FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBERDecember 31, 19961999
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission Registrant; State of Incorporation; I.R.SI.R.S. Employer
File Number Address; and Telephone Number Identification No.
- ----------- ----------------------------------- ------------------
1-5324 NORTHEAST UTILITIES 04-2147929
(a Massachusetts voluntary assocation)
174 BRUSH HILL AVENUE
WEST SPRINGFIELD, MASSACHUSETTSBrush Hill Avenue
West Springfield, Massachusetts 01090-2010
Telephone: (413) 785-5871
0-11419 THE CONNECTICUT LIGHT AND POWER COMPANY 06-0303850
(a Connecticut corporation)
SELDEN STREET
BERLIN, CONNECTICUT107 Selden Street
Berlin, Connecticut 06037-1616
Telephone: (860) 665-5000
1-6392 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 02-0181050
(a New Hampshire corporation)
1000 ELM STREET
MANCHESTER, NEW HAMPSHIREElm Street
Manchester, New Hampshire 03105-0330
Telephone: (603) 669-4000
0-7624 WESTERN MASSACHUSETTS ELECTRIC COMPANY 04-1961130
(a Massachusetts corporation)
174 BRUSH HILL AVENUE
WEST SPRINGFIELD, MASSACHUSETTSBrush Hill Avenue
West Springfield, Massachusetts 01090-2010
Telephone: (413) 785-5871
33-43508 NORTH ATLANTIC ENERGY CORPORATION 06-1339460
(a New Hampshire corporation)
1000 ELM STREET
MANCHESTER, NEW HAMPSHIREElm Street
Manchester, New Hampshire 03105-0330
Telephone: (603) 669-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Each Class on Which Registered
NORTHEAST UTILITIES- ---------- ------------------- ---------------------
Northeast Utilities Common Shares,$5.00 par New York Stock Exchange,Inc.
$5.00 par value
THE CONNECTICUT LIGHTThe Connecticut 9.3% Cumulative Monthly New York Stock Exchange,Inc.
AND POWER COMPANYLight and Power Monthly Income
Company Preferred Securities Series A(1)A (1)
(1) Issued by CL&P Capital, L.P., a wholly owned subsidiary of The Connecticut
Light and Power Company ("CL&P"), and guaranteed by CL&P.
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Each Class
NORTHEAST UTILITIES Common Share Warrants, no par value,
exercisable at $24 per share
THE CONNECTICUT LIGHT AND- ---------- -------------------
The Connecticut Light and Preferred Stock, par value $50.00 per share,
POWER COMPANYPower Company issuable in series, of which the following series
are outstanding:
$1.90 Series of 1947 4.96% Series of 1958
$2.00 Series of 1947 4.50% Series of 1963
$2.04 Series of 1949 5.28% Series of 1967
$2.20 Series of 1949 6.56% Series of 1968
3.90% Series of 1949 $3.24 Series G of 1968
$2.06 Series E of 1954 7.23% Series of 1992
$2.09 Series F of 1955 5.30% Series of 1993
4.50% Series of 1956
PUBLIC SERVICE COMPANYPublic Service Company Preferred Stock, par value $25.00 per share,
OF NEW HAMPSHIREof New Hampshire issuable in series, of which the following series
areis outstanding:
10.60% Series A of 1991
WESTERN MASSACHUSETTSWestern Massachusetts Preferred Stock, par value $100.00 per share,
ELECTRIC COMPANYElectric Company issuable in series, of which the following series
is outstanding:
7.72% Series B of 1971
Class A Preferred Stock, par value $25.00 per
share, issuable in series, of which the following
series areis outstanding:
7.60% Series of 1987
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
YESYes X NONo
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ][X]
The aggregate market value of NORTHEAST UTILITIES'Northeast Utilities' Common Share, $5.00 Par
Value, held by nonaffiliates, was $1,410,859,795$2,584,522,278 based on a closing sales
price of $10.37$18.815 per share for the 136,052,050137,383,244 common shares outstanding on
February 28, 1997. NORTHEAST UTILITIES29, 2000. Northeast Utilities holds all of the 12,222,930 shares,
1,000 shares, 1,072,471 shares and 1,000 shares of the outstanding common
stock of THE CONNECTICUT LIGHT AND POWER COMPANY, PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE, WESTERN MASSACHUSETTS ELECTRIC COMPANY,The Connecticut Light and NORTH ATLANTIC ENERGY
CORPORATION,Power Company, Public Service Company of
New Hampshire, Western Massachusetts Electric Company, and North Atlantic
Energy Corporation, respectively.
Documents Incorporated by Reference:
Part of Form 10-K
into Which Document
Description is Incorporated
- ----------- -------------------
Portions of Annual Reports to Shareholders of
the following companies for the year ended
December 31, 1996:1999:
Northeast Utilities Part II
The Connecticut Light and Power Company Part II
Public Service Company of New Hampshire Part II
Western Massachusetts Electric Company Part II
North Atlantic Energy Corporation Part II
Portions of the Northeast Utilities Proxy
Statement dated March 31, 2000 Part III
dated April 30, 1997.
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms that
are found throughout this report:
COMPANIES
NU ...........................NU................................... Northeast Utilities
CL&P..........................&P................................. The Connecticut Light and Power Company
Charter Oak or COE............COE................... Charter Oak Energy, Inc.
WMECO.........................WMECO................................ Western Massachusetts Electric Company
HWP............................HolyokeHWP.................................. Holyoke Water Power Company
NUSCO or the Service Company..Company......... Northeast Utilities Service Company
NNECO.........................NNECO................................ Northeast Nuclear Energy Company
NAEC..........................NAEC................................. North Atlantic Energy Corporation
NAESCO or North Atlantic......Atlantic............. North Atlantic Energy Service Corporation
PSNH..........................PSNH................................. Public Service Company of New Hampshire
RRR...........................RRR.................................. The Rocky River Realty Company
Select Energy........................ Select Energy, Partners............... NUSCO Energy Partners, Inc.
Mode 1........................1............................... Mode 1 Communications, Inc.
HEC...........................HEC.................................. HEC Inc.
Quinnehtuk....................Quinnehtuk........................... The Quinnehtuk Company
the System....................The NU system........................ The Northeast Utilities System
CYAPC.........................CYAPC................................ Connecticut Yankee Atomic Power Company
MYAPC.........................MYAPC................................ Maine Yankee Atomic Power Company
VYNPC.........................VYNPC................................ Vermont Yankee Nuclear Power Corporation
YAEC..........................YAEC................................. Yankee Atomic Electric Company
theThe Yankee Companies..........Companies................. CYAPC, MYAPC, VYNPC, and YAEC
GENERATING UNITS
Millstone 1...................1.......................... Millstone Unit No. 1, a 660-MW660 MW nuclear
generating
unit completed in 1970
Millstone 2...................2.......................... Millstone Unit No. 2, an 870-MW870 MW nuclear
electric generating unit completed
in 1975
Millstone 3...................3.......................... Millstone Unit No. 3, a 1,154-MW1,154 MW nuclear
electric generating unit completed
in 1986
Seabrook or Seabrook 1........1............... Seabrook Unit No. 1, a 1,148-MW1,148 MW nuclear
electric generating unit completed
in 1986. Seabrook 1 went into service
in 1990.
REGULATORS
DOE...........................DOE.................................. U.S. Department of Energy
DPU...........................DTE.................................. Massachusetts Department of
Public Utilities
DPUC..........................Telecommunications and Energy
DPUC................................. Connecticut Department of Public Utility
Control
MDEP..........................MDEP................................. Massachusetts Department of Environmental
Protection
CDEP..........................CDEP................................. Connecticut Department of Environmental
Protection
EPA...........................EPA.................................. U.S. Environmental Protection Agency
FERC..........................FERC................................. Federal Energy Regulatory Commission
NHDES.........................NHDES................................ New Hampshire Department of Environmental
Services
NHPUC.........................NHPUC................................ New Hampshire Public Utilities Commission
NRC...........................NRC.................................. Nuclear Regulatory Commission
SEC...........................SEC.................................. Securities and Exchange Commission
OTHER
1935 Act......................Act............................. Public Utility Holding Company
Act of 1935
CAAA..........................CAAA................................. Clean Air Act Amendments of 1990
DSM...........................DSM.................................. Demand-Side Management
Energy Act....................Act........................... Energy Policy Act of 1992
EWG...........................EWG.................................. Exempt wholesale generator
EAC...........................EAC.................................. Energy Adjustment Clause (CL&P)
FAC...........................FAC.................................. Fuel Adjustment Clause (CL&P)
FPPAC.........................FPPAC................................ Fuel and purchased powerpurchased-power adjustment
clause (PSNH)
FUCO..........................FUCO................................. Foreign utility company
GUAC..........................GUAC................................. Generation Utilization Adjustment Clause
(CL&P)
IRM...........................IRM.................................. Integrated resource management
kWh...........................kWh.................................. Kilowatt-hour
MW............................MW................................... Megawatt
NBFT..........................NBFT................................. Niantic Bay Fuel Trust, lessor of nuclear
fuel used by CL&P and WMECO
NEPOOL........................NEPOOL............................... New England Power Pool
NUGs..........................NUGs................................. Nonutility generators
NUG&T.........................&T................................ Northeast Utilities Generation and
Transmission Agreement
QF............................QF................................... Qualifying facility
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTH ATLANTIC ENERGY CORPORATION
19961999 Form 10-K Annual Report
Table of Contents
PART I
Page
Item 1. Business...............................................Business....................................................... 1
The Northeast Utilities System..............................System..................................... 1
Forward-Looking Statements..................................Safe Harbor Statement.............................................. 2
Overview of Nuclear MattersMergers and Related
Financial Matters......................................... 2
CompetitionAcquisitions........................................... 3
Consolidated Edison, Inc. Merger............................... 3
Yankee Energy System, Inc. Merger.............................. 5
Rates and Cost Recovery...............................Electric Industry Restructuring.......................... 5
Rates.......................................................General........................................................ 5
Connecticut Rates and Restructuring............................ 6
Connecticut Retail Rates............................... 6Massachusetts Rates and Restructuring.......................... 7
New Hampshire Retail Rates.............................Rates and Restructuring.......................... 8
Competitive System Businesses...................................... 9
Massachusetts Retail Rates.............................Energy-Related Products and Service and Gas Investments........ 9
Electric Generation and Services............................... 11
Energy Management Services..................................... 11
Telecommunications............................................. 12
Financing Program.................................................. 13
1999 Financings................................................ 13
2000 Financing Requirements.................................... 14
Resource Plans.............................................. 16
Construction........................................... 16
Future Needs........................................... 172000 Financing Program........................................... 18
1996 Financings........................................ 18
1997Plans........................................... 14
Financing Requirements............................Limitations.......................................... 15
Construction Program............................................... 19
1997 Financing Plans................................... 20
Financing Limitations.................................. 21Regulated Electric Operations......................................... 25Operations...................................... 19
Distribution and Load.................................. 25Sales......................................... 20
Regional and System Coordination....................... 28Coordination............................... 21
Transmission Access and FERC Regulatory Changes........ 29
Fossil Fuels........................................... 29Changes................ 21
Nuclear Generation..................................... 30Generation................................................. 21
General........................................................ 21
Nuclear Plant Performance and Regulatory Oversight..... 31
Decommissioning........................................ 38
Energy Related Businesses................................... 40
Private Power Development.............................. 40
Energy Management Services............................. 41
Telecommunications..................................... 41
Energy Products and Services........................... 42Performance...................................... 23
Nuclear Insurance.............................................. 24
Nuclear Fuel................................................... 24
Decommissioning................................................ 26
Other Regulatory and Environmental Matters.................. 42Matters......................... 29
Environmental Regulation............................... 42Regulation....................................... 29
Electric and Magnetic Fields........................... 50Fields................................... 32
FERC HydroHydroelectric Project Licensing................................ 51
Employees................................................... 52Licensing........................... 32
Employees.......................................................... 33
Year 2000.......................................................... 33
Item 2. Properties............................................. 53Properties..................................................... 34
Item 3. Legal Proceedings...................................... 58Proceedings.............................................. 39
Item 4. Submission of Matters to a Vote of Security Holders.... 63Holders............ 42
PART II
Item 5. Market for Registrants' Common Equity and Related
Shareholder Matters.................................... 64Matters............................................ 42
Item 6. Selected Financial Data................................ 65Data........................................ 42
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 65Operations............................ 43
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.................................................... 43
Item 8. Financial Statements and Supplementary Data............ 65Data.................... 44
Item 9. Changes in Disagreements with Accountants on
Accounting and Financial Disclosure.................... 66Disclosure............................ 44
PART III
Item 10. Directors and Executive Officers of the Registrants.... 67Registrants............ 45
Item 11. Executive Compensation................................. 72Compensation......................................... 50
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................. 83Management..................................................... 61
Item 13. Certain Relationships and Related Transactions......... 85Transactions................. 63
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.................................... 868-K........................................... 64
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTH ATLANTIC ENERGY CORPORATION
PART I
ITEM 1. BUSINESS
THE NORTHEAST UTILITIES SYSTEM
Northeast Utilities (NU) is the parent company of a number of companies comprising the Northeast Utilities
system (the System) and is not itself an operating
company.NU system). The SystemNU system furnishes franchised retail electric
service in Connecticut, New Hampshire and western Massachusetts through fourthree
of NU's wholly owned subsidiaries (The Connecticut Light and Power Company
[CL&P], Public Service Company of New Hampshire [PSNH], and Western
Massachusetts Electric Company [WMECO]) and to a limited number of customers
through another wholly owned subsidiary, Holyoke Water Power Company [HWP])(HWP).
In addition to their franchised
retail electric service, CL&P, PSNH, WMECO and HWP (including its wholly owned
subsidiary, Holyoke Power and Electric Company) (the System companies) together
furnish wholesale electric service to various municipalities and other utilities
and, on a pilot basis pursuant to state regulatory experiments, provide off-The NU system retail electric service. The System serves aboutapproximately 30 percent of New England's electric needs
and is one of the 20 largest electric utility systems in the country as
measured by revenues.
