  :            Q ,.                                                                                      \
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                                                                                                      -.        _ - -            -. _--~
k CHANGE
                                                                                                                                                                      -          I Ily now, it should be obvious that lloston Edison's future success de[vnds on our ability to change the way we do businew. This does not mean that                                  ,
the way we have done businew iii the p.ist was wrong. Tii the contrary,                                                                  ,
we have a lOS) car history of succeu in both good and bad economic times; ae can and should take pride in our record of accomplishments.
l lt does rucan that our custorneth require more and different ser-
                                          \ ices.11 means that our etnployee workforce is changing and we must                                                .          4 prepare for that chanpc through better development, training and succes-sion plannine. And it means that you, our shareholders, can espect bel-Stephen J.Sweeney retired let vahle for your investment, lly pursuing cAcellence, llosion Edison                                on Docomber i,1990 ma the Company will successfully meet the changing needs of our customers,                                  Company's Chief Enocutive
!                                                                                                                                              N " H " ' m 'ia* **
cmployees and shareholders.
Chairman of the Board of Directors, Sweeney's retirement APPOINTMENTS                                                                                                      ,        ,,
with Booton[dison,encom . ,
1:Hestne December 1. Pnt                                                                              paulng manyimportant milootones bothfor the -
Bernard W. Retnicek we clnted Chief laccuine Of fker, suucedmg hiephen j 'e n ne).
Company and for the utility      1 Kernset came to I;dnon as hnident and Cine! Operatmp Off act m 19s7 Imm the Industryingeneral Hewas Omaha Puhhc Power Ibtrict. w hele he sened a heudent and Cl O lmm 19si to IW7.
lie he nuire than 32 )can nirnerke in the unlu) unhnir) in the areas of auountirip, mW                We
'                                              Imance. emplonce relanom ami senior manayement.
                                                                                                                                                          "U            "Y"**
ofinterconnections among .        ,
Ralph G. Bird w e eletted laecume Yhe hnident m (harpe of all entmeermp and prahn-                    utilities, which improved the i -
tion operanom, nnluJmy the blynm Nuclear Powet $tauon-                                            reliabihty and economy of        3 Thonias J. May w n clated laecutne Vice heudent m th. ape of the Companyi f mance, o
                                                                                                                                              - the region's electrical sys-admmotrainin, customer sen kc, marLetmy. planmnp arkt torporate relatiorn orpani/s              tegn. He served as the first tions.                                                                                            diret, tor of the Rhode island, EsWem MassachusWs, George W. Davis, Jr. w n clnled hemor Yn e Preudent. Nuclear.
Vermont Energy Conte (,' -
John J. Higg.ms we c!nted Scmor Yuc hoident,iluman Knou''"                                            Center (REMVEC),one of Roy A< Anderson we elected Vice hnident. Nuslear Operatiom and Station thre. tor,                    four controlcenters thet elleetne Ostoher 1.1"                                                                          < madetheimprovedinter.
connection possible.' At 1.necine l'ebruary I.1091:
                                                                                                                                                              *""'Y #'#
moted theough the manage-Martin S. Karl w aulected Vhe honient. Corporate PlanmnF                                              ment ranks to become Robert J. Weafer, Jr. we elected Vac hnalent. Controller and Chiel Aaounung OfIwer                    Chairman, President and CEOin 1990 Among his-Richard S. Hahn, fornk rh Yke hn' klent tarp' Planmng. n rnw VAc Proklent of Alarketmp i
accompliehments, Sweeney .
oversaw the recruitment of .
a new management team,?
the restoration of the Pil/
grim Nuclear Power Station to fulloporation and the ret olution of maior regulatory -
i and financleluncertainties.
12
 
Table of Contents for Financial Section Mana;;oment's DJeussion and Analysis                                t4 Consoldated Statements of income noss)                              20 Consolidated Statements of Cash riows                              2t Consetidated Balance Sheets                                        22 Consolidated Statements of Retained Iamings                        23 Consolidated Schedules of Capital Stcd                              23 Consolidated Schedules of indebtodness                              24 flotes to Consolidated Schedules of Capital Stock and indebtedness  26 Notes to Consolidated Financial Statements                          27 Report of Independent Certified Public Accountants                  34 Selected Consolidated Statistics                                    35 Of ficers and Directors                                            39
          $hareholder loformation                                            40 I
t3
 
1 1
Monogement's Discussion end Analysis Regulatory hoceedmgs On October 31.199 tN Comnnwa'th o' tha teet's Depa tn+"t o' IW tw . CDDU1 antroved e setwnent apement (the DPU bett.enel !qeernent e"e:0,e thembt d 1,10i? tt atng !? mimo DiU p'omed om irwg the Compry On    !
tbvember h 19Xi the Iedt4 lne'gi he$tmi Co9mean tthe 4 LO app oaa the WWeue bewntN A;reenets leMog to (kms f eed tw Wte WWesse cupwe's of tne Com;u"y n tm A t& wth me 19% 1?iX 0;tNm 61 Pdpn ILdev hoe' Staten Phm n 5ta000 The Compam ne cash pynents to the Mdewe settmg petres m the to#th wier of 19)O of approomateN $3MD0 000 as o scussed fmtte! hen under te a resit of the DPU Settieei(ht AgTeme't and the WVive Semement lgeomentt the Compam fecNded n tv 1;ip? os#tet o' 1M a t< be to thyge o i$178 (40(O') w+th an dieFiat e'tect of $100 280 000 of $2 78 pet shre o' comnon stx6 hs chtge e ndu1ed n the 19i3 yem end 5tetement Of 1%ome as a conw+nt o! Other Ncnie (Low covu'nt eth aCCoJnhng p'actKe Dnd DTse'latiOn BPDka!M to the e!eitnc UMtt M1Jst!y Ihe components O@ated mth th's 19D non fecumng cWge ta ea"ungs re not recmeratde through rates hom either the Cmnpn o fetad or whoWe (umniers lhe chxge to ownngs im # of the betSement AgTements muudes upp oomt.My $80(100 000 of wten deord sW mragefnet etpenM $31 AGE O of prevoasty dei ened ircementd hader ostage esper+es. 53E0X) 003 o! Lt>geon. regabnon wnnumn ana other eipenset and 531.000.000 for certain reNa:ement pset costs Den and ode management eend tuu s mut doett4 assouated mth the Setitement Ag'eements) We normh recoveraUe 1Nough rates p/suhnt to regatatory gJtdeh'+s Def erred incren+Na! nudhir outage costs hot ddectly assocated w th the Settlement Aay ementM we hof mA nduded d', pyt of operahng empenses (Amo'11abon of Deterred thuear Oatage Cost 9 in the Statement of Nome The Comrom e' pats to see6 rMovery of une costs incuned n the futu e m a:cwdyte with PMt tegubtuy devsons of W DPU r
Resuhs of Operations Eammgs per common shre amounted to $2 01 in 100. vo indades $0 41 pe, wmmon shee relat:ng to the cumautwe citat of a change in a; count ng pona;ie ampted at of Janury 1,19:0 unrua! of untded revenaeu I sdatong the chmge o! $2 78 per common shme in 19B9 febted to the IKord ng o' the DPU and Wholesale Settement Apements. t mnmgs per convuon shee from conte.uing opinabons im the yews ended Demmber 31,1981 rid t 9@ snounted to $193 and 1186 rest +ctwely The 1989 m tyt) includes a 50 !4 per common shat gin trom an erronent dama n tanna of ce tain                                          r Company pmperty 1990 Versus 1989 Ewrungs per common shee for the vem ended December 31,19'.O anounted to 52 01 as compred to a ion of t$0 fa for the ver ended Dece9ber bl l9d9 The resatts of opef aho% for the yet ended Dec emtie 31.1910 incuae 50 41 per contmon shat dae to the cumulatae effect of a change m acounbng ponopte effectne Januay 1.1!O0 (acQu of untaed revenas), as d:scussed fmther in Note i of 7btes to Conschdeted hnanos 5tatemeMs' bdud ng the cumdame effect of the chrge m axoanSng pnnapu eamings amounted to $160 per common shme for the yes ended DecemW 31,197J as comDred to a lon of $0 BB per common shme (10 84 per common shree had tre Company in en accrung untded revenues a 1909i f m the bame penud bst ger The 19M results ndude a $2 78 per commm shme chxge relanng to rate and contract settWments and a 5014 per common sha'e gwn reabng to an eminent cuma>n tehng of Company p'operty as d:scuned f sther m Nate C of 76tcs to Conschdated huanaa! Statements' Net income tot tmh mnb meiades sevefd! non castl items. Induding eQ}ty income Ilom certd-n Investmen!s in afiddted Comph@s, amortla'lon o! pnof yen munlODa!
p'operly th UDhtements, the reveQa! to inCnTe of cert @n de!ened 13tes, kUonances for f und5 Used Du:ing ConStrucbon f AF UDC1 and the impsted interest effect of the Compp 5 reWa;two ad@on of Statement of hnnce Accoanhng $ted eds fbf AS1 t[3 90 as d scussed tyther m Note D of 'Nmes to Conschdated hnanos Statements' These non cash items tesdudtng the e!!ect of a cNnge in aCC0Jnbng pnnDpie 85 d sc;' Sed tuf ther n N3te I of 1Dtes to Conschdated hnahed $1atementh amounted to 50 56 per common Shye in the yey eMed Decemtiet 31,1930 and $0 43 W common shWe 17 the sMr@ 00000 bst year old opef ahng f evenueS amounted to $1,2934kOM a deOebe 04 0 9% as f anous 0 ?% increase m retad 6 Wh mes tAed                                                                                                                                              i          266.003 hc! ease in pertymance clause revenues
* 20.582 000 Decrease in f ue! and pfChased poAef blustment cuuse revenues                                                                                                                            (23 460,000)
Sa!es for resse                                                                                                                                                                            14 60suo Other changes f                                                                                                                                                                        _ 0 579 00m Decrease m t;ts rc~enues                                                                                                                                                _5 (10.7aa 000i w !cMveeM P m'Iqww , W ' .e Ne e 1 10--! e e Car ;,va s m ' M L me W ' % : ts op weg $N W OE me e+
p-  : hww ! m o ow y w m e a m in:m u w n + ew m # n,. m N w +et w n mu u m
                  !$ dIPl ll 4;j  70 bl4 d uM e f f(t 4 27 f d kh                                i  i4 + l" { !  { !") f 41F i 't P l    / !0 '. rs ': 41;* I ' d./ ' Q I t 0*t lt'I f fif n O pNO Wh F rdM 01m 3I l} O li  %; f 4 A i c' 'tWe M CM - p M ; Fqn ')                  59 4"r                  my ng e e      ; r e L 1 ;.1 C M 4 + r d a (9 r je  *Oi        gpd ;We 14
 
l .
hotad IWh !J( S Id ed ty the it# (Niel Deit"nw 31 IM N'er e] O 2~'. n cowf10 in the v nle pP ed iSt it # A nep po'te si the lege de 't m e m f uel m J pawyd twe' %twes ya !# a90 pm ud wm ' im mes of 1?? 4R0;O inJ
    $20 3M DT f e:pecte 8 Le 10 use* pa Mej entag, ( M m so:ehd a th r M y-e
* Crpr, ge                                                                      n e'#m e t',W @:h makej vphe, mt w p; w i Mye ut.r ct te as (; npf ed to IN < 9 e pc rd ; mt u e Gtme fw f nm C rper, e,&j fxi tes nas an h ta the sey EW e pynprel ta the tyne ;e v1 W wf wp j w".                                                              ?4 p@e m WA pt:'m N Nm other Viitti p' "J6 d.t to mrt M ed i Wh cu'.;tt tWm Pif 9 Stetfi IN "@ Y (0 17 ff (t' dM (V: n3 ed U mt" eqe ses h t to:0,e ed thwgh !# ami p/;h' +1 pone' Asm w'h P e te& tieN > cred Po @ tne tsne tres Otner opeawn rnd " ante ao:e enact m m't eN $24 7 70 0;O vemi% n o te:;' -J w mim m utny emipiat+ tx u%
eq+'se and A;o r:Oti s.t pf t :tLy oHt t I h de:n Mt3 - Tgfat'.sy ( D"-m usW aSJ 'twf Lh a51 Je icip"it*t e s pf" ses tuhort lat ;n ei orte"ed f 4 !rm oatsge MIS deJ'eheJ $19 i'0 DM d m 10 P'e M te vt of Utc t?n'% o M "ej tu 4 # UWje tests m the to ett aarter cd 199 as Dr! of P e it B %D ON (wge as a < wed Pemw, Peppe1, ed othe' te espe %e demed 11.118 000 te mm d;e t? W.er tewt, %es m a rt u v the 19s l' otwent v a in epate Mb the M N !bMo" Me.a:% ntS The Cepany 5 e"+ t ve m-:ow to ratn fu' the g ys ended Dmemte 31 19M ind 19:0 we M 4 - (" Wjeg the c out w e he:t of P (Mnoe an%9a p' r opw ed % 7' tecdog the bett:ement Ayeemeun respectwe', h cae' hye m 190 m rested to tt e teveV of wtam v1 yest ceWed mee tm s t%
ud:u aten 9 atxh was baMd up:m a f W wenw mg repa ng AIUD1 Bede ne'e t*: g ee1ted 10 n:vme c Mh meth0Dogy has tot (+e' aJ:;pted t', the DPU in a; *orurce Mb N/ ttan o' the DPU Vt c"ent Ayeen+nt the C onwy teMyel m mcome certam muwM tai otatemew uwmve% 113 000 0R m -1 acieoed n:ome tw s !!? ON O@ W the we en+d Dec ember 31.19M See no NMe il of ' Notes to Coomk4d ImW StMew m ()tu N.whe m 19d o WM b $014 twf Owe gan on en ennnent unam taiN as d <:uu ed Femua
            /J UDC tWeJ $8 B33 090. a de:W e 9 10' t'om 190 Le ta emser m tem p e meoy weutton nW m p: gen tee and the M UDC tate Tota NereM ei;mse eene115M CO) vmW rewed to in ecen m men shuq te"n kun tWance OJtMMd 09 Mt<h E nMeisYy tD bupWJt the C)Mu% 5 onp7 iWF o! pW t Pd !#eu the Jfe I[W i su3me of
    $100 000.0D0 of tuty sea' 9 7/1 t DeMtses and 1100 COD C@ of f a uw F V                                                    De tenfes e "J m Dne"le vi MN N Compans Maot es a porton v its op ta' noend tres tmgh me, geerated fue wm the tuaw t%;at citeW t:rinungs 1989 Versus 1988 The Com;n gunes a loss of $0 W w comon swe 'or the ,t w enan1 Dec emter 31.1M co"pe1 to camngs ps wwmn swe of $100 for tte same pm od n 19% % mu v $0 W per c omrm Wre r 19D n Wed a 12 S cte 10 ernmgs ponWy teetmg to the DPU Settrmet.t Ayeexmt d9d the WWe;a r ktvert A3f ements vi!-e! n pyt. t , a $014 y common shme g3m reiahng to e FTmed U/wn tM q v COmtcy pmwt, f et m ome mWM tY0e to wh de M M UDC the mputeJ mieTst effect of the (!ompany $ tePuxtve arpton of $f AS W 90 te 14 med ' Tiber m N?te (1 M 'f bes to Conso d$ted Fmanoat Sutemenn at the ressa's tMa n vor vers de'ened mee u es at d numeJ te"e N eeMe Rese 'tems dmofdea to 50 43 per common sVe m 1%9 rd $0 % te c a" nm swe m 1%
Tots epeaMg fewenses amounted to $11C9 345J03 an m mee of 5 h k as te > ss 0 91 mcrease m retM iWh sa es                                                                                                                                  i 4 006 000 It"tormaNP cbuse f ew%es "                                                                                                                                          3.174 000 hCreJse n id i aM pMased ponef rdds'me'd LM.6e (e.V *s                                                                                                            O B02.000 Sees te teWe                                                                                                                                                      111% 000 Othe mcnases net
* 7 953 0N In~! ease in to'a; f eVensN                                                                                                                              $ % G O 000 r
p, y e DF > , m. n ,.. (,,y. p . ,e y ,
4                                          y  1 l i. , o i  .g                  y,; ;..            .:t    -ya.,  , ,    e b, y      = gg } - g  *  ,g  e
              ;m jh ~ hw - 1 1        .  .*-7  r,  t o; , ,*    3:        ,4 p,              p                  "g .g.  > 'e      y 1ir  'e  we e,t%        * ,    hi. P 'i ? M s  t  '/I',              .o                                s&  n Retal @ sa es for 1% miemed 0 9" imm 13% wes for reue mewd H m 00 : w v as s rew d metered Outpat hDm Pognm Stron n%d Tttnej 17 M power m 19@ Appomateh Ni 9 the outp;t i'c r P4 : Et E n6 unjto0"ler utMes purs; ant to mg to"n pwN. sed tow conPacts The !yge a mem m f A r,d p c:nsM por * 'es nues a d W ed punasene,w ew ses a m em au $4muume a ce demg esmoem md toe oeunese
        @ pacased ham cSer u S s Pqen Swm orered at gmL#y wea, .g poma ,,es as pm o' tv Puner Asww na Test hogyn m 19M and Pu to oed A B m we3 fm ,. e I pet nan t it- Compra nas aMe to rede :ts oveT lew of pa^e props im ostsde smes b 22" n 1989 as need to 40 e m 1H h < 4 r wSm of f M a% ormed tme ethe"ses fefeCodfe)$9 }J[ fJe'aSdpjIO !5e'J[QA'''ilf>esVi#b piIiS Me tMg reintered PlIlhiIld'd Ia!P; One n;ieraton %pe tes in >< .ned 57.124 000 onmes, as a reset of m n m es ' aK , e ob,ee bow is eope' w and                      -
uncoN ttres Mawenre : e M'se Omrease3115 972 000 d;e to de >ened e< pena tres at Pg m Mat (n r i Sm eM s of schedad t.ni overhafs n 19f 3 vmsus 19M Deve: Mo^ and anyt ;&n expe..e maad $1b 010 000 h to 6 w0e mease in me acar aevnase ow mestmeo base mmaw comw sed d Pgm Sw n ada t m Mvh me cc nu+3 ao pNed ib
 
