ML20076E693

Annual Financial Rept 1982

ML20076E693
Person / Time
Site:	Seabrook
Issue date:	07/27/1983
From:	Eichorn J G EASTERN UTILITIES ASSOCIATES
To:
Shared Package
ML20076E650	List: ML20076E646 ML20076E664 ML20076E671 ML20076E675 ML20076E685 ML20076E690 ML20076E693 ML20076E703 ML20076E714 ML20076E722 ML20076E727 ML20076E730
References
NUDOCS 8308240640
Download: ML20076E693 (28)

Text

,

Eastern Utilities Associates Annual Report 1982 I

}

l P'9 B308240640 G30727 h.d PDR ADOCK 05000443 PDR I

Tcble of Contents 2 Highlights 3 President's Letter 4 Centennial 6 Review of Operations 12 Selected Consolidated Financial Data 14 Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Consolidated Financial Statements 20 Notes to Consolidated Financial Statements 24 Quarterly Financial and Common Share Information 24 Dividend Reinvestment and Common Share Purchase Plan 25 Supplementary Financial Statement Information 27 Consolidated Operating Statistics The Company Eastern Utilities Associates is the a Declaration of Trust dated parent company for two reiail April 2,1928. as amended, and all electric companies, a wholesale persons dealing with Eastern generation and transmission Utilities Associates must look solely company and a service company. to the trust property for the The EUA System furnishes electric enforcement of any claims against service to portions of southeastern Eastern Utilities Associates as Massachusetts and northern neither the Trustees, Officers nor Rhode Island. Shareholders assume any personal The name Eastern Utihties liability for obligations entered Associates is the designation of the into on behalf of Eastern Utilities Trustees for the time being under Associates.

Syst:m Companies Eastern Utilities Associates Blackstone Valley Electric Company EUA Service Corporation Washington Highway Montaup Electric Company Lincoln, R.I. 02865 99 High Street * (401) 333-1400 P.O. Box 2333 William R. Bisson, President Boston, Mass. 02107 Eastern Edison Company (617) 357-9590 John F. G. Eichorn, Jr., President 110 Mu! berry Street Brockton, Mass. 02403 (617) 580-1213

• Effective June 1983, Allan K. Hamer, President One Liberty Square 1

Highlights  % increase 1982 1981 (Decrease) li1come, Earnings, Dividends:

Consolidated Net income $ 16,941,000 S 12,437,000 36 %

Average Common Shares Outstanding 7,519,381 6,123,334 23 %

Consolidated Earnings per Average Common Share $2.25 $2.03 11 %

Dividends Paid Per Share $1.70 $1.60 6%

Return on Average Common Equity 13.5 % 12.1 % 12 %

Revenues, Sales, Customers:

Total Operating Revenues $288,417,000 $297,931,000 (3)%

Total Electric Sales (thousands of kwh) 4,049,000 4,268,000 (5)%

Customers, Year End 230,094 227.887 1%

Property and Plant:

Net Utility Plant $413,260,000 $347,440,000 19 %

Construction Expenditures $ 77,096,000 $ 54,436,000 42 %

2

To Our Shareholders:

l l

As owners of Eastern Utilities Although fuel oil prices are 1 Associates, you will be gratified to expected to remain lower for the '

learn that this year-end report immediate future, we remember l

reflects a significant continuation the volatile past and we are  ;

j of a steady, upward trend. You will continuing to reduce our de- i recall that 1981 was a successful pendency on foreign oil. In year. Farnings per share for 1982 March of this year, our Montaup l were $2.25, an 11 % improvement generating plant completed the i over 1981. Net income advanced to first phase of its conversion to '

$16.9 million, an increase of 36%; lower-cost domestic coal.

and, for the first time in over thirty By the end of 1983, we will l years, we closed the year with no have reduced our dependence on '

short-term debt. oil from 78% to 56%. For the long l

This improved financial position term, we anticipate the completion of is directly attributable to the efforts three nuclear units of which we are j of an aggressive management team a part-owner and look forward to l which has relentlessly pursued low-cost, hydro-electric eriergy i t timely and adequate rate relief at from Canada to further reduce our . l both Federal and state levels. Those reliance on oil.

• efforts cannot and will not be The improved financial condition relaxed. They have a direct effect of the System enabled us to success-on the level of your dividend pay- fully complete a $66 million ment and the market value of your shares.

financing program during 1982, . g, retiring all of our short-term debt -

9 e-Early in 1982, the Trustees of your by year-end. Two EUA common __ r I

Association were able to increase share offerings resu'ted in proceeds the dividend rate to $1.70 per year. of $23 million. Eastern Edison Com- '

We hope that it will be possible to pany, our Massachusetts retail provide additional increases at subsidiary, raised $24 million regular intervals to help share- through the sale of bonds and $15 holders' income keep pace with million through the sale of preferred -

inflation. This is one of our primary stock. An additional $3.7 million .

objectives. At the same time, we was the result of shareholder par-l are sensitive to the plight of our rate. ticipation in our dividend reinvest- '

payers who are also victims of the ment plan.

economy. In order to keep neces- In 1983, we plan to raise $70 sary consumer price increases to a million of new, permanent capital minimum, we are diligently seeking through the sale of bonds, tax the lowest cost of fut.I for the exempt pollution control securities generation of electricity, and common shares. The proceeds In 1982, despite the implementa- from these financings will be used tion of rate increases, our residential to refinance maturing debt and pay customers experienced only a for our construction program.

minimal ir, crease in the price We are optimistic that 1983 will actually paid for electricity when see further strengthening of our compared with the preceding financial position and the main-year. This was due to a substantial tenance of a reasonable balance decrease in the cost of generating between funded debt and equity in electricity. The decrease was due our capital structure, along with an

partly to outstanding efficiency improved return on equity for our l in our generating plant operations shareholder.

and partly to greater use of lower- ,

l cost nuclear generation. The most Very truly yours, i substantia reduction, however, was the drop in 1 9 price of oil.

John F. G. Eichorn, Jr.

President 4

Centennial formed Pawtucket Electric Lighting the industrial Revolut'on. Bridge Mill Company. Power was purchased in 1896 by the in Wonnsocket, Rhode Island, Pawtucket Electric Company. It February 1881, Tho:nas Alva Edison electric lines were first stretched became, in time, today's Pawtucket wrote in his joumal: "My work here from building to building in 1882 Hydro Station No. 2.

is done; my light is perfected. I'm with the founding of Manufacturers As cities grew so did the towns now going into the practical produc. Foundry and Machine Company, around them. Small power stations tion ofit." which fumished power for manu- and electric companies sprang up in The EUA System proudly traces facturing purposes. many communities. But it was its history beyond that early dream Three days after his Brockton expensive to operate all those small startup, Edison agreed "to fumish companies. Mergers became

. " of Edison to enrich our lives. and install at Fall River, County of commonplace.

October 1,1883 marked the start of the great inventor's first New Bristol, State of Massachusetts . . The Brockton and Fa!! River England centra! generating station. an Edison Electric Light Central companies purchased neighboring

' On that date, Edison himself threw Stati,on Plant necessary to furnish a firms and extended their lines to maximum of 1, several surrounding towns between  ;

N ' , the switch and the~ glow of 160 lampscandles each.,,600 lights of ten 1904 and 1935. It was in that year s

^

4

' ?brightened the ciys business . Edison Electric liluminating Com- that the Edison Electric illum,nating I [ district' c An arti cle in the nexk day's Brock-- pany of Fall R,iver was Fall River's Company of Brockton became

. 4" iton Enterprise newspaper said:. second electnc company - pre- known as the Brockton Edison

^

"After several months of hard work, . ceded by several months by the Fall Company.

' the Edison Electric illuminating :

'- River Electric Light Company. The two Fall River companies Company of Brockton have got [ sic] With the founding of the corporate built adjacent electric plants on ancestors to today's Syrtern com- Hartwell Street, one of which remains their plant in working order. As a .

F . whole, the first trial may be con. w panies, the elements were in place. the site of today s headquarters of What was dest,ined to become )

t sidered a success, and the lights will the Fall River Division of Eastern , j

' Eastern Utilities Associates had its Edison Company. Fall River Electnc bum brighter and more steadily after start. bought Edison illuminating in 1896.

the system is got in complete-(

t<-

. working order." In 1894, the Bridge Mill Power in Rhode Island, high-voltage l In 1880-even before Edison Company began construction of a transmission lines were built in 1909

?> ' wrote of his satisfaction in his journal -hydroelectnc generating station on enabling Woonsocket and R 7 'Amold formed a partnership in- Lucius the Blackstone River, in Pawtucket, Pawtucket to exchange bulk power.

u Rhode B.Island,-

Darling lessand thanOlney- a half-mile

, p' ,

F

, ^Y Pawtucket Rhode Island tolight thA

, , 1 downstream from the mill where 100 ii Q streets of that city with electric arct s years earlier Samuel Slater started

? K lamps. Their company.was boughti. 4 if. 1900's e C ;out three years later y the newly [ (

. E ectric con-o measured by chemical meters

/ - 4 I

"+ ' 1880's-

.j -

j .jj ,

like this one from

{ Fall River. Elec - ~.

l '

trodes were .

NK d weighed to deter-l lUCJ mine monthly electrical usage. :

_ 1920's ;

^

1888-1983 (~j;s@ o $ IC-EUA System companies trace their :

origins to utility companies formed -

s y, y [,

g 'n:i,.J; Jl J

j, 3 ..>

h y\A ' <^

s 100 years ago. Thus 1983 marks '

our first century of service.-

- _j${,jg,,

- %Q ; -

~

41 -

gy ,

, Thomas Edison, himself,'fthrew the .i switch" that put this original central generating station in Brockton, Mass., a on-line, a New England first. Ja* 1 6 . . - . _% . r _ _ n  !

$1000's'. Poles to carry ..

p < overhead electric; l

' g~ .k UT . 41' '4 '

h,

• lines were set by '

' gy using long-~

handled " pole ,

~

y , ,.

" ^ ;. i- pikes" in the :

• 4( early days. .g 3

.p, j ,

F s .

.w

.f, 'D d [. p i3 p, ,

m

, .pyp 2

ph Q g~ %W 1910 . .. iA^';t m

Li 4 '.

1. m Pne-

. Background photo of workmen in old _ ~

Bridge Mill Power stateon, now Paw j% Ong Pawtucket No.1 steam generating: c a 4 9. y tucket Hycro Station No. 2,is being 2 r' #

station

• Y

.r rehabilitated. Modern turbine /R > # - t5 i"J "3

.,' generators will enable this 19Q c Lj - s 4

• . Century station once again to serves . W /;p W"

, customers.- 7 a - 2; &

n . ,

'&W  ; - yff;

Three years later, the companies plants and construction of individual in 1961. The power plant was the merged to form the Blackstone new units would have been nation's second commercial nuclear ,

Valley Gas and Electric Company. uneconomical. reactor.