NU, through its wholly owned subsidiary, NU Enterprises, Inc. (NUEI),
owns a number of competitive energy and telecommunications related businesses,
including Northeast Generation Company (NGC), Northeast Generation Services
Company (NGS), Select Energy, Inc. (Select Energy), HEC Inc. (HEC), Mode 1
Communications, Inc. (Mode 1) and Select Energy Portland Pipeline, Inc.
(SEPPI). For information regarding the activities of these subsidiaries, see
"Competitive System Businesses."
North Atlantic Energy Corporation (NAEC) is a special-purposewholly owned special-
purpose operating subsidiary of NU that owns a 35.98 percent interest in the
Seabrook nuclear generating facility (Seabrook) in Seabrook, New Hampshire,
and sells its share of the capacity and output from Seabrook to PSNH under
two life-of-unit, full-cost recovery contracts.contracts (Seabrook Power Contracts).
Several wholly owned subsidiaries of NU provide support services for the
SystemNU system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized accounting,
administrative, information resources,technology, engineering, financial, legal,
operational, planning, purchasing, and other services to the SystemNU system
companies. North Atlantic Energy Service Corporation (NAESCO) has operational
responsibility for Seabrook. Northeast Nuclear Energy Company (NNECO) acts
as agent for the SystemNU system companies and other New England utilities in operating the Millstone nuclear
generating facilitiesunits (Millstone) in Waterford, Connecticut. Three other
subsidiaries construct, acquire or lease some of the property and facilities
used by the SystemNU system companies.
The NU has four subsidiaries, Charter Oak Energy, Inc. (Charter Oak), HEC Inc.
(HEC), Mode 1 Communications, Inc. (Mode 1) and NUSCO Energy Partners,
Inc.(Energy Partners), which engage, either directly or indirectly through
subsidiaries, in a variety of energy-related activities. Charter Oak develops
and invests in nonutility generation as permitted under the Public Utility
Regulatory Policy Act (collectively, NUGs) and in exempt wholesale generators
and foreign utility companies as permitted under the Energy Policy Act of 1992
(Energy Act). HEC provides energy management services, both for the System's
commercial, industrial and institutional electric customers and for others.
Mode 1 and NUSCO Energy were formed in 1996 to develop and invest in
telecommunications and energy-related activities, respectively. See "Energy-
Related Businesses."
The System traditionally has beensystem is regulated in virtually all aspects of its business by
various federal and state agencies, including the Securities and Exchange
Commission (SEC), the Federal Energy Regulatory Commission (FERC), the
Nuclear Regulatory Commission (NRC)and various state and/or local regulatory
authorities with jurisdiction over the industry and the service areas in
which each company operates.operates, including the Connecticut Department of Public
Utility Control (DPUC), the New Hampshire Public Utilities Commission (NHPUC)
and the Massachusetts Department of Telecommunications and Energy (DTE). In
recent years, there has been significant activity at both the legislative and
regulatory level, particularly in New England,levels to change the nature of regulation of the industry. For
more information regarding recentthese restructuring initiatives, see "Competition"Rates and
Cost Recovery," "Rates,"Electric Industry Restructuring" and "Electric"Regulated Electric Operations."
FORWARD-LOOKING STATEMENTSSAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), NU and its reporting subsidiaries
occasionally make forward-lookingare hereby filing cautionary statements withinidentifying important factors that
could cause NU or its subsidiaries' actual results to differ materially from
those projected in forward looking statements (as such term is defined in the
meaningReform Act) made by or on behalf of the Securities Exchange Act of 1934, as amended, such as
forecasts and projections of expected future performanceNU or statements of their
plans and objectives. These forward-looking statements may be containedits subsidiaries in this combined
Form 10-K, in any subsequent filings with the SEC, lettersin presentations, in
response to shareholders, press releasesquestions, or otherwise. Any statements that express or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events, or performance (often, but not always, through the use of words
or phrases such as will likely result, are expected to, will continue, is
anticipated, estimated, projection, outlook) are not statements of historical
facts and oral
statements. Although such forward-lookingmay be forward looking. Forward looking statements have been based on
reasonableinvolve
estimates, assumptions there is no assurance that the expected results will be
achieved, and actual results could differ materially from these statements. Some
of the factorsuncertainties that could cause actual results to
differ materially include, but
are not limited to: governmental and regulatory actions and initiatives; the
impact of deregulation and increased competitionfrom those expressed in the industry; generating
plant performance; weather conditions; fuel pricesforward looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to, and availability; general
economic conditions, includingare accompanied by, the effectsfollowing important factors that could cause
NU or its subsidiaries' actual results to differ materially from those
contained in forward looking statements of inflation; technological changes;
and uncertainties involved with foreign investments. These and other factors
are discussed in SEC filingsNU or its subsidiaries made by or
on behalf of NU CL&P, WMECO, PSNHor its subsidiaries.
Any forward looking statement speaks only as of the date on which such
statement is made, and NAECNU and its subsidiaries undertake no obligation to
update any forward looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time
including this report.
OVERVIEW OF NUCLEAR AND RELATED FINANCIAL MATTERS
On January 29, 1996, Millstone was placedand it is not possible for management to predict all of such factors, nor can
it assess the impact of each such factor on the NRC's watch listbusiness or the extent to
which any factor, or combination of factors may cause actual results to
differ materially from those contained in any forward looking statements;
however, NU and its subsidiaries are required by law to update and disclose
any material developments related to previously disclosed information or to
correct any material statement made in this report and in all future reports
that turns out to be false.
Some important factors that could cause actual results or outcomes to
differ materially from those discussed in the forward looking statements
include prevailing governmental policies and regulatory actions, including
those of the SEC, the NRC, the FERC, and state regulatory agencies, with
respect to allowed rates of return, industry and rate structure, operation of
nuclear power facilities, acquisition and disposal of assets and facilities,
operation and construction of plant facilities, recovery of purchased-power
costs, stranded costs, decommissioning costs, and present or prospective
wholesale and retail competition (including but not limited to retail
wheeling and transmission costs).
The business and profitability of NU and its subsidiaries are also
influenced by economic and geographic factors including political and
economic risks, changes in environmental and safety laws and policies,
weather conditions (including natural disasters), population growth rates and
demographic patterns, competition for retail and wholesale customers, pricing
and transportation of commodities, market demand for energy from plants or
facilities, changes in tax rates or policies or in rates of inflation,
changes in project costs, unanticipated changes in certain expenses and
capital expenditures, capital market conditions, competition for new energy
development opportunities, and legal and administrative proceedings (whether
civil or criminal) and settlements.
All such factors are difficult to predict, contain uncertainties which
may materially affect actual results and are beyond the control of NU or its
subsidiaries.
MERGERS AND AQUISITIONS
CONSOLIDATED EDISON, INC. (CON EDISON) MERGER
On October 13, 1999, NU and Con Edison agreed to a merger to combine the
two companies. Assuming the merger closes on December 31, 2000, and NU meets
the nuclear divestiture condition discussed below, Con Edison will pay
approximately $3.8 billion for all the common shares of NU. In addition, Con
Edison will assume NU's debt, capitalized leases and preferred securities
which totaled $3.7 billion as of December 31, 1999. As of the present time,
however, NU and Con Edison are attempting to achieve a Category 2 facility. As set forth below,closing in July 2000.
Under the agreement, Con Edison will pay a base price of $25 for each
share of NU in a combination of cash and Con Edison common stock. NU
shareholders will receive an additional $1 per share in value if definitive
agreements to sell CL&P&P's and WMECO have significant
financial and capacityWMECO's interests in Millstone. Facilities in Category 2 have
been identified by the NRC as having weaknesses that warrant increased attention
until the licensee, NNECO, demonstrates a period of improved performance.
Millstone was subsequently reclassified as a Category 3 facility, which requires
NNECO to receive formal NRC commissioners' approval to restart any of the units.
Millstone 1, 2 and 3 have been out of service since November 4, 1995, February
21, 1996are
entered into and March 30, 1996, respectively. Following these decisions,recommended by the System
faced in 1996,Utility Operations and continues to face, someManagement Unit of
the most severe regulatory
scrutiny and financial challenges inDPUC on or prior to the historylater of December 31, 2000, or the closing of the
United States nuclear
industry, including numerous civil lawsuits and criminal investigations. See,
"Item 3. Legal Proceedings."
Millstone 1, a 660-MW boiling water reactor, and Millstone 2, an 870-MW
pressurized water reactor,merger (the divestiture condition). If the merger closes before the
divestiture condition is met, NU shareholders still will receive the
additional $1 per share if the divestiture condition is met prior to December
31, 2000. Further, the value of the amount of cash or stock to be received
by NU shareholders will increase by $0.0034 per share per day, or about 10
cents per month, for each day that the transaction does not close after
August 5, 2000.
NU shareholders will have the right to elect either cash or stock, but
their elections are each owned 81subject to proration if the cumulative elections exceed
50 percent by CL&P and 19 percent by
WMECO. Millstone 3, a 1154-MW pressurized water reactor, is jointly owned by
CL&P (52.93 percent), WMECO (12.24 percent), PSNH (2.85 percent) and other New
England utilities.
The System has initiatedin either cash or stock. NU shareholders who elect to receive
stock will receive a number of changesshares of Con Edison stock based on the
average trading price of Con Edison shares, determined pursuant to a formula,
during a fixed period prior to the closing (pricing period).
The merger price is subject to a trading price collar on Con Edison's
share price of between $36 and $46. Assuming the divestiture condition is
satisfied, a Con Edison average stock price within the collar and a year end
2000 closing, the total value of Con Edison common stock received by the NU
shareholders for each NU share will be $26.50. However, if the average price
of Con Edison stock is below $36 per share during the pricing period, the
stock component of the transaction will decline in value. For example,
assuming a shareholder receives 50 percent stock and 50 percent cash, for
each $1 below $36 that Con Edison averages during the pricing period, the
total value of each NU share will decline by approximately 37 cents per share.
Conversely, for each $1 above $46 that Con Edison averages during the pricing
period, the value of the transaction to that NU shareholder grows by
approximately 29 cents per share.
Ultimately the value of the transaction to NU shareholders depends on
NU's ability to satisfy the divestiture condition, the actual timing of the
closing, and the average price of Con Edison shares during the pricing
period.
On July 7, 1999, the DPUC issued a decision on the determination of the
minimum bids to be utilized in the managementauction process to dispose of Millstone.
On December 29, 1999, the Connecticut Office of Consumer Counsel (OCC) filed
a motion with the Connecticut Superior Court for a partial stay of the
decision, which, if granted, would stay the fixing of the minimum bid prices
for CL&P's share of Millstone. Although CL&P believes that it is highly
unlikely that such a stay will be granted, such a stay would delay the
commencement of the auction process for Millstone and adversely affect NU's
ability to meet the divestiture condition.
The merger is conditioned upon the approval of the shareholders of both
companies and several state regulatory agencies, the FERC, the SEC, and
the NRC. The companies hope that these regulatory proceedings can be
completed by the end of July 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary
of Con Edison. NU's operating companies will retain their names, and their
headquarters will continue to be located in their respective service
territories. The combined company will be the nation's largest electric
distribution utility as measured by customers with over 5 million electric as
well as 1.4 million gas customers serving a diverse mix of urban and suburban
communities with a population of more than 13 million. The companies have
estimated that the combined company will have revenues on a pro forma basis
of approximately $11.9 billion and total assets of $27.3 billion, as of
December 31, 1999.
YANKEE ENERGY SYSTEM, INC. (YANKEE) MERGER
On March 1, 2000, NU acquired Yankee, and Yankee became a wholly owned
subsidiary of NU. Yankee is the parent of the Yankee Gas Services Company,
the largest natural gas distribution company in Connecticut. NU paid $45 per
share or $478 million in cash and stock for all Yankee shares. In addition,
NU assumed $164 million of Yankee's outstanding long-term debt and all of its
nuclear program to address the problemsshort-term debt which totaled $70 million at Millstone. In April 1996, the NU
Board of Trustees (NU Board) announced the formation of a special committeeclosing. Yankee shareholders
received 45 percent of the $478 million in NU Board to provide high-level oversightcommon shares and 55 percent
in cash. NU arranged financing for the cash portion of the safetydeal and effectivenessmet the
stock component of NU's nuclear operationsthe deal by issuing 11.1 million new NU shares. NU expects
to redeem the majority of these shares later this year by closing out a forward
share purchase program with proceeds from restructuring. The forward share
purchase program was conducted late in 1999 and early in 2000 through two
financial institutions. With certain limited exceptions, NU is prohibited
from purchasing additional shares under its merger agreement with Con Edison.
Yankee will continue to act as the progress toward resolving open NRC issuesholding company of the Yankee Gas
Services Company and employee, community,its four active nonutility subsidiaries, NorConn
Properties, Inc., which holds the property and customer concerns. The committee consists exclusivelyfacilities of outside trustees.Yankee; Yankee
Energy Financial Services Company, which provides customers with financing
for energy equipment installations; Yankee Energy Services Company (YESCO),
which provides energy-related services; and R.M. Services, Inc., which
provides debt collection service to utilities and other businesses
nationwide. It is chaired by E. Gail de Planque, who is a former NRC
commissioner. In light of substantial NU Board activities associated with the
current nuclear situation, the NU Board elected Elizabeth T. Kennan in 1996 as
Lead Trustee to facilitate the extensive, ongoing communications and activities
between the NU Board and management.
In response to various internal reports and other reviewsexpected that focused on
nuclear management as a fundamental cause for the decline in the performance of
Millstone, the NU Board elected Bruce D. Kenyon as President - Nuclear Group of
NU, in September 1996. Following this appointment, management unveiled a
reorganization of NU senior nuclear management that is intended to establish
direct accountability for performance at each of the nuclear power units that
the System operates. The new management team, including executives loaned from
unaffiliated utility companies with excellent nuclear programs, has focused in
the near-term on the recovery efforts of Millstone and improving nuclear
oversight and the System's employee concerns program. In January 1997, Neil S.