_--___E l                                                                                                                                          .      . Y into semce in late 1988) and transm:ssion and d:stnbuton oppment add tons Property and other tw e. pense d" creased $4 Gt9 000 dae to lower property taxes as a result of the sett:ement of a tas d spute w.tn the City of Boston Massa:hmetts in late 1968 The Company's eHectse income tas rate for 1989 tescud.ng the DPU Settement Ag,eement and the Who: esse Settement Ameementsi is 26 7% versus 26 9% in 1988 Income tnes ex;iense per the acompanying tnarat statements decrease 151M 000. a porton of wnich is due to a s5951 dechne in taxable income The Company dso teversed certan pnor yea's' def ened ncome taxes in tnth 1939 and 1938 assoaateu wth AF UDC related defened taies pmv'ded danng the yeam 1977-1979. the ca:cuuton of anich was based upon f ERC Order 501 methcWogy These were restmed to mcome as such methodobgv has not t+en ajopted by Be DPU The eammgs per common share effect of these reversais was $015 in 19s9 and 5010 in 1988, see ab Note J of %tes to Corcohdated Finanoa!
Statements'.
Other ncome increased over the pnor year penod pnmwy as a resu't of eenses incuned in 1988 in opp %:en to an ntatve petton wne would have requaed the shutdown of an operatmg nucier p: ants n the Commonweann in add ton. in 1939 the Company recorded a ga<n o! $a499 000. net of ta<es. tmm the emment doma n tahng o' certa n Company property See Note D of
      ' Notes to Consckiated finaw3! Statements' for informaton on the impact on 1989 and 1939 eamings 00ssi relatse to the Comfany's adophon in 1987 of EF AS Nc 90 AFUDC totSed i,10.474 OQ ) decrease of 54% from 1938. dae to a :a'ge decrease m the construct on work m prog en tuse.
wh.ch is pnmwy re!ated to the compienon of woo at Pagom Staton in late 1988 and in the transnussion and d<stobuten system The Comoany finances a pation of its capu expenatu        r es through niemany generated f anas wth the twance through ettema' Mrs interest expense on long term debt increasea $9.891000. onma'6 as a resun o' the September 1938 msu. a of %d 000 009 of Unsecured Med:um Term Notes, the proceeds of which were used to redJCe short te'm bonoWhQS beierenCe d Odends mOeaSed 53.512.000 due to the issuance of 500.000 sha'es o' Stated Rah Aucten Pre'erence stoo in October t% the omceeas of ech were a!so usea ta mdace shortterm bonowngs Financial Condition, Liquidity and Outlook for Future Financial Condition in connect;on wth the DPU Setticment Ayeement. the Company has agwd to kne its retad revenue inceases poor to Navemte 1, 1992 to approomateN 2% per year, sub    i  ec ta adystment based on Pdgnm Staton s pedormance kcomnw tne Company s atety to mmnta<n or mcrease eamings through October 31,1992 wd' depena pnmanh on as anay to controi costs and increase uowattnour sales, as well as the efacent operaton of Pdgnm Staton Dunng the pedormance pero 1 November 1,1939 through Octat'er 31 1990 tne Company received approumate;y $20.000 000 in accordance utn the retad revenue inaease remusly a scussed. atusted for PJgnm Staton performance. dunng that pened, Pdgnm Staton operated at a careaty f actor of appomateN 68 % wNch was wth>n the neutrai zone of perfom1ance per the DPU Settlement Agreement Effect se Novemw 1.1990 annua: rew reveoes mcreased a, add:tona $22.500,000 sub!ect to adystment based upon Pdgnm Steton's performa ce in ads ten if tne Company wodd not othermse achreve retal rates of retJM of 11 b% in 1991 and 12 0% in 1932, tne Company may make certam accounting alusments (but onN to th9 extent that such adjustments do not result m the Companis etceed ng sucn retal rates of retumi 0 by f edaang deferred income tas expense by $13,000,000 m 1991 and $23 000 000 m 1992 and tM by acceteatrg the amortea*on pened of certa n muniopai property tat abatements t;tahng approuma'eiy $37.000.000 from sa to three years Danng the penod Novemte 1.1992 though October 31,2000. tne Company nas ayeed to institute a new cost recove y mechan:sm. wh'ch is aSo t;ed to Pdgnm Statan s purformance, for a porton of tre Company's nvestment and costs re:ated to Pognm Stren The Companys e;ectnc generaton un:ts. ether than Pdgnm Staton. me fossa fueLfved a or natural gasi Fossd fuel re:ated expenses (escludmg net purchased power) accounted for approumateh 21%. 26 and 19% of tota' cperatrg estenses m each of the years ended December 31.1990.1989. and 1958 respectiveN The ma:onty of the Company s fossa fuel purchases invoNe imported residua! fuel od acquaed pnmanN from mtematonal supphers and rava! gas wh.cn is suopt ed to tne Compans on an mterruptbie' bases. The Company has expenencud recent increases in the pnce of residual fuei od as a reW! of d s'upt ons in he caproduang reg 4ons of the wodd, but does not anbopate d:sruptons n tre avaa abMy of suppiy to tne New Eng'and regon The Company is currently recovenng ircreased power generaton costs assocated ath recent f ossd fuel pnce mcreases via the norma! operaton o' f uei adjustment clauses The Company does not espect to ce matenany imorted by the passage of the Clean Aa 41 The Company currently recewes recovery ci fosse fue! costs incurred. as a result of burnmg very low su!!u+ f ae! oJ in comph3nce anth the new leg sution, via eustmg f uel atustment clauses in both its retal and wholesaW rate sct'eauies Tne Company is affected by inhaton wah respect to its operat on and manterance costs The Company is aiso affected by mf!ation to the extent eat inf;aton appears in the form of higher constructon and re!are d 'nanc ng costs for new generat.on statons.
l'ansm!Alon and d stobuton eqJ'pment, and signif; Cant imDrovements to esGtmg f aQ            I 'bes Ine Company's level of deDreOahon expense is based upon the histor cai cost of its piant tne Company te' eves tnat depreoaton e<;m ise catcu:ated on a repeacement Cost of f aCM.es' bais would be sigVWtly higher 16
 
_ ____ _ __.__._._ _.~-._ _ _                                                                                        __                _._ _ _ --
Expected Plant Expenditures and Future Generation Capacity The Company's estmate of plant egenditures over the next fne years (which is subject to continuing review and adiustments), is j              current!y estimated to be approomately $1,004.000.000 bncluding nuclear fuel, but excluding Af UDCL Long term debt and medium-term note matunties and sinking fund requirements for both debt and preferred stock agyegate $330.000,000 in the next hve years.
See also Note 5 of ' Notes to Schedules of Capital Stock and Indebtedness' with respect to potential mandatory redemption requirements on the Company's outstanding Stated Rate Auct on Preference Stock subsequent to November 1991.
The Company ts continually studying vanous energy a!!cmatives in order to add'ess its capabihty requirements Due to the demand for electnoty in the region, and regulatory emphasis on least cost options coupled w!!h certain environmental considerabons, a
;              growing snare of future plant expenditures is being invested in demand-side management programs and regiona! transnussion fachties Pmsuant to guidehnes from the DPU, the selection of lea
* cost options may be subect              t to advance approval of the DPU. l Alsc., as part of the DPU Settlement Agreement. the Company committed to spend $75,000.000 in demand-side management                            l
              . programs donng 1990-1992, of which approximately $53,127.000 remams to be spent as of December 31,1990 In 1990, the                            1 Company cont;nued to seek independent proposals for purchases of power from cogeneration fachties and/or povate power
            . producers. increaseo emphasis on customer utihzation of demand side management programs. and explored the feasibihty of insta!hng new generahon capaoty at the Edgar Ener0y Park. located on Companyowned property in Weymouth MA in add > ton, the Company continued to explore other least-cost options mcluding potential long-term purchases of power from Canadian fachties and the installation of combustion turbines.
t              Liquidity and Financing The Company's scheduled debt panopal repayments are $56,800 000 in 1991 Irterest on antiopated long-term debt outstanding.
estimated to be $106 000.000 in 1991, rs expected to be funded via normal cash flow from operabons. Funds generated intemally (excluding the affects of the 1989 rate and contract settlements) represented approumate:y 734 02% and 43% of plant expend:tures in the years 1990 1989 and 1988 respectively.
The Company's estimate of working capita! needs for calendar years 1991 and 1992 is expected to be consistent with histoncal levels. except for the additional impact of the 377,000,000 of expected future cash outlays m 1991-1992 as pan of the settlement                j agreements (of which approomately $54.000,000 are classified as a cunent habany on the Company's twance sheett Approomately                      ;
              $68,000.000 of simdar payments were made the setthng parties in 1990 The Company meets working capitar requirements. as well as the intenm hnanong necessa'y for its cunent program of plant egenditures. onmanly by Internally generated funds, supplemen!Od Dy the issuance of short-term commeroa! paper and bank borrowings The Company current!y has short-term bonowng authonty from the FERC of $350,000,000. which N Company deems adequate to cover worung capital and other hauid ty requirements unclud<ng                      ,
the $77,000.000 of remaining fwre cash out:ays as discussed above) As of Cecember 31.1990, the Company had $153,530.000 of short term debt outstandtng (wh,ch excludes $56,800,000 of long-term debt due within one year and $21,000.000 of shon-term debt l
tssued by the Company's wholly owned subsdaryL The Company has available a three year $330.000.000 revolvmg credat f achty which expires m February,1993 As of Decembei 31,1990, the Company had not apphed to the DPU for regulatory approval to mcor long-term debt under this agreement. nor had the Company incuned an) Short term debt thereunder The Company also has arrangements wth certain banks to prowde add;tionat short-term credit on an uncommitted and as avadable b.Ws.
                  . In June,1990 the Company issued $100,000,000 of 9 7/8% Debentures due 2020, in December,1990 the Company issued another $100.000,000 of 8 7/8% Detentures due 1995 -in December.1990 Harbor Electric Energy Company (HEECL a wholfy owned subsid,ary of the Company, borrowed the proceeds of $21,000.000 of short term Sewage Faokty Revenue Bonds (the Bonds) issued
            ' for the benefit of HEEC by the Industnal Development Fmanong Authonty of the City of Boston, Massachusetts The net proceeds of the Bonas were used by HEEC to reimburse the Company for advances extended to pay the costs of acquinng. equipping and instathng certain ele:,tnc transmission fachties owned and operated by HEEC In 1990, the Company redeemed both the ternaineng $6,110.000 of Senes V Bonds (12 5/9%) and $10.029.000 of Senes T Bonds (121/4M As a result of tt e net increase in long term debt secunties outstandmg, the Company's capitahzation ratios became,55% long-term debt.11% prete red / preference stock, and 34% common equity. In September,1990. the Company fded for an additional 2.000.000 shares of comrn n stock with the Seconties and Exchange Commission to be issued in accordance with the Company's Dividend Reinvestment and Con imon Stock Purchase Plan Outlook for Future A large portion of the Company's kWh sales are in the commercal sector as compared to the muuttnai sector The New England area is currently expenenong a sluggish economy Whde the Ccmpany does not anticipate i ny sigmficant effects from a continuatron of the current slowdown m the regional economy, the Company does not antiopate significant growth in retail kWh sales Retad kWh sales b'ited for the year ended Decembu31l1990 were 0 2% greater than the same penod last year Future revenues commenong in February and Jury,1991 wdl include ennua! rate increases of $6 800.000 and $2.800,000. respectively from certain wholesa re customers; such increases are subject to refund pending tne outcome of a wno(esde rate heartrig The Company mtends to fde in the first quarter of 1991 with the DPU for recovery of certain expenditures related to demano4idc rnanagement ('DSM') programs.
recovery of lost base revenues associated with the implementation of the>e demand-s:de management programs, and an mcentive consistent with simdar fihngs of other Massachusetts electnc utthties Some of the major programs include,1) rebates to customers for reduced energy consumption,2) offenng commercia! and industnal customers programs to revamp fachties. 3) offenng the largest commercai and industna! customers the opportun:ty to redesign energy systems, 4) Cash incentives to customers for the use 17
 