Growth was rapid. Additional The companies pooled resources in 1964, Blackstone Valley sold generating stations were built; bulk to build a large, efficient generating its gas operations and deleted the transmission lines laced together station in Somerset, Massachusetts. " Gas" portion of its name.

the communities served by each Montaup Electric Companywas in- Formation of a service corporation company. A network of distribution corporated April 24,1923, to build in 1971 was the first r.;p in EUA's lines further tied streets and and operate the Somerset Station. long-range program to improve neighborhoods to the central station. Five yearslater, the Brockton and operational efficiency and the By 1928 Blackstone Valley Gas Blackstone Valley Companies System's financing capabilities.

and Electric could say:"With few formed Eastern Utilities Associates. Many services duplicated in exceptions, privately owned water The following year, EUA acquired a subsidiary companies were con-wheels are idle and mills along the portion of Fall River Electric Light solidated under the EUA Service Blackstone River are operated by and full ownership in 1950. <

Corporation banner. -

central station power." Today, the oldest and smallest i The 1979 merger of Brockton Growth was notlimited to units at Somerset have been C Edison and Fall River Electric Light ! -

industrial customers. Commercial

~

t mothballed. Units 5 and 6, with*al f ' ' created a new electric utility -  !

establishments learned quickly how capacity of approximately 200 mw; 4 Eastern Edison Company, and ..

attractively lighted stores and have been converted to burn less;

• Montaup became a wholly-owned c

, displays could enhance their sales, expensive domestic coal, and' # Eastem Edison subsidiary, re , i l

Homemakers found electricity-7 '- insta!!ation of modern electrostatic The EUA System's direct connec- 1 t

the "servantwho never sleeps"-- e precipitators to protect the environ- ' tion with Thomas Edison'is a source .

I an efficient and valuable asset in' JA = ment is underway.

of pride. His achievement of brighter, the home. ' .

'. '. . ~f Montaup was one of the first utili- stead,ily burning lights in 1883 ' .

Blackstone Valley Gas and Elec; N" ties in the natior, h take advantage marked the beginning of social and tric, Brockton Edisort and Fall River of lower cost energy from nuclear ecortomic progress for the com-

- Electric Light all found themselves - 1 power through its part ownership of munities we serve; progress fostered bin similar positions as the 1920'st j Jtje Yar)kee Atomic Electric Company '1by the growth and expansion of the i I

, began.'

^- Additions to existing powen g%rn Rowe, Massachusetts, beginning use of electric energy. e.

. , 7

, . +

s; R 3p D,

.A re-  ; f As EUA enters its second century t

, ,,e

- - ~

a gmr 9 1

s 2 7

4 ff-@ Myh%7J. ?IMIdh[#

4 y p%4W{O j [of service it does so thatit WHI continue to meet the needs

' }of fle customers land coptribute to a

-?

A % M1 OY "Atomici ?A%E~ Mk TIM" SC

-4 C g,c @%*' gdh&GQf W:

$ fjpany, coqW @ '

Q3

%&D T(

QQ WM3 ih W

a W Mass., 5,C .p 4 , %; , .

Ji EUA's @d M&, WA n h[ c[M pa r .

in y 4n yg

[ e one ew E L f' y 7I i((

.m p 7 whi st theh Ty s. m

. kr

• 9

.M Y;

h j

j~

Ay af -

{k y hk

~

[j

A -; o.

a a

M3 q .g .N 4 .- coego . 4 O [Q k]4 " Plenty of Haril . ,, p k" y, '@

~x to Mon-7 i ? sales couldroit iFi convince pot dr nt L, f-i tric in a c w.y m s oN,

~i ]% "3 move to ' C g J M

'i electrifyhomeg

.h us .il' <, 4- .

1L t ,

y:

i a fuel costs' ndencej, ;g y

MlL h@g Q['199@s- ;

j ting unlis; I!

i o[g h /y W g '

e lown . x

% y : , ,

s y.  ! n ~ %y . sg y y, A1 ' Mk ;y

't, -

4 /' 5. '

( kga;kp x7%y j

Qi K i n-

• 4 4

m

,= y m. A .. t hI$2 - "

agg .

4 g F Iaad . y, ;p' pe ,%

ut t=

y conserva(vities in ~ + g n4% g g n V, $ vN ' t a i%DL,

.t

- ;{w:  :

s \i's- D,, i;,

1 h

(

helped

..'%A} % d ?s

'$il YElectrified p W*

7gd[h,gy go use

.~

5 advertising, encouraged

• M

h. ~jp.a Th.: energywisely, J >

. ' merchants to "Tell it with Light." '

vQ. t 3 yJiyQ,,4p g) W 7,./b g.,eg.4, pi m-

,C.

%r gu y ,:( -5 u

~ ~ ' ' ' '

ll - .. - -

Review e.f Cperations Ecrnings and Dividends facilities increased by $.3 million to NETINCOME AND EARN /NGS PER ' $11.7 million. Expenditures for SHARE CONT /NUE TO IMPROVE general plant amounted to $1.8 million in 1982, a decrease of $.6 Earnings per average common share million.

for 1982 continued to improve, Continuation of the high level of reaching $2.25,10.8% over the $2.03 expenditures associated with the earned in 1981 on fewer average Seabrook and Millstone units will shares. Consolidated Net income of result in the estimated 1983

$16.9 million in 1982 was up $4.5 construction program expenditures million, or 36.2% over 1981. As was increasing to approximately $104.0 the case in 1981, additional rate million. These expenditures, broken relief was the primary source of the down by major functional classifica-improvement in 1982. See " Rate tion, are: Generation, $81.7 million; Relief" section for a detailed discus- Transmission, $5.7 million; Distribu-sion of rate ac.tivity. tion. $13.0 million; and General, The quarterly dividend rate was $3.6 million.

increased from 40c per share t 42.Sc per share ,n i February 1982.

F/VE-YEAR CONSTRUCTION This increase in the dividend was REQUIREMENTS - $359.1 I

the first since 1977 and was the MILL /ON initial step toward achieving our Construction expenditures for the goal of providing dividend increases five-year period 1983-1987 are on a more regular bas,s. i currently estimated at $359.1 million.

A detailed review of Sales, Rev- Completion of the Seabrook and enues and Expenses is included in Millstone nuclear generating units

" Management's Discussion and w ll require $207.0 million of the Analysis of Financial Condition and total. During this period, it is also Results of Operations" on page 14. anticipated that approximately $42.5 Construction million will be spent on completing CONSTRUCT /ON EXPENDITURES the conversion of the two generating INCREASE BY $22.7 MILLION units at Montaup from burning oil to coal. A more detailed review of The System's 1982 construction this project follows.

program required record The 1983-1987 construction expenditures of $77.1 million, an program also includes expenditures

- r -_--- increase of $22.7 million over 1981. of approximately $109.6 million for

! Other ge.neration, transmission,

? Returnon Amrage

] Expenditures for theNo.

1 and 2 and the Millstone Seabrook 3 Nos. and general plant distribution

[ Comunen Esquity N 4 nuclear generating units amounted additions.

to $24.1 million and $22.5 million. COAL CONVERSION TO CUT 4 respectively. This represented a FUEL COSTS 1]

k'

-. 4 totalincrease of approximately l $8.9 million over 1981. During 1982 Two units at the Somerset Station

' ! approximately $14.0 million was of Montaup Electric Company have

[p li expended for the initial phase of the been converted from burning more

[ j conversion of Montaup Electric expensive foreign oil to lower-cost

Company's Somerset Station to burn domestic coal.

[ ] coal. Montaup is the System's Activity commenced prior to L  ! generation and transmission receiving state and Federal agency

[g z subsidiary. Other generation-related 1 projects required expenditures of approvals in order to expedite the burning of coal. This accelerateo -

i. j $1.3 million in 1982, a decrease of approach was taken in order to

[ ] $1.2 mil lien from 1981. Transmission realize fuel cost savings for

] expenditures of $1.8 million customers as promptly as possible.

p 3 increased by $1.3 million from 1981, The initial phase included J

[ 1 while expenditures for distribution refurbishment and improvement of

; existing coal handling and coal firing L equipment, la addition, new facilities

[ were installed as required to

[ protect the environment.

LM w

79f am 80 s - 81

. ww 82 ^

r a i

6

Concurrent with cony;rsion turbines removed and a new inlet r ~m- - ~

preparations, Montaup worked trash diverter constructed. The ra- Construcdon closely with state and Federal mainder of the new equipment will ' Egenstures agencies supplying stJdies, reports be installed during 1983. Reactiva-and plans in order to obtain the tion is expected to be completed JMililons of ootrars) -

necessary regulatory approvals. early in 1984 and will result in an The two units started burning coal annual generation of seven million l

, i under a Delayed Compliance Order kilowatthours (kwh) to replace ap-(DCO) issued by the Federal proximately 13,000 barrels of oil and Environmental Protection Agency provide energy to 1,500 homes.

in March,1983. The DCO Negotiations between New Eng- - 4 temporarily relaxes air quality land Utilities and Hydro-Quebec, to regulations that do not affect bring hydro electricity to New Eng-public health. land from Canada, are progressing.

While burning coal under the A high-capacity direct-current 3 DCO, Montaup is working expediti- transmission line will be built ously to install new, state-of-the-art through Vermont, terminating in . .

electrostatic precipitators. When New Hampshire. There a converter l installed, the precipitators will allow station will change the direct current these units to operate in compliance electricity to attemating current that I with air quality regulations. The will then be fed into the New Eng-

conversion to coal and the use of land transmission grid.

new precipitators will result in Negotiations to increase the ca-cleaner air than when the plant was pacity of this interconnection from burning oil. 690 megawatts (mw) to 2,000 mw The cost of conversion, estimated have commenced. ,

n n a a n 77 m n so si sa .

to be $57 million is being recovered The EUA System is entitled to pur-through an Oil Conservation Adjust- chase 150 million kwh per year of brook un.ts' i completion schedule ment (OCA) rate approved by the the lower cost energy which is ex- has slipped. The completion date Federal Energy Regulatory pected to be available by 1986. for Commission. The OCA rate allows 1g8 he t No 2 has Ip ed Computers, operators' consoles- to July 1987. Millstone Unit No. 3 printers and other devices, which has maintained a schedule of May f el os aving be no comprise the master station equip-coal to pay for the conversion cost. 1986. The review of cost estimates The remaining fuel cost savings are ment foN new SN Q,r- resulted in significant increases for passed on to customers. visory Control and Data Acquis,ition) both plants. The Millstone No. 3 sysMm, are to be delivered dunng estimate rose 39.9% resulting in a When conversion costs are fully recovered,100% of the fuel cost the first part of 1983. Th,s i equ,p-i cash estimate of $99.7 million for the ment, when linked to the many Company's share while Seabrook's savings will be passed on to customers. Annual savings, based remote control units already in- cost estimate rose 43.8% to $109.2 on the projected cost differential staM, will be used by our System million for the Company's portion in Operators to manage the EUA both units.

between oil and coal are estimated to be $26 million initially. power system. SCADA will provide a it was reported to you last year sophisticated means by which the that Montaup expected to sell half of HYDRO-POWER PROJECTS Operator can oversee and control its ownership share in Millstone Unit MOVE AHEAD our distribution and transmission No. 3. Early in the year the Company facilities, meter interchange energy- reconsidered the appropriateness of Work necessary to reactivate Black- calculate bills and monitor and stono Valley Electric's run-of-the- selling a 2.0% share of this nuclear

, control our generators. The system unit. It was concluded that the long-nyer hydroelectnc generating plant is expected to be fully operational w'.s initiated dunng the year. Black- range interest of both shareholders during the third quarter of 1983. and customers would be served best stona Valley Electric Company is the System's Rhode Island retail sub. Nuclear by retaining ownership at the pres-sidiary. This plant, which was orig. CONSTRUCT /ON SCHEDULES AND ent level. Particular emphasis was inilly designed and constructed COSTS REWSED placed upon reducing reliance on between 1893 and 1895,was shut oil for generation thereby avoiding down in 1971 due to the increased Montaup has an ownersh,ip share of higher fuel costs.

costs of operating and maintaining 2.90% in the two Seabrook 1,150 tha 76 year old plant. The reactiva- megawatt (mw) nuclear units and a tion plan calls for the installation of 4.01% share in the single 1,150 mw n'.w, fully automatic, turbine /gener- Millstone Unit No. 3. Both of these (tors to replace the five old ma, projects underwent an intensive chints. During 1982, the station was review of construction costs and dewatered and cleaned out, the old scheduling during 1982. The Sea-7

Other facilities are business ven- 1983 F/NANCING PROGRAM Capitalization Ratios (%) tures organized solely to produce and sell electricity to Blackstone. The cash requirements of our on-Local rainfall patterns dictate minim. going construction program plus the dE i bngNer'rNeYt' asComr Prefehon Equit al or little generation during sum. maturity of approximately $14 million mer peak load conditions. There. In outstanding bonds will require gFx 1

fore, these sites offer no firm the raising of at least $70 million of

.N E capacity for either planning or oper, new permanent capita! in 1983.