Carns was elected to the position of Senior Vice President and Chief Nuclear
Officer of NNECO to oversee the operations of Millstone. Both Mr. Kenyon and
Mr. Carns have extensive experience at other utilities with reputations for
excellent nuclear operations.
The new nuclear management team has developed comprehensive plans for
restarting each of the Millstone units. Each unit's recovery team is working
towards restart of its respective unit on a parallel basis with the other two
units. Management estimates that one of the unitsYESCO's business will be ready for restart in
the third quarter of 1997,closely coordinated
with the second and third units being ready for
restart in the fourth quarter of 1997 and the first quarter of 1998,
respectively. Management hopes to have at least one unit operating in the
second half of 1997.
However, before and following notification to the NRC that a unit is ready
to resume operations,HEC's energy management expects that the NRC staff will conduct
extensive reviews and inspections, and before such notification, independent
corrective action verification teams also will inspect each unit. The System
also will need to comply with an NRC order regarding the development of a
comprehensive employee concerns program, which will need to be reviewed by an
independent third-party. Furthermore, because of the length of the outages,
management cannot estimate the time it will take for the units to resume full
power after NRC approval to restart.business. For more information regarding specific regulatory actions related toHEC,
see "Competitive System Businesses" below.
RATES AND ELECTRIC INDUSTRY RESTRUCTURING
GENERAL
NU's nuclear unitselectric utility subsidiaries, CL&P, WMECO and the December 4, 1996 decision of the board of directors of
Connecticut Yankee Atomic Power Company (CYAPC) to retire the Connecticut Yankee
nuclear unit (CY) from commercial operation, see "Electric Operations--Nuclear
Generation." For information regarding actions taken to meet System capacity
needs caused by the Millstone outages, See "Electric Operations--Distribution
and Load."
AsPSNH, have
undergone, or will undergo, fundamental changes in their business operations
as a result of the extended Millstone outages,restructuring of the Systemelectric industry in their respective
jurisdictions. Most notably, the companies have incurreddivested, or will divest,
all of their interests in generation assets and will continuesolely act as
transmission and distribution companies in the future. In general, their
customers will be able to bear substantial costs at least untilchoose their energy suppliers, with the three
Millstone units have been restarted. Most ofelectric
utility companies furnishing "standard offer" service just to those customers
who do not choose a competitive supplier. Critical to this restructuring is
the companies' ability to recover their stranded costs. Stranded costs are
being borne by CL&P
and WMECO, which have the greatest investment share of the Millstone units.
Although PSNH did incur additional costs related to the outage, these costs were
somewhat mitigated by its increased sales of electricity from Seabrook and
fossil generation. In 1996, System companies expensed a total of approximately
$403 million Millstone-related non-fuel operation and maintenance costs, which
included among other costs $116 million for non-fuel incremental O&M costs
related to the Millstone outages ($93 million for CL&P, $21 million for WMECO
and $2 million for PSNH) and $63 million reservedexpenditures incurred, or commitments for future Millstone
incremental O&M costs ($50 million for CL&P, $12 million for WMECO and $1
million for PSNH). O&M costs for Millstone in 1997 are estimated to be $386
million. O&M costs have been, and willexpenditures made, on behalf
of customers with the expectation such expenditures would continue to be
absorbed through the
System companies' current rates.
The System companies also expensed approximately $260 million for
replacement-power costs in 1996 ($216 million for CL&P, $41 million for WMECO
and $3 million for PSNH). Management expects that monthly replacement-power
costs for the System companies will average approximately $35 million ($30
million for CL&P and $5 million for WMECO) in 1997 while all three Millstone
units remain out of service. The System expensed a significant portion of its
1996 replacement power costs related to the nuclear outages and it is continuing
to expense 1997 replacement power costs.
Although the System companies are not precluded from seeking rate
recoveries of these costsrecoverable in the future management has committed not to seek
recovery of the portion of these costs attributable to the failure to meet
industry standards in operating Millstone. In light of that commitment, and in
recognition of the NRC's watch list designation of Millstone and that numerous
internal and external reports have been critical of the operation of Millstone,
management believes that CL&P and WMECO will not seek rate recovery of a
substantial portion of such costs. Management currently does not intend to
request any such recoveries until after the Millstone units begin returning to
service, so it is unlikely that any additional revenues from any permitted
recovery of these costs will be available while the units are out of service to
contribute to funding the recovery efforts.
The System has arranged a variety of borrowing facilities to fund its cash
requirements, including the nuclear recovery efforts. See "Financing Program---
1996 Financings." The length of the Millstone outages and the high costs of the
recovery efforts have weakened NU's, CL&P's and WMECO's 1996 earnings, balance
sheets and cash flows, and they continue to have adverse impacts on these
companies' financial conditions. Management believes that the borrowing
facilities that are currently in place provide System companies with adequate
access to the funds needed to bring the Millstone units back to service if those
units begin operating close to the currently envisioned schedules and if the
other assumptions on which management has based its planning do not
substantially change. For the System companies to access the entire amounts of
contractually committed borrowing capacity, some waivers or modifications of the
borrowing terms have been obtained and others might be required. See "Financing
Program---Financing Limitations."
If the return to service of one or more Millstone units is delayed
substantially, or if the needed waivers or modifications are not forthcoming on
reasonable terms, or if the System encounters additional significant costs or
other significant deviations from management's current assumptions the currently
available borrowing facilities could be insufficient to meet all of the System's
cash requirements, and some facilities could become unavailable because of
difficulties in meeting borrowing conditions. In those circumstances,
management would take actions to reduce costs and cash outflows and would
attempt to take actions to arrange additional sources of funds. The
availability of such sources would be dependent on general market conditions and
the System's credit and financial condition at the time.
COMPETITION AND COST RECOVERY
Competition in the energy industry continues to grow as a result of
legislative and regulatory action, technological advances, relatively high
electric rates in certain regions of the country, including New England, surplus
generating capacity and the increased availability of natural gas. These
competitive pressures are particularly strong in the System's service
territories, where legislators and regulatory agencies have been at the
forefront of the restructuring movement.
A major risk of competition for the System is "strandable investments."
These are expenditures that have been made by utilities in the past to meet
their public service obligations, with the expectation that they would be
recovered from customers in the future.through rates. However, under certain circumstances
these costs might not be recoverable from customers in a fully competitive
electric utility industry. The System is particularly vulnerable to strandable
investments because of: (i)industry (i.e., the System's relatively high investmentcosts may result in nuclear
generating capacity, which had a high initial cost to build; (ii) state-mandated
purchased-power arrangements priced above market; (iii) significant regulatory
assets, which are those costs (including purchased-power costs)above-market energy
prices).
As discussed more fully below, Connecticut and Massachusetts have
enacted restructuring legislation that have been
deferred by state regulators for future collection from customerspermits CL&P and (iv) costs
incurred and assets created in connection with the bankruptcy reorganization of
PSNH in 1990 and NU's 1992 acquisition of PSNH.
As of December 31, 1996, the System's net investment in nuclear generating
capacity, excluding its investment in certain regional nuclear companies, was
$3.6 billion, and in its regulatory assets was approximately $2.2 billion. The
System expectsWMECO to recover
substantially all of its nuclear investment and its
regulatory assets from customers. The System is currently collecting its
nuclear investment through depreciation charges approved by its various state
utility regulators. See "Depreciation" in the notes to NU's financial
statements. Unless amortization levels are changed from currently scheduled
rates, the System's regulatory assets are expected to be substantially decreased
in the next five years. Although the System companies continue to operate
predominantly in state-approved franchise territories under traditional cost-of-
service regulation, various restructuring initiatives in the System's service
territories, particularly recent actions taken by the New Hampshire Public
Utility Commission (NHPUC), have created uncertainty with respect to future
rates and the recovery of strandable investments.
In 1995 regulators in Connecticut concluded that electric utilities should
be allowed a reasonable opportunity to recover strandable investments. Various
electric utility restructuring legislative proposals have been, and others will
be, introduced in the Connecticut State Legislature in 1997. On December 30,
1996, the Massachusetts Department of Public Utilities (DPU) issued its Model
Rules on Restructuring (Model Rules). The Model Rules indicate that utilities
will have a reasonable opportunity to recover strandable investmentstheir prudently incurred on
or before August 16, 1995, which will be collected through a Stranded Cost
Access Charge. The Massachusetts General Court also has established a
legislative task force to review restructuring during the 1997 legislative
session.
On February 28, 1997, NHPUC issued its orders related to restructuring the
state's electric utility industry and setting interim stranded cost charges for
PSNH pursuant to legislation enacted in New Hampshire in 1996. In the orders,
the NHPUC announced a departure from cost-based ratemaking and instead adopted a
market-priced approach to stranded cost recovery. On March 10, 1997,costs. NU, NAEC, PSNH and NUSCO received a temporary restraining order from the United States
District Court for the District of Rhode Island, which stayed the NHPUC's
February 28, 1997 orders to the extent they established a rate setting
methodology that is not designed to recover PNSH's costs of providing service
and would require PSNH to write off any regulatory assets. If this stay or
another appropriate court action does not remain in effect, this methodology
will require PSNH to remove from its balance sheet for the quarter ending March
31, 1997 substantially all of its regulatory assets. The amount of that
potential write-off is currently estimated at over $400 million, after taxes.
For more information regarding this decision and other restructuring
initiatives, see "Rates;" for more information regarding the effect of the
February 28, 1997 decision on PSNH and NAEC's financings, see "Financing
Program---Financing Limitations."
Notwithstanding these legislative and regulatory initiatives, the System
has developed, and is continuing to develop, a number of marketing initiatives
to retain and continue to serve its existing customers. In particular, System
companies have been devoting increasing attention in recent years to negotiating
long-term power supply arrangements with certain large commercial and industrial
retail customers. Approximately 12 percent of the System's commercial and
industrial retail revenues were under negotiated rate agreements at the end of
1996. In 1996, those negotiated rate reductions amounted to approximately $39
million in annual revenues, up from $35 million in 1995. CL&P accounted for
approximately $19 million of the 1996 rate reductions, PSNH for $12.5 million,
WMECO for $6 million and HWP for $1.5 million. The average term of these
agreements is approximately 5.8 years.
The System has expanded its Retail Marketing organization to provide value-
added solutions to its customers. The System devoted significantly more
resources to its retail marketing efforts in 1996 than in prior years. In
particular, NUSCO hired approximately 170 new employees as part of its retail
sales organization. The new employees will allow the System to have more direct
contact with customers in order to develop tailor-made solutions for customers'
energy needs. In addition, the System companies, as well as other NU
subsidiaries, received orders from the SEC and FERC in 1996 that increased their
flexibility to market and broker electricity, gas, oil and other forms of energy
throughout the United States and to provide various services related thereto.
RATES
CONNECTICUT RETAIL RATES
GENERAL
Approximately 63% of System revenues are derived from CL&P, and 56% of the
book value of the System's electric utility assets are owned by CL&P.
CL&P's retail rates are subject to the jurisdiction of the Connecticut
Department of Public Utility Control (DPUC). Connecticut law provides that
revised rates may not be put into effect without the prior approval of the DPUC.
Connecticut law also authorizes the DPUC to order a rate reduction under certain
circumstances before holding a full-scale rate proceeding. The DPUC is further
required to review a utility's rates every four years if there has not been a
rate proceeding during such period. The DPUC is expected to begin such a review
in the second half of 1997. Based on recently enacted legislation, if the DPUC
approves performance-based incentives for a particular company, the DPUC will
include in such an order periodic monitoring and review of the company's
performance in lieu of the four year review.
On July 1, 1996, the DPUC approved a settlement agreement (Settlement) that
had been jointly submitted to the DPUC by CL&P, the Connecticut Office of
Consumer Counsel (OCC) and the independent Prosecutorial Division of the DPUC.
The Settlement provides that CL&P's base rates will be frozen until at least
December 31, 1997. The Settlement provides that during the rate freeze, CL&P's
target return on equity (ROE) will be 10.7 percent, but the Settlement does not
alter CL&P's allowed ROE of 11.7 percent. One-third of earnings above the
target ROE will be refunded to customers. The Settlement also accelerated the
amortization of CL&P's regulatory assets ($73 million in 1996 and $54 to $68
million in 1997). As of December 31, 1996, CL&P's regulatory assets totaled
approximately $1.4 billion.
The Settlement terminated all outstanding litigation pending as of March
31, 1996 among the parties that potentially could affect CL&P's rates. Such
litigation included appeals by CL&P and the OCC from CL&P's 1993 rate case
decision, appeals from the DPUC's decisions concerning the 1992-1993 and 1993-
1994 fuel-recovery periods, nuclear operating prudence review proceedings
pending at the time of the settlement, and OCC's appeal from the DPUC guidelines
adopted in 1995 allowing additional flexibility in negotiating special rates
with electric customers. In exchange, CL&P agreed not to seek recovery from its
customers of approximately $115 million in uncollected nuclear costs incurred
before March 31, 1996.
The Settlement does not affect issues to be addressed by the DPUC in future
restructuring proceedings and the recovery of costs related to the ongoing
Millstone outages. For information regarding the prudence proceeding related to
nuclear operations for the period March 31, 1996 to June 30, 1996, See "Rates---
CL&P Adjustment Clauses and Prudence."