9 of their own on-s te generaton S of tenng commertta! and industna! customers rebates for repbang 1,gstag systems w@ move energy ethc ent systems and(a oHenng energy saong measmes to resioonte custome's who use electnc hot water heotog s> stems l    The Company has expended approumateiy $28 000 000 danng 19E0 for DSM expendtu'es of wNch appoumatety 122.000.000 is
!    assoaaad uth the prewously d scussed DPU Settlement Ayeement i            in 1989, fbetheast Ulit,es became the a; parent succersf a! tudde' for the ownersh p of ht;Lc Sewe 01 Ne'. Hampshre, an I
electoc utity servmg a Irge porton of the Staw of New Hampsve WMe comp < ebon of tv van %cton is suhett to vanous regfatory appmval prehnaN approvats for 19 merger were g' anted n Decenter 1930 The Company and other uttes are feQaestmg the f ERC to impNe Cond>t ons on tNs takeover on 'he tms that the new combined ent>ty would contro! most of the excess generatng capaoty m New Engund and most of tne adab:e ma,or electre transmisson fastes entenng the southeastem New Eng'and reg on On Sememte 21.19n the U S Cou't of Appexs fr tne Fest Cncun re ew a May im wy ved.ct aga nst the Company for
      $39.300.030 in an antorust so t teought by ce'tyn of the Compaw s nv apa! cu~tr                              Januay 22,1991 the Customers pettsoned the Unned States Supreme Court f ar a wra of ce toran seehng to restore 19 =                      ' ihn Compry teeves that, even m the unaeh event that the Supreme Court wo agree to her the appeal tte 1E qwt agmst the Company wi not tm re;nstated That !uagment is not retected m tne accomrany:ng i nyd statements and accurd ng!y. the A;ipea's Court oeasion had no etfect on tne Company's repcvted eam ngs The Company h3s been named as a potenta% respostue rwty try co'ta n envuonmenW authoni.es mth fespect to the c!ean up of Ce't3 n haZrdoJS waste s-tes The ComDa3 bePeses that the behhM 11 y, o mcu      r any matend Labiti Eth resreCl to Such cla;ms is remo'e Pilgrim Station Operating License Extension in Janury.1991, t'e NRC extended Pagam Sta Ms operatng Mse hcm F e yer 2008 to 2012 an estenson of approumate>y three and one nxt vers Edgar Energy Park On W,1,1990 ine Company fu ed its Long-Range forecast of E er c Paw Need3 au Regeements for tre vers 19902014 wth the Commonweaa of Massacnu sein Energ, f acit es Sang Coun ca Be 'EFSC1 hwded mth ins Mng was a request for approva!
of tne Edg-r Energy Prk pm ect. which q a propcsed 300 MW comtined cy-;e ge + ratmg stat!On aNh the Company p:ans to const'uct on tne Companywed sae of the reued Edg r Gene at rg Su! on ocmed m Weymouth, Massa:nusetts A!so on May 1 1940 the Company f red wth tre DPU a request for a Jon:ng esemp'an for tre Edge Energy Prk Pm:ect On August 1.1990. the Cormany fJed acationa: requests at N DPU seerna H apmou to to'm a www ned sues.d ry to const'uct and operate the 300 MW gereratrg un:t at the Edgy Erergy Pat 2i aco<od to make an ea rty mvestment up to $90 000 000 m the subma ary and 3i app'osa! of a contra:t between tne Company and the stwdry one e en to Company woWa purcnase the ene<gy and capaaty of the generat ng uM 'or 20 grs DPU nea"ngs on appress to form the sabs amy and to mak e an mmai mvestment m the subsdary commenced m tate 1990 Hearegs on the Compam s tJ ng Defwe the EFSC re antc pated to commence m me 1,rst garter of 1991 On Janury 31.1991 ine Company !ied for FE PC appmvs o' the coaer ou< chase centract tet Aeen the Company and es sisdry in adcSon to proceedngs before tne DPU. EFSC anc FERC the Com;uny has also commenced apptatens to c@er revec ce'mds and approvss mclud:ng m pbcar trey enwonmmta! permds, De' ore a number of other federal sute rid loca: apnoes Recect of an tne vanous perrNs and regdatary appm.a s is not e<oec'ed uw ine second han of 1991 Assumaq tre successf u! earn completon of permi Lng act', Les and recept of regwato5 approm it <s antapated that consUuct:on of th:s f a: :ty by the subs:d ary ccdd start by the end of 1991 The Comcany Las cweny ecmdea approtmately $3 000.000 on in.s omtect wNcn o reiuded i, constract:on work m prcqess Harbor Electric Energy Comnany On Novemoer 2 1%0, HEEC and the Ccr-pany f iec an apom:aScn reqw ng appes o' a f nanang Man wtn tw DPU h the event the tranong pan is not arrm ed by the DPU t:y Decemr 31 1991 HEEC w n ba 'ea;rea to a ssJse and es avets ano 1aoit es e be transfened O ine Company Other Uncerta5tks Emergency Preparedness Plan for Pilgrim Station On August 4.19R tv Federa; Emergency Mragement Agency (FEMA 1 teWed tw resats of a rev % of ine ajeu av of tne offs;te eme'ge^cy sepa adws p'an fo' Pdg n Cer FEM A @@ + J c' mn ad eer aes mh t e 'ne eng 04Me eme< gena resDonse !D an and Windf 9/ - s pre rous mtem I nd ng Of ad Ga:y IN CCmCany coon #5 i3 woo W?h "W Common APMb of Mcsachusein One Commonwea W and icca cff cais to 'mme e n4s> eTqercy ve;wedMS PWs w%h are tM responsibet, of the Commow 3 " Or jmyy 30.1%1. the Con r :nnM s a 'a " Arnd Letter M CeticaSon for tre Pym Stat:on o'f s te emWgenci Crecaredne^s prayam tu FEMA on rt t apt :at - F EtM gar &
On 0: tour 12 a-d 13 19n 'ne Comen aw a m tw Cn~ mwn uao MMa~ pric aea n a ta ca:e en emmy peorea + m er se N P1 + Stm / he w w ,a; r e " t i ny + " N;ctar Reg;rur, Comssy : UNRC1 and FEMA On FeNry 1 t %0. FE MA ' M a reuv' to % Cu" co < w + e, r o + a 9 o us e e Commc                            w nnedth s B
 
performance dunng the October d'M and daected the state to schedde and sucu n+vN complete a remed.a! dnt add esong these dehcrenc es The remed at daii was conduc ted on May 25,19X) On AJguSt 31 l9}0, f EMA issbed its hna' repo't on the emergency preparedness extnose conducted on October 12 and 13.1989 The tepo't indcated that the e we'e no cefoences fohawmg the remed;a' dr2 cond;cted on May 25,1930 1he report centled lorty-thw a'eas recenng correr e act on hvh1ch the Commonwtmh and local commampes must resoNe in tt tme exermes) as een as nine p:anang issues lhe next f s ! pmtopaten biennd exerose is tentatsety schedaied for August 1991 in JJy 1990 the Inspector Genera! of the NRC :ssued a report wNc5 was cntical ef the NRC s rerew of the adequacy of the off Sde PTerQE'nC'( prepa'edness p'og'am dJong the IM of 19S3 As a reSu't o' the hSpeCio' benera's hepoil, a congressonj heanng was hem in Plymouth on October 30,1990 and a tast f cece was crea*ed tv, the NRC f or the parpose of condactag an mdepth reuew of the adegaacy of the offs:te emergency p*eomedness program The tast force, wNch rs comensed cd ofhaa's from the NRC and FEMA. m meetmg wah loca! and state of fca's to determme whether the NRC shoWd reconsider ds cunent f nding that there is seasonable assurance that the offs >te prcgam is adeaate it 6 not ampated that tne task force wM comptete these dehberabons before the second aaarter of 1931 Wnce prayess has been rnade in emergency preparedness in fecent years. formal approvat of the off s:te emergency plans f or PJgom Staton tas not been obta'ned f rom any of the necessa'y twt er As preuously stated the NRC wm continue to mondor emergency preparedness issues on an ongomg base Vancus md u1aa's and g<oaps contnue to mon: tor and eppow operatrons at Pagom Staten Cancer Studies Completed in Zeptember 1990, tne Natona' institutes of Hea:th!Nat.ona! C? :er M i Me released the resu'ts of a twayear study regarding the inadE nte of cancer in the areas sunoundmg noctear powe' p;ards in the Un.ted States The staanwh<ch included the atea sarround ng Ngnr 15 tat.on, showed no increased cancer nsk to rescents o' com s whe'e twe are n aclea power plants in Octater 1990. the Commonwewth of Massachusetts Department of Puont Heatn reieased the resuits of a threeyear case cDntrol study Conducted for the purpose of miestgatmg asait ieauma maaence rates for certa.n commandes surrou,d.no Nonm Staton The report stated that poor to 1984 them was an moensed madence of edit (eusemia among persons Mng near Pdgnm Stanon as compared to those hymg m an area more remote from Ngom Staten The stacy recommended increased monitanng of rad ation TEdeases from the pl ant Stocter ad quahty reaaucments in the Commonnemth and a study of ChddvX)d leukemia inodences The Company sucng y d sputes the f<nd:ngs of the Commonweadn's stacy The results a'e contrwi to a urge tvady of scentf c miormat:on colected oser the past forty vers on the hey!h ef'ects of rad abon The Company and the Massachusetts Department of Pubhc Healb have lomt:y p<ccosed a further revtew of the rdudy m omer to re sone open s aes Income Taxes in December 193T the Fmanoa! Account ng Standeds Baad tF ASBl asued SC AS No 9& which, as amenced by SF AS No 101 e now schedjed to become effective in 1992 It !s antopated tha! 0;e to the enpact of readaton tne pnmyy effect of the statement we be ref=ected on tne ba;ance sheet and u resu!t in no 99n Lcant mcact on net mcome Post Retirement Benefits Other Than Pensions in December 1M0. tne F ASB issued SF AS No 100 ' Account:ng for Post <emement Benefds Other than Pensons' wh4ch wn be effecise for the 1993 f: scal year. SF AS N3 10E recunes n a:tuya: method of aZountmg for benet:ts lother than penoons! for ret red emptyees and f uture retaees The Compmy cu"enry recoa, <es suen benefds pnmae          v as c:a ms are pa d whde ine Company may be faced wah a wae mcrease ;n Labatt !% Comoany has not yet fuCy dete'mmed the e'fect of implemenLng tM accountng pronouncement not the pomntN reco,er) ci such egenses ca effects of the rate-maimg process The adopt on of th 5 accountmg pronouncement is not emected to impact cash f o A m the ner f ata'e 19
 
l Consolidated Statements cf income (Loss) years ended December 31              j hn thousands, except earnings Coss) per sha<e)                                                              1990                        1989_                1988 l
0perating revenues
                                                                                                          $ 1.258.546          $ 1.209.345              $ 1.202,6_55 Operating expenses:                                                                                                                                                    r Fuel                                                                                            276.333                  277.274                205.305 Net purchased power                                                                            187.801                  207.188                231,366 Other operatons and maintenance                                                                381.420                  356.650                365.498 Depreciatico and amorteation (Note U                                                          121,881                  120.759                105.144 Amorteation of deferred cost of cancetWI nuclear unit (Note Di                                  24.381                      24,381              24.381 Amorteation of deferred nuclear outage costs (Note B)                                              1.500                    21.376              21,376 Taxes property and other                                                                        55.854                      56.972              61.612 Provision for income taxes (tjote J)                                                            29.638                        26.222            27,868 Iotal operating e3penses                                                            1.078,808              _ 1.090.822              1,042fq50 Operating income                                                                                        179.738                    178.523              160,105 Other income (loss)
Rate and cor tract settlements (Note B)                                                                0                (178 650)                        0 Income taxes on rate and contract settlements (Note J)                                                0                      72.370                    0 Allowance for other funds used during construction (Note E)                                            0                        1.362              6,875 Other, net (Notes C. D and J)                                                                    6.294                      11,041                1.309 Operating and other income                                                                              186,032                        84.646            168.289 l
Interest charges-Long torm debt                                                                                  93,706                        91.674              81,783 Other                                                                                          21,543                        18.219              18.335
              - Allowance for borrowed funds used du*ing construction credit (Note E)                              (8.833)                      (9 112)          (16.041)
_ _ TotaMtpest cha'ges, _ _ _                                    ,    _        _ _ _      _,
10pg16              _ 100.781                    84.077 income (loss) before cumulative effect of accounting change                                              79.616                      (16,135)            84.212 Cumgative e_ffect of accrua! for unbg!ed revenues, net of taxes of $9._819 (tpte 1)                        15.824__                _
0                  _0 Netincome (loss)                                                                                        95.440                      (16,135)            84.212 Preferred and preference dividends provided                                                                t 7,652                      17.653              14,141
_Ba!an_ce__ava4
          ,m              _    table mfo_r commo_n m m -- . - -stock thote B) ~ . _ -
_ . _$ , _77,788          _5 _(33.788)_ . _ ~ $, . 70.0_71    -
Common shares outstanding (weighted average)                                                              38,779_ - . _ .              38,246              37.684 l
l      Earnings (loss) per share of common stock
!                  Before ct;mulative effect of accounting change                                                  $1.60                      $(0.88)              $1.86 c
__Cumufative effeet of accrua[of unblied revenue _sjNote;l)_ _ _ ___ 0 41                                                _          _
0    __0
:                        Totai        _ _ , _ _ __ __
                                                                                                                  $ 2pt_$ o18t_ $g The accompanytng notes and schedules are an integral part of the consolidated financW statements.
20                                                                                                                                                                          ,
 
Consolidstad Statements of Cash Flows l
l                                                                                                                                years ended December 31, tyn ttpysands) .                                                                                  1990                          1989            1988 Cash flows from operating act>vities Net income Coss)                                                                $ 95.440          $ (16,135)                  $ 84.212 Adjustments to reconcie net income Oois) to net cash provided by operat.ng actMties Cumulative etfect (net) for years pnot to 1990 of change for unbdled revenues (15.8241                                0                  0 Rate and contract settlements, net (Note Bi                                    (68.079)                      98.630                      0 Depreciaton (Notes A and J)                                                    107.659                      106.727            92.316 Amorteation of nuclear fuel                                                      25,913                        10.614            2.688 Amortization of deferred cost of canceued nuclear unit (net)(Note D)              19,967                      18.898            17.903 Other amortcation                                                                12,922                      12.159            11.364 A!lowance for f unds used dunng construction                                      (8.833)                    (10.4741        (22,916)
Net changes in.
Accounts recevable                                                                21.173                      (27.515)          20.699 Fuel, matenals & supplies                                                        (16,890)                      (1.536)          21.133 secounts payable                                                                  16.320                        5.502          (14.930)
Other cunent assets and hab !1tes                                                    (105)                    14.783          (13.748)
Other, net                                                                          6.096                      25.242              2.748 Net cash provided by operating activities                                                196.308                      236.895          201.469 Cash flows provided (used) by investing activmes Plant expenditures (excluding AFUDC)                                              (255,784)                  (235,946)          (245.103)
Decommiss;oning fund                                                                  16.679)                      (6.983)          (3.337)
Investments in electnc compan:es                                                      (3.367)                    (11,207)              (874)
                  . Proceeds from asset dispos. tons (Note C)                                                  0                        9.145                    0 Net cash lused) by investing activities                                                (265 830)                    (244.991)        (249.314)
Cash ttows provided (used) by hnancing activities.
Issuances.
Common stock                                                                        8.623                      10.943              7.866 Preferred and preference stock                                                          0                            0        50.000 Long-term debt                                                                  200.000                                0      150.000 Sewage facmty revenue conds                                                      21.000                              0                  0 Redemptions.
Debt retirements                                                                (23 689)                      (16.270)            (6.125)
Net change in notes payab<e                                                        (60.3101                      93.200          (71.083)
Dividends pa d                                                                      176.484)                    (87.083)          (82.207)
Net cash provided by financing a,ctivities_ _, _        __    ___    _ _ . __ _          69.140 _._                    6.850  _
48.451 Net increase (decrease)in cash                                                                (322)                      (1.246)                606 Cash at the beg >nn[ng cf the year                    _
1.989                        3 235            2.629 Casyat,the end of the year ,
                                                                                                      $ 1.667                  $ 1.989              $ 3.235 Casn paid danng the year for.
Interest, net of amounts capitakzed                                            $ 105,642                  $ 100.647          $ 78.509
                      !ncome taxes                                                                    $ 19.227                  5 42.159            $ 43.843 The accompanying notes and scheddes are an integrat pa't of the consohdated financia! statements 21
 