.i0- -

h

'N J ating purposes and are viewed solely as sources of randomly, Current plans include a S35 mi!! ion issue of First Mortgage and

.gfG[

4> ' M- produced hydro-electricity. Collateral Trust Bonds by Eastern 6 Edison in the second quarter. This yr Financing w ll be followed by an effering of tax

, e & PERMANENT F/NANC/NG exempt pollution control securities 1 Of ELIM/ NATES YEAR-END in the thnd quarter. Proceeds from C

n" s>, M 3-M SHORT-TERM DEBT A continued strengthening of the the latter transaction will be utilized to finance pollution control facilities that must be installed in connection to s.s to.s s.7 System's financial position took w th Montaup's conversion from oil place in 1982 as a result ofimproved to coal burning at its Somerset earnings and completion of $66 generating station.

31.1 '31.1 2s.4 30.5 34.s million in permanent financing. It is also anticipated that an Completion of the 1982 financing offering of one million common program enabled the System to end shares of the Association will be 1982 with no short-term debt, the required during the fourth quarter 7s 7e so si s2 first time in over thirty years. of 1983. Shareholders will be notified Two offerings, each for 900,000 n advance of this offering. Further common shares of the Association- growth in shareholder participation Co-Generation were successfully completed during in the Dividend Reinvestment and l In 1978, Congress passed the Pub- the year. The first offering, in early Common Share Purchase Plan lic Utility Regulatory Policy Act April, provided net proceeds of should result in proceeds of about

! which included legislation directing approximately $10.9 million. The S4.5 million.

electric utilities to buy at avoided second offering took place in early The System's continued ability to cost all electricity offered for sale December and yielded net proceeds raise the large amounts of new by small hydroelectric producers. In of approximately $12.1 million. capital is contingent upon its ability addition, a series of subsequent These financings were completed to continue to obtain responsive congressional acts offered special through negotiated public offerings regulatory treatment at the wholesale energy tax credits and accelerated by underwriters selected by the level and more responsive retail tax depreciation benefits to foster Association. rate decisions.

development of small hydro plants. Eastern Edison Company, the The common thread in all of these System's Massachusetts retail Rate Relief actions is to create renewable subsidiary, raised $24 million in MONTAUP RECEIVES RELIEF energy resources to supplement June through the issue and sale, at Responsive rate relief from the Fed-higher fossil fuel costs. competitive bidding, of 10-year eral Energy Regulatory Commission EUA has worked closely w,ith sev- 16%% First Mortgage and (FERC), which regulates approxi-l eral developers of hydroelectric fa- Collateral Trust Bonds. In mately 77% cf System revenues, cilities along the Blackstone River December, Eastern Edison raised was the single most important con-in Rhode Island. Blackstone Valley an additional $15 million through tribution to the improvement in the Electric Company has contractual the sale by a private pfacement of 1982 financial results.

arrangements with these companies. 150,000 shares of 13.25% preferred As reported in last year's annual One facility was installed to produce stock.

report, Montaup Electric Company's hydroelectric energy primarily for Participation in the Dividend its own use. Blackstone purchases $10.5 million rate increase became Reinvestment and Common Share effective, subject to refund, on No-all surplus electricity as it occurs. Purchase Plan continued to increase vember 5,1981 after a one day sus-in 1982 as more shareholders took pension. These increased rates advantage of the income tax benefits were billed throughout 1982. The available under the Economic Tax 1981 report also indicated that Mon-Recovery Act of 1981. At year end, taup had fded, on February 19,1982, 26% of the shareholderswere participating in the Plan. Approxi-mately $3.7 million was invested during 1982 by those participating.

8

a supplemental rate increase for with the MDPU and was granted an application is not required by statute

$4.2 million. This latter increase was additional $867,000 on January before October of this year.

based on the inclusion of a portion 24,1983. The inability to obtain responsive of Construction Work in Progress The MDPU's most recent decision rate decisions in Massachusetts and (CWIP) in rate base. FERC per- increased Eastern's allowed return Rhode Island has forced the System mitted Montaup to commence billing on equity to 16% However, it fell to be persistent in its efforts to the $4.2 million in supplemental far short of the Company's require- obtain retail rate relief which is truly CWIP based rates, on a subject to ments and it will be necessary to adequate and not influenced by refund basis, starting April 21,1982 prepare and file another rate in- political expediency, after a one day suspension. crease application as soon as Year in Review Formal hearings on the $10.5 mil- practicable.

OPERAT/ONS AND FUEL lion increase and the $4.2 million On May 20,1982 the Rhode Island increase began on February 2,1983. PURCHASING ACHIEVEMENTS Public Utilities Comm,ission granted To ensure that Montaup's earned BENEFIT CUSTOMERS Blackstone Valley Electric Company return on common equity will con- a rate increase of $3.2 million. This 1982 was a year of progress, meas-tinue to move closer to approved decision was in response to Black- ured by the continued improvement levels, a new rate increase request stone's August 21,1981 application of financial performance. Progress was filed on November 8,1982. This for an increase of $5.7 million. Whi!e was also made towards controlling increase aggregated $18.1 million the May 20 crder increased Black- customer costs and reducing the over those rates which became stone's allowed return on equity reliance on more costly and poten-effective in November 1981 or $13.9 from 13.25% to 15.50%, the rev- tially unreliable imported oil used to million over the rates which became enues granted provide no oppor- generate electricity. The successful effective in April,1982. The Novem- tunity for Blackstone to actually earn pursuit of these goals is essential to ber 8 request also included some the allowed return. strike an appropriate balance of I CWIP in rate base. FERC's staff re- Because of the inadequacy of the shareholder and customer needs.

viewed Montaup's request and re- May 20 order, Blackstone found it Efforts to control the rise in cus-ceived supplemental input from cther necessary to return to the Rhode tomer costs was highlighted by a interested parties. These prelimin- Island Commission on January 28, most favorable report released to ary reviews resulted in Montaup sub- 1983, with an application for an $8.3 the public by the Massachusetts sequently reducing its request by million increase. A decisinn on this

$1.3 million to $16.8 million.

On December 30,1982 FERC issued an order permitting Montaup Where Each EUA Dollar Came From to implement a $16.8 million in-crease, on a subject to refund basis, on January 9,1983 after a one day suspension.

v.se heidential N 27.3 commercial .%

RETAIL RATEINCREASES TOTAL 18.se industrial MW4

$11.9 MILLION 13.3e Other Electric Utliities M: 1 E'# 0**'

As previously reported, the Massa-chusetts Department of Public Utili-ties (MDPU) early in 1982 granted Eastern Edison Company only $4.4 .

million of the $10.1 million rat increase requested. Where Each EUA Dollar Went That increase was inadequate to meet Eastern Edison's needs and it 44,,, p,,, g was necessary to immediately file 5 1s.7e other operation and Maintenance for additional rate relief. An applica- , ,_

tion for $10.8 million was filed on May 4,1982. The MDPU ,ssued i its - <

order on November 9,1982 in re. s.4e Tam sponse to this application and 4.48 Depreciation and Amortization \Y,y,j,J R- E' granted only $3.4 million. The Com- s.se Earnings 1 pany's analysis of the order indi-cated that the MDPU had made sev-eral calculation errors. Eastern Edi-son filed a request for recalculation 9

Department of Put"ic Utilities. The including communication skills be commended fu their enthusiasm, report, prepared by an independent training. The program, predicated their dedication to ineir daily tasks, auditing firm, concluded that fuel on an assessment of expressed and their continuing participation in purchasing and operations at the management and employee needs, the challenging area of communica-System's generating and transmis- was begun in 1982 and will continue. tion with customers.

sion subsidiary, Montaup Electric Meeting the objectives of better The total number of EUA Systern Company, "were such as to promote informed and more highly skilled employees has continued at procurement of fuel and purchased employees is essential to being substantially the same level for the power at the best price." successful in meeting the growing past five years. The level of 950-1000 The New England Power Ex- and more complex demands of employees represents a significant change (NEPEX), the operating arm today's business environment. and substantial reduction from the of the New England Power Pool, Progress continued during 1982 early 1970's average of 1,250 coordinates the use of generating toward organizing and staffing EUA's employees. The reduction was units throughout the region. By corporate planning function. The effected with no adverse impact on ordering the use of units based on rate research and resource planning the quality of service to customers.

economics (those units producing groups were strengthened through Diversification the lowest cost energy are used the selective addition of qualified MODEST EFFORT BEGAN /N 1982 first), NEPEX operations saved professional and tecnnical talent.

System customers $2.4 million in in addition, a new strategic studies in the 1981 Annual Report, it was 1982. function was formed and installation announced that the System had

! A special achievement was real- of a related sophisticated business received approval from the Securities ized by the Vermont Yankee nuclear planning modelis in progress. These and Exchange Commission to em-power plant of which the System is moves reflect continued progress bark on a small-scale diversification i a part owner. Vermont Yankee set a toward enhancing EUA's profes- program into activities outside of world record in 1982 by operating at sional, technical and analytical traditional business. During the 92.7% of capacity for the year. This planning skills, latter part of 1982 operations outstanding performance con- Organization commenced, providing on a modest

tributed to the rerlization of lower EMPLOYEE LEVEL MAINTAINED, scale, engineering services and l fuel costs for custt mers. CONTR/BUTIONS LAUDED computer-related services to a few The System's contract for 25% of small, non-affiliated customers.

the output of Canal Unit No.1, which Employees are one of the System's These diversification activities will was cited as the most efficient oil- most valuable resources. They are to be carefully monitored.

l fired plant in the nation, also con-tributed to lower fuel costs.