ELECTRIC INDUSTRY RESTRUCTURING IN CONNECTICUT
Pursuant to legislation introduced in 1995, a legislative task force was
created to consider electric industry restructuring in Connecticut. The final
report of the task force was issued on December 18, 1996. Although the members
of the task force did not come to a consensus on restructuring, the report
included several recommendations on legislation, including, among other things,
legislation to enable securitization of strandable investments; reduction of tax
burdens incorporated in electric rates; reduction of rate impacts of government-
mandated contracts with NUGs; and elimination of obsolete regulation. After
considering the report of the task force, the legislative members of the task
force submitted their own proposal on restructuring to the members of the
legislative Energy and Technology Committee. Their proposal includes two
alternatives: one for a retail competition pilot program available to 10 percent
of the load in each rate class by January 1, 1998; and a second for full retail
competition beginning January 1, 1998 unless CL&P had effected 10 percent retail
rate reductions for all rate classes by that date. This proposal, among others,
is being considered in developing restructuring legislation in 1997.
CL&P ADJUSTMENT CLAUSES AND PRUDENCE
On October 8, 1996, the DPUC issued its final order establishing an Energy
Adjustment Clause (EAC) in place of CL&P's existing Fuel Adjustment Clause and
Generation Utilization Adjustment Clause (GUAC). The EAC took effect on January
1, 1997. The EAC is designed to reconcile and adjust every six months the
difference between actual fuel costs and the fuel revenue collected through base
rates. The EAC includes an incentive mechanism that disallows recovery of the
first $9 million in fuel costs that exceeds base levels and permits CL&P to
retain the first $9 million in fuel cost savings. The EAC also designates a 60
percent nuclear capacity factor floor. When the six-month nuclear capacity
factor falls below 60 percent, related energy costs are deferred to the
subsequent EAC period for consideration for recovery. Finally, the costs to
serve nonfirm wholesale transactions will continue to be removed from the
calculation of fuel costs at actual marginal cost.
On December 31, 1996, the DPUC issued a decision approving CL&P's request
to recover $25 million, excluding replacement power costs (see below), through
the GUAC for the period April 1 - August 31, 1996. The $25 million will be
recovered over a twelve-month period beginning January 1, 1997. The fuel costs
for the period September 1, 1996 through December 31, 1996, excluding
replacement power costs for the current nuclear outages at Millstone, are
expected to be filed with the DPUC in March 1997. Management does not expect a
significant dollar request for the period.
Despite an earlier procedural order indicating that prudence hearings on
the current nuclear outages at Millstone would take place after the nuclear
plants return to service, on January 15, 1997, the DPUC notified CL&P that it
will be conducting its prudence review of nuclear cost recovery issues in
multiple phases. The first phase, covering the period April 1 through June 30,
1996, has already begun. CL&P will not be permitted to collect any replacement
power costs associated with the current nuclear outages prior to the completion
of the DPUC's prudence reviews. Management believes that CL&P will not seek
rate recovery of a substantial portion of such costs.
In connection with an ongoing management audit of CL&P, including matters
related to the NRC watch list designation, the two consulting firms hired by the
DPUC to review such matters issued reports in December 1996 that were highly
critical of NU's management of its nuclear program. The results of these reports
could bear on any future DPUC review of the prudence of the System's nuclear-
related costs. In a separate proceeding, the DPUC ordered CL&P to submit
studies by July 1, 1997 that analyze the economic benefits from the continued
operation of Millstone 1 and 2. The DPUC stated that these studies were
necessary in light of the uncertainty regarding restart dates of the units and
the costs associated with returning these units to operation.
In May 1996, the Connecticut state legislature enacted legislation to
create the Nuclear Energy Advisory Council (NEAC), a volunteer group of fourteen
members. The NEAC was charged with conducting a broad review of safety and
operations of the System's four Connecticut nuclear units and to advise the
Governor, the legislature and affected municipalities on these issues. The NEAC
issued its first report on February 7, 1997, which provided a wide-range of
preliminary recommendations, including legislation and additional public
hearings related to nuclear spent fuel, federal congressional hearings, review
by the Connecticut Attorney General of the NRC's oversight of the System's
nuclear operations and the requirement for a state nuclear plant resident
inspector. These recommendations are similar to various legislative proposals
currently pending at the state legislature related to nuclear oversight,
operations and cost recovery. Management cannot predict the ultimate effect of
this report or such proposed legislation.
DEMAND-SIDE MANAGEMENT
CL&P provides demand side management (DSM) programs for its residential,
commercial and industrial customers. CL&P is allowed to recover DSM costs in
excess of costs reflected in base rates over periods ranging from approximately
four to ten years.
On April 9, 1996, the DPUC issued an order approving CL&P's budget of $37.1
million for 1996 DSM expenditures, which will be recovered over a 2.43 year
amortization period. In November 1996, CL&P filed its 1996-1997 DSM programs
and budgets with the DPUC. CL&P proposed a budget level of $36 million for 1997
DSM expenditures. CL&P's unrecovered DSM costs at December 31, 1996, excluding
carrying costs, which are collected currently, were approximately $90 million.
NEW HAMPSHIRE RETAIL RATES
GENERAL
Approximately 24% of System revenues are derived from PSNH, and 17% of the
book value of the System's electric utility assets are owned by PSNH.
PSNH's Rate Agreement with
the state of New Hampshire (State) provided for
seven base rate increases of 5.5 percent per year beginning in 1990 andhave reached a comprehensive fuel and purchased power adjustment clause (FPPAC). The final
base rate increase went into effect on June 1, 1996. The Rate Agreement
provides that PSNH's ratessettlement (Settlement Agreement),
which, if approved, will be subjectpermit, PSNH to traditional rate regulation after
the fixed rate period expires on May 31, 1997, but that the FPPAC will continue
through May 31, 2000. Although the FPPAC continues for an additional 3 years
beyond the end of the fixed rate period, there is uncertainty regarding how it
will function after May 31, 1997. Given the completion of the fixed rate
period, and the uncertainty surrounding the FPPAC, management expects that PSNH
will file a rate case with the NHPUC in May 1997. For more information
regarding other cost recovery matters related to the Rate Agreement, see
"Unamortized PSNH Acquisition Costs."
ELECTRIC INDUSTRY RESTRUCTURING IN NEW HAMPSHIRE
Pilot Program
The NHPUC initiated a two-year retail-wheeling pilot program (Program) in
mid-1996. The Program included up to three percent of PSNH's retail customers
(approximately 12,000 customers). On April 24, 1996, the NHPUC approved the
terms for PSNH's participation in the Program. Under this plan, PSNH provides a
10-percent incentive credit off its traditional rates to customers who
participate in the program and will be allowed to recover all of its costs above
an assumed market price of power. CL&P, through either affiliated companies or
marketing divisions, also is participating in the Program. In early 1997, PSNH
transferred its interest in PSNH Energy, a competitive supplier in the New
Hampshire retail electric competition pilot program, to Energy Partners, but
PSNH continues to sell power to Energy Partners at wholesale.
Based upon its preliminary analysis of the Program, PSNH, with its current
relatively high cost rate structure, could lose a substantial portion of its
currentstranded costs in connection with restructuring.
CONNECTICUT RATES AND RESTRUCTURING
Pursuant to legislation enacted in April 1998, CL&P has sold or will
sell all of its generating capacity and disposed of or renegotiated its power
supply contracts, and effective January 1, 2000, began acquiring its standard
offer energy supply on the open market share if New Hampshire was openthrough competitive bidding. On
January 1, 2000, up to wide-scale retail competition.
PSNH could mitigate this loss somewhat by securing new off-franchise35 percent of CL&P customers although it already serves 70%located in distressed
cities became eligible to choose their electric supplier. On July 1, 2000,
100 percent of availableCL&P's customers will be able to choose their electric
supplier. Customers who do not choose an alternate supplier may take standard
offer service from CL&P until December 31, 2003.
CL&P had sought permission in New Hampshire. To
offsetMarch 1999 from the risk of a substantial decrease in revenues, the System is actively
developing marketing initiatives to retain existing customers and attract new
off-franchise customers should full-scale competition be introduced in New
Hampshire accordingDPUC pursuant to the
proposed schedule. The critical factor regarding
significant losses for PSNH relatedrestructuring legislation to electric utility restructuring, however,
isrecover from customers approximately $4.4
billion of its stranded costs. In a July 7, 1999 decision, the issue ofDPUC approved
the recovery of strandable investments.approximately $3.5 billion of stranded costs and provided for
the possible recovery of a significant portion of the remaining amount in the
future through adjustments to the decision's assumptions about future market
prices of power and other variables when the actual prices and values of
those variables are known. The OCC appealed this decision in August 1999.
The appeal is now pending.
In April 1999, CL&P filed with the DPUC for approval of its standard
offer rates. On October 1, 1999 and December 15, 1999, the DPUC issued
decisions regarding this filing. CL&P's overall rates, effective January 1,
2000, reflect a 10 percent reduction from the December 31, 1996 rate, as
mandated by the state restructuring legislation. CL&P's rates have been
unbundled into seven components, including an energy component, in order to
implement the legislation and allow customers to purchase energy from
competitive suppliers beginning on January 1, 2000.
In the October 1, 1999 decision, the DPUC also identified $470 million
of nonnuclear stranded costs that would be eligible for securitization if
customer benefits can be shown in a separate proceeding, which is expected to
be filed in the spring of 2000. Securitization is the monetizing of stranded
costs through the sale of nonrecourse debt securities, rate reduction bonds,
by a special purpose entity, as authorized by legislation, which are
collateralized by the NU system companies' interests in their stranded cost
recoveries. Securitization proceeds are applied in general to retire higher
cost capital of the utility.
The DPUC approved an interim nuclear capital recovery mechanism for the
period from January 1, 2000, until the nuclear units are sold at auction. The
DPUC, however, denied the recovery of most of the capital costs associated
with CL&P's nuclear investment subsequent to June 30, 1997, which CL&P had
expended or will expend prior to the sale of the plants, currently estimated
to occur in 2001. The DPUC has reopened the docket to reconsider this portion
of the order. Management believes the restructuring legislation provides for
the recovery of these prudently incurred expenditures. If CL&P is
unsuccessful in favorably resolving this contingency, an impairment loss of
approximately $50 million would be recorded.
CL&P's power supply to furnish standard offer service was procured
through a competitive bidding process conducted by the DPUC. On November 3,
1999, two unaffiliated companies were awarded 50 percent of CL&P's total
standard offer service load. As permitted in the restructuring legislation,
CL&P's competitive affiliate, an energy supply company, Select Energy, is
providing the remaining 50 percent, at the weighted average price of the
winning bids submitted by the unaffiliated companies. The four-year supply
contracts were effective January 1, 2000.
On December 15, 1999, as required by the restructuring legislation, CL&P
sold 2,235 megawatts (MW) of fossil-fueled generation assets in Connecticut
to an unaffiliated company for $460 million, and in March 2000, CL&P
transferred 1,057 MW of hydroelectric generation assets in Connecticut and
Massachusetts to NGC, an affiliated company, for approximately $681 million.
During the first quarter of 1999, in accordance with the Connecticut
restructuring legislation, CL&P renegotiated 15 power purchase agreements
(PPAs) with independent power producers. These renegotiations resulted in
buy out, buy down or prepayment agreements relating to the 15 PPAs. These
agreements were filed with the DPUC for approval and require that CL&P make
cash payments to the plant owners, contingent upon its receipt of proceeds
from rate reduction bonds. The DPUC has approved one of the agreements and
the DPUC proceedings concerning the remaining agreements are pending. For
CL&P's PPAs that were not renegotiated, an auction is being conducted by the
DPUC. CL&P expects that the auction results will be known in the first
quarter of 2000.
In November 1999, CL&P filed its divestiture plan for Millstone with the
DPUC. CL&P expects the auction of its share of Millstone, which will include
WMECO's and PSNH's share as well, to begin shortly after the DPUC has
approved its divestiture plan, which is currently expected to occur in March
2000. Based on this schedule a successful bidder could be chosen by mid 2000
with a closing in 2001. No NU system company will participate. CL&P intends
to auction its interest in the Seabrook nuclear plant when NAEC auctions its
Seabrook interest. The NAEC auction is contingent on approval of the PSNH
Settlement Agreement, discussed more information,
see "Competitionfully below, and Cost Recovery"on NHPUC approval of a
divestiture plan.
In the fall of 1999, in order to implement the generation divestiture
provisions of the restructuring legislation, CL&P and "Energy-Related Businesses--Energy
ProductsWMECO agreed to sell
the capacity and Services."
NHPUC Restructuring Plan
On May 21, 1996, legislation became effectiveenergy associated with their unit entitlements in New Hampshire requiringMillstone
2 and 3 and Seabrook to Select Energy and five unaffiliated companies
beginning January 1, 2000, and ending December 31, 2001. The price the
NHPUCpurchasers will pay is generally comprised of a capacity charge and an energy
charge. If the units operate as expected, the revenues that result from
these contracts over the two year period are expected to issuerecover CL&P's and
WMECO's share of the nuclear operating costs including a finalreturn of and on the
remaining nuclear plant balances. The energy payments to CL&P and WMECO,
however, are contingent on the plants operating.
MASSACHUSETTS RATES AND RESTRUCTURING
Massachusetts enacted comprehensive electric utility industry
restructuring plan no later than February 28, 1997.
Electric utilities must submit compliance filings by June 30,in November 1997. The legislation directedmandated, among other
things, customer choice of an energy supplier as of March 1, 1998, and
reduction of each electric utility's rates, including WMECO, by
September 1, 1999, to a level 15 percent below those in effect in August
1997, adjusted for inflation.
On September 17, 1999 and on December 20, 1999, the NHPUCDTE issued orders on
WMECO'S restructuring plan. The orders permit WMECO to implement fullrecover, among other
items, nonnuclear generation-related asset costs, certain nuclear generation-
related asset costs and nuclear decommissioning costs. The DTE also
approved WMECO's requested 11 percent return on equity for those transition
costs earning a return as well as the sale of WMECO's interest in Millstone
to be conducted concurrently with CL&P's sale of its interest in Millstone.
The DTE disallowed a return on WMECO's Millstone 1 investment and on its
investment in Millstone 2 and 3 from the date of retail competitionaccess (March 1,
1998) until the date such units returned to service from their extended
outages (July 15, 1998 for Millstone 3 and May 19, 1999 for Millstone 2).