        - -                .              .          .                    - ~ . _ - _ .        -      .        -.                        --        - _ - - - - _ .
Consolidated Balance Sheets December 31, 1990                                        1989 (in thousands)                              .
                                                                                                                                                                                -)
Assets Property, piant and equipment. at on0ina! cost (Notes A, B. E. F and L).
Utihty plant in serv:ce                                                    $ 3,317,696                              $ 3.172,132 Less' accumulated deprecLaten 1.015.371        S 2.302.325- - .-- 950,298 . . 5. 2.221,834
          ._. _ Less: accumulated amortgaton                  ,_ _
163.694                84,901 _ _
142.023      . _ 93.839 Constructon work in progress                                                                            142,233                                      83.827 Tota!                                                                                          2.529.459                                2.39% 500 investments in electric companies, at equity                                                                      25.79'l                                      22,427 Nuclear decommissoning fund (Note L)-                                                                              37,765                                      31.085 Current assets-Cash                                                                                  1,667                                  1,999 '
Accounts receivable                                                              163,648                                187,950 Accrued unbilled revenues (Noto D                                                  28,772                                      0 Fuet, materials & supplies, at average cost                                      106.533                                  89.643 7,260
      ._. _ P epateypenses ho_ther current assets                  _            . _    _ 6.116            _
306.736                                    286.842 Deferred debits:
Deferred cost of cancelled nuclear unit (Note D)                                    64,777                                84,744
_.01heggte AL                                                                            49.593              114.370            53.673                  138.417.
Tota! assets                                                                              $ 3.014.123                            $ 2.878.271 Capitalization and Liabilities tw aconwyrg kwm e4 cou sm ro tenew Common stock equity                                                                                        5 671,362                              $ 644.548 Cumulative preferred stock:
Non-mandatory redeemable senes                                                                            83,000                                      83,000 Mandatory redeemable series                                                                              50.000                                      50.000 Cumulative preference stock
              'Non-mandatory redeerruble senes                                                                          38,287                                      38.287 Mandatory redeemable senes                                                                                50.000                                      50.000 First mortgage bonds                                                                                            774.025                                    798,839
    . Debentures                                                                                                      200,000'                                            0 Unsecured medium-term notes                                                                                      100,000                                    150.000 Current habities:(Note H)
              - Sewage f acAty revenue bonds                                              5        21.000                          $            0 Long term debt due w: thin one year                                                56,800                                  5.675 Notes payable                                                                    153.530                                213.840 Accounts payaole                                                                  132,7 M                                I15,891 income, property and other taxes accrued (Note J)                                    7,278                                  8.669 Interest accrued                                                                    21,878                                21,104 Dividends payabic                                                                    18.073                                17,308 Other                                                                                6.376                                  7,008
_ Rate and contract settiemen'sjNote_B_)_ _ __                                      .
53.784              470,930 _      _ _89.541_        _ 79,036  4 Deferred credits-Accumulated deferred income taxes (Note J)                                      405.895                                377,227 Accumulated deferred investment tax credits (Note J)                                89,271                                94.835 Nuclear decommissioning reserve (Note L)                                            41,323                                35,409 Rate settlement (Note B)                                                            23.300                                  50.000 Other                                                                                16.730              576.519            27.090                  584.561 Commitments and contingencies (Notes B. F. G and H) m_,
T
                    ,,_ot_al  capitairzat
_m on  and,habet,ies _ m
                                                                                                                $ 3.014.123
                                                                                                            - -- = - - - . . - ..
                                                                                                                                                      -,.,$ ._8.2 287 71 The accompanying notes and schedules are an integral part of the conschdated f4nancial statements 22
 
Consolidatsd Statem:nts of Retsined Earnings years ended December 31, On thousands)                                                                                                                                  1990                                          1989            _
1988 Balance at beginning of year                                                                                                          $ 142.952                                    $ 243.569                  $ 242,161 Net income Coss)                                                                                                                  95,440                                        (16.135)                      84,212 Subtotal                                                                                                                238.392                                        227.434                        326,373 Cash dividends declared Preterred                                                                                                                          9.147                                          9.147                        9.147 Preference                                                                                                                          8.505                                          8.506                        4.994 Common                                                                      . _ _ -                      .-
59.597                            -
6 0,829.-      - .-68,663 Subtota!                                                                                                                  77.249                                        84.482                        82.804 B_a!ance at end of year                                                                                                              $ 161.143                                    $ 142.952                  $ 243.569 Consolidated Schedules of Capital Stock December 31 On thousands. except per share amounts)                                                                                                                                                        1990                          1989 Common stock equity:
Common stock Par va!ue $5 per share (Note 1) 50.000.000 sha es authonzed.
issued and outstanding 38.998.531 and 38.526.035 shares                                                                                                                      $ 194.993                    $        192 630 Premium on common stock                                                                                                                                                                  314.82)                      300.561 Retained earnings                                                                                                                                                                        161.143                      142.952 Surpius invested in piant                                                                                                                                                                      405                            405 Total                                                                                                                                                            $ 071.362                    5 644.548 Cumulative preferred stock:
Par value $100 per share. 2,830.000 shares authonzed, issued and outstanding Non-mandatory redeemable series (Note 2)
Senes                                              Shares 4 25 %                                            180.000                                                                                                            $        18.000              $        18.000 4.78 %                                          250.000                                                                                                                      25,000                        25.000 8 88 %                                          400.000                                                                                                                      40.000                        40.000 Total                                                                                                                                                              $      83.000              $        83.000 7.27% mandatory redeemabie senes (Note 3) - 500.000 shares                                                                                                                $      50.000              $        50.000 Cumulative preference stock:
Par value $1 per share. 8.000.000 6uthorized, tssued and outstanding Non-mandatory redeemable ser,es (Note 4).
                        $146 Seres - 2.675.000 shares                                                                                                                                          $        2.675              $          2.675
__ .._._Premjum on $146 Senes_._ _. _ _                                                              _ _ _ _ _                          _ _ . .
                                                                                                                                                                        ._ _ ._ _ 35,612_. _ _ _3k612 Total                                                                                                                                                              $      38.287              $
38.28J Mandatory redeemable senes (Note 51:
Stated rate aucton preference stock - 500.000 snares                                                                                                                    $          500              $            500
_.. _ _Premiom on sta'ed rate auct on prefe[ence stock
_                                                                        __                                                                              ...        .4_9.500_    _          _    _4 9.500 Tota'                                                                                                                                                              $      50.000              $        50.000 The accompanying notes and schedules are an integra' part of the consohdated financial statements 23
 
A Censolidated Schedules of Indebtedness l      Long-term debt (Note CL Boston Edison Company-i      Fust mor1 gage bonds On thousands)
Interest                                                                                                                                            December 31 Rate (%)                  -.
Maturity..                                                                                                      1930                          1989 S. e_nes- -
H                      41/4                        June 1,1992                                                                                $ 15.000                            $ 15.000 Nov 1,1995                                                                                              25 000                      25,000 1                        43/4 J                        61/8                      Jur e 1,1997                                                                                            40.000                      40.000 Nov 1,1993                                                                                              50.000                      50,000 K                        67/8 9                          Dec.1.1939                                                                                              50.000                      50,000 L
M                        93/8                        July 1,2000                                                                                            60,000                      60 000 N                        81/8                      May 15,2001                                                                                              75.000                      75.000 Vanable                    Jan 15,2002                                                                                              25 000                      25,000 0                        93/4                        Dec 15,2003                                                                                              74,575                      78,375 R                        10 95                      Oct 31,2004                                                                                              56.250                      60,000 P                        91/4                        Apr 15. 2007                                                                                            60.000                      60,000 T                          12 1/4                    Apr 15,2013                                                                                                        0                    10.029 U                          10 1/4                    Apr.1,2014                                                                                                15,000                        15.000 V                          125/8                    Apr 1.2015                                                                                                        0                          6,110 W                        9 1/2                      Ju!y 15,2016                                                                                          135,000                    135.000 X                        11                        Sept _15. 2017                                                                                        100,000                _
100.000 Total first mortgage bonds                                                                                                                                780.825                    804.514 5,675
_ __L_ess. du. e_ wit _hin o,n.e_ year _ _ . _ . .
_          _ ._                            _ _ . . _ _ _                    _ __ _                              _            _ _ 6.800. . _ . _ _ _.
__fusyng! gage p3g ge!,                          n_    ,,            ,u , ~  _ - _ _ _ ,_, _ , , , -
{743_ $,793.839 Unsecured medium-term notes                                                                                                                      $ 150.000                          $ 150.000
__ Less: due within one year                                                                                                                                    50.000                                  0 Unsecured medium , term note _s .r et ,___ _ _____ . _____$ 100,00._0, ,_$,_150.,_000 Debentures (Note 7) 9 7/8%, due June 1,2020                                                                                                                    $ 100,000                                              0 8 7/8% . d e December 11,1995                                                                                                                        100.000                                      0
          ,___o_ta'      T      d.ebe_ntu,_res ,__ ._ . , ___. _
                                            ..                                                    . _ _ _ _ _                    _.m.._.  .. _ ,_.
                                                                                                                                                              $ 200,000_._._                            _m, m.,0 Short term debt:
Beston Ed: son Company:
Notes payable (Note 8)~
Bank loans                                                                                                                                  $ 72,500                        $ 39,000 Commercial paper                                                                                                              _ _ _ _ _81.030._                          __.174Sto
                      .-_otal notes T                payable        , _ -                  - -  - .,                ,        ~. . .                . .  .          $ .153 530  _.        -~
                                                                                                                                                                                              $, _213.840          .
            . . .                      . =
Harbor Electoc Erergy Company-Sewage facikty revenue bords (Note 9)                                                                                                        $ 21.000                                              0 The accompanying notes and schedules are an integ'ai part of the consohdated financial statements 24
 