COMMUNICATIONS AND ^

PLANNING FUNCTIONS nynnoags PROGRESS myy gcsn: g v L g% ~ - - v&m m A more aggressive customer x 4a $u*$$,A q communications effort was fy b-/7 N#

developed and implemented by 9 .

f ff h'

g. y% e the recently expanded Corporate f Communications Department. The r/ -' %p p ~ ^ ~ , ,

program, comprised of advertising, ( gj m

more intensive press and consumer 7' 1

relations and speaker club presenta-tions, is aimed at informing $

customers of the System's efforts on L $

their behalf. Converting to lower- l cost coal, participation in the acquisition of lower-cost hydro- n j electric power imported from h Canada and energy conservation l are subjects covered to date.

l An expanded pogram of work l brought about progress in the area ,

of employee communications, 1982 1983 1987 l

10

Fin:nci:1 Secti:n t

s f

11

E s,Jrn Utilitics Associates and Subsidiary Companies Selected Consolidated Financi:1 D:ta Y:ars Ended D cember 31, (in Thousands Except Per Share Amounts) 1982 1981 1980 1979 1978 Operating Revenues $288,417 $297,931 $244,642 $185,801 $158,313 Consolidated Net income 18,941 12.437 8,990 8,488 8,199 Earnings Per Average Common Share 2.25 2.03 1.63 1.74 1.92 Cash Dividends Per Common Share 1.70- 1.60 1.60 1.60 1.60 Return on Average Common Equity 13.5 % 12.1 % 9.5 % 9.4 % 10.2 %

Total Assets 489,259 426,821 390,958 348,642 317,819 Capitalization:

Long-Term Debt 199,850 188,464 162,682 123,485 97,870 Redeemable Preferred Stock 34,457 19,906 20,199 5,607 5,921 Non-Redeemable Preferred Stock 15,079 15,079 15.079 15,079 15,079 Common Equity 140,973 109,875 95,424 93,765 85,842 Short-Term Debt 0 27.100 31,540 63,300 50,450

$390,359 $360,424 $324,924 $301,236 $255.162 1

f 4

w 12

. . . _ . . _ , . _ , .. ~ _ . _ . _ _ _ . _ . _ _ _ , - , _ . - _. .- _

Report of Management Auditors' Report to the Trusises of The management of Eastern Utilities Associates is Eastern Utilities Associates responsible for the consolidated financial statements We have examined the consolidated balance and related information included in this annual report. sheets and statements of capitalization of Eastern The financial statements are prepared in accordance Utilities Associates ar.d subsidiary companies as of with generally accepted accounting principles appli- December 31,1982 and 1981 and the related cable to rate-regulated utilities and include amounts consolidated statements of income, retained earnings based on the best estimates and judgments of and changes in financial position for each of the three management, giving appropriate consideration to years in the period ended December 31,1982. Our materiality. Financial information included elsewhere in examinations were made in accordance with generally the annual report is consistent with the financial accepted auditing standards and, accordingly, included statements. such tests of the accounting records and such other The Company maintains an accounting system and auditing procedures as we considered necessary in related system of internal controls which are designed the circumstances.

to provide reasonable assurance as to the reliability of in our opinion, the financial statements referred to financial records and the protection of assets. The above present fairly the consolidated financial position Company's staff of internal auditors conducts reviews to of Eastem Utilities Associates and subsidiary companies maintain the effectiveness of intemal control procedures, at December 31,1982 and 1981 and the consolidated Alexander Grant & Company, certified public results of their operations and changes in their financial accountants, are engaged to examine and express an position for each of the three years in the period ended opiqion on our financial statements. Their examinations December 31,1982 in conformity with generally include a review of internal controls to the extent accepted accounting principles applied on a required by generally accepted auditing standards. consistent basis.

The Audit Committee of the Board of Trustees, which consists solely of outside Trustees, meets with h management, internal auditors and Alexander Grant & Boston, Massachusetts Company to discuss auditing, internal controls and March 2,1983 financial reporting matters. The internal auditors and Alexander Grant & Company have free access to the Audit Committee without management present.

4 13

Management'a Discussion cnd An: lysis cf Financi:1 Condition cnd Result 3 cf Operctions Results of Operations 5.1 % and 1.5%, respectively, over previous years.

The System's financial performance in 1982 showed Residential sales increased 1.3% in 1982 and continued improvement over the performance of the past decreased 2.4% in 1981 over prior years; commercial two years. Consolidated Net income for 1982 increased sales decreased 1.0% in 1982 and were virtually 36.2% over 1981 and 1981 increased 38.3% over unchanged in 1981; industrial sales were 8.2% lower in 1980. Earnings per average common share of $2.25 in 1982 over 1981 and 0.8% lower in 1981 over 1980.

1982 increased 10.8% over 1981 while 1981 per share Sales to other electric utilities and others decreased earnings showed an increase of 24.5% over 1980. 14.5% in 1982 and increased 1.5% in 1981, respectively.

These changes include the effects of an increase in the During 1982 and 1981 approximately 78% of the average number of common shares outstanding during System's generating capacity was fueled by oil. System the periods. Operating Revenues include revenues fuel expense decreased $27.1 million or 16.5%in1982 subject to possible refund of approximately $12.9 over 1981 and 1981 increased $31.2 million or 23.5%

million. See Note i of Notes to Ccnsolidated Financial over 1980, in the face of slight decreases in kilowatthour Statements. sales. Purchased Power-Demand increased S4.4 million Operating Revenues in 1982 decreased $9.5 million in 1982 and S2.0 million in 1981 or 15.4% and 7.5%,

from 1981 while 1981 increased $53.3 million over 1980, respectively, over prior periods. Increases in other Virtually all of the 1982 decrease and approximately operation and maintenance expenses were primarily due 59% of the 1981 increase were due to significant to inflationary increases in the costs of labor, materials changes in fuel oil costs. The cost of fossil fuel is and services.

recovered through the operation of the adjusiment Depreciation and Amortization in 1982 and 1981 clauses which are designed to provide timely recovery increased $2.1 million in each year primarily as a result of such costs. The billing of higher wholesale and retail of increased amortization of costs related to cancelled rates of $12.1 million and $6.1 million, respectively in nuclear projects and increased depreciable plant.

1982 and $14.8 million and $6.4 million, respectively in The System experienced increases in the level of 1981 also affected the not change in revenues for those Allowance for Funds Used During Construction years. These higher rates were slightly offset by lower (AFUDC) (both equity and debt) totaling $3.2 million in

kilowatthour consumption by customers. 1982 and $2.8 million in 1981. AFUDC represents a Kilowatthour sales continue to be depressed as a non-cash element of income. The System's continuing result of generally weak economic conditions and expenditures for the construction of future generating continuing conservation efforts by customers. Total facilities has resulted in significant increases in the level kilowatthour sales during 1982 and 1981 have decreased of construction-work-in-progress balances to which the AFUDC rate is applied. AFUDC as a component of consolidated not income decreased from 110% in 1980 to 102% in 1981 and further decreased to 94% in 1982.

The inclusion in rate base during 1982 of a portion of construction work in progress limited the increase in AFUDC.

Increases in total interest expense are reflective of the System's continuing need to borrow funds, both long and short-term, to meet those cash requirements of its construction program which cannot be met with funds generated internally from operations.

Increases in long-term debt interest since 1980 reflect greater amounts of debt outstanding, mainly due to the permanent funding of short-term debt. (See Statement of Capitalization for details). Other Interest Expense decreased $3.3 million from 1981 and decreased $4.7 million in 1981 over 1980 primarily as a result of decreased levels of short-term borrowings.

The interest rates incurred during this period also reached historic levels.

14

inflation continues to be a significant element in the Current regulatory practices have permitted the operation of our System. The traditional use of a System to earn, on a subject to refund basis, a cash historical test period for retail rate making purposes return on only a portion of new generating facilities does not provide a reasonable opportunity for System under construction. Since the System expects its cash retail companies to actually earn their allowed return construction requirements to remain at current levels on invested capital. Accordingly, System retail through 1984, it wil! be required to raise large amounts companies have included requests for " attrition" or of permanent capital. Such capital is expected to be "crosion" adjustments in their rate filings and will raised through the issuance of additionallong-term continue to pursue these and other innovative concepts debt, preferred stock and common shares.

in an effort to bring actual earned returns closer to the The completion of approximately $108.7 million in level permitted by the regulatory agencies. See permanent financing during 1981 and 1982 has enabled

" Supplementary Information to Disclose the Effects of the System to end the year 1982 with no short-term Changing Prices" on page 25 for further financial bank borrowings, for the first time in more than 30 years.

information regarding the effects of inflation using The ability to maintain reduced levels of short-term rneasurement bases developed by the Financial borrowings will be dependent on the System's ability Accounting Standards Board. to sell additional amounts of permanent securities. The bility to raise the required amounts of permanent Financial Condition capal wW M contingent upon the ability of System The System is required to make substantial capital companMs b da,n i smasd rate mM m amoums expenditures in order to meet the needs of its existing customers and to meet the future requirements of w sa ed comage tests mqM for the issuance of bonds and preferred stock. In addition, these customers as well as new customers. As is higher earned returns on common equity will be required customary i,n the utility industry, cash construction to make Syctem securities more attractive to investors.

requirements in excess of internally generated funds are obtained through short-term borrowings which are ultimately funded with permanent capital. In 1982 intemally generated funds amounted to $12.7 million or 20.7% of the $61.2 million in cash construction requirements. The remaining cash construction requirements were funded with short-term bank borrowings, which have been permanently funded with the issuance of common shares in April,1982, bonds in June,1982 and common shares and preferred stock in December,1982 and, to a lesser degree, with funds received from the Dividend Reinvestment and Common Share Purchase Plan. In 1981 and 1980, the System's cash construction requirements were S41.7 million and

$25.0 million, respectively, and it was able to generate 22.5% and 4.5%, respectively, of such requirements with internally generated funds with the balance coming from short-term borrowings.

15

Erstern Utilities Associates and Subsidiary Companies Consolidated inc me Stat; ment Yests Ended December 31, (In Thousands Except Numbers of Shares and Per Share Amounts) 1982 1981 1980 Operating Revenues (A) (I) $ 288,417 $ 297,931 $ 244,642 Operating Expenses.