The pretax impact to WMECO's earnings from these dissallowances was $41
million. Two intervenors in WMECO's restructuring proceedings have appealed
the decision.
On December 30, 1999, the DTE approved the results of the auctions held
by WMECO to procure competitive standard offer service, default service and
interruptible rate standard offer service for the year 2000 from four
unaffiliated entities. Select Energy will supply customers receiving
interruptible rate standard offer service. WMECO will competitively procure
standard offer service, default service and interruptible rate standard offer
service from January 1, 1998 or at the earliest date determined to be in the public interest by the
NHPUC, but not later than July 1, 1998.
On2001 through February 28, 1997,2005, at a later date.
On July 23, 1999, pursuant to the restructuring legislation, WMECO
completed the $47 million sale of 290 MW of fossil and hydroelectric
generation assets to Consolidated Edison Energy, Massachusetts, Inc., and in
accordanceMarch 2000, WMECO transferred 272 MW of hydro generation assets to NGC for
approximately $184 million. The net proceeds from these sales reduce WMECO's
stranded costs.
WMECO intends to file an application with thisthe DTE in 2000, requesting
authorization to securitize a portion of its stranded costs.
NEW HAMPSHIRE RATES AND RESTRUCTURING
The state of New Hampshire's attempts to restructure the electric
utility industry in that state have resulted in extensive litigation in
various federal and state courts. In 1996, New Hampshire enacted legislation
requiring a competitive electric industry beginning in 1997. In February
1997, the NHPUC issued itsrestructuring orders related to restructuring the state's electric utility industry and
setting interim stranded cost charges for PSNH.
In the orders, the NHPUC announced a departure from cost-based ratemaking
and instead adopted the market-priced approach to stranded cost recovery
advocated by the NHPUC's consultants, LaCapra Associates. Accordingly, unless
the orders are stayed or modified, PSNH will be required to discontinue
accounting under Financial Accounting Standard No. 71, ACCOUNTING FOR THE
EFFECTS OF CERTAIN TYPES OF REGULATION (FAS 71) and have to remove from its
balance sheet as early as the quarter ending March 31, 1997 substantially all of
its regulatory assets. The amount of that potential write-off is currently
estimated at over $400 million, after taxes. However, PSNH does not believe
that under the orders it would be required to recognize any additional loss
resulting from the impairment of the value of its other long-lived assets under
the provisions of FAS 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND LONG-LIVED ASSETS TO BE DISPOSED OF. See, "Unamortized PSNH Acquisition
Costs" and "Seabrook Power Contracts" below.
The orders also contain rulings on numerous other issues that would if put
into effect, have a substantial effect on the operations of PSNH. Included
among these rulings are an assertion that the 1989 Rate Agreement by and between
NU and the State of New Hampshire, which was an integral part of NU's
acquisition of PSNH in 1992, is not binding on the State; the requirement that
PSNH divest within two years following the initiation of competition all of its
owned-generation and all of its wholesale power purchase contracts (including
its contract with NAEC for Seabrook output); a prohibition on the remaining
distribution company and its affiliates from engaging in retail marketing or
load aggregation services; and a mandate for the filing of tariffs with the FERC
for the provision of unbundled retail transmission service.
On March 3, 1997, PSNH, NU, NAEC and NUSCO filed for a temporary
restraining order, preliminary and permanent injunctive relief and for a
declaratory judgment in the United States District Court for New Hampshire. The
case was subsequently transferred to Rhode Island. On March 10, 1997, the court
issued a temporary restraining order, which stayed the NHPUC's February 28, 1997
orders to the extent they established a rate setting methodology that is not
designed to recover PSNH's costs of providing service and would require PSNH to
write off any regulatory assets under FAS 71. An evidentiary hearing regarding
the System plaintiffs' request for a preliminary injunction prohibiting the
NHPUC from taking any action to implement the restructuring orders and the
restructuring statute as construed and applied in the orders will be held in the
same court on March 20, 1997.
If this stay or another appropriate court action does not remain in effect,
the write-off triggered by the decision would result in defaults which, if not
waived or renegotiated, would give investors and lenders the right to accelerate
the repayment of approximately $686 million of PSNH indebtedness and $515
million of NAEC indebtedness. These circumstances could forceforced PSNH and
NAEC to write off all of their regulatory assets and possibly seek bankruptcy protection
under Chapter 11 of the bankruptcy laws. Following the issuance of these
orders, PSNH also
intends to pursue claims for damagesimmediately sought declaratory and injunctive relief on various
grounds in Statefederal district court inand received a preliminary injunction that
prevents implementation of the NHPUC's restructuring orders.
In August 1999, NU, PSNH and the state of New Hampshire for
abrogationsigned a
Settlement Agreement intended to settle a number of pending regulatory and
court proceedings related to PSNH. Parties to the 1989 Rate Agreement. The damage claims will be inagreement included the
hundredsgovernor of millions of dollars.
Freedom Energy Proceedings
In 1994, Freedom Energy Company, LLC (Freedom), filed a petition with the
NHPUC for permission to operate as a retail electric utility selling to large
industrial customers in New Hampshire, including customersthe Governor's Office of PSNH. PSNH
intervened in Freedom's proceeding, arguing that Freedom could not sell
electricity to PSNH customers because PSNH had an exclusive franchise. In June
1995, the NHPUC determined that electric utility franchises in New Hampshire
need not be exclusive as a matter of law. PSNH appealed this decision toEnergy and Community
Service, the New Hampshire Supreme Court, which affirmed on May 13, 1996, holding thatattorney general, certain members of the staff of
the NHPUC, can alter existing exclusive franchise orders if itPSNH, and NU. The Settlement Agreement was submitted to the NHPUC
on August 2, 1999, and is determined to be inawaiting approval. If approved by the public good to do so. The Supreme Court expressly indicated, however, thatNHPUC, the
Settlement Agreement would resolve 11 NHPUC dockets and PSNH's federal
lawsuit which had enjoined the state of New Hampshire from implementing its
decision does not address whether any such alteration of the franchiserestructuring legislation, would require compensationPSNH to the utility.
The remaining issues related to the Freedom proceedings, including whether
Freedom has qualifications to operate a public utility, are still pending at the
NHPUC. In the Springwrite off $225 million
after-tax of 1997, the NHPUC intends to hold hearings to investigate
Freedom's financial, managerialits stranded costs and operational abilities to be deemed a
utility. Freedom's petition is opposed by other parties seeking to be
participants in a restructured, competitive electric industry. A related FERC
proceeding is still pending.
FPPAC AND PRUDENCE
The FPPAC provideswould allow for the recovery or refundof the
remaining amount. Also, implementation of the Settlement Agreement is
contingent upon the issuance of $725 million in rate reduction bonds
(securitization). Issuance of the rate reduction bonds requires the initial
approval of the NHPUC and final approval from the New Hampshire Legislature
via enactment of appropriate legislation. Other approvals are also required
from various federal and state regulatory agencies and financial lenders.
Under the terms of the Settlement Agreement, on the effective date, PSNH's
rates will be reduced from current levels by an average of 18.3 percent. A
decision on the Settlement Agreement is expected in the first quarter of
2000.
The Settlement Agreement also requires PSNH to sell its generation
assets and certain power contracts, including PSNH's current purchased-power
contract with NAEC for the ten-year
period beginning on May 16, 1991,output from Seabrook. The net proceeds from all
sales will be used to recover a portion of PSNH's stranded costs. The sales
would be accomplished through an auction process subject to approval by the
NHPUC. Following the divestiture, the transmission and distribution portion
of the difference between its actual prudent
energy and purchased power costs and the estimated amounts of such costs
included in base rates established by the Rate Agreement. The FPPAC amount is
calculated for a six-month period based on forecasted data and is reconciledbusiness will continue to actual data in subsequent FPPAC billing periods.be cost-of-service based.
On June 3, 1996, the NHPUC ordered PSNH to refund $41.5 million, which
amount includes $5 million of interest, related to NUG costs which had been
previously collected through the FPPAC. The refund, which will be made by
crediting customer bills through May 31, 1997, was implemented on June 1, 1996.
When actual fuel and purchased power costs are less than the estimated costs in
base rates, PSNH is permitted to retain revenues to offset previously deferred
charges, including the $41.5 million refund. By this method PSNH will have
fully recovered the $41.5 million by May 1, 1997.
On December 3, 1996,November 2, 1999, the NHPUC approved PSNH's FPPAC ratecontinuation of the fuel and
purchased-power adjustment clause (FPPAC) charge for December 1,
1996 throughPSNH at its current
level until May 31, 1997, representing2000.
COMPETITIVE SYSTEM BUSINESSES
NU is engaged in a variety of competitive businesses through Select
Energy, HEC, NGC, NGS, SEPPI, and Mode 1. With the exception of HEC whose
business is nationwide, the competitive businesses operate primarily in the
Northeast region of the United States.
ENERGY-RELATED PRODUCTS AND SERVICES AND GAS INVESTMENTS
Select Energy sells electricity, natural gas and oil to wholesale and
retail customers in the northeastern United States. Select Energy is the
largest wholesale and retail electric energy marketer in New England as
measured by MW load. In addition, Select Energy also markets natural gas and
develops and markets energy-related products and services and offers energy
management services through an overall rate decreaseaffiliate, HEC, discussed more fully below.
Select Energy has recently received licenses to provide retail electric
supply from Delaware, New Jersey, Maine, Pennsylvania, New York,
Massachusetts, Rhode Island, and New Hampshire. The DPUC has also granted
Select Energy a six-month provisional license expiring on June 30, 2000, to
serve customers in Connecticut. Proceedings at the DPUC are ongoing to
extend Select Energy's license. Select Energy is currently registered with
approximately 50 electric distribution companies and 50 gas distribution
companies to provide retail services.
Select Energy's goal is to be the regional and national leader in
providing standard offer service to those Northeast markets opened to retail
competition. Currently, Select Energy provides more than 5,000 MW of
1.0 percent.
NUGsstandard offer load, making it the largest provider of standard offer service
in the Northeast. On December 22, 1999, Select Energy and a Massachusetts
utility signed a six-month power supply agreement, effective January 1, 2000,
to meet the utility's standard offer service requirements, which are expected
to exceed 3,000 MW. This contract does not include renewal or termination
provisions. Select Energy has been serving this standard offer load since
December 1998. During 1999, revenues billed to this customer totaled $276.1
million, or approximately 46 percent of Select Energy's revenues. On January
1, 2000, Select Energy began serving CL&P with one-half of its approximately
2,000 MW standard offer requirement for a four-year period. The costs associatedCL&P
standard offer contract does not include renewal provisions. Select Energy
can terminate the contract if the FERC or DPUC require changes to the
contract which create material adverse economic impact to Select Energy which
cannot be cured. These power supply contracts are expected to provide Select
Energy with purchasesover 50 percent of its revenues in the year 2000. In addition,
beginning in January 2000, Select Energy assumed responsibility for serving
approximately 500 MW of market-based wholesale contracts throughout New
England with electric energy supply that was previously provided by PSNH from certain NUGs atCL&P and
WMECO. For the most part, the prices above the level assumed in rates are deferredfixed by contract and recovered through the FPPAC
over ten years.applicable to
actual volumes.
As of December 31, 1996, NUG deferrals totaled1999, Select Energy had contracts with retail electric
customers in states throughout the Northeast with primarily one-year
terms. These contracts represent approximately $211650 MW of load and 17,000
service locations and include predominantly commercial, institutional and
industrial accounts. This retail load establishes Select Energy as the
largest competitive retail supplier in New England as measured by MW load.
There is no single retail customer that accounts for over 5 percent of Select
Energy's expected retail revenues.
The energy marketing and brokering business is intensely competitive,
with many large companies with larger financial resources than NU's bidding
for business in the increasingly restructured New England market. Sharply
fluctuating cost of power supply caused by, among other things, weather
extremes, plant outages and fuel costs, and a lack of load-following
generating facilities, have made it difficult for Select Energy to
economically match its wholesale power purchases with its power supply
obligations. In 1998, Select Energy recorded a net loss of $13.4 million on
revenues of $29.3 million, and in 1999 Select Energy recorded a net loss of
$38.8 million on revenues of $554.9 million.
UnderDisputes with respect to interpretation and implementation of the Rate Agreement, PSNHNew
England Power Pool (NEPOOL) market rules have arisen with respect to various
competitive product markets. In certain cases, Select Energy and the State have an obligationNU
operating companies stand to use
their best effortsgain as a result of resolution of such disputes.
In other cases, Select Energy and the NU operating companies could incur
additional costs as a result of resolution of the disputes. The various
disputes are in different stages of resolution through alternative dispute
resolution and regulatory review. It is too early to renegotiate burdensome purchased power arrangements with
13 specified hydroelectric and wood-burning NUGstell the level of
potential gain or loss that were selling their output
to PSNH under long-term NHPUC rate orders. If approved, PSNH will exchange
near-term cash payments for partial relief from high-cost purchased power
20
obligations to the NUGs, with such payments and an associated return on the
unamortized portion being recoverable from customers in a future amortization
period.
Sevenmay result upon resolution of these orders haveissues.
Select Energy's ability to economically compete has also been successfully renegotiated, and PSNH has
reached agreements, subject to NHPUC approval, with the six remaining wood-fired
NUGs. The six agreements could result in net savings of approximately $440
million to PSNH's customers over a period of 20 years in exchange for upfront
payments of approximately $250 million recoverable in future charges to
customers.
In early 1996, the NHPUC began a proceeding to decide whether to approve
these settlement agreements. Despite a determinationaffected by
NU's weakened financial position caused by the extended Millstone outages
which ended in mid 1999.