9 Notes to Consolidated Schedules of Capital Stock and Indebtedness
: 1. Common Stock Since December 31,1987, the Company has issued shares of common stock, $5 par value, as fonows Number              Total          Premium on of Shares          Par Value Common Stock Batance December 31,1987                                                            37.424,910      $187.124,550          $295,257,031 D vidend Re:nvestment Plan W                                              d68.681          2,344 405            5 522.068
                                                            ~
Ba!ance December 31,1988                                                            37,893,791      $189.468,955          $300,779.099 3.161.470            7,781,966
_._ Dd?nd Rynvestment Plan
* _      _ _ _ _
_ 632.294 _
Baiance December 31,1989                                                            30,526.085      $192.630.425          $308.561,065 Div>dend Rejnvestment P!an
* 472.446          2,362,230            6 620.499 38.993.531      $194,992.655          $314.821.564 Ba!ance December 31,1990 ,
w tm rews mown nm 3%emwwo w we esme .re n Den %smm ra tem sw Nu.e %e ms sum (if OtWmfe 31,19)0 2,        Cumulative Non-Mandatory Redeemable Preferred Stock There were no changes donng 1988.1989. or 1990 in cumutat:ve non-mandatory redeemable preferred stock. The redemphon pnces at December 31,1990 for the 4 25%,4 78% and 8 88% Senes of Cumulame Preferred Stco ate $103 625. $102.80, and $102 00, respectively Upon any Louidation of the Company, holders are entitled to $100 per share.
: 3.        Cumulative Mandatory Redeemable Preferred Stock The Company sold 500.000 shares of 7 27% Sinking Fund Senes $100 par value Cumulat,ve Preferred Stock on March 12,1987 The shares of 7 27% Preferred Stock a'e redeemable at the opt on of the Company at $107.27 poor to May 1.1992, and at pnces dect ning from 5107.27 per share to par value commencing May 1. 2002, provided that no redemption may be made poor to May 1,1992 tnrough refunding by the issuance of indentedness or certa:n stock havag an interest rate or cost, or dividend rate or cost to the Company ot less than 7.334% per annum The 7 27% Prefened Stock wul be entit:ed to a sinking fund to retire 20.000 shares at $100 per shre. plus accrued d<vidends on May 1 of each year, beginning in 1993. On May 1 in any year, beginning in 1993. the Company has the non cumula!Ne option to redecm an additional number of sha'es. not to exceed 20.000 shares. for the sinking fund at $100 per share. pius accrued dividends.
: 4.      Cumulative Non-Mandatory Redeemable Preference Stock There were no changes d;nng 1968,1989, or 1990 in the $146 Senes of Preference Stock Upon resolution of the Board of Directors.
the shares may be redeemed as a whole or in part. the redemption pnce at December 31,1990 is $15140 per share Sub;ect to the pnor pelerental nghts of the cumulative preferred sinckholders, uoan involuntary hauidation of the Company holders of the $146 Senes are enhtied to receive $15 per share
: 5.        Cumulative Mandatory Redeemable Preference Stock On Octooer 6.1988, the Company issued 500.000 shares of Stated Rate Auction Preference Stock, Senes A CSTRAPS1 laquidation Vtue of $100 per shre. Par Vatue of $100 per share. at a pace of $100 per share The dividend rate is 9 20% per annum througn November 30,1991. Thereafter, the dmdend rate, for dividend pertods whose length sha!! be setected by the Company, woi be determined by auction and may not exceed a Maumum Permitted Rate estabhshed by the Commonwealth of Massachusetts Department of Pubi c Uuhties CDPU1 which is current!y 15% in certa:n circumstances, if the div:dend rate would exceed the Maumum Permitted Rate. the Company is obhgated to redeem the STRAPS at $100 per share plus accrued and unpaid dividends The Comoany may in the future, but is r'ot obhgated to, petition the DPU for an order increasing or ehminating the Maomum Permitted Rate Dividends are cumulatue from date of onginalissue and are payable when and as declared out of funds legaity avadable therefor.
The STRAPS are redeemable at the Company's cot!on at $100 per share plus accrued and unpaid dividends to the redemption date, at the end of the init'ai d:vidend penod (November 30.199'l and at certa n other times thereaf ter The Company's preference stock is subordinate to the cumulative preferred stock but senior to its common stock both with respect to d:vidends and upon hquidation.
Without approval of the holders of the Company's Common stock, the aggregate hqutdation va!ue of all outstanding shares of preference stock cannot exceed $100,000.000. Follow:ng the issuance of the STRAPS. the Company may not issue additional shares of preference stock having a hquidat:on value in excess of approomately $10.000.000 without obtaining such approval The Company does not expect to be able to satisfy net eamings requirements necessary to issue add:tional senes of cumutative preferred stock before the second qua'ter of 1991 25
: 6.      Long' Term Debt Substant,a!!y au pmperty, piant and eq2pment and matenats and supphes owned by the Company are subsect to hen under the te'ms of the indenture of Trust and hrst Mortgage dated December 1,1940, and suppiemen!s thereta l            The aggregate pnncipai amounts of long term dent, debentures and med1am term notes including sinMg f un d reaanements dae in the f,ve years 1991 through 1995 se $56.800 000. $21.800 000. $56.800.000. $56.800.000. and $131,800,000. respectveN See also Note 3 preced.ng uth respect to a suing fund requaement on tne Company s outstand.ng 7 27% reJeemab!e pre'ened stock which commences in 1993 and Note 5 preceding with respect to a potent 4a! rna'datory redempt.on requaement on the Company s outstand:ng STRAPS wNeh may be in ettect subsequent to Novembm 30.1991 The Company s First Modgage Bonds. Senes S. adi ustabte rate dae 2002. tore irderest at 10 30+ per annum for tne pencd Janua y 15.1990 through January 14, 1991 The rate is a%;sted annuaN and is based upon the ten year constant matunty Treason, Rate as puthshed by the Federal Reserve Board The interest ree for the perod January 15,1991 through Januxy 14.1992 wh be 10 50%
h Apn! of 1990, the Company redeemed ano f the outstMnq Senes T and V Bonds at a tota' redemption pnce of $17.67&000 Onclud,ng a redempton prenuum of $1.539.0001 On September 15.1988 the Company issued $150.000.000 Medzum-Term Notes. Senes A in three e:l;at increments of
      $50.000.000. teanng interest at 9 35 A 9 65h and 9 75% per annum and matunng on September 16.193L Septemte 15.1993.and September 15.1994. respectNeiy The effectue cost to the Company af ter undewnting comm:ssions was 9 71% The 9 35L notes a'e not redeemabie The 9 65% and 9 75% notes are redeemaNe af ter Sepember 15.1991 and September 15,1992 respectwely at 102 4125% and 10195% of par value, respectuery dechning to 100% of par sa!ue in 1992 and :n 1993 respectne!y Interest is payable on March 1 and September 1 in each year, and at matunty The notes are unsecured obhgatons o' the Company.
: 7.      Debentures On JJne Il.1990, the Company issued $100.000,000 of debentu es The debentures bear an interest rate of 9 875% pm annum and mature on June L 2020 On or af ter June t 2000. the debentu es    r a'e redeemabie at onces dechning from 104 433% o! par begyn:ng on June 1,2000 to 100% of par on and af ter June 1,2010 On Decemoer 18.1990 the Company issued an add;tiona $100.000 000 of debentures wh:ch bear an interest rate of 8 875% per annum and mature on December 15.1995 and a'e not cahable Defore that date The net proceeds f rom the sa!es of ne secunt.es were used to reduce certa.n outstand ng sho t tem 1 mdebtedness incu' red f or capital expend.tur es for extensions add.tions and improvements to the Compam s plant and propen:es
: 8. Notes Payable The Company amended a $330.000,000 revoMng cred t ag eement anh a group of Danis in March 1990 Th's agreement replaced most of the Company s commated short term knes of cred,t and is intended to pmvide a stanaci source of short. term bonowngs The agreement terminates on the earher of M Feorury 28.1993 or M the 364th day fonown0 the 6:st bonomng ;f the Company has not recewed regu'atory approva! to incur mdebtedness pursuant to the ag'eement pa, ante more tran one sear atter the date thereof As of Decemter 31.1930. tne Company had not apphed to the DPU for regufatory appmvai to mcur long term uebt under the agreement nor had the Company incurred any short term debt tnereunde The Company is ochgated to pa3 commttmentf ees on the unused portion of the commitment amount.
Under the terms of tNs ag eement the ComDany is reased to mamta;n and f orecast cenacq finanaai ratios related to captaMai:on and interest coverages The most restnchve cosenant requnes inat the Company not declare dvdends or mee other d<stnbutions on its common sicd, or ir cur additional cebt it certa n captavation rahos are not mainta:ned As of December 31.1990, the Company s castauation ratio exceeded the mamum reawement See aiso Note H The Company ar so has arrangements wth certa n banks to prov;de addit onal short term cied.t on an uncommitted and as avaMUe basis The Company currently has author:ty to issue un to $350 000.000 of shott-term dect In'ormaton regard.ng short term borrowngi compnsed of bam loans, commercial paper, and short term sewage f aMiy reve%e Donds. is as Iohaws (thousands of donars)                                                                                    1990      1989        1938 Maumum short-term borromngs                                                                          $302.900  $233.275    $340.705 Dady weighted average amount outstandmg                                                              $22 L525  $169 37 7    $212.344 Weighted average interest rates, e<cturtng commitwnt fees, on ba!ance dunng the year (dam                                                                    85i      94*          769
: 9. Sewage Facility Revenue Bonds On December 21.1990, Harbor E!ectoc Energy Company (HEEG a whohy omd suhsus of the Conmny. borrowed the pmceeds of $2LOOO 000 of short-term sewage f aahty revenue bonda ehe Bond 9 issued for the beneht of HEEC by tne bdustM DeMcpment Fmanong Autnanty of the City of Boston Massachwis. at a coupon rate of 6 353 Ponopa: and accrued inWest are dJe on Decemter 10,1991 sub:ect to easy redemphon at pa ugrnmg on Ju!y 1,1991 The net proceeds of the Bonds were used by HEEC to reimbu'Se the Company for advance 5 hiended to pay IM Costs Of acGJ N eQJDF j and M!a?ng certa >n ebCinC transnVsson faQ 19s oWrWd and opera'ed by HEEC The Bonds rc s < aed av a Witm of a !
* The Emds a e non remase debt to the Company a'tr ough to Company is rewed to mm em of up to $5 000 000 to HEEC Worg !u ottu ermce of cefaWt ov HEEC under as ag eement we tne ba% 'sso;ng tw W n' credi rd to n m HEEC s par + nt cohqav . to t'" bd i tre esent of certam amindments 10 o' the tern %at:oh "t HEEC s corpOQte nW9 26
 
Notes to Consolidated Financial Statements Note A. Summary of Significant Accounting Policies The Company is subject to regulation by vanous agencies Because of the etiect in regulated businesses of the rate-making process.
there are d,fferences in genera!Iv accepted accounting pnnapies between rego!ated and nonregulated businesses Such d.fferences are related poncipally to the time at which vanous items enter into the determ: nation of net income in accordance with the pnnaple of matching costs and revenues (Accounung pokoes are also descoted in Notes B. E. I. J. K and L) Certain reclassdicatons. not affecting income, have been made to amounts reported in poor years to conform to presentations used in 1990
: t. Basis of Conschdaton The consohdated finanaa! statements include tne accounts of Harbor Elecinc Energy Company a wholly owned subsdary of the Company All intercompany transactions have been ehminated 2 Depreaation, Amortaation and Maintenance Physicat property (excluding a 14 tor for nuclear decommissoning costs) was deprecated on a stra:ght Ane bas,s in 1990.1989 and 1988 at approdmately 3 41$ 3 59% and 3 46% annua!!y, respectively, ut,leng the acage remaining hfe melhorJ of computing depreaabon At the time of rebrement of property units, their cost and the net of cost of removal and saNage is charged to accumulated depreciation The cost of nuclear fuelis amorteed to fuel expense based on the quantity of energy produced for the generaton of electnoty. Nuclear fue! apense also includes a provis>on for the costs assoaated with the ultimate d sposal of spent nuclear fuel, such estimated disposa! costs are subiect to rev ew and are amortged to fuel expense, where they are beng recovered through tne Company's fuel ar,d purchased power adjustment clause (See Note L )
Maintenance expense is charged for the cost of current repa:rs, replacement or items not accounted for as units of property.
and minor tetterments of piants and properties as they are incurred 3 Forecasted Fuel Clause and Performance Clause The Company's retad f uel and purchased power adjustment clause permits all fuel costs. the capaaty portion of certain purchased power costs, and certain transmisson and demand side management costs to be bMed to customers monthly utilmng a forecasted rate The difference between actual and estimated cost is included in accounts receivable on the accompanying balance sheets pending adiustments of subsequent rates The non-fuel portion of certain purchased power costs are recovered through base rates The DPU has the oght to reduce suDsequent fuel clause bdhngs if it finds that the Company has been unreasonable or imprudent in the operaton of its generating units or in the procurement of f uel As part of the DPU Settlement Agreement (discussed further in Note B) the Company commenced the bding of a performance adjustment clause to retad customers effective November 1989
: 4. Revenue Recognition in the first quarter of 1990 the Company began accru:ng the base portion of revenues for services rendered but not bmed in outer to match revenues with expenses more closely Poor to this adopton, the Company recogneed revenues when services were bed
($ee also Note h 5 Amorteatens of D:scounts. Prem:ums and Redempton Premiums on Debt The Company amortges d:Scounts, premiums redempbon premiums and related expenses assocated with debt issuances or rehnancings ratably over the bfe of the new debt.
Note B. Settlement of Certain Proceedings On October 31.1989. the Commonwealth of Massachusetts Department of Pubhc Utaties (the *DPU1 approved a settlement agreement effective November 1,1989. (the 'DPU Settlement Agreement 1 relating to certam DPU proceedings mvoNing the Company On November 5,1990. the Federat Energy RegWatory Commisson Itne TERC1 approved the purchased power contract settlement agreements (the V/holesa'e Settlement Agreements 1 relat:ng to claims fded by certam wholesale customers of the Company in conjunction with the 19861988 outage at Pugnm Naclear Power Staton PPdgnm Stabon1 As a result of the DPU Settlement Agreement and the Wholesa e Settlement Agreements. the Company recorded in the fourth quarter of 1939 a before-tax charge of $178,650.000 Onclud ng a reserve for the then remaining regulatory proceedings and relied ht gaton in connecton with the wholesale customer dispute descnbed abovel with an attentu effect of apprommately $106.280.000 or $2 78 per share of common stock This charge was included in the 1989 year end Statement of Income as a component of 'Other income Rossr consistent with accounting practice and presentaten apphcable to the electric utsty industry The components assooated with this 1939 nondecumng charge to eammgs are not recoveiable through rates from either the Company's retad or wholesale customers The nondecomng charge to earnings associated with au of the Settiement Agreements. totahng approamate!y $178 650.000    =
before taxes, included approomately $80.000.000 for demand s.de rnanagement progmms, $31.000.000 for certmn replacement power costs. $36 000.000 of htigabon. reguato'y commismon and othe' e<penses and the wnte of f of the remammg $31.000.000 of previously deferred incrementa! nuclear outage costs mcurred poor to 1989 Poor to the October 1989 Settiement Agreements previous!y deferred mcrementa: nuc! ear outage costs were beng amorteed to e,oer,se <as part 04 norma! operat.ng expenses) over a bVe year per od cons stent witn prev,ous retaa rate ordets f rom tne DPu and who: esse contract troesons                                    i 27
 
The Company made cash outtays retabng to all Settlernent Agreements of approumateN $8 000,000 in 1989 and aporoumately
  $68,070.000 for the year ended December 31,1990 As of December 31.1930. the Company anbaputes mahng f uture cash outtays of appeoumate!y $77.000.000 as part of these approved settiement agreements (of which approumv $54 000 000 are classdied as a current habaty on the Company's ba;ance sheen in connection with the DPU Sett!ement Agreement, the Company has ag'eed to Imt its retad revenue maeases poor to November 1,1992 to approumateN 2% per year, sub;ect to adjustment trased on PJgnm Staton's performance Accord:ng'y, the Company s admty to ma ntain or merease eammgs throuf October 31,1932. wM depend pnmanN on its abmty to contro! costs and j
maease Howatthour sales, as well as the ethDent operabon of Pdgnm Sta50n Deng the performance penod Ibvember 1,1989 through October 31,1990 the Company receved approumateN $20 000,000 in accordance mth the mtad revenue increase prevmus'y dscussed, adjusted for Pdgnm Stabon performance, dang that pened Pdgnm Stabon operated at a capacty f actor of approumateN 08% which was within the neutral zone of pe'formance per the DPU Settlement Agreement Effecbve November 1,1970 anns retal revenues inceased an add bona! $22,500.000. subect  i  to adystment based upon Pdgom Stabon s pedomance in add. bon. if the Company would not othewse acNeve retad rates of retum of 115% in 1991 and 12 04 m 1992. the Company may mat e certmn account ng adjustments (but onN to the extent that such a]pstments do not result in the Company s esceed ng such retal rates of return) 0 by reddong deferred income tax expense by $13.000 000 m 1991 and $23 000,000 m 1992 and 60 by acce!eratmg the amort 2ation pened of certmn munrapa! poperty tax atwements totahng approumate>y $37.000.000 from sa to three yea's Dunng the penod November 1,1992 tnrough October 31,2000. tne Company has ayeed to msttute a new cost recovey mechamsm wNch is also tied to Pdgnm Stabon's perf ormance, for a portion of the Company's ovestment and cos's Mated to Pagom Subon Note C. Eminent Domain Taking On May 4,1939 the Commonwea'th of Massachusetts MetropoFian D;stnct Comm sson tihe 'MDCS f eed an order of land tabno with respect to certa n Company owned property located m Qancy MA The MDC inndered its ca tered amount of $9145.000 to the Company on August 24.1989, and the Company recorded a gan of $314 pe common shxe. wNch is ref ected m the accompanymg finanaal statements Ihe Company has three yea *s from the date o' tN + ' uner! mma n tabng to detemme wnnhet to pursue addmonal damages .n cour t Note D. Cancelled Nuclear Unit The Company commenced amorteg the cost of the canceded Ngnm 2 nudex sn? n Wy 1982 oer approumate9 e:even and one-half years pursuant to retal rate orders of the DPU Sucn tosis mauce certan f nanc carrung cask that wm be reviewed and may be increased or decreased f rom time to time by the DPU The Company's adoption of Statement of Fmanoa' Accountmg Standards PSFAS1 No 90 'Accountmg for Abandonments and D,sailowances of Plant Costs', m 1987 had the effect of ncreasmg net mcome for 1990.1939 and 1938 by $?.724.000 ($0 07 per i
sha'e), $3.384.000 t$0 09 per share) and $3.998.000 ($011 per sha:et net o' taxes of $1630.000, $2.099 000 and $2.481.000.
respectiveN, due to tne inclusion m net mcome of the imputed mierest nccme re ated to the canMed P999m 2 nucea: un t costs bemg recovered through resenues from customers At December 31.1990. the uramortced d&ount was approumatetv $6 034.000.
with related deferred taxes of $2 311.000 Note E. Allowance for Funds Used During Constms. tion Tne Company capitanzes as pa't of plant egend tmes an adowance for f unds used dug constrmo CAFUDC1 AFUDC represents the estimated cost of borrowed and eamty funds used to f: nance the Ccmpany's n' ant emerd wes TNs cost is not an item cf current cash income, but as recovered over the semce hfe of p: ant in the form of moeasea revenue co: ected as a resdt of higher depreciabon expense. AFUDC rates for me years 1990,1939 and 1938 were 9 Oi .10 2% and 9 0' . respectneN Note F. Information Regarding Jointly.0wned Electric Plant and Long Term Power Contracts 1 JomtN-Owned Electnc Ptant The Commny is a pnt owner of W. F Wyman Unit 4, which was constructed by Centra! Ma ne Power Company and commenced operat ons m 1979; ncluded m the accompanymg ba:ance sheets m the Company's proport anate sha'e (5 883V of plant in service of $12.229,000 and $12.207.000 for 1990 and 1959. respectNety and accumu!atcd depreoabon of $5143.000 ana
            $4,708.000 for 1990 and 1989. resoectNeiy The Company ncludes as share of drect egenses of W F. Wyman Unit 4 in the correspond:ng ooerabng expenses on its income statement.
28
 