Fuel _ 137,308 164,367 133,120 -

Purchased Power-Demand (l) 32,732 28,362 26,383 Other Operation 40,156 35,128 31,204 Maintenance 7,852 7,144 6,416 Depreciation and Arnortization (A) 13,379 11,280 9,154 Taxes - Other Than income 14,143 14,358 13,560 Income and Deferred Taxes (A) (8) 11,551 8,458 690 Total Operating Expenses 257,121 269,097 220,527 Operating income 31,296 28,834 24.115 Equity in Earnings of Nuclear Generating Companies (A) 1,121 928 636 Allowance for Other Funds Uced During Construction (A) 6,657 4,955 2,298 Other income - Net 152 482 117 income Before Interest Charges 39,226 35,199 27,166 Interest Charges:

Interest on Long-Term Debt 23,760 19,552 11,955 Other Interest Expense 3,764 7,063 11,779 Allowance for Borrowed Funds Used During Construction (Credit) (A) (9,203) (7,736) (7,617)

Net Interest Charges 18,321 18,879 16,117 income After Interest Charges 20,905 16,320 11,049 Preferred Dividends of Subsidiaries 3,964 3,883 2,059 Consolidated Not income $ 16,941 $ 12,437 $ 8,990 Average Common Shares Outstanding 7,519,381 6,123,334 5,525,320 Consolidated Earnings Per Average Common Share $2.25 $2.03 $1.63 Dividends Per Common Share $1.70 $1.60 $1.60 Consolidated Retained Earnings Statement Years Ended December 31, (in Thousands) 1982 1981 1980 Consolidated Retained Earnings - Beginning of Year $26,137 $23,462 $23,291 Consolidated Net income 16,941 12,437 8,990 Total 43,078 35,899 32.281 Dividends Paid - EUA Common Shares 12,682 9,762 8,793 )

' Miscellaneous Adjustments 3 Consolidated Retained Earnings - End of Year (E) $30,396 $26,137 $23,462 16 The accompanying notes are an integral part of the financial statements.

I

Eastern Utilities Associates and Subsidiary Companies Consolid ted _ Statement cf Ch:nges in Fin:nci:1 Position Yzars Ended December 31,

_ (In Thousands) 1982 1981 1980 SOURCE OF FUNDS:

Internally Generated:

Income After interest Charges $ 20,905 S16,320 $11,049 l

Principal Non-Cash Charges (Credits) to locome:

Depreciation (A) 11,277 10,876 9,416 Amortizetion 3,223 1,376 309 Deferred Taxes (A) (B) 4,694 6,604 4,346 investment Tax Credits, Net (A) 5,565 1,016 (3,209)

Equity in Undistributed Earnings of Nuclear Gener ding Companies (500) (464) (16)

Allowance for Funds Used During Construction (Ai (15,860) (12,691) (9.915)

Funds from Operations 29,304 23,037 11,980 Less: Dividends Declared:

EUA Common Dividends (12,682) (9,762) (8,793)

Subsidiary Preferred Dividends (3,964) (3,883) (2,059)

Internally Generated Funds 12,658 9,392 1,128 External Sources:

Proceeds from Sale of Common Shares 26,975 11,908 1,668 Proceeds from Sale of Bonds 24,000 30.800 44,200 Proceeds from Sale of Preferred Stock 15,000 15,000 Proceeds from Repayment of Promissory Notes 585 Other - Net 1,833 171 289 Funds from External Sources 68,393 42,879 61,157 Total Source of Funds $ 81,051 $52,271 $62,285 APPLICATION OF FUNDS:

Construction Expenoitures $ 77,096 $54,436 $34,939 Less: Allowance for Funds Used During Construction (15,860) (12,691) (9,915)

Net Construction Expenditures 61,236 41,745 25,024 Decrease in Short-Term Notes Payable to Banks 27,100 4,440 31,760 Retirement of Long-Term Debt 5,000 5,000 Retirement of Preferred Stock 300 300 300 Purchase of Promissory Notes 360 225 Decrease in Working Capital (10,454) (2,105) (1,695)

Other Application - Net 2,869 2,531 1,671 Total Application of Funds $ 81,051 $52,271 $62,285 CHANGES IN COMPONENTS OF WORKING CAPITAL (Excluding Short-Term Debt, Current Deferred Taxes and Redeemable Preferred Stock Sinking Fund Requirement)

Cash

$ (809) $ 22 $ (1,102)

Accounts Receivable (4,546) (3,062) 14,528 i Materials and Supplies 3,152 (6,246) 2.414 Other Current Assets 56 (176) (165)

Accounts Payable (7,331) 9,669 (14,867)

Accrued Taxes (73) (312) (605)

Other Current Liabilities (2,232) (1,898)

(671)

Decrease in Working Capital $(10,454) $ (2,105) $ (1,695)

The accompanying notes are an integral part of the financial statements. 17

Eastarn Utilities Associates and Subsidiary Companies

' Consolidated B:l:n:o Sheet December 31, (in Thousands) 1982 1981 Assets Utility Plant and Other Investments:

Utility Plant (A) (H):

In Service $358 599 $348,255 Less Accumulated Provision for Depreciation (A) 117,396 110,163 Net Utility Plant in Service 241,203 238,092 Construction Work in Progress 172,057 109,348 Net Utility Plant 413,260 347,440 Nonutility Property- Net 903 903 Investments in Nuclear Generating Companies (A) 8,313 8,399 Other investments (at cost)' 69 69_

Total Utility Plant and Other investments 422,545 356.811 Current Assets:

Cash (G) 299 1,108 Accounts Receivab!e:

Customers. Less Allowance for Doubtful Accounts of $349,500 and $351,000, respectively 25,502 29,621 Accrued Unbilled Revenues (A) 5,810 6,391 Other 820 667 Materials and Supplies (at average cost):

9,090 6,206 J

Fuel i Plant Materials and Operating Supplies 5,578 5,311 4 Other Current Assets 271 446 Total Current Assets 47,370 49,750 Deferred Debits:

Unamortized Debt Expense 2,170 1,703 Extraordinary Property Losses 10,164 12,860

' Other Deferred Debits 7,010 _ 5,697 Total Deferred Debits 19,344 20,260 Total Assets _$489,259 $426,8_2_1, Liabilities and Capitalization Capitalization:

Common Equity . $140,973 $109,875

Non-Redeemable Preferred Stock of Subsidiaries 15,079 15.079 I Redeemable Preferred Stock of Subsidiaries 34,457 19,906 Long-Term Debt - Net 199,850 188,464

^

Total Capitalization 383,359 333,324 Current Uabilities:

Long-Term Debt Due Within One Year 13,996 i Notes Payable - Banks (G) 27,100 Accounts Payable 25,865 18,534

! Redeemable Preferred Stock Sinking Fund Requirement 268 178 Customer Deposits 1,880 1,792 Taxes Accrued (B) 3,541 3,467 Deferred Taxes (A) (B) 2,445 1,335 Interest Accrued 8,340 5,898 Other Current U$ilities 1,135 996 Total Current Liabilities 55,470 59,300 Deferred Credits:

j Unamortized investment Credit (A) 13,819 8,053 Other Deferred Credits 37

~

122 Total Deferred Credits 13,741 8,090 Accumulated Deferred Taxes (A) (B) 29,689 26,107 i Total Liabilities and Capitalization $489,259 $426,821 4

i 18 The accompany'ng notes are an integral part of the financhJ statements.

Eastern Utilities Associates and Subsidiary Companies Consolid;ted St;tement cf Capitaliz: tion December 31, I (Dottar Amounts in Thousands) 1982 1981 I Eastern Utilities Associates:

Common Shares:

$5 par value, authonzed 12,000,000 shares, outstanding 8.788,991 shares in 1982 and 6,664,560 shares in 1981 (C) $ 43,945 $ 33,323

' Other Paid-In Capital (C) 68,183 51,830 Common Shares Expense (1,551) (1,415)

Retained Earnings (E) 30,396 26,137 Total Common Equity 140,973 36.1 % 109,875 33.0 %

Preferred Stock of Subsidiaries:

Non-Redeemable Preferred (C):

Blackstone Valley Electric Company:

4.25%, $100 par value 35,000 sharest 3,500 3,500 5.60%, $100 par value 25,000 sharest 2,500 2,500 Premium 129 129 Eastem Edison Company:

4.64%, S100 par value 60.000 sharest 6,000 6,000 8.32%, $100 par value 30,000 sharest 3,000 3,000 Expense, Net of Premium (50) (50) 15,079 3.9 15,079 4.5 Redeemable Preferred (D):

Eastem Edison Company:

13.25%, $100 par value 150,000 sharest 15,000 13.60%, $100 par valuett 5,100 5,400

15.48%, $100 par value 150,000 sharest 15,000 15,000 Expense Net of Premium (329) (180)

Sinking Fund and Reacquired Shares (314) (314)

I 34,457 8.8 19,906 6.0 Long-Term Debt (F):

Eastern Utilities Associates:

Senior Notes 10% % due 1999 22,500 22,500 EUA Service Corporation:

Notes Payable (Various Maturities at Money Market rates) 1,400 Blackstone Valley Electric Company:

First Mortgage Bonds:

14% % due 1995 (Series A) 30,000 30,000 Eastern Edison Company:

First Mortgage and Collateral Trust Bonds:

3%% due 1983 6,800 6,800 7%% due 1983 (second series) 5,000 5,000 4%% due 1983 (third series) 2,196 2,196 3%% duc 1985 6,000 6,000 12% due 1985 (second series) 19,800 19,800 4%% dua 1987 3,000 3,000 4%% due 1988 3,000 3,000 14%% due 1990 15,000 15,000 l 17W% due 1991 30,000 30,000 16%% due 1992 24,000 4W% due 1993 5,000 5,000 6W% due 1997 7,000 7,000 l

8%% due 1999 5,000 5,000 7%% due 2002 8,000 8,000 j 8%% oue 2003 10,000 10,000 Note Fayable due 1985 (Prime X 105%) 10,000 10,000 Unamortized Premium 150 168 213,846 188,464 Less Portion Due Within One Year 13,996 Total 199,850 _5_1.2_

188,464 56.5 Total Capitalization $390,359 100.0 % $333,324 100.0 %

{ Authorized and outstanding.

{ l Authorized 60.000 shares. Outstanding $1,000 shares in 1982 and 54,000 shares in 1981.

The accompanying notes are an integral part of the financial statements. 19

Eastem Utmties Associates and Subsidiary Compar"es Notes To Con:olid:;ted Fin nci:1 Stitsmenta December 31,1982.1981 and 1980 (A) Summary of Significant Accounting Policies: that property at rates of 3% in 1975 and 3.5% since General: Eastem Utilities Associates (EUA) and 1975. The chsnge had the effect of increasing EUA Service Corporation (Service) are subject to the consolidated net income and earnings per common jurisdiction of the Securities and Exchange Commission share in 1980 by $1,238,000 and S0.22, respectively. Of under the Public Utility Holding Company Act of 1935 those amounts $974,000 and $0.18, respectively, relate and Service's accounts are maintained under the system to periods prior to 1980.

of accounts prescribed by that Act. The accounting Operating Revenues: Revenues are based on billing policies and practices of the retail subsidiaries, rates authorized by applicable Federal and state Blackstone Valley Electric Company (Blackstone) and regulatory commiscions. The retail subsidiaries follow Eastern Edison Company (Eastern Edison), and of the policy of accruing the estimated amount of unbilled Montaup Electric Company (Montaup) are subject to base rate revenues for electricity provided at the end of regulation by the Federal Energy Regulatory Commission the month to more closely match costs and revenues.

(FERC) and the respective state regulatory commissions in addition they also accrue unrecovered fuel costs.