In order to support and complement its growing wholesale and retail
business, Select Energy has contracted with NGC, NU's generation holding
company affiliate, to purchase 1,329 MW from resources acquired at auction
from CL&P and WMECO for a six-year period beginning in 2000. In addition,
Select Energy is purchasing approximately 200 MW of coal and hydroelectric
generating resources from HWP and more than 1,500 MW of electrical supply from
various New Hampshire
Attorney General finding that PSNH had usedEngland generating facilities on a long-term basis. In addition,
Select Energy utilizes generation failure insurance, options and energy
futures to hedge its best efforts to renegotiatesupply requirements.
In May of 1999, Select Energy signed a $26 million asset purchase
agreement with Aurora Natural Gas LLC (Aurora). Aurora is a privately
held natural gas marketing and trading company based in Dallas, Texas which
serves the 13 agreements, on March 11, 1996, the NHPUC decided to open a docket, which is
ongoing, to independently review that issue.
In January 1997, the NHPUC issued an order approvingproducer, wholesale and retail market segments. Select Energy
acquired Aurora's retail customer contracts and associated natural gas
supplies in New England, making Select Energy one of the six NUG
settlements. However,region's largest
competitive retail gas providers as measured by volume. As of December 31,
1999, Select Energy had contracts with approximately 650 retail gas
customers, primarily located in Connecticut, Massachusetts and Pennsylvania.
These contracts generally have one-year terms and include only commercial,
institutional and industrial accounts. There is no single retail gas
customer that accounts for over 5 percent of Select Energy's expected retail
gas revenues. In 1999, Select Energy's retail gas revenues were
approximately $20 million.
SEPPI was formed in March 1999 to hold a 5 percent partnership interest
in the order expressly indicatesPortland Natural Gas Transmission System. SEPPI's investment in the
project was $9.6 million as of December 31, 1999.
ELECTRIC GENERATION AND SERVICES
NGC was formed in 1999 to acquire generating facilities. In March 2000,
1,329 MW of hydroelectric and pumped storage generating assets in Connecticut
and Massachusetts were transferred to NGC from CL&P and WMECO. These assets
include seven facilities of CL&P's Housatonic River System (123 MW), three
facilities that PSNH is not assured of
recovering all ofmake up CL&P's Eastern Connecticut System, including one gas
turbine (27 MW), the payments the company must make pursuant to the agreement.
In addition, the order required PSNHNorthfield Mountain pumped storage station (owned 81% by
CL&P and 19% by WMECO) and the NUG owner to contribute an
undisclosed amount to create a fund designed to mitigate the impact of the
buydown agreement on the wood-fuel industry. On February 14, 1997, PSNH filed a
response with the NHPUC stating that the uncertainties of recovery statedCabot and Turners Falls No. 1 hydroelectric
stations located in the
order made it impossible to finance the upfront payments for the agreement.
UNAMORTIZED PSNH ACQUISITION COSTS
The Rate Agreement also provides for the recoveryMassachusetts and owned by PSNH through rates of
unamortized PSNH acquisition costs, which is the aggregate value placed by
PSNH's reorganization plan on PSNH's assetsWMECO (1,179 MW in excess of the net book value of
its non-Seabrook assets and the value assigned to Seabrook. The unrecovered
balance of PSNH acquisition costs at December 31, 1996 was approximately $491.7
million. In accordance with the Rate Agreement, approximately $82.0 million of
this amount will be recovered through rates by June 1, 1998, and the remaining
amount, approximately $409.7 million, will be recovered through rates by 2011.
PSNH earns a return each year on the unamortized portion of the costs. This
amount will not be deemed "impaired" by the NHPUC's February 28, 1997
restructuring decision within the meaning of FAS 121. For more information
regarding PSNH's recovery of these costs, see "Unamortized PSNH Acquisition
Costs" in the notes to NU's financial statements and "Unamortized Acquisition
Costs" in the notes to PSNH's financial statements.
SEABROOK POWER CONTRACTS
PSNH and NAEC have entered into two power contracts that collectively
obligate PSNH to purchase NAEC's 35.98 percent ownership ofaggregate).
NGC has sold the capacity and output of Seabrookthe plants to Select Energy for a
period of six years.
NGS was formed in 1999 to provide energy-related operation and maintenance
services to owners of generation facilities and the industrial market in the
Northeast. NGS currently focuses on providing turnkey management and operation
services and also a full range of industrial and consulting services. NGS has
entered into contracts to operate the generating facilities of NGC and HWP.
NGS's industrial services include maintenance, permitting, and
environmental and specialized electrical testing services to large and
medium-sized industrial businesses. NGS also provides consulting services to
these customers, including engineering and design, construction management,
asset development, due diligence reviews and environmental regulatory
compliance and permitting services. During 1999, NGS's revenues were
approximately $5.3 million, but are expected to grow significantly in 2000 as
a result of the NGC and HWP contracts referenced above, which are expected to
account for over 60 percent of NGS's revenues in 2000.
ENERGY MANAGEMENT SERVICES
In general, HEC contracts to reduce its customers' energy costs, improve
their facilities and conserve energy and other resources. HEC's energy
management and consulting services have primarily been directed to the
commercial, industrial and institutional markets and utilities in the eastern
United States. HEC has been awarded energy-saving contracts for federal
installations throughout the United States. In competitive procurements by
the U.S. Departments of Energy and Defense, HEC has been selected as an
"Energy Saving Performance Contractor" (ESPC) for all 50 states and overseas
bases. Specific task orders have been placed with HEC to date by Fort
Huachuca in Arizona, Portsmouth Naval Shipyard in Maine and Tobyhanna Army
Depot in Pennsylvania. The Tobyhanna award is the largest and calls for HEC
to build a 13.5-mile gas pipeline, replace the inefficient central plant,
upgrade controls and lighting, and provide gas and maintenance services for
22 years. In 1999, federal ESPC work constituted 38% of HEC's revenues.
NU's aggregate equity investment in HEC was approximately $19 million as of
December 31, 1999. HEC's 1999 revenues were approximately $46.6 million,
double their 1998 total revenues.
In August 1999, HEC acquired through a wholly owned subsidiary, Select
Energy Contracting, Inc., the name and substantially all of the assets of
Denron Plumbing and HVAC, Inc. of Manchester, New Hampshire, the largest
mechanical contractor in northern New England. HEC's revenues from the
acquisition were $6.3 million in 1999.
TELECOMMUNICATIONS
Mode 1 was established in 1996 to participate in a wide range of
telecommunications activities both within and outside New England. NU's
cumulative, total investment in Mode 1 was approximately $6.3 million as of
December 31, 1999. Mode 1 is a licensed competitive local exchange carrier
authorized to provide local phone service within the state of Connecticut.
In 1999, Mode 1 constructed a fiber optic network called "HELPNET"
connecting 41 public schools and libraries in the city of Hartford. Mode 1
was awarded a $3.3 million contract from the city for the term of Seabrook's NRC operating license and to pay
NAEC's "cost of service" during this period, whetherHELPNET project,
under a grant from the federal government.
Mode 1 currently owns approximately 26 percent, fully diluted, or
not Seabrook continues
to operate. NAEC's cost of service includes all of its prudently incurred
Seabrook-related costs, including O&M expenses, cost of fuel, depreciation of
NAEC's recoverable investment in Seabrook and a phased-in return on that
investment. The payments by PSNH to NAEC under these contracts constitute
purchased power costs for purposesapproximately 4.8 million, of the FPPACcommon shares of NorthEast Optic Network,
Inc. (NEON), which is constructing a fiber optic communications network
through New England, New York, Philadelphia, and are recovered from PSNH
customers under the Rate Agreement. Decommissioning costs are separately
collected by PSNH in its base rates. See "Rates--New Hampshire Retail Rates--
General" and--"FPPAC and Prudence" for information relating to the Rate
Agreement. At December 31, 1996, NAEC's net utility plant investment, including
fuel, in Seabrook was approximately $692 million.
If Seabrook were retired before the expiration of its NRC operating license
term, NAEC would continue to be entitled under the contracts to recover its
remaining Seabrook investment and a return on that investment and its other
Seabrook-related costs over a 39-year period, less the period during which
Seabrook has operated.
The contracts provide that NAEC's return on its "allowed investment" in
Seabrook (its investment in working capital, fuel, capital additions after the
date of commercial operation andWashington, D.C., utilizing a
portion of the initial investment) is
calculated based on NAEC's actual capitalization over the termNU system companies' transmission and distribution facilities.
An officer of NU and an officer of NUSCO are members of the contracts,
its actual debtBoard of
Directors of NEON. In addition, NU is a party to an agreement with Central
Maine Power Company (CMP), an owner of approximately 33 percent of NEON's
common shares, fully diluted, wherein NU and preferred equity costs and a common equity cost of 12.53CMP each agree that, as long as
NU owns at least 10 percent for the first ten years of the contracts,outstanding common stock of NEON, fully
diluted, and thereafterthe cumulative holdings of NU and CMP are at an equity
rateleast 33 1/3
percent, fully diluted, neither NU nor CMP will take any action which will
allow NEON to merge, consolidate, liquidate or sell, lease or transfer
substantially all of returnits assets or commence or acquiesce to be fixedany action or
proceeding under any bankruptcy laws.
In November 1999, NEON entered into subscription agreements with
Consolidated Edison Communications, Inc. (CEC), a subsidiary of Con Edison,
and another unaffiliated company for NEON to issue stock in a filing with FERC.exchange for
contributions to NEON by each utility of telecommunications assets in kind
and cash. Under the agreements, CEC and the other party, subject to certain
vesting conditions, ultimately would receive 10.75 and 9.25 percent of NEON
stock, respectively, and would each nominate one member to the NEON board of
directors. The portion of the initial
investment, which is included in the allowed investment, has increased annually
since May 1991 and reached 100 percent on May 31, 1996.
NAEC is entitled to earn a deferred return on the portion of the initial
investment not yet phased into rates. At December 31, 1996, the amount of this
deferred return was $185.1 million In addition, NAEC's utility plant includes
$84.1 million of deferred return (including taxes) that was transferred as part
of the Seabrook assets to NAEC on the acquisition date. The deferred return,
including the portion transferred to NAEC, will be recovered with carrying
charges beginning December 1, 1997, and will be fully recovered by May 2001.
For additional information regarding the contracts, see "Deferred Costs-Nuclear
Plants" in the notes to PSNH's financial statements.
MASSACHUSETTS RETAIL RATES
GENERAL
Approximately 11% of System revenues are derived from WMECO, and 11% of the
book value of the System's electric utility assets are owned by WMECO.
WMECO's retail ratesagreements are subject to regulatory approvals, which are
expected by the jurisdictionspring of the Massachusetts
Department2000.
FINANCING PROGRAM
1999 FINANCINGS
On April 14, 1999, PSNH entered into two letters of Public Utilities (DPU)credit and
reimbursement agreements totaling $115.4 million, which support its Series D
and E pollution control revenue bonds (PCRBs). The rates charged under HWP's contractsnew letters of credit,
which replaced similar letters of credit that were set to expire on April 22,
1999, allow the PCRBs to remain in their flexible, floating interest rate
mode and expire on April 12, 2000. In connection with these letter of credit
transactions, on April 14, 1999, PSNH terminated its industrial customers are not$75 million revolving
credit facility that was set to expire on April 22, 1999.
On November 19, 1999, NU entered into a $350 million, 364-day revolving
credit facility which allows NU access to $200 million in cash and allows
Select Energy and other competitive subsidiaries, subject to the ratemaking jurisdiction of
any state or federal regulatory agency.
On April 30, 1996, the DPU approved a settlement which was proposed by
WMECO and the Massachusetts Attorney General (the Agreement). The Agreement
will continue, through February 1998, a 2.4-percent rate reduction instituted in
June 1994. The Agreement terminates pending reviews of WMECO's generating plant
performance and any potential reviews associated with Millstone 2's 1994-1995
extended outage. The Agreement also accelerates its amortization of strandable
generation assets by approximately $6overall $350
million limit, access to $250 million in 1996 and $10 million in 1997.
ELECTRIC INDUSTRY RESTRUCTURING IN MASSACHUSETTS
On December 30, 1996, the DPU issued the Model Rules, which supplemented an
earlier setletters of draft rules issued on May 1, 1996. The Model Rules and
accompanying order endorsed January 1, 1998 as the date for full customer choice
of energy suppliers in Massachusetts. In addition, the Model Rules provide that
utilities will have a reasonable opportunity to recover strandable investments
and for the functional unbundling of a utility's distribution, transmission,
generation and marketing functions. The Model Rules also addressed many of the
other issues, including the future structure of the electric utility industry,
that were addressed in the DPU's May 1 explanatory statement. The Model Rules,
however, require a number of statutory changes to be enacted in order to
implement these rules. The Massachusetts legislature has given no formal
indication as to whether it will enact the statutory changes requested by the
DPU. It is unclear at this time how the DPU will proceed if the requested
statutory changes are not enacted.
The DPU also issued regulations establishing standards of conduct governing
the relationship between electric company distribution companies and their
competitive affiliates, which include all affiliates that "engage in the selling
or marketing of natural gas, electricity, or related services on a competitive
basis, including, but not limited to, natural gas or electric supply or
capacity, and demand-side management." Among other restrictions and reporting
requirements, the rules provide a number of restrictions on the flow of
information between a distribution company and its competitive affiliates,
provide that much of the information that is shared between a distribution
company and its competitive affiliate must be provided to non-affiliates, and
provide for physical separation between employees of a distribution company and
its competitive affiliate. The System is currently developing and implementing
procedures to comply with this order.
In addition to the proposed rules set forth above, the DPU also ordered
each electric company, including WMECO, to develop revenue-neutral rates
unbundled into at least generation, transmission and distribution components.
WMECO filed its proposed unbundled rates with the DPU on March 3, 1997. The DPU
has stated that Massachusetts electric utilities should be prepared to begin
sending unbundled bills to Massachusetts customers by June 1997 and that all
customers should be in receipt of unbundled bills by the end of August 1997.