2 Long-Term Contracts for the Purchase of Electncity The Compry has certa.n long tenn contracts for the pwchase of e!ectuc pos N Compny is oNgated to piy as poportonate share of the neatng costs Onchnng pecaton and a retum on capita 4 though the contract eqcaton Me The tota annud costs under these contracts we inducahvth pumhased power emense in the Conwys Statemems d Income The contracts a<e as f*ws On thousands) 1930 proportionate share                                            Company Interest            SharedDebt Contract  Uncs o' Canaaty                    tan  rum                                                Pceton          Outstand ng Expeation                    Puoased "                      Debt              d Mxnmum                                    Through Cont Generat:ng Un.1 MW                  Service            Debt Serqce                                          Exp Date
_ Date _ _
Cana: Un.1 1                                                      2001      25 0        142              5      842              5                                  361            $ 2.418 2007      95            56                    3 451                                                2 630              19,238
* Connectcut Yad ee Atonuc Yan6ee Atomic                                                    2000      95            16                      150                                                    88                  2.850 Ocean St3te Power                                                2010      47 0          130                  14.199                                                11.560              57.575 V Massa:husetts Bay Transportabon Authonty Gas Turbine                                          2005  100 0            35                                                                                                              n H          200                    7.389                                                5.710                    4.701 ~
Northeast Utst!es - Base Load                                      1993 Unced huminatirg -
N H Ha'bor/Mmstone                                  ._
1992 N        100                        i                                        ._ ._
                                                                                                                                                                                                  ._f Tota!                                                                                      _ $_ _ _26 030            .$ 20.349                                    _
                                                                                                                                                                                          $ 86.782 ta,    % Neeau um es c m reve*nt atet s n a re cece v s rs i ed oct us.c, e e re wm m                                                ,1                            e e,e eu ett C.kw. state hMM Uit 1 39T'e4Pe 9 h Oc+'ar State Foot" Cr t 1 '                        ''d J Med r' Pr COT't wa s Mtal'11 r'et ( Au: ! tv 'Of Dear'!
* 31 iYiG by F e th'W Erma e ce sw eaan W      O'tmsamos, :1"e COnvy tas pradeed 12MOOO w TNs co naa aces ra eed V N Me cf P~e et t cwem t* c aw I wew s est rwd acM race"a re xgt tre cmmt oper er are h0 toe Cwniedny Ls feared to ro, e+ 7eate: c' 122 to c - 5 ^ ,ev a w u hE ion Cxow har < s t 4 Act et ent chege t t: 563 00 tw t /v
            'y tW W S " E O M t*l cdpaCIy @ bt"!'V 3b b M A i " M eT er td LT P Y J G %) O "#'Q Sf ij bib 6 3 he Ut} N#[ !Uf U% ctDdel b.V ed nx m a nece,rer at mo we,e si m om fi i ins cOTUrt t3 for 100 PA\ far tN ser 13891M 200 M A t v tMO 1}il, aod 300 M A ty 'ni-1 ru rd IM2 !M3 O' these awts 60 N co"mM o' hi.f th' e:d Moeta n N Ted vocage h t a and t + re"a neg 4a a s made ir d wW awrit M FAI t <nr: Ptvt ! Uot s 1 7,e d 3 m in s cowaa cc us c' e wm het %en n,tu um 1 am a M A M M we um 3 the own a w .um ca, a um, cnyae ; $mm
              's0N iN LOArrved? IM) 1%2 a er g w.t*, anhltt j t ei cc- '; % try At P r (;h g%yg,g t_y p3 pgnyg, t 3 jg g gg g.g g 3-)' jg u
wen 5a ER0 000
      @ Cow Swe Pw U- t 1 tw,e cemeNa' creut er" on Memte R W Tota! f ned and vanao!e costs for tnese contracts for the years ended Decerntes 31.1990.1989 and 1988 were $93.707.000.
      $62.334 000 and $48 479.000. respectNeiy The vanab'e contponent represents f ue! costs which are included with net purchased power in the Statements of income.
The aggregate pnncmal amounts of these future uncond.tkonai punhase obhgations due in the fWe years 1991 through 1995 are $130,147.000, $143.800.000. $125 310,000. $76 626.000. $74 832,000, respectiveiy. and $830.276.000 thereafter The agg egate present value of sucn obhganons is $715,649 000 The Company a:so has severa! transmisson contra:ts whcn re: ate to these pucased pw.er conna:ts. informabon relaDve to these agreements is !ncluded in Note H:2) 29
 
3, t.ong-Term Power Sales The Company sells a portion of the output from Pdgnm Nucleat Power Staton to other utdines pursuant to long-term contracts for the sale of electnc power The contracts are as follows Year of Contract                  .Ungs of Cappty Sold Contract                                                                              . Expuaton                      %                              MW Commonwealth Electnc Company                                                                  2012                11 0                              73 7 Montaup Electnc Company                                                                      2012                11 0                              73 7 Vanous Municipakties                                _        _.
2000
* 37                              25 0 Total                                                                                              25 7                            172 4 w surwmocem%stmems Under these contracts, the participating utthties wdl bear their proportional share of the costs of operating Pdgnm Nuclear Power Station and associated transmission facdities including operation and maintenance expenses, insu ance,            r                local taxes, depreciation, decommissioning and a retum on the cost of capitalinvested The abdity of tho Company to recover certain costs reksted to the operaton of Pdgnm Staten is subi ect to certain hmitatens set forth in the Wholesale Settlement Agreements see Note B.
Note G. Wholesale and Contract Customers On July 24.1987, the Towns of Concord, MA and Wellesley, MA (the ' Customers') fded a comp!aint against the Company in the United States Distoct Court for the Distoct of Massachusetts aheging volatons of the federal antitrust laws The Company supphes substantially all of the electnc power requirements of the Customers The Customers' complaint included a! legations of poce discomination, anticompetitwo restnctions and poce squeeze In May 1989 a jury determined that the Company had violated federal antitrust laws and awarded damages of $13,100.000, which results in a tota! judgment of $39.300,000 when trebted under antitrust law plus interest, On September 21,1990 the United States Court of Appea!s for the First Circu:t reversed the $39,300,000 todgment aga:nst the Company On January 22,1991 the Customers petitoned to the United States Supreme Court for a wnt of certoran seelong tr., restore the lury verdict The Company tekeves that. even in the unkkely event that the Supreme Court wdl agree to hear the appeal, the 1989 iudgment against the Company we not be reinstated That judgment has not been reflected in the Company's financial statements. and accord ngly the Appeals Court deoson had no effect on the Company's reported eamings.
Note H. Commitments and Contingencies (see also Notes B and G) 1 CapitalCommitments At December 31,1990, estimated contractual obhgatons for plant and equipmeat were approumately $65,000,000.
: 2. Lease Commitrents At December 31,1990 and 1989, the Company had leases covenng certain faciht;es and equipment Some of these leases are
              ' capita! leases *, as defined by the Financ:al Accounting Standards Board CFASBi Beginning in 1984 F ASB requaed that regulated utikties commence the capitahzation of certain leases. Had allleases which meet such cntefia been capitahzed, the amount of the asset and the habihty that woui d have been included in the balance sheets as of December 31.1990 and 1989 and the effect on expenses for each of the three years in the period ended December 31.1990 would not have been matenaI Estimated minimum rental commitments under both noncance!!able leases and transmission agreements for years subsequent to 1990 are as fellows On thousands)                                              _  _    ___                  __
_    _ Tota!
1991                                                                                                                                        $ 36.589 1992                                                                                                                                          31,846 1993 27,504 1994                                                                                                                                          21.408 1995                                                                                                                                          19.160 Years Thereaf ter 200,370 Tota!                                                                                                                            $336.877 A portion of the aforementoned lease rentah wdl be capitabzed as part of plant emenditures in the future Tota: eense for both lease renta!s and transmisson agreements for the years ended December 31.1990.1989 and 1988 were $32.000.000. $29,300.000 and $28.500,000. respectsely. net of $3.000,000, $4 600.000 and $4 300,000. respectNe!y, of capitah2ed expenses lease payments under certain transmisson kr'e agreements are expected to be off set by the sarngs from a related energy contract Recovery of these lease payments (net of any savmgs) are currently Dassed through the Company's retad f uel and purchased power clause-30
 
3 Naaear insurance On August 20.19M a f oteen year estens:on to the Po n Ande son Act became effectae he Act cu enty vovJes $7 807 r                                                                      n bloon of fmancu potect on for pubhc labibly r!a ms and jeg C costs ansmg from a smg+ nudex re;ated a: ment lhe iJst $2D0 neon o! nuver Latety is coued by the traomum p<oved by commend msuw.ce AdJ tom nacLW Latniy insurance up to
  $7245 bhon is moeded ty a ret'aspectwe asse ment of up to $63 maan m meiae                                n t iev+d on each of tv lib unas kenned to n
opeMe m the Unaed States sub:ect to a maumum assessment of $ 10 naon per rea: tor per (udent n ry war The shu                                                          i nac;ey itabMy msu ance amount of $7 246 bAnn IS subiect ta change as new commew nudey unas ye Mensed and eustmg r
un:ts gae up thee kenso in adJ< bon to the nbea' Latsty ret'ospectNe assessments d&un ed ahe, if the sum o' aH pab ^
n labMy clams and legY costs ansmg hem ry nuaer accdent eiceeds tne n% mom amou                                                          t oi %roat Potect.on, ea:h kensee can be asseSwd an w1J tonat 53 ;$315 mAom o' the maumum retrospectne assessment Insmance has teen pu'Umed from her E+ecinc Insarance Lmted CNEIL1 to coet" cote n coMs mcuned n oto n ng rep:y;ement power danng a prolonged ardents outage at Pdgnm Staton and the cost of repa( replacemer
* dwtaminabon or decomnessionng o' uttty Pope ty resatong ham m ed occo'rentes at pp m Sta' ion The maumum potente assessmenti aprnst the Compan, mth respect to losses amng dunny currer.t poky years me appoumately $4,563 000 u der the n
replacement poAer poky and $7,000=000 unde tv excess popety drnage de:ontamnate and decomme sonag pa%y An compan es F.ared 4th NEll We SJlheCt IQ retrodeliVe a%e5sments d Iobse5 e4CePd the a2CumuId ted f dnds avalable to NE!l Wde asse%ments may iso be made for Iosses m Certa n pn0r MCy ye# 5 In0 Compa7y is not aMe of any Iosse5 in suCh yeSs WhiCh it bebtNes ye li eh to ret ;i m an assessment 4 Ha:mdous Waste Under the reaunements of the aop4catde state and federt ' Supe %nd* uns and rega!ahons auted thereunder. the Company and othe's d'e etposed 13 potentia! jomt and severM latEh wdh reSpeL to the cYanMP of "aes where halafdouS waste 5 may hMO been Soded or ispo5ed o! in the past Ihe Company has had Clam assFied aginst it feWed to C+an up Costs at a numbe! of such saes m Massa:husetts and other states WNe the Company is unab;e at tms hme to p'ed,ct the anxe tota: c easuo costs for sach s: tea or what es are ci cmis et be f or erb such tae. on the bas s of inbmanon vesen N uadalve the Company beheses the M e mcod that a wou        l d e:ur an3 mateu labm m connecton wth such sees i remote 5 Hydro-Caene The Company. song wth cinm New Enyand eeant utees nas enteed no an agreement to expana ine erstmg 690 MN tansm:ssion Ine nterconnection wm tne Hyd o-Quetec system of Canada to 2.000 MW These tansmeson f ast:es were transimred to the New Eng:and Power Escnange for commemai operatens on November i 1990 ine Company has appfoemateiy an 11% eQJty ownersh p mie'est A two comprue5 who own Inese transm sston f adaes_ vv'@ is in%oed in the accompanyog Lnava! sta'ements Ine Compants sha'e of the Gmoul Conmtted ior sJiWI o! ineSe i3CD > ls mdudOd in Note Hi2) Ab eaatty prucrams me requ4ed tc guxaraet , m ad3 tion to tNa own shwe. tne 13:a! cttgatons of thre petopants not meetng certa:n credit craena. Tne equ ty pa'topays are comper sated accordmgy Amounts so quranteed bs tne ComNny are acmoomateN $25.000.000 at Decemoe< 31,1990 Note L Change in Accounting Principle Unb? led Revenues Effecbe Janury 1,1990. the Company began accru,ng the base port'on of revenucs for wwes rendered hat not taed m orde to more close:N mfch revenues mth e<penws The edect of it.e cnange m accoant>ng ponc#e in the yew eNed Decemner 31 1990 was an increase of $0 39 per common shme ($15 286 000 net o' taes o! $9 485.000) cons: sung of $0 41 per common shse
($15.824,000 net of taxes of $9 819.0001 for the cumulatue e'fect of the cnange at Janury 1.180. and a decease of $0 02 per common sna e !$538 000 net of tases of $334 000) for the ew enced December 31.1990 HH tt e Compa% haen accN ng u"tMed resenues in 1989. the pro forma e'fect of tN; cunge on the year ended Decemner 31,19B rs ris woukt hase been as fotws bn InousdndS, except eenmgs per shmei 1939                                                                1988 as reported                        pro f orma                      as moorted          pro forma
                                                                        $ (Ib 135          $ (14 646;                                      $      84 212      $      85.898
      ! mCome/hosS)
                                                                        $ 03788)          $ O2 299                                        $      70 071      $      71,757 Ba:ance a tacabs for commen stoo (O SW      $                                    (0 84!    $        1 80    $        1 90 IncomeNossi per common shre                                        1 31
 