- with respect to their rates and accounting. The retail Federal /ncome Taxes: The general policy of EUA subsidiaries and Montaup conform with generally and its subsidiaries with respect to accounting for accepted accounting principles, as applied in the case Federal income taxes is to reflect in income the of regulated public utilities, and conform with the estimated amount of taxes currently payable and to accounting requirements and rate-making practices of provide for deferred taxes on certain items subje^t to the regulatory authority having jurisdiction. timing differences to the extent permitted by the various Principles of Consolidation: The consolidated regulatory commissions. See Note B for details of major financial statements include the accounts of EUA and deferred tax items.

its subsidiaries (Blackstone, Eastern Edison, Montaup As permitted by the regulatory commissions it is the and Service). All material intercompany balances and policy of the subsidiaries to defer the annual investment transactions have been eliminated in consolidation. tax credits and to amortize these cred;ts over the Nuclear Generating Companies: Montaup follows productive lives of the related assets.

the equity method of accounting for its investments in Allowance for Funds Used During Construction:

four regional nuclear generating companies. Montaup's Allowance for funds used during construction (AFUDC) investments in those companies range from 2.50 to 4.50 (a non-cash item) is defined in the applicable regulatory percent. Montaup is entitled to electricity produced from system of accounts as "the net cost during the period of these facilities based on its ownership interests and is construction of borrowed funds used for construction billed pursuant to contractual agreements which are purposes and a reasonable rate upon other funds when approved by FERC. so used."

Utility Plant: Utility plant is stated at original cost. The combined rate used in calculating AFUDC was The cost of additions to utility plant includes contracted 14.00% in 1982 and 1981 and 14.50% in 1980. In work, direct labor and material, allocable overhead. accordance with rate orders, Eastern Edison and allowance for funds used during construction and Montaup provide deferred income taxes on the borrowed indirect charges for engineering and supervision. funds component of AFUDC.

Depreciation of Utility Plant: For financial statement purposes, depreciation is computed on the straight-line (B) income and Deferred Taxes:

Components of income and deferred tax expense method based on estimated usefullives of the various for the years 1982,1981 and 1980 are as follows:

classes of property, - - - - - - - - - - - --

Provisions for depreciation, on a consolidated basis.

(in Thousands) 1982 1981 1980

! were equivalent to a composite rate of approximately l 3.2% in 1982,1981 and 1980 based on the average Fe er depreciable property balances at the beginning and end of each year. Deferred 4,455 6.179 4 071 Investrnent Tax Credit, Net 5,778 958 (3 209) in February 1981, as a result of an order of the 10,668 7.646 219 l

Massachusetts Department of Pubic Utilities (MDPU)

Eastern Edison retroactively reduced the composite )

sta$rrent 645 387 196 depreciation rate on certair of its property from 3.5% Deferred 238 425 275 to 2.5% Eastem Edison had recorded depreciation on 883 812 471 l

Charged to Operat:cns 11,551 8 458 690 Charged to Other income 133 l Total $11,684 $ _8.458 5 690 i -- .-

l 20 i

L

Federal income tax expenso was less than the preferred stock is entitled to: Blackstone's 4.25%

amounts computed by applying Federal income tax issue, $104.40; Blackstone's 5.60% issue, $103.82; statutory rates to book income sub.iect to tax for the Eastern Edison's 4.64% issue, $102.98; Eastern following reasons: Edison's 8.32% issue, $107.70 prior to 10-1-83 and at reduced premiums in subsequent years.

(In Thousands) 1982 1981 1980 Under the terms and provisions of ine issues

_ _ _ of preferred stock of Blackstone and Eat, tern Federa! income Tax Computed at Edison, certain restrictions are placed upon the statutory nates $14,661 $11.243 $ 5.385 payment of d,vidends on common stock by each (Decr s s) Increases in Tax From: company, but at December 31,1982 and 1981 the (3,151) (2.583) (3353)

Overheads (101) (651) (277) respective capitalization ratios were in excess of Other (643) 157 (556) the minimum which would make these restrictions Federal Income Tax Expense $10,769 5 8.163 $ 693 effeClive.

(D) Redeemable Preferred Stock:

The provirion for deferred taxes resulting from Eastem Edison's 13.60%,15.48% and 13.25%

timing differences is comprised of the following: Preferred Stock issues are entitled to mandatory sinking

- - _ _ _ _ .- - - funds sufficient to redeer.13,000,6,000 and 7,500 (in Thousands) 1982 1981 1980 shares, respectively, during each twelve month period, commencing October 1,1980 in the case of the 13.60%

Excess Tax Depreciation S 1.282 $ 1.083 $ 1.151 issue, October 1,1985 in the case of the 15.48%

r

{,mp n99c0sj (1g) 9 (ig) (iy) issue and January 31,1989 in the case of the 13.25%

Unbdled Purchased Power Costs (1,702) (731) 1,864 issue. The redemption price, for each issue, is equal to Unbmed Fuel Costs 373 (235) the initial public offering price ($104.615, S101.50 fAFUDC 3

$Qnm#enl $ss and $100 respectively) plus accrued dividends. Eastern capaaiaed Overheads 481 Edison also has the non-cumulative option of redeeming Effect of state and Local Taxes 238 425 275 an additional 3,000,6.000 and 7,500 shares, respec-Other - Net _1 (5) __,8 Total $ 4,694 tively, during each period at such price, in the case of

$ 6.604 s_4.346 the 13.25% issue, if Eastem Edison does not exercise its option of redeeming an additional 7,500 shares, the At December 31,1982 unused investment tax holders of the preferred stock have the right to exercise credits of approximately $10,230,000 are available to such option.

reduce future Federal income tax liability. In the event of involuntary liquidation the redeemable (C) CrpitalStock: preferred stock of Eastem Edison is entitled to $100 The changes in the number of common shares p r share. In the event of voluntary hquidation, or if redeemed at the option of Eastern Edison, the 13.60%,

outstanding and the increases in other paid-in and 15.48% issues of redeemable preferred stock are capital during the years ended Decemtaer 31,1982, entitled to $114.82 and $116.98 prior to October 1,1985, 1981 and 1980 were as follows:

respectively; the 13.25% issue is entitled to S113.25 pri r to January 31,1984. The redemption premium

---% e cc- swa am.e reduces in subsequent years.

ndO1. The aggregate amount of redeemable preferred stock CL$7 M5 sinking fund requirements for each of the five years v,m, '"*iUS'" "sf w E.Nal following 1982 are: $314,000 in 1983 and 1984, and 1982 324,431 1,800,000 2,124,431 $16,352,501 ,

n N, M ad M 1981 180,926 900.000 1.080.92G 6.503.102 1980 144.665 144.665 945,056

, in the event of involuntary liquidation the non-i recieemable preferred stock of Blackstone and Eastern Edison is entitled to $100 per share. In the event of voluntary liquidation, or if redeemed at the option of those companies, the non-redeemable 21

(E) Retained Earnings: each of the five years following 1982 are: $13,996,000 Under the provisions of the Note Agreements dated in 1983, S6,125,000 in 1984, $31,925,000 in 1985, May 23,1979 relating to EUA's Senior Notes, Retained S4,125,000 in 1986 and S7,125,000 in 1987.

Eamings in the amount of $22,918,507 as of December 31,1982 and S18,659,347 as of December 31,1981 N) Unos of Cmdh EUA System Compan,es i had unused short-term lines were unrestricted as to the payment of cash dividends of credit with various banks of approximately S44,500,000 on EUA Common Shares. and S18,800.000 at December 31,1982 and 1981, Under the provisions of Eastern Edison's Indenture respectively. In accordance w,ith informal agreements securing its First Mortgage and Collateral Trust Bonds, Retained Earnings in the amount of $16,939,887 and with the variops banks commitment fees are required to maintain the lines of credit,

$13,999,668 as of December 31,1982 and 1981, respectively, were unrestricted as to the payment of (H) Jointly Owned Facilities:

cash dividends on its Common Stock. At Decemt.er 31,1982 Montaup owned the following Under the provisions of Blackstone's Indenture interests in jointly-owned electric generating facilities securing its First Mortgage Bonds, Retained Earnings (dollars in thousands):

in the amount of $2,289,220 and $1,756,778 as'of __ _

. December 31,1982 and 1981, respectively, were o......, u ,m2 unrestricted as to the payment of cash dividends on its - --- --

Common Stock, ,_ ,, ,, ge,t, cogon

"" * S* *'" ' " ' ' ' ' ' ' ' ' S* "'""

(F) Long-Term Debt:

Under terms of the Indenture securing its First Mortgage Cana! No. 2 50.0 % $G4,354 $15,587 $48,767 $ 108 and Collateral Trust Bonds, Eastem Edison is required Wyman to deposit annually with the indenture Trustee, cash in No. 4 1.96 3.953 469 3,484 an amount equal to 1% of the greatest aggregate Sa principal amount of bonds previously authenticated and and 2 2.90 62 5 57 74,972 delivered. ]Sy 4.01 75,706 Eastem Edison has satisfied sinking fund requirements for 1982 and 1981 under alternate provisions of the The foregoing amounts represent Montaup's interest Indenture by certifying to the Indenture Trustee in each facility. Financing for all such interest is available property additions' and Eastern Edison rovided by Montaup. Montaup's share of related expects to continue such practice during 1983. o erating and maintenance expenses is included in its The First Mortgage and Collateral Trust Ronds of corresponding operating expenses.

Eastern Edison are collateralized by securities of Monthup in the principal amount of $233,103,000. In (1) Commitments and Contingencies:

addition, the First Mortgage and Collateral Trust Bonds The System companies have leases covering certain of Eastem Edison are secured by substantially all of facilities and equipment. Total rental expense for these its utility plant. leases for the years 1982,1981 and 1980 amounted to Under terms of its First Mortgage Indenture and approximately S1,781,000, $1,590,000 and $1,233,000,

. Deed of Trust. Blackstone is required to deposit annually respectively.

! with the Trustee, cash in an amount equal to 2.25% All of the System companies' leases are treated as i- of the average gross investment in depreciable property. operating leases for rate making purposes and have

Blackstone has satisfied sinking fund requirements been accounted for as such; however, certain lease

! for 1982 under altemate provisions of the Indenture by agreements meet the criteria requiring capitalization as certifying to the Trustee "available property additions" set forth in the Statement of Financial Accounting i and Blackstone expects to continue such practice Standards No.13. If such leases were capitalized, the

, duiing 1983. amounts thereof would not have a matenai effect on

. Blackstone's First Mortgage Bonds Series A, due assets, liabilities, or related expenses.

- 1995 are secured by substantially all of its utility plant. Future minimum rental payments at December 31,

- The aggregate amount of EUA System cash sinking 1982 for such leases are estimated to aggregate )

fund requirements and maturities for long-term debt for $1,729,000 in 1983, $1,691,000 in 1984, S1,599,000 in 1985, S1,459,000 in 1986, $953,000 in 1987 and

$3,015,000 for years after 1987.

The EUA System Companies participate in a pension i plan covering substantially all of their employees. The

'- total pension expense charged to operations, which includes amortization of past service costs over 20 22

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

o

m j

-+ g, t;

years, amounted to approximately S1,942,000, 28% PSNH s offer to other utMit of an cenership -

$1,640.000 and $2.067,000 for the years ended 1982, interest of approximately 7% received no substantial 19d1 and 1980, respectively. The EUA System responses.