On February 28, 1997, the DPU approved a settlement agreement involving an
unaffiliated electric company, Massachusetts Electric Company (MECO), which is
intended to meet the restructuring objectives of the DPU. This proposal calls
for full-retail choice by January 1, 1998 or a later date when customers of
other Massachusetts electric companies have the opportunity to choose their
energy supplier. Under the settlement, MECO's generating affiliate will divest
itself of its generation assets and MECO will collect strandable investments
through a nonbypassable access charge on customers' bills. The settlement,
however, provides that further DPU approval is required before retail access is
triggered and acknowledges that the legislature can alter the settlement through
subsequent restructuring legislation. Two other Massachusetts electric
companies have indicated that they have reach similar agreements in principal
with the Attorney General, but have not yet filed such agreement. WMECO
currently does not have any plans to divest itself of generation assets in
connection with a restructuring plan.
WMECO FUEL ADJUSTMENT CLAUSE AND GENERATING UNIT OPERATING PERFORMANCE
In Massachusetts, all fuel costs are collected on a current basis by means
of a forecasted quarterly fuel clause. The DPU must hold public hearings before
permitting adjustments in WMECO's retail fuel adjustment clause. In addition to
energy costs, the fuel adjustment clause includes capacity and transmission
charges and credits that result from short-term transactions with other
utilities and from certain FERC-approved contracts among the System operating
companies.
Massachusetts law establishes an annual performance program related to fuel
procurement and use and requires the DPU to review generating unit performance
and related fuel costs. Fuel clause revenues collected in Massachusetts are
subject to potential refund, pending the DPU's examination of the actual
performance of WMECO's generating units. The DPU has found that possession of a
minority ownership interest in a generating plant does not relieve a company of
its responsibilities for the prudent operation of that plant. For information
regarding WMECO's ownership interests in nuclear generating units, see "Electric
Operations--Nuclear Generation."
On February 28, 1997, the DPU approved a settlement agreement between
WMECO and the Massachusetts Attorney General to maintain WMECO's FAC at its
August 1996 level through August 1997. The settlement also provides that
WMECO will not seek carrying charges on any deferred fuel costs incurred as
a result of maintaining the FAC at the agreed-upon level. In accepting the
settlement, the DPU deferred any inquiry into WMECO's fuel expenses, including
replacement power fuel expenses related to the current Millstone outages.
Management believes that WMECO will not seek rate recovery of a substantial
portion of such costs.
DEMAND-SIDE MANAGEMENT
In 1992, the DPU established a conservation charge (CC) to be included in
WMECO's customers' bills. The CC includes incremental DSM program costs above
or below base rate recovery levels, lost fixed-cost recovery adjustments and the
provision for a DSM incentive mechanism.
In August and November 1995, the DPU issued decisions limiting WMECO's
recovery of lost base revenues in calendar year 1996 to those revenues lost due
to implementation of conservation-related costs in the most recent three-year
period. The DPU decision reduced 1996 revenues by approximately $5.5 million.
On January 17, 1996, the DPU approved a two-year settlement proposal that
resolves WMECO's DSM-related proceedings before the DPU. The settlement
resolves: (i) DSM budget levels for 1996 and 1997 (at $12.4 million and $11.9
million, respectively); (ii) the CC for each rate class for 1996 and 1997; and
(iii) energy savings associated with past DSM activity. The Agreement,
modifies, in part, the above-referenced DSM decisions. The Agreement shifted $8
million once included in the CC as lost base revenues into base rates.
On March 3, the DPU approved WMECO's proposed conservation charges for the
period March 1, 1997 - February 28, 1998. These new charges are now being
included on customers' bills. In addition, the DPU approved WMECO's estimates
of energy savings from its DSM programs.
RESOURCE PLANS
CONSTRUCTION
The System's construction program in the period 1997 through 2001 is
estimated as follows:
1997* 1998 1999 2000 2001
(Millions)
CL&P $165 $180 $164 $163 $170
PSNH 35 46 49 37 39
WMECO 37 42 31 28 31
NAEC 9 7 6 6 6
OTHER 34 15 14 16 14
TOTAL $280 $290 $264 $250 $260
* The 1997 data include costs of approximately $20 million related to upgrading
the System's transmission facilities to meet capacity needs caused by the
extended Millstone outages. See, "Electric Operations--Distribution and Load."
The construction program data shown above include all anticipated capital
costs necessary for committed projects and for those reasonably expected to
become committed, regardless of whether the need for the project arises from
environmental compliance, nuclear safety, reliability requirements or other
causes. The construction program's main focus is maintaining and upgrading the
existing transmission and distribution system and nuclear and fossil-generating
facilities.
The construction program data shown above generally include the anticipated
capital costs necessary for fossil generating units to operate at least until
their scheduled retirement dates. Whether a unit will be operated beyond its
scheduled retirement date, be deactivated or be retired on or before its
scheduled retirement date is regularly evaluated in light of the System's needs
for resources at the time, the cost and availability of alternatives and the
costs and benefits of operating the unit compared with the costs and benefits of
retiring the unit. Retirement of certain of the units could, in turn, require
substantial compensating expenditures for other parts of the System's bulk power
supply system. Those compensating capital expenditures have not been fully
identified or evaluated and are not included in the table.
FUTURE NEEDS
The System periodically updates its long-range resource needs through its
integrated demand and supply planning process. While the System does not
foresee the need for any new major generating facilities at least until 2010, it
has reactivated some older facilities and leased additional facilities in 1996
to supplement its capacity requirements due to the extended Millstone outages.
The System's long-term plans rely, in part, on certain DSM programs. These
System company sponsored measures, including installations to date, are
projected to lower the System summer peak load in 2010 by 703 MW and lower the
winter peak load as of January 1, 2011 by 482 MW. See "Rates" for information
about rate treatment of DSM costs.
In addition, System companies have long-term arrangements to purchase the
output from certain NUGs under federal and state laws, regulations and orders
mandating such purchases. NUGs supplied 660.4 MW of firm capacity in 1996. The
System companies do not expect to purchase additional capacity from NUGs for the
foreseeable future. See "Rates--New Hampshire Retail Rates--NUGs" for
information concerning PSNH's efforts to renegotiate its agreements with wood-
burning NUGs and "CL&P Cogeneration Costs" in the notes to NU's financial
statements and "Cogeneration Costs" in the notes to CL&P's financial statements
for information regarding CL&P's termination of one of its purchased-power
agreements.
The System's need for new resources may be affected by premature
retirements of existing generating units, regulatory approval of the continued
operation of certain fossil fuel units past scheduled retirement dates, and the
possible deactivation of plants resulting from environmental compliance costs,
licensing decisions and other regulatory matters. The System's need for new
resources also may be substantially affected by restructuring of the electric
industry. For more information regarding restructuring, see "Rates".
FINANCING PROGRAM
1996 FINANCINGS
On April 30, 1996, PSNH extended and increased its $125 million revolving-
credit agreement to $225 million. A portion of the facility in the amount of
$100 million will expire April 29, 1997 and the remaining $125 million will
expire on April 30, 1999. PSNH used the facility in part to finance the
repayment at maturity of PSNH's $172.5 million of Series A First Mortgage Bonds
on May 16, 1996.
On May 21, 1996, the Connecticut Development Authority issued $62 million
of tax-exempt pollution control revenue bonds. Concurrent with that issuance,
the proceeds of the bonds were loaned to CL&P for the reimbursement of a portion
of CL&P's share of the previously incurred costs of financing, acquiring,
constructing, and installing pollution control, sewage, and solid waste disposal
facilities at Millstone 3. The bonds were issued with an initial variable
interest rate of 3.7 percent per annum. The bonds will mature on May 1, 2031 and
may bear, at CL&P's discretion, a variable or fixed interest rate, which may not
exceed 12 percent. The bonds were originally backed by a five-year letter of
credit, which was secured by a second mortgage on CL&P's interest in Millstone
1. On January 23, 1997, the letter of credit was replaced with an insurance
facility and a standby bond purchase agreement. The second mortgage was replaced
with the issuance of $62 million of First and Refunding Mortgage Bonds, 1996
Series B, bearing the same interest rate as the underlying bonds. As of
February 28, 1997, the bonds bore an interest rate of 3.3 percent per annum.
On June 21, 1996, CL&P entered into an operating lease agreement for CL&P
to acquire the use of four turbine generators having an installed cost of
approximately $70 million. The initial lease term is for a five-year period.
The lease agreement provides for five consecutive renewal options under which
CL&P may lease the turbines for five additional twelve-month terms. The rental
payments are based on a 30 day floating interest rate plus 1 percent. The
interest rate averaged 6.42 percent during 1996. Upon termination of the lease
agreement, ownership of the turbines will remain with the lessor, unless CL&P
exercises its purchase option.
On June 25, 1996, CL&P issued $160 million of First and Refunding Mortgage
Bonds, 1996 Series A. The 1996 Series A Bonds bear interest at an annual rate
of 7.875%, and will mature on June 1, 2001. The net proceeds from the issuance
and sale of the 1996 Series A Bonds, plus funds from other sources, are intended
to be used to repay approximately $193.3 million in principal amount of CL&P's
Series UU bonds, due April 1, 1997. Before maturity of the Series UU bonds, CL&P
has used a portion of the net proceeds to reduce short-term borrowing
requirements.
On July 11, 1996, CL&P entered into an agreement to sell up to $200 million
of fractional undivided percentage interests in eligible accounts receivable
with limited recourse. The agreement provides for a loss reserve pursuant to
which additional customer receivables are allocated to the purchaser on an
interim basis, to protect against bad debt. To the extent actual loss
experience of the pool receivables exceeds the loss reserve, the purchaser
absorbs the excess. For receivables sold, CL&P has retained collection and
servicing responsibilities as agent for the purchaser.
On September 13, 1996, WMECO entered into an agreement to sell fractional
undivided percentage receivable interests in WMECO's eligible billed and
unbilled accounts receivable. The amount of receivables sold at any one time
will not exceed $40 million plus limited reserves for losses. To the extent
actual loss experience of the pool receivables exceeds the loss reserves, the
purchaser will absorb the excess. WMECO has retained collection and servicing
responsibilities as agent for the purchaser.
In order to comply with new accounting requirements, effective January 1,
1997, the CL&P receivables agreement and the WMECO receivables agreement are
being restructured. The WMECO receivables agreement will terminate if it is not
restructured and if certain regulatory approvals are not obtained before April
1, 1997, unless extended by mutual agreement.credit.
On November 21, 1996, NU,19, 1999, CL&P and WMECO entered into a new three-year364-day
revolving credit facility for $500 million, replacing the previous $313.75
million facility which was to expire on November 21, 1999. Under this
agreement, (the New Credit Agreement)CL&P and WMECO may draw up to $300 million and $200 million,
respectively. Once CL&P and WMECO receive the proceeds of securitization,
the borrowing limits will be reduced to $300 million, with a group$200 million
limit for CL&P and a $100 million limit for WMECO.
In connection with the sale of banks.
UnderCL&P's fossil units, CL&P redeemed in
December 1999, the New Credit Agreement,following series of first mortgage bonds: 1994 Series B 6
1/8%, Series YY 7 1/2% and Series ZZ 7 3/8% and a portion of its Series XX 5
3/4%.
On September 14, 1999, the NU is ableBoard of Trustees approved the payment of
NU's first common share dividend since March 1997. NU paid a dividend of 10
cents per share on December 30, 1999, to borrowshareholders of record as of the
close of business December 1, 1999. On January 11, 2000, the NU Board of
Trustees declared a regular quarterly dividend of 10 cents per share, payable
March 31, 2000, to shareholders of record of March 1, 2000. The record date
for this dividend was changed on a revolving basis upJanuary 31, 2000 to $150 million, CL&P is ableMarch 6, 2000, to
borrow approximately $313 million, and WMECO will
be ableprovide Yankee shareholders who received NU common shares the opportunity to
borrow up to $150 million, subject to a total borrowing limit of
approximately $313 million for all three borrowers. The New Credit Agreement
replaces a like amount of borrowing availability under earlier revolving credit
agreements (Old Credit Agreements). Approximately $56 million is still
available underreceive the Old Credit Agreement. For information regarding amendments
to this agreement and issues related to its financial covenants, see "Financing
Limitations," below.dividend following the Yankee merger.
Total SystemNU system debt, including short-term and capitalized leasedlease
obligations, was $4.15$3.3 billion as of December 31, 1996,1999, compared with $4.25$3.9
billion as of December 31, 1995 and $4.54 billion as of December 31, 1994.1998. For more information regarding SystemNU system
financing, see "Notes to Consolidated Statements of Capitalization" in NU's
financial statements, other footnotes related to long-term debt, short-term
debt and "Short-Term Debt"the sale of accounts receivables, as applicable, in the notes to
NU's, CL&P's, PSNH's, WMECO's, and NAEC's financial statements and "Item 7.
ManagementManagement's Discussion and Analysis of Financial Condition and Results of
Operations."
19972000 FINANCING REQUIREMENTS
The System'sNU system's aggregate capital requirements for 1997, exclusive of
requirements under the Niantic Bay Fuel Trust (NBFT) and a one percent sinking
and improvement fund for CL&P and WMECO,2000 are approximately
as follows:
CL&P PSNH WMECO NAEC Other SystemNU system
(Millions)
Construction $165$205.8 $ 3551.6 $24.2 $ 37 $ 9 $ 34 $2804.5 $23.6 $309.7
Nuclear Fuel 547.5 1.2 10.7 14.8 - 1 1574.2
Maturities 159.0 - 21
Maturities 20460.0 200.0 - 15 - - 219419.0
Cash Sinking funds - 25 - 20 56 101Funds 19.8 25.0 1.5 70.0 28.1 144.4
------ ------ ----- ------ ----- ------
Total $374$432.1 $ 60 $ 53 $44 $90 $621
For further information on NBFT and the System's financing of its nuclear
fuel requirements, see "Leases" in the notes to NU's, CL&P's and WMECO's
financial statements.77.8 $96.4 $289.3 $51.7 $947.3
====== ====== ===== ====== ===== ======
For further information on the System's 1997NU system's 2000 and five-
yearfive-year financing
requirements, see "Notes to Consolidated Statements of Capitalization" in
NU's financial statements, "Long-Term Debt" in the notes to CL&P's, PSNH's,
WMECO's, and WMECO'sNAEC's financial statements and "Item 7. ManagementManagement's Discussion
and Analysis of Financial Condition and Results of Operations."