d Note J. Income Taxes lhe Company's income before income tax expense resutts soie!y from domestic oneations Defened income 13x egense resutts itom t! ming differences in the recogmtion of certa n income and expenses for tax and f,nanoa! statement purposes investment tax cred,ts are refietted in income over the estimated usef ul hves of the related prope'ty Components of ncome        i      tax empense are as foDows On thousands)                                                                                      1990                                        1989                      1988 Cancelied nuciear un:t FUe Di                                                              $ (6.936)                  5 (8 998)                                    ~ $ (7,750)
Excess tax deprecaton over twA depreaabon                                                        11.165                                  4 464                          7.326 Deferred f uel egense                                                                            (4.141)                                          (S79)                    (221)
Debt portion of a!iowance for iunds used danng construct 4on                                        2,966                                  2 897                        5.0E0 Massachusetts corporate franch se tax                                                              5.964                                          (9461                (2.751)
Defened nuclear outage espense                                                                        1477)                              (6.795)                        (6.795)
Unbilted revenues                                                                                    2 73,                              (1,938)                        (2 688)
Cost of remova!                                                                                    3 063                                    1.359                        1,035 Revenue reserve ad;ustment                                                                        (1,297)                                  4 843                        (1,875)
Rate and contract settien ents                                                                  20 389
* 0                    0 Other                                                                                                1429>                              0.900)*                        (8 4141
* Subtotal def erred ncome taes                                              27,332                                  l9891                        (17 034)
Cunent income tax expense                                                                          7.046                            40.349                            49 936 Investment tax credits                                                                            ta 740)                                14,233i                        (5.034)
Provision for income taxes                                                          29 638                              20222                              27 868 1
Taxes on othe income Cunent                                                                                    518                                      1,065                          643 1,689                                                                2 481 Defened _ ..                                                                                                                      5 511 _        .
Subtotal                                                                    2.207                                      6 576                      3 124 Change rn accounting panople (Note it Cunent                                                                                    876                                                      0                  0 Defened                                                                                  8 943                                                      0                  0 Subtotal                                                                      9 819                                                      0                    0 Rate and contract se'tlements Cunent                                                                                          0                                (2.929)                                0
                ~ Defened                                        ~
0                        169.441)                                        0 Sdto.ta! --      . - - .                            -                    ..0-                .
(72 370) 0
          - _ - , ~= .
                              - Total    .                                            .
5 41.664        -
                                                                                                                              $ 09.572)                                _
                                                                                                                                                                            $ 30.992 The effective income tax rates f ehected tn the Onanaa! statements and the teasons for their d f ferences from the statJtory federat income tax rate are expla:ned below 1990                                            1989                  1988 Statutory tax rate ibenett!                                                                          34 0 %                                        G4 OM                    34 0 %
Mowance f ar other funds used danng construction                                                                                                          108)                (2Ot Massachusetts corporate franchise tas                                                                  41                                                (451                  42 Investn'ent tax credit                                                                                G 4:                                              (S21                14 di Muniapai property tax adpstment                                                                        (13>                                              0 2)                (15)
Reversal of outage expense defened taxes                                                                                                                  (7 1)
Reversat of defened taxes settiement agreement                                                        ()5)"
Other                                                                                                  (15)                                          (13 2)" _                G 4)
* __,.= _ _ota!_-_-_        T                      _ , __      .-
30 4 %                                          (710M                  26 9 %
(+        in 1%9 ami m Pe founn we' of 19dd me Comce3 re<tced uev+ ncme tn eceme by $t Y)0 CO) a 10 M m cr."'fe Yve vil $3100 000 e 5010 rmr common pse. remc' ve9 f eu m M ne % ems c' cenn M J WC Ne"h taneiiw!ed da r9 Pe vws 1311 IU9 P e c3 cuW on of wNcb an tased uccc FE RC Orw Ec1 refrungv ire DRU % m awed ve FEPC "wNu qv W ve:.e en n a fes oi e cnads e e a u defef'Wj t.j( 3" icv'"3 hine LtW IP3tOfed f0 !hCO*C (N        Ir' 1990 o Etordne wt* e e DPU Set: e"e 1 Agee"'e". Pe CanTm y tocM $2 i.W TM r/ we ned n me tues 'a ner e. s- Noto B Federalincome tax retums through 1984 have been exammed and cimed 32
 
Note K. Pensions and Other Post Employment Benehts The Company has a nonconthbutory f unded plan, w th certa:n volantry conmbutory tenes Berdis me based upon yers of semce and an employee s compensa$on dJnng the latl yea's of employment The Company s f andmQ PODcy is to (onthbute annugy an amount which at least eaJais the mn' mum amount re0Jaed by g?vemment f undag stanledi bJi does not eteed the amount wbth can be dedstea for iedeM income tax pu' poses f%n assets tomst pwpah o' msutan contmir, evt es and rea' estre Fetrement p!an costs f or the yeau 1930 1989 and 1938 me $2 550.000. $3.728 000 and $2113 dOO. rewectivet y. of wWh
$743.000. $837,000 and $473 000, respectively. we can teced The components ci net pensm cost f ar 19'n 19S9 and 1958 were as folW nn thousandN                                                                              1930                          1989                    1988 Current seMce cost benetts ea ed dnng the penod                                      $ 6 086          $ 5821                              5 5.102 Interest cost on prpiected benett obkgabon                                            31 627              29 823                            27,772 Actud return on pian assets                                                            (9 4641          150 261)                          Q5 674)
Net amort rabon and defed                                                            Q6 269:                18 345                          (5 0eh f Jet pension cost                                                        $ 2.5B0          $ 3 728                              $ 2.113 The fohowmg tab!e sets tyth the pian s fundod status a De ember 31,1930 and 1N9 -                  ,
bn thousands)                                                                                                              1930                1989 Actumd present va:ge of ber"Lt obbgations Accurnutated beneht othgabon. inciuding vested benetts of $270 561 and $244 586                      $ 286141                          ,$ 268 281 Plan assets at f a4 viue                                                                            i 371 400                          $ 396.049 Projected benett lobhganom f or serv:ce rende'ed to are                                                (350 865i                          (360.870)
Plan assets in excess of projected benett obbgAons                                                              20,535                        35 179 Unrecogwed pnor serwce cost                                                                                      10.082                      10 754 Unrecogwed net ga n                                                                                          Mb 921)                        (63.206)
Unrecogn led net obi gaton                                                                                        12.734                    13668 (Accrued! pens on cost included in accounts pa,able at De:emoer 31                          $ Q.570)                            $ (3.605)
Ine we'ghted average d'scount rate and rate of compensabon increase used to measare the protected berdt obbtyt:on f or 1990 and 1989 were 9 0% and 5 56. respectwy. For 1990. in- end of yee cortcensat;on inaease for funded statas was 4 5 ' The we:gnted average expected long term rate of reten on pian assets for 1990 and 1989 was 9 25 L In add bon to pensen benef as. the Company prcmaes certa:n hea1h cme and Me m came nenetts to retaed empiovees The cost o' proed:ng those benetts was approommeiy $6 856.500 o 1930 $4 574 000 in 1989 aN $4 069,000 :n 1938 The Company recognees healh care benef tts and deatn benetts as cia.ms are pad New f ASB rses e%e in 1993 we reau re Ine ubhcaton of an actuana' method of account 99f or these benet is The Company has not yet f u% determ'ned the effect of imprement:ng these ru'es nor the potent:a! recovery of such escenses ea e9ects of the rat +manng proce:s Note L Estimated future Costs Related to Ultimate Disposal of Spent Nuclear Fuel and Nuclear Generating Plants The Company has expanded its spent nuclear fuei storage f ar.hty at PJgnm Statnn to e duce suff=cem capamy for spent nuclear f uel through approomately the year 1935. howeset parsuant to the Nadear Waste Poacy Act o' 1932 the Unced States Department o' Energy rDOElis respons oie for tne utmate a:sposa! of spent nac ear fuei The Compey reco,ers the cost of pa,ments to the DOE
  'or the u t mate d sposa: of spent nucles f uei tnrough its f ue! and pmcnased pow adjustment ciaases i
The Company is recovenng tnrougn decreaanon an annua! prow on for tne cost of dscommissenmg PJgnm Staban at the end o!
its usefulLfe Funds colected for decomm:ss;on<rg are restacted m their use. such f unas coDetted in rmes me based upon a 1985 est1 mate ($122 000,000i to decommiss,on tne plant hmmed-ate d smant ement method: as accroved by tre DPU The Company wS request ap0rova! of its most resent estanate of decomm ssianmg G21E 000 000) m its rot raw case espected m 1992 Secunt es he;d in the nuclea decomm:ss;oning fund se stated at cost. whcn approonute; maiet The Company a'so co% cts a prowson for the cost of decommiss:on:ng Pilgnm Station from contract customers The Comp;ny a!so peticipates as an investor in tuo o?er domesbc nu2r anos Botn o' the " un'ts we recovenng as part of their who:esale rates a prov:ston for est: mated rhrges for SKnt ruder fu 1sposi costs a"d pum decommdsionmg costs See a'so Note At2) 33
 
Rrport of Independent Certified Public Accountants To the Stockheders and Daectors of Boston Ed: son Company We have aud:ted the a: Companying consobdated ba:ance sheets of Boston Ed1 son Company and subsdary (the Company) as of December 31,1990 and 1939 and the re!atea conschdated statements of income 00ss). reta:ned earrengs and cash fiews for each of the three ycars in the penod ended December 31.1990 These financia! statements are the respontabihti of the Company s management Our responsbhty is to express an op: non on these finanaa! statements based on our audits We co* ducted our aad.ts in accordance with genera!iy accepted audtog standards Those standa'os requee that we plan and Derform the aud;l to obta:n reasonable assurance about whether the financa! statements are free of matena! misstatement An aJUt!
inoudes examin:ng, on a test bas % evidence supporting the amounts and d:sclosu        r  es in the finanaa! statements An aad t also includes assess:ng the account;ng pnnap!es used and significant est! mates made by mana;}ement as weli as evaluating the overall hnancai Statement presentation We beheve that our aJd:ts provde a reasonable basis for our opinton In our opinion. the conschdated hr'nc.a! statements referred to above p!esent fa1rly, in all materia! respects, the conschdated fmanaal poston of the Comcany as of December 31,1990 and 1989 and the consohdated results of its operatons and its cash hows f or each of the three years in the penod enced December 31.1990 in conform'ty wth genera 1y accepted accounting ponaptes As d:scussed in Note I of ' Notes to Conschdated Finanoaf Statements'. in 1990 the Company changed to the unbmed method of recogneng te venues
                                                                      -Qn ;                      p        Grssf-..
Boston, Massachusetts January 22,1991 11
 
                                                                                                                                                                                  ))
Selected C2nsolidated Financial Stat'Ctics (Unaudit0d)                                                                                                                          )
i Quarterly Financial Data Earnings /(Loss)
                                                                                                                                                                                  )
On thousands of dollars. except earnings per share)                                                                  Balance Avadab;e              Per Share of'd' Qperahng ggenyys            Opsanng income Jg!incomg(Loss)                                for Common Stock              Common Stock as            pro          as                    pro          as          pro                  as    pro          as          pro rpported      forma _ repo ted                  _f o! rya reported _      forma      reported        forma repo[ted _          forma 1990                                                                                                                                                                    !
First Otr=            $ 309.064          -
                                                          $ 39.213                  -      $ 30,595 M                    $26.182 M                  $0 68 M        -
Second Otr.              269.652        -          22,905                            (2,048)                      (6.462)                    ;0 17)
      - Third Otr.              353.863          -          81,483                            56,914            -
52.502          -
1 35          -
Fourth Otr.            325,367          -
36,137                            9.979            -            5,566                      0 14          -
1989 W First 0tr .          $ 296,253 $292.889 $ 33.564                    $30,200 $ 11,813 $ 9,737                    $ 7,400 $ 5.324            $019        $ 014          l Second 0tr.            282,729    284.901        24.327              26,499          1,120      2,460          (3,294)    (1,954)        (0 09)      (0 05)        !
Third 0tr.              3S3,895    389fGS          78,134              83.877      58.961        62,503        54.540      58.091          1.42        1.51 m      j Fourth Otr.            306.468    304,333        42.498                40.363      (88.029) M (89.346) N (92.443) M (93.700 W                (2 40) *    (2 43)        l l
l (al    0450'i QTA Q4rtttf ty Wei@ ted ayer,Kje numbet Of comnkM Shafes outstJDeng u inewaes s!oc iso 000 vtm twteon rewt,ng fny, the recaamo of rate and ccreact seniements in tre tun wier et 689 ic) hdioes sn 824.000 o, so 4i o.n common pare from an acconteg crange (See Nate I of ' Notes to ConW4ited F ecai L!atementsi (6) Pro forma ntamw,on is oroved for 1%9 as if tne change o accountog prmole ret teer m e4ct dureg the year (See Note i of %tes to Cceschdated hnance Suterrents')
KWh safes and base revenues are seaso'nal in nature, with both being tower in the spnng and fall seasons in add.t:on, pursuant to retad rate orders of the DPU, base retad rates bdled to customers are. on average, forty percent h gher in the bang months of July through October. AccordingN, a sign hcant portion of annual eamings occurs in the Company's third quarter.
Quarterly Stock Data Fol!owing a*o the reported hign and low sales paces of Boston Edison Company's commen stock on the New York Stock Exchange Conschdated Tape for each of the quarters of 1990 ar.d 1989 and the dividends declared per share dunng each of those quJters:
1 1990                                                        1989 l
High                ,
Low    _
Dividends                H.ign_ _ _ _ Low - _ , Div!          ends d
First Quarter                          $19 7/8                    $17 5/8                  $0380              $16 5/8              $15 3/8            $0455 Second Quarter                              19 5/8                    17 3/4                0 380              17 3/4                15 1/2              0 455 Third Quarter                              19 3/8                    16 1/2                0.380              19 1/4                16 7/8              0 455 Fourth Quarter                            20 1/4                      17 1/4                0 395              22 1/8                18                  0.380 l
35 i
  -                      , . - ,        -                      - . . - . - -                  -                  . - .      . _ . - -            -                          A
 