Companies make annual contributions to the plan equal Montaup is unable to predict whether any other action to the amounts accrued for pension expense. The will be ordered by tne New Hambhire Public Utilities accumulated plan benefits and plan net assets for the Commission or what effect such action, ci the financing Employees' Retirement Plan of Eastern Utilities Asso- difficuities of PSNH, may have on the cost'or completion ciates and its Subsidiary Companies is presented befow. of the Seabrook Units or on Montaup.

FERC permitted Montaup to commenc,e billing of a January 1, January 1, $10.5 milli 6n wholesale rate increase on a subject to -

On Thcusands) 1982 1981 refund basis effective November 5,1981. Fart of this

-- -- increase relatos to the amortization of a portion of the Actuarial Present Vafue of Accumulated loss incurred with respect to the cancellation of the Plan Benefits: Pilgrim No. 2 nuclear generating unit. In December, 8 8 NnYested 1981 the MDPU ordered Eastern Edison to delay billing

$25,962 'S23'566 its portion of the Monfaup charges relating to the

-=

tJarket Value of Net Assets Avaitable Pilgrirn cancellation. .

for Benefits $32,289

~'

$30,642

'~

Eastern Edison complied with the MDPU order but appealed the order to the Massachusetts Supreche The assumed rate of return used in determining the Judicial Court on be contention that the MDPU lacks authonty to order Eastern Edison not to bill a Federally actuarial present value of the accumulated plan approved rate. In June 1982, the MDPU issued an order

. benefits was 8.0% for 1982 and 1981.

The EUA System is committed under long-term permitting Eastern Edison to recover approximately purchase power contracts, expiring on various dates se cogs assdad 2 N R@m M 2 through the year 2002, to pay demand charges whether writegff. Eastem Edison also appealed th,is order, or not energy is received. Under terms in effect at asserting its right to recover a!I of such costs. Unti'such time as the appeal is decided, Eastem Edison, as December 31,1982 the aggregate annual rninimum permitted by the MDPU order, w'll accumulate the -

commitments for such contracts is approximately i

2

$35,356,000 in 1983,1984 and 1985, $32,404,000 in disallowed portion of such costs in a deferred account. .

- 1986, $31,943,000 in 1987 and will aggregate At December 31,1982 approximately $12.9 million .

$366.933,000 for years after 1987. In addition, the of Montaup's revenue was subject to possible refund. '

EUA System is required to pay additional amounts Of this amcunt S11.7 million andEdison

$1.2 million relate to ;d-depending on the actual amount of energy received 1982 and 1981, respectively, Eastem has delaje under such contracts. The demand costs associated with billing approximately 50.6 million and S0.2 miltron in those years,under the MDPU order.

these contracts are reflected as Purchased Power-ontaup arid the other stockholders of Vermont Demand on the Consolidated income Statement. ,

The EUA System's construction program is estimated Yankee Nuoiear Power Corporation have guaranteed at $104,000,000 for the year 1983 and S359,100,000 for their respective pro rata shares (2.5% in the case-of -

the years 1983 through 1987 (including allowance for d of a SMO,%0 numaduginandng. M funds used during construction). addnion/Montaup along with the other stockholders of m Montaup has a 2.90% ownership interest in each of Connecticut Yenkee Atomic Po$ver Company hwe the two 1150 megawatt nuclear generating units being guaran!eed their respective pro, REM shares (4.5% in cas of MontauM N a W M i d cmW of up to constructed in Seabrook, New Ha:,1pshire, by the lead participant, Public Service Company of New Hampshire 50,000,000 and a debenture bond !ssue _of 550,000,000.

The ptoceeds of the debentures were used ,n i part toe (PSNH). All of the necessary stato and Federal regulatory ,

approvals for the construction of the units have been repay subordinated notes purchased by Montaup and obtained. One court appeal from Federal regulatory o ctsholders pursuant to an interim fmanc,ag approvals is still pending and further appeals are ""9***

possible. PSNH's original 50% share of the Seabrook Units has been reduced to 35% The New Hampshire , ,

Public Utilities Commission has ordered PSNH to '

reduce its ownership share in the Seabrook Units to y '

A 23 y - ,..m,.- _

y - v - , , . - . - - , , ,- p- _.--, - _ _ . _ - --.-.,.-,--y_,---p - - - - , - -

P

. jl -- ' t . . :y & 7 -

s  ;- ..;

E -

4I asterMities Atsociates and Subsidiari Coiepanbs Cuarkely'FinIncislyand Common;Gharef infermdi n

-(Unaudd ) s ..g .

^1

~'

s .g. --,- ,

, , '.u .L * ' .

.J - -.k , . - . - - - . . - _ - _ _

f . .

Earnings

Common Share

,~ income After ate Avefage Mafket Price

. Operahng Operating Intemst Net Common Dividends ,

, R,every s income ~ Charged Inonme Share Paid High Low tho'usahds

[,,i N For the quartss .

'7- < ended 1982: ,' '

' March 31 . . . . . . . . s $80,363 S8.373 . 55,593 S4,633 S0.69 $0 425 12 % 11 June 30 . . . . .h . , .3 564.3M 57.037 S4.2 72 . $3.314 S0.43 S0.425 13 % 12

• September 30 . . 568 OG4 S7,944 S5.270 S4s12- 50.56 S0.425 13 % 11 %

December 31. . . '. S75,/16 $7.912 - 55,770 $4,882 50.58 S0.425 14Y- 13 7For the quarters t- ended 1981:

M March 31 T. I.77,871 $3190 $4.644 S3,S67 S0.65 $0.40 12 % 10 %

/-

1 . .

' June 30 . . . . . . . s , < 573,013 S7,016 S3,619F ' S2,645 ' 50.47 S0.40 12 % 10 %

, September 20 . . . ' SS9.467 $6.816 S3.842 $2,874 ' S0.44 S0.40 11 % 10%

i December 31 . . 578MCs 56,806 54,215 $3,251 $0.49 $0.40 11 % 10 %

The common shreres of Eastern Ut.lities Associates are listed or) the New York Stock Exchange and the ticker symboMs "EUA" i;hegpproximate number of Common Shareholders of record on February 1,1983 was 23,900.

DiMend Reinv sin ent'and Common Share Purchas.e Plan

m,. -. = -. -

s A Divide'nd Reinvestmont and Coniraon: Share Purchase to $750 annually (S1,500 on a joint return) of qualified k- Plin is available to all registered' shareholders and reinvested dividends.

- Systeyn company pmployeqs., .

The-investment Date for all shares purchased under Parti.cipa'nts inthe Pion'are p!ven a 5% discount on the Pian is the dividend payment date for the months in

' shares po? chase &ui:h r$nvespd dividends. Participants which dividends are payable. For each month in which t

may eisound in gdgitional cat h payments as frequently a dividend b not payable the investment Date is the 15th as once a mown to p wchase additional shares with no of 'such month. The price of shares purchased is based discount. Optional cash payments are limited to a maxi- on the average closing prices of EUA shares for the five mua br$5,000 p'er calendar cuarter and must be trading days preceding each investment date.

received r>01 law thin the 5th day preceding the In- Completg details regarding the Plan may be obtained jestment Dat9. , by writing: .

- The Econor6.cecovery Tax Act of 1981 made certain The First National Bank of Boston

< tax tenefits avail' abl 3 beginning in 1982 to, individual EUA Automatic Dividend Reinvestment Plan 4 - shurnholders who reinvest their dividends under EUA's P.O. Box,1681 Plan. Individual sharehoicers are eliO !de to exclude Boston Mass.02105

, f(om thbir;in,come, for Federal inco6ie tax purposes, up ,

+ -

3- - ,

Transfer Agent Trustee The First National Sink 01 Boston State Srfeet Bank and Trust Company F.O. Box C44 225 Franklin Street Boston, Mass. 02102 Boston, Mass. 02110

, (Common and Preferred Shares) ,

(Bonds of all series)

L -

l r

s

, (

~9

• 24 \

_. ~

? . .-

jm. : _ ._., - . _ . _ _ . _ _

.. . - - - = - -- _ _ _ . -

Eastern .Utmt:es Associates and Subsidiary Companies -

'(Cupp% ment:ry inf:rm ti:n To Discidss'Tha. Effects of Ch nging Prices

~\

(Unaudited) - 3 d '

9

-p ,

N h The following supplementary information lisupplied in , Mhe current cost of utility plant, compris ng all plant accordance with the requirements of the Statement of3 in arvin, construction work in progress and plant held

^

r inancial Accounting StandJrds No. 33 for the purpose 16r future use, represents the estimated cost of replacing of providing certain inforrr.aiidn about the effects of f , existing piant assets and was pt;marily determined by changing prices. It should oc viewed as an estimate of . indexirig 'he surviving plant by the Handy-Whitman

- the approximate effect of inflation, rather than a precise Indcu of Public Utility Construction Costs.

measure, since a number of subjective judgments and Tl:e current year's provision for depreciation or a con-

- estimating techniques were used in developing this star / dollar and current cost basis was computed by information, s applymg the current depreciation rates to the respective Constant dollar amounto represent historical costs indexed plant amounts, stated in terms of dollers ral oqual purchasing power, as Fuel inventories, the cost of fuel used in generation, measured by the Consume'r PrMe Index for all Urban and purchast.d power for resale have not been restated Consumem Co'trent cost amouhts reflect the changes in frorn their historical cost. Regulation lim:ts the recovery

, specific prices from the date the plant was acquired to . of fuel and purchased power costs through the operation the present, and differ from constant dollar amounts to of adjustment clauses. For this reason fuelinventories the extent that specific prices have increased more or are effectively monetary assets.

less rapidly than prices in general,

.C nsolidated Statement of Income From Continuing Operations -

Adjust:d For Changing Prices '

For the year ended December 31,1_082 Constant Current Dollar Cost Histoucal Average Average Cost 1982 Dollars 1982 Doliars (Thcusands of Dollars)

Operating Revenues $288,417 $288,417 $288,417 Fuel and Purchased Power Expense 170,040 170,040 170,040

, Other Operating and Maintenance Expenses 48,008 48,008 48,008 Depreciation and Amortization 13,379 29,098 34,788 Taxes Other Than income - 14,143 14,143 14,143 Income Taxes ;i 11,551 11,551 11,551 Interest Charges - Net s 18.321 18,321 18,321 l Other (Income) and Deductions - Net (7,930) (7,930) (7,930) 267,512 283,231 288.921

' Income (Loss) From Continuing Operations (excluding adjustment to net recoserable cost) $ 20.9_05 S _5,186*

$_ (504)

! Increase in SpeciSc Prices of Utility Plant Held During the Year * * $ $ 14,841 Adjustment to Net Recoverable Cost 1,469 23,722 Effect of increases in General Price Level J1,404)

Excess'of increne in General Price Level Over increase in Gpecific Prices After Reduction to Ilet Racoverable Cost 7,159 Gain Frcai Deckne in Purchasing Power of Net Arrounts Owed 7,970 7.970 NE I' 1

.S-9,43- .9. $_1_5.,129

• Including the adjustment to net recoverable cost, income from continuing opera-tions on a constant do!!ar basis would have been $6.655.

~ ** At December 31, 1982. the current cost of net utility p! ant was $862.348 while

, historical cost or net cost recoverable through depreciation was $413.260.