Solicted Consolidated Operating Statistics 1990                                                                          _ 19          . 89                1938          1937          1986 Capacity - MW New Boston Station                                    760                                                                                              760            700          700            760 Pilgum Staton                                        670                                                                                            670              670          670            670 Mystic Staton                                    1,014                                                                                      1.018                  1.027        1.036          1.034 L SUeet Staton                                          22                                                                                                22            22            22              23 W F Wyman Unit 4                                        36                                                                                                36            36            36              36 Jet turt>nes                                          259                                                                                              251            249          256            260 Total                                    2.761                                                                                    2,757                  2,764        2.780          2.783 Contract purchases                                    924                                                                                    1,102                1,301          901            700 Contract sales                                      (173;                                                                                          (171)            (173)        (258)          (203)
Net capbaty at yeanend MW                3.512                                                                                      3.688                  3.892        3 423        3.280 Net capabety at peabMW                                  3.505                                                                                      3.483                  3.200        3.200          2.963 Capabety responsibaty to NtPOOL at peabMW 3 393                                                                                                    3.443                  3 253        2.827          2.905 Ed: son temtory Hourly peabMW                                    2.54B                                                                                        2.626                2.626        2 432          2.254 Load f actor                                          62 2 %                                                                                            614%          60 5 %        62 7 %          64 8 %
Generating staten economy (BTU / net kWh)            10.403                                                                                  10.300                    10.050        10.151        10.097 Avef age cost of fu(I(Company)-
e per milhon BTU FosM                                            255 51                                                                                  254 E6                    226 91        272 24        238 45 i: ., ear                                          59 05                                                                                        56 79                    -
102 53 Composite                                        19148                                                                                  223 86                                                224 03 CapabAty (net 6W)
Fossil                                                81 %                                                                                              62 %          83 %          80 %            80 %
Nudear                                                  19 %                                                                                              1B%          17*          207            20 %
Generaton (system kWh excluding interchange).
Fossil                                                  72 %                                                                                            87 %          90 %          90 %            84 %
Nuclear                                                28 %                                                                                              13 %          10 %          10 %            16 %
Utaty punt Ewend tures                                  $ 240,902                                                                $ 234 263                              $ 244.807      317.797    $ 162.206 Reinements                                      27.180                                                                                      14 042                12.017        23.070        22.266 Accumula*ed deprecaton                      1.015.371                                                                              950.298                    862.297      779,246        743.908 Deprecable plant                            3,277.616                                                                  3.130 031                              2.910.390    2.492.547      2,383 274 Number of employees at yeanend                          4.733                                                                                          4.686          4,559        4 532          4 428 36
 
$$lected Consolidated Sales Statistics 1939                  1988                  1987                    1986
_                        .                                    19%)                                                                                          _
Electnc enorgy RWh in thousands)
Sources net system output Generated                                    12.744.238                                                        11.679.060                              8,653,274                8.951.229                9,862.768 Purchased                                        3 395 491                                                          4.177.079                          4.474.726                3.129.045                2.763,274 Interchange                                        (819,434                                                                (919,391)                    1.116.394                  1.501.746                881.567 TotM                                                                                                    14.936 748                            14.244.394              13.582.020              13.507.609
_      .        _  _  15 230.295_  .
Retad sales Commerca!                                    7.183 347                                                            7,095.297                        7.004.452                  6.750 870              6.362.478 Resident >al                                  3,430.720                                                            3.413.801                        3.430 611                  3,188348                3.048.454 Industoal                                    1.750 325                                                            1.845.441                        1.839.363                1,853,010              1.837.263 Street hghting                                  132.016                                                                      132.791                    131.549                132.666                134.116 Radroads                                        143 197                                                                        126.971                      90.697                          0                    0 Total retsi                          12.639.605                                                          12.614.301                        12.496.672              11.925.303                11.382.311 Sates tor resale - tota! requeements              336.343 __                                                                    332.800                    331.918                315.354                302.349 Temtory total                          12.975,948                                                          12,N 7.101                          12.828.590              12.240.657              11.684.660 Sates ior resa'e partial reauirements            1.337.771                                                                      805.882                    282.929                  219.293                714.804 Total system                            14.313.719                                                          13.752.983                        13.111.519              12,459.955              12.399 464 M<sceuneous usage                                  916.576                                                                1.183.765                        1.132.875              1.122,065              1.108.145 Total                                                                        __                      _.936,748 14                                14,244.394                115S?.020              13.507.609
        ._. .                            .. _ _        _ _ .15.230.2 _95 Kdowatthouts annualgrowth wcent Reta I sales Commerc a!                                            12%                                                                                13%                    38%                      61%                  62%
Resident.a!                                            05                                                                                (05)                    76                      46                    52 Industna!                                          (52)                                                                                  03                    (07)                      00                    08 Sneet bghting                                      (061                                                                                  09                    (08)                    (1.1)                  08 Radroads                                            12 8                                                                                40 0                    -                        -
Total retad                                    02                                                                                09                    4.8                      48                    50 Sales for resate - total requeements                        1.1                                                                              03                    53                      43                  (28 7)
Terntory tota!                                  02                                                                                09                    48                      48                    3.7 Safes for resaie - partiat requeements                66 0                                                                                184 8      __
29 0                    (69 3)                (62 5)
                        . - . Total - sys. tem                              41%                          -
49%                    52%
05%                  (5 9)%
                                    -            -~ ~.
          - - , , System total electnc revenues by class-Commetaa!                                                        48 %                                                                        48%                      48%                      49 %                49 %
Residentiat                                                      78 %                                                                        27a                      28 %                    28 %                26 %
Industral                                                          10 %                                                                      11 %                    11 %                    12 %                13 %
Sales for resale                                                        9%                                                                  10 %                      9%                    9%                  10 %
Other                                                                      5%                                                                  4%                        4%                    2%                    2%
Electnc sales stat.stics Resiaent,a! averages Annual kWh use                                    6.150                                                                                6.160                6.270                    5.903                5.735 Revenue per kWh "                                  1010c                                                                                1019c                  9 95c                  10 20e                9 42e Annua!ba *                                      ~$621 15                                                                            5627 70              $623 87              5605 65                $540 24 Customer Meters at year end                            677,667                                                                              672.992              663 627                653.903                644.138 Average numtwr                                642.041                                                                              637.871              6/9.659                621.083                609.283 W EuMes Me"ed fe reanua Certain reclassif cations have been made to data reported in poor years to conform to presentat;ons used in 1990 37 r
 
Ssisctsd Consolidated Financial Statistics 1990                    1989              1938            1987              1986
                                                                                        $1.258.546        $1,269.345              $1.202 655        $1 181,097      $1,105,367 Operating tevenues (000)
                                                                                          $77,788          ($33.768)                $70.071        $34,255          $97.404 Ba!ance for common 1000i Per common sha'e.
Eamingslaoss) per she e                                                    $2 0) #              $(0 88) *            $186            $2 27 *          $2.72
* Dmdends dec!ared                                                          $1535              $1745                    $i 82            $1.80            $1.75 Dmdends paid                                                              $1.52                    $182              $1.82            $1.79          $1735 Booi value                                                                $17 20              $16 71                $19 36          $19 35          $18 84 Cash flow ""                                                                $6 86                  $510              $4 55            $5 53            $6 61 Payout rato                                                                          76 %                      -
* 98 %            79 %                  64 %
Retum on netage common equ:ty                                                      11.82 %                  (4 6%)            9 60 %        11 86 %          14 80 %
79%                      76%            11 03 %          9 71 %                6 91 %
            't ear end dvdend weld Fned charge coverage (SEC)                                                          213x                    052x              2 08<          285x                  3 56x Capita!wtion 55 %                    52 %              50 4            48 %                  46 %
Long term debt Preferreo and preference equ>ty                                                11 %                    12 %              12 %            10 %                  10 %
Common equity                                                                34 %                    36 %              38 %            42 %                  44 %
                                                                                        $1,074.025          $948.839                $96E534        $822,659        $728,909 Long-term det't (000i Redeemable preferred!
preference stocks (000)                                                $100.000          $100.000                $100.000        $50,000          $35,188
                                                                                        $3,014,123        $2.878,271                $2.817.050      $2.702,960      $2,361,998 Total assets (000)
Intemal generaton af ter dedends (000) *                                      $187,954          $147,449                $104,241        $148,644          $184,723 Piant expenduutes t000;                                                      $255.784          $235S16                  5245,103        $309,239          $174.645 Internal generaton #                                                                73 %                    62 %              43 %            48 %                106 %
Common stockholders at year end                                                  45.826                  49 149            49,976          48,063            48,046 Common shares outstand-ng-      ,
38.778.901        38,245.648              37 083.515      37.168.722      35,817.344 Weighted average 38.998,531        38.526.085              37,893.791      37,424.910      36,905.558 Yeanend Stock once H gh                                                                      20 1/4                  22i/3              18 3/4          28                    28 Low                                                                        16 1/2                  15 3/8            12 1/2          16 3/4                21 1/8 20                      20                16 1/2          18 3/4                25 3/4 Yearend Yeanend market value (000)                                                    $779,971          $764.913                $625,248        $701.717          $950.318 19.652.300      29.938.900                46.517.500      30.040,900        29,657,400 Trading volume Market / book (year end)                                                            1 16                    1.20                E5              97                  1.37 Pnce/eamings rato (yeanend)                                                        10 0                      - d              88              83                    95 W      hcodes $2JB ter temmen ihare .cas acecaNe to raw and comat set'wmer.u d      inrid9 $0 30 av110 C t f.et ccmmor,r s :a e from dc. cont-nej ctwf at cm 'a tre ws 19c7 an11% res;vetwy k)    Not cacuated teed een a to pu arrron wre A cmout orc 9 e ora a e-cer umnp raw of 10 5 <ee cecuwed tawd ucon t' e il 90 ter COftn.Ol' LPa!ff 6YWngs es:Jutt'91*.C $2 Id fef COrepen grwe V)s3 dye ta ryg y ej ccc':get $ethemer',
a      hu.es to 41 pr came srare fr en an acccentw tear ge W      F evju s"ect c' li*13 as and coext setemerts Certa:n recianf:cabons have been made to data reported in onor years to conf arm to the presentations used in 1990 38
 
Officers                                                                        Directors Bemard W. Re:ntcek, President and Chief                                    tuu Helene R Cahners-Kap:an. Trustee Executive Ofbeer ma WJham F. Connell Chairman and Chici isecuta e Thomas J. May Executive Vice President                                                  Othcer. Connell Limited Partnership (metals recythng and processing and indastnat producton)
Ra!ph G B,rd. Executive Vice President um Ga<v L Countryman. President and Chief E>ecutive Wdham D Hamngton, Senor Vice President                                                  Othcer. Liberty Mutua! Insurance Ccmpany Canieron H Da!ey. Senior Vice President                                      um Thomas G Dignan. Jr., Partner. Ropes & Gray Oaw brm)
L Carkslo Gustin. Senior %:e Presdent                                        (tm Charles K. Gif ford. President. Bank of Boston Corporaton (bank holding company) and The First John J Higgins. Senor Vice President                                                    Natona1 Bank of Boston George W Davis, Jr., Senior Vice President - Nuclear                        wa Nelson S. Gifford, Vice Chairman. Avery Dennison Corporaton (pressure-sensitive adnes'ves and C Bruce Damrelt Vice President - Power Dehvery System                                  matenals, othce products. prodact identihcation and control systems and specia!!y chemicals)
Craig D. Peffer Vice President Customer Service ud Kenneth I Guscott. General Partner, Long Bay Marc S. Alpert, Vice President and Treasurer                                              Management Company (real estate development)
John J Desmond lll Vice President and Generai Counsel                        tte Matina S Homer Executve Vice President, Teachers Insurance and Annu:ty Assoaaton and College Richard S Hahn Vice President - Mrketing                                                  Retirement Equities Fund Artnur P, Phiihps. Jr., Vice President -                                    tw Wdham D Manly, Former Executve Vme President, Corporate Informaton services                                                              Cabot Corporaton tenergy and performance chemicals)
Joel Y. Kamya. Vice President Producten Operatons (tm Sherry H Penney, Chance: lor, University of Edwin J. Wagner. Vice President - Nuclear Engineenng                                        Massachusetts at Boston. MA Roy A Anderson Vice President Nuclear Operatons and                              v Bemard W. Reznicek, President and Chief Executive Station Director                                                                              Cthcer. Boston Edison Company Robert J Weafer, Jr Vice Pres: dent, Controlier and Chief                    md Herbert Roth, Jr., Former Chairman of the Board and Accounting Othccr                                                                            Chief Executve Othcer, LFE Corporation (traf fic and industnai process contr01 systems)
Martin S. Karl Vice Pres 4 dent Corporate Planning tm Stephen J. Sweenev. Chuman and former Chief Theodora S Conwsser, Clerk of the Corporaton                                                    Executive Of hcor, Boston Edison Company Donald Anastasia. Assistant Treasure:                                        am Paul E Tsongas. Chairman. Commonwealth of Massachusetts E'oard of Regents of Higher Education James J. Judge. Assistant Treasurer                                                              and of counsel. Fole/, Hoag and Ehot Oaw hrm)
Jean C Qu:no, Assistant Clerk of the Corporaton                              um Charles A. Zraket, Trustee, The MITRE Corporaton (not-for proht system research and engineenng brm) w Me-te d becow comnwee its Mette M AA i Lunmee f                  4 IN M_If C              $ N. 'J e II((b! Ui@iNet 6 c                  Memt- 1 %nw Otenns R*m Comme                                l 39
 
Dividend Riinvestm:nt Plan l'
The Dividend Reinvestment and Common Stxk Purchase Plan is avalable to common, prefened and preference shareholders Under the plan, common, preferred and preference shareholders may have thea d1vidends reinvested in common stxk at cunent ma'ket pnces All pa'topants may invest optiona! cash coninbutions, up to a maumum of $k000 per qua'ter, which wm be invested at the current market pnce Pattopants do not pay fees or commiss,ons All holders of record of shares of common. pretened or preference stock are eigbie to petopate dvectry in the Plan Benefca!
owners of the Company's stock whose shares a<e reg:stered in names other than their own (e g , a broker or bank nominee) must anange pytopabon with the record hoider if for any reason a benetcal owner is unable to arrange pytopaDon with his brober or tank nom: nee, he must tecome a record holder by having the sha'es transfened to h:s own name.
Al! conescondence concerning changes in plan ownership should be dvected to the Plan Agent The First National Bank of Boston Dividend Reinvestment Unit Mail Stop: 45 01 06 P. O. Box 1681 Boston, Massachusetts 02105-1681 Important Shareholder Information Annual Meeting                                                                Dividend Reinvestment Plan Agent The Annual Meeting of Stockholders of the Company                              The Fast Nationa! Bank of Boston will be held on May 2,1991, at 1100 a m A copy of tne President's remarks wm be sent on request                                  Stock Transfer Agent and Registrar of Stock The Fest Nabona! Bank of Boston Com?any Contact Theodora S. Convisser, Clerk of the Corporation                                SEC Form 10 K Stockholders may obtain a copy of Boston Ed: son Generel0ffices                                                                  Company's annual report to the Secunties and 800 Boylston Street, Boston, Massachusetts                                      Exchange Commission, on Form 104, including the 02199                                                                          financial statements an't schedules thereto, by (6171424-2000                                                                  makmg a wntten request to the Clerk of the Corporabon Stock Listings New York and Boston stock exchanges                                            inquiries Concerning Stock If you have questions concernmg your dmdend Stock Symbol                                                                  payments, dmdend reiniestment o?an status, transfer BSE                                                                          procedur es and other stock account matters, piease contact the Stock Transfer Agent for Boston Edison at Dividend Payment Dates                                                        the followmg address-Common and Preferred                                                                  The First National Bank of Boston 1st of February May. Avist, November                                                  Shareholders Services Division Preference                                                                            Mail Stop: 45 02 09 1st of March, June. September. December                                                P,0, Box 644 Boston, Massachusetts 02102 0644 Tax Status of i990 Dividends                                                        if you are submitting documents requesting a No part of d vidends pa;d on Boston Edison Company                              transfer, address change or account consohdation, common, preferred and preference stock in 1990                                  please use this same address with Mall Stop:
were a retum of capital                                                        45 01 05. If you would hke to contact the Bank by teiephone, a tothfree number is now avadable to shareholders outside of Massachusetts. Please call 1 800-442 2001.
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