3

+

25 a s

--s+., -- - J. ., ._ - . . _

. . . _ ;/ - ~ _ _ _ _ . . _ . . _ _ . - _ . _ , -._--~_-._--m-

As prescribed in Financial Accounting Standard No. ment should be offset by the gain from the decline in 33, income taxes were not adjusted. purchasing power of net amounts owed. During a period Under the rate-making prescribed by the regulatory of inflation, holders of monetary assets suffer a loss of commissions to which the System companies are sub- general purchasing power while holders of monetary ject, only the historical cost of plant is recoverable in liabilities experience a gain. The gain from the decline

, revenues as depreciation. Therefore, the excess of the in purchasing power of net amounts owed is primarily cost of plant siated in terms of constant dollars that attributable to the substantial amount of debt which has exceeds the historical cost of plant is not presently been used to finance property, plant, and equipment.

recoverable in rates as depreciation, and is reflected as Since the depreciation on this plant is limited to the a reduction to net recoverable cost. To properly reflect recovery of historical costs, the System companies do the economics of rate regulation in the Statement of not have the opportunity to realize a holding gain on debt income from Continuing Operations, the reduction to and are limited to recovery only of the embedded cost not recoverable cost of net property, plant, and equip. of debt capital.

Five Year Summary of Selected Financial Data Adjusted for the Effects of Changing Prices Years Ended December 31, 1982 1981 1980 1979 1978 i (In Thousands of Average 1982 Dollars)

Operatieg Revenues $288,417 $316,254 $286,573 $247,079 $234.229 Historical Cost Information Adjusted For Generalinflation income (Loss) From Continuing Operations Excluding Adjustment To Net .

Recoverable Cost 5,188 2,178 1,944 6,719 income (Loss) Per Common Share After Preferred Dividend Requirements and Excluding Adjustment To Net Recoverable Cost 0.18 (0.32) (0.08) 0.93 Net Assets At Year-End At Not Recoverable Cost 188,358 148.798 146,229 144,545 Current Cost information income (Loss) From Continuing Operations Excluding Adjustment To Net Recoverable Cost (504) (2,846) (1,643) 1,336 income (Loss) Per Common Share After Preferred Dividend Requirements and Excluding Adjustment To Net Recoverable Cost (0.59) (1,14) (0.73) (0.17)

Excess Of increase in General Pnce Level Over increase in Specific Prices After Adjustment To Net Recoverable Cost (7,159) 5,269 23.274 25,219 Net Assets At Year-End At Net Recoverable Cost 188,358 148,798 146.229 144,545 Cenerallnformation Gain From Decline in Purchasing Power Of Net Amounts Owed 7,970 17,676 23,370 25,206 Cash Dividends Paid Per Common Share 1.70 1.70 1.88 2.12 2.37 Market Price Per Common Share At Year End 14.13 12.08 13.04 15.63 21.08 )

Average Consumer Price Index 289.1 272.4 246.8 217.4 195.4 l

[

l I

< es

E: stern Utilities Associates and Subsidiary Companies Consolid ted Cper ting St:tistiaa 1982 1981 1980 1979 1978 1977 1972 Energ/ Generated and Purchased (miliions kwh):

Generated - by EUA System 738 940 1.041 792 600 667 1,865

-by Equity-Owned Nuclear Units 661 869 393 479 530 490 250

-by Jointly-Owned Units 1.632 1,784 1.746 1.793 1.865 1,599 -

Interchange with NEPOOL (49) (240) (263) (600) (620) (284) 301 Purchased Power-Unit Power 867 915 1.411 1,649 1,490 1,381 1.210 Total Generated and Purchased _ _4,049 _ 4,268 _ _ _4.333 _ 4.115 .

. 3 925 3 853 ,36(6 Operating Revenues (thousands):

Residential 3 97,161 $ 94,217 $ 79.357 $ 63,394 $ 55.731 $ 56.302 $ 29.687 Commercial 83,519 82,515 67.377 53,012 46.976 45.159 18.104 Industrial 56,468 60.486 48,931 38,192 32,440 30.201 15,472 Oscr Electric Utiht;es 18,289 22,770 18.183 12.435 10.220 11.418 5.930 Other 10,761 9 081 7 886 7102 7.505 7.657 3.165 Total Primary Sates Revenues 266,198 269,039 221,734 174.535 152.872 150,739 72.353 Unit Contracts 22,219 28 0G2 22.908 11 266 5.441 0.961 600 Total Operating Revenues $297,931 $244.24? $185 801 $, 72,958

$288.4_17

$158 713 $157.700 h % dee._ ..e4+ .iw . - _ . -m . _m+.-wm-. - _ - - ,m m- _._-___-.# - . , , . - ,-

Erergy Sates (mnlions kwh):

Residential 1,137 1,122 1,149 1,150 1,123 1,119 1,011 Commercial 1,044 1.055 1,058 1.052 1.011 998 694 Industrial 772 841 848 853 815 788 833 Other Electnc Utihties 365 431 420 399 403 399 461 Other 36 38 42 44 49 48 42 Total Primary Safes 3,354 3.487 3.517 3.503 3.401 3.352 3.041 Losses and Company Use 206 196 230 226 290 246 267 Total System Rcqurrements 3,560 3.683 3,747 3,729 3.691 3,598 3.303 Unit Contracts 489 585 583 38G 234 255 318 Total Energy Sales 4,049 4.268 4.333 4.115 3.925 3.853 3.626 Number of Customers at December 31:

Residential 207,702 205 894 204.221 201,435 198.910 199.063 189.073 Commercial 21,133 20,732 20.380 20.073 19.781 21.501 19.564 Industnal 1,210 1,213 1.219 1,222 1.213 1.513 1,865 Other Electnc Ut.htres 18 14 17 16 15 16 12 Other 31 34 30 150 171 222 245 Total Customers 230,094 _227,887 _225 867_ ..222.596 220.090 210 759 222.3_15 Average Revenue per Resident.al Customer ($) 468 458 389 315 280 283 157 Average Uso per Resident at Customer (kAh) 5,474 5.449 5.626 5,708 5.646 5.621 5.347 Average Hevenue per kwh:

Hesidential 8,55c 8 40c 6.91 c 5.52c 4.96c 5 03c 2.94 c Commerciat 7,99g 7.82c 6.37c 5.04 c 4.65c 4.53c 2.61 c Industrial 7.31# 7.20c 5.77c 4.44c 3.98 c 3.83c 1.86c 27

Eastern UtAties Associates and Subsidiary Companies Consolidated Cper; ting Stati; tics - General 1982 1981 1980 1979 1978 1977 1972 Capitalization:

' (thousands)

Mortgage Bonds (Net) $185,950 $155.964 $125,182 $ 80.985 $ 81.203 $ 83.658 $ 68.740 Other Long Term Debt 33,900 32.500 37,500 42.500 16.667 35.000 10.200 Totat Long. Term Debt 199,850 188.464 162,682 123.485 97.870 118.658 78.940 Preferred Stock 49,538 34.985 35.278' 20,686 21,000 21,000 12.175 Common Equity 140,973 109.875 95.424 93.765 85.842 75.417 51.303 Total Capitalization _$390,359 $333.324 $293,384, $237.936 $204.712_ $215.075 $142.41_8 Common Shares Data:

Earnings Per Share ($) 2.25 2.03 1.63 1.74 1.92 1.50 1.97 Dividends Per Share ($) 1.70 1.60 1.60 1 60 1.60 1.60 1.50 Payout (%) 75.8 78.8 98.2 92.0 83.3 106.7 76 1 i Average Common Shares Outstanding 7,519,381 6,123.334 5.525.320 4.871.667 4.266.921 3,970.459 2.784.945 Book Value Per Share ($) 18.04 16.49 17.09 17.24 17.75 17.82 18.42

,. Percent Earned On Average Common Eqwty(%) 13.5 12.1 95 9.4 10.2 8.5 10.8 i Market Prices ($):

High 14 % 12 % 13 % 15% 17 19 % 23 %

Low 11 10 % 10 % 11 % 14 % 16 % 19 %

,' Miscellaneous;

installed Capability - MW 927 927 940 996 1.005 988 820 Less

Unit Contract Sales - MW 70_ 80 _ _88 88 3_6_ 49 13 System Capability - MW 857 847 852 908 969 939 792

System Peak Demand - MW 860 661 695 677 666 668 612 Reserve Margin (%) 28.0 28.1 22.7 34.1 44.2 40.6 25.3

! System Load Factor (%) 59.8 63 6 61.5 62.8 62.7 61.5 59.7

{ Sources of Energy (%):

Nuclear 22.2 20 0 17.0 21.9 22.0 18.7 10.6 Fossil 77.8 79.4 83.0 78.1 78 0 81.3 89.4

Cost of Fuel (Mills Per kwh)

! Fossif (Oil) 41.5 47.0 35.3 25.1 18.1 21.5 6.2 Nuclear 8.3 5.4 4.9 35 3.0 2.4 3.3

All Fuela Combined 34.1 39.0 30.8 19.6 14 3 17.5 5.9 t

l I

l l

i I

l l

l I

Annual Meeting The 1983 Annual Share-holders Meeting will be held l

on Monday, April 25,1983 i at 10 a.m. in the Board Roorn on the 33rd Floor at State Street Bank and Trust Company,225 Franklin 28 Street, Boston, Mass.

Trustees Ass:cisti:n Offic:rs .

Cliv:r F. Ames (A,F) John F. G. Eich:rn, Jr.

Director, Fiduciary Trust Company, arid President and private trustee, Boston. Chief Executive Officer Srmu:1 C. Brown (A,P) Robert E. Maguire Consultant, Massachusetts Health and Executive Vice President Educational Facilities Authority, Boston. Donald G. Pardus Vice President, Treasurer and R:bert 1. Dexter (C F)

President. Abington Mutual Fire Chief Financial Officer Insurance Company, Abington, Massachusetts. Arthur A. Hatch J;hn F.G. Eichorn, Jr. V:ce President President and Chief Executive Officer of the Robert P. Tassinari Association. Vice President P;t:r B. Freeman (A,P) Richard M. Bums Business and financial consultant Comptroller Providence, Rhode island.

William F. O'Connor N: thin H. Garrick, Jr. (F) Secretary Retired R;bert E. Maguire i Executive Vice President of the Association.

W:slIy W. Marple, Jr. (P)

, Professor of Finance, Northeastern University, Boston.

D:n:Id G. pardus Vice President, Treasurer and Chief Financial Officer of the Association.

M:rgir:t M. Stapleton (C)

Second Vice President, John Hancock Mutual Life Insurance Coropany, Boston.

D. RIld Weedon, Jr. (C.F)

Senior Vice President, Arthur D. Little, Inc.

Cambridge, Massachusetts.

A-Indicates member of Audit Committee

, C-Indicates member of Compensation and Nominating Committee

~

~ " ' " ~ ~

, F-Indicates member of Finance Committee ,ay m w : m l P-Indicates member of Pension Trust Committee  : r2 Territoeles sernd at retail 1

A

. - , _ c,

1. l

~W 1

j-  :::"

I t

=-

(

\ \'

i.

' (#

EUA System Territory

.-_