19972000 FINANCING PLANS
The SystemAs a result of industry restructuring and new business initiatives, the
NU system companies generally proposeare likely to financeundertake a much higher level of financing,
refinancing, and debt and preferred stock retirement in 2000 than they have
in previous years. CL&P, PSNH and WMECO all intend to work with authorities
in their 1997 requirementsrespective states in 2000 to securitize stranded costs. More than
$2.5 billion could become available to those three regulated companies and
NAEC to retire debt and preferred stock and return common equity to the
parent company. Additionally, the transfer of 1,329 MW of generating assets
to NGC in March 2000 provided CL&P and WMECO with $681 million and $184
million, respectively, of additional proceeds, approximately $390 million of
which is expected to be returned to NU in the form of stock repurchases
($300 million from CL&P and $90 million from WMECO) and the balance was used
primarily to pay off debt and preferred stock. By the end of 2000, assuming
securitization occurs in each state, NU anticipates that the total
capitalization of CL&P, PSNH, WMECO, and NAEC will be materially reduced from
levels at the start of the year. Each of the regulated subsidiaries'
construction needs, nuclear fuel purchases, maturities, and sinking funds is
expected to be largely met through internally generated funds and short-term
borrowings.
WMECO also
proposesNU's merger with Yankee on March 1, 2000, was financed with a combination
of 11.1 million newly issued NU shares and a $263 million senior term loan
credit facility. NGC expects to issue upfinance the acquisition of certain of CL&P's
and WMECO's hydroelectric assets with a $430 million credit facility that will
mature on December 29, 2000. NGC is examining various options for refinancing
that facility prior to its maturity.
As discussed above, PSNH has approximately $60$110 million of first mortgage bonds, and
CL&P is evaluating the issue and saleletters of
up to $200 millioncredit that support certain variable-rate pollution control bonds. These
letters of first mortgage
bonds. CL&P and WMECO also propose to sell receivables to finance a portion of
their 1997 requirements. For more information regarding the issuance of
additional CL&P and WMECO first mortgage bonds as collateral for the New Credit
Agreement, see "Financing Limitations," below.
Incredit will expire on April 1995, NU began issuing NU common shares to fund its Dividend
Reinvestment Plan (DRP). The total amount financed through the DRP in 1996 was
approximately $10.5 million. NU stopped issuing new shares to fund the DRP in
March 1996 and has been funding, and expects to continue through 1997 to fund,
the DRP by purchasing shares in the open market.
On October 8, 1996, Moody's Investors Service (Moody's) downgraded the
senior securities of NU, CL&P, WMECO and NBFT for the second time in 1996.
Standard & Poor's Ratings Group (S&P) downgraded the senior securities of NU,
CL&P and NBFT on October 11, 1996.12, 2000. On March 3, 1997, Moody's and S&P further
downgraded its ratings on NU, PSNH and NAEC in response to1, 2000, the NHPUC
decision
described above under "Rates--New Hampshire Retail Rates--Electric Industry
Restructuring." S&P's and Moody's have both announced that all System securities
are being reviewedapproved PSNH's application to renew them for further downgrades.
On January 28, 1997, the NU Board declared a 25 cent dividend on each
outstanding commons share payable on March 31, 1997. In light of the
seriousness of the NHPUC's February 28th restructuring orders and the extent of
the Millstone outages, management will recommend that the NU Board consider
suspending the NU dividend. If a dividend suspension were to occur, that would
conserve about $140 million annually of additional funds, compared with the
current dividend of 25 cents. For more information regarding restructuring, see
"Rates" and regarding restrictions on NU and certain System companies' ability
to pay dividends, see "Financing Limitations," below.12-month period from April 4,
2000.
FINANCING LIMITATIONS
Many of the SystemNU system companies' charters and borrowing facilities
contain financial limitations (as discussed more fully below) that must be satisfied before borrowings can be
made and for outstanding borrowings to remain outstanding.
To date, CL&P, PSNH, WMECO and NAEC have satisfied all financial
covenants required underUnder their respective borrowing facilities, but NU needed
and obtained a limited waiver of an interest coverage covenant that had to be
satisfied for NU to borrow under the New Credit Agreement.
NU,current revolving credit agreement, CL&P and WMECO are
currently maintaining their accessrequired to maintain a ratio of common equity to total capitalization of at
least 28 percent through December 31, 1999, and 30 percent thereafter. At
December 31, 1999, CL&P's and WMECO's common equity ratios were 34.61 percent
and 34.65 percent, respectively. This agreement also requires, beginning in
the New Credit
Agreement under a written arrangement which expires March 28, 1997, unless
extended by mutual consent, under which (i) NU agreed not to borrow more than
$27 million against the facility for a periodfourth quarter of time, and (ii) NU agreed to
enter into an interim written arrangement whereby NU,1999, both CL&P and WMECO will seek
regulatory approval for certain amendments in order to maintain accessa quarterly ratio
of 12-month operating income to interest expense (interest coverage ratio) of
at least 2 to 1. For the New Credit Agreement through its maturity date. It is anticipated that these
amendments will include (i) CL&P and WMECO providing lenders first mortgage
bonds as collateral for specified periods and subject to specified terms for
releasing the collateral, (ii) revised financial covenants that are consistent
with NU's,quarter ended December 31, 1999, CL&P's and WMECO's
current financial forecastsinterest coverage ratios were 3.44 to 1 and (iii) an upfront
payment2.69 to the lenders in order1, respectively.
Under NU's revolving short-term credit agreement and its Yankee-related
short-term loan agreement, NU is required to maintain commitmentsa consolidated common
equity ratio of at least 28 percent through December 31, 1999, and 30 percent
thereafter. At December 31, 1999, NU's consolidated common equity ratio was
35.31 percent. In addition, NU is required to maintain a consolidated
quarterly interest coverage ratio of 2 to 1. For the quarter ended
December 31, 1999, NU's consolidated interest coverage ratio was 2.67 to 1.
NU is also required to maintain as of the end of each quarter commencing with
the quarter ending March 31, 2000, a ratio of operating cash flow to fixed
charges of at least 1.50 to 1.
These agreements also limit NU's ability, without creditor approval, to
incur additional debt, except for debt incurred in connection with pending
matters, and limit NU's ability to make future investments, including
investments in Select Energy and other subsidiaries in excess of $100 million
and $50 million, respectively.
PSNH and NAEC are parties to a variety of financing agreements which
provide that the credit thereunder can be terminated or accelerated if each
does not maintain specified minimum ratios of common equity to capitalization
(as defined in each agreement). For PSNH, the minimum common equity ratio
required in certain letters of credit and reimbursement agreements is not
less than 32.5 percent. At December 31, 1999, PSNH's common equity ratio was
56.6 percent. For NAEC, the minimum common equity ratio required under its
term loan agreement is 25 percent; at December 31, 1999, NAEC's common equity
ratio was 30.02 percent.
In addition, PSNH's letters of credit and reimbursement agreements
require that for PSNH to obtain and maintain borrowings thereunder, it must
demonstrate that its ratio of operating income to interest expense will be at
least 2.35 to 1 at the end of each fiscal quarter for the remaining term of
the agreements. The NAEC term loan agreement requires a ratio of adjusted
net income to interest expense of 1.50 to 1 at the end of each fiscal quarter
for the remaining term of the agreement. For the 12-month period ended
December 31, 1999, the corresponding ratios for PSNH and NAEC were 4.98 to 1
and 2.84 to 1, respectively.
PSNH's letters of credit and reimbursement agreements limit PSNH's
unsecured debt to $25 million. In addition, these financing agreements
provide in effect that the credit thereunder can be terminated or accelerated
if there are actions taken, either by PSNH or NAEC or by the state of New
Credit
Agreement.Hampshire, that deprive PSNH and/or NAEC of the benefits of the Rate
Agreement and/or the Seabrook Power Contracts.
The amountsamount of short-term borrowingsdebt that may be incurred by NU, CL&P, PSNH, WMECO,
HWP, and NAEC are also subject to periodic approval by the SEC under the 1935
Act. PSNH's short-term debt is regulated by the NHPUC. The following table
shows the amount of short-term borrowings authorized by the SEC or the NHPUC
for each company, as the case may be, as of January 1, 1997December 31, 1999, and the net
amounts of outstanding short-term debt and cash investments of those
companies at the end of 19961999 and as of February 28, 1997:March 1, 2000:
Short-Term Debt
Maximum Authorized Short-Term Debt Outstanding
Short-Term Debt and (Cash Investments)*
12/31/96 2/28/97------------------ -----------------------
December 31, March 1,
1999 2000
(Millions)
NU.................. $400.0 $ 15019.7 $ 33 $ ( 62)34.7
CL&P ............... 375 (109) ( 16)
PSNH ............... 225*375.0 101.7 9.6
PSNH** ( 18) 12.............. 68.3 (180.1) (237.1)
WMECO............... 150 47 74250.0 132.4 133.4
HWP................. 5 ( 9) ( 9)5.0 (15.5) (17.2)
NAEC................ 50 3 2660.0 (56.4) (61.0)
OTHER............... N/A 45.1 74.5
------- -------
Total $( 53) $ 2546.9 $(63.1)
======= =======
* These columns includesinclude borrowings of or cash investments by various SystemNU
system companies from NU and other SystemNU system companies. Total SystemNU system
short-term indebtedness to unaffiliated lenders was $39$278 million at
December 31, 19961999, and $93$288 million at February 28, 1997.March 1, 2000.
** This limitUnder applicable NHPUC provisions, PSNH can incur short-term debt up to
10 percent of net fixed plant. As of December 31, 1999, PSNH's net fixed plant
as measured by FERC was approved by the NHPUC and will decreaseapproximately $683 million, so PSNH could borrow up
to $125$68.3 million effective May 14, 1997.of short-term debt.
The supplemental indentures under which NU issued $175 million in
principal amount of 8.58 percent amortizing notes in December 1991 and $75
million in principal amount of 8.38 percent amortizing notes in March 1992
contain restrictions on dispositions of certain SystemNU system companies' stock,
limitations of liens on NU assets and restrictions on distributions on and
acquisitions of NU stock. Under these provisions, neither NU, CL&P, PSNH, norand WMECO
may not dispose of voting stock of CL&P, PSNH or WMECO other than to NU or
another SystemNU system company, except that CL&P may sell voting stock for cash to
third persons if so ordered by a regulatory agency so long as the amount sold
is not more than 19 percent of CL&P's voting stock after the sale. The
restrictions also generally prohibit NU from pledging voting stock of CL&P,
PSNH or WMECO or granting liens on its other assets in amounts greater than
five percent of the total common equity of NU. Many of the NU system
companies' loan agreements have similar restrictions. As of December 31,
1996,1999, no NU debt was secured by liens on NU assets. Finally,Furthermore, NU may not
declare or make distributions on its capital stock, acquire its capital stock
(or rights thereto), or permit a SystemNU system company to do the same, at times
when there is an event of default under the supplemental indentures under
which the amortizing notes were issued.
Pursuant to its revolving short-term credit agreement and the Yankee
credit agreement, NU may not declare dividends or make distributions, except
for dividends not to exceed $53 million during any 12-month period and stock
repurchases of up to $215 million in connection with the Yankee merger.
Similar restrictions are found in NU's merger agreement with Con Edison.
The charters of CL&P and WMECO contain preferred stock provisions
restricting the amount of unsecured debt those companies may incur. As of
December 31, 1996,1999, CL&P's and WMECO's charters permit CL&P and WMECO to incur
an additional $524$322 million and $78$132 million, respectively, of unsecured debt.
In connection with NU's acquisition of PSNH, the DPUC imposed certain
financial conditions intended to prevent NU from relying on CL&P resources if
the PSNH acquisition strained NU's financial condition. The principal
conditions provided for a DPUC review if CL&P's common equity falls to 36
percent or below, require NU to obtain DPUC approval to secure NU financings
with CL&P stock or assets and obligate NU to use its best efforts to sell CL&P
preferred or common stock to the public if NU cannot meet CL&P's need for equity
capital. If, at any time, CL&P projects that its common equity ratio as of the
end of the next fiscal quarter will be below 36% or plans to take any action
that will result or can reasonably be expected to result in reducing the above
ratio below 36% then CL&P is required to notify the DPUC in writing at least 45
days before such action is taken or event is anticipated to occur. The DPUC may
conduct a proceeding after its receipt of CL&P's notice. At December 31, 1996,
CL&P's common equity ratio was 36.6 percent. CL&P does not expect to meet this
condition as of June 30, 1997 and will notify the DPUC in accordance with the
foregoing requirement.
While not directly restricting the amount of short-term debt that CL&P,
WMECO, Rocky River Realty (RRR), NNECO and NU may incur, the revolving credit
agreements to which CL&P, WMECO, HWP, RRR, NNECO and NU are parties provide that
the lenders are not required to make additional loans, and that the maturity of
indebtedness can be accelerated, if NU (on a consolidated basis) does not meet a
common equity ratio test that requires, in effect, that NU's consolidated common
equity (as defined) be at least 30 percent in any quarter. At December 31,
1996, NU's common equity ratio was 34.6 percent.
Under the New Credit Agreement, NU is prohibited from incurring additional
debt unless it is able to demonstrate, on a pro forma basis for the prior
quarter and going forward, that its equity ratio (as defined) will be at least
30 percent of total capitalization (as defined) through December 31, 1996, 31
percent through December 31, 1997 and 32 percent thereafter. In addition, NU
must demonstrate that its ratio of operating income to interest expense will be
at least 1.25 to 1 through December 31, 1996, 1.50 to 1 through June 30, 1997,
2.25 to 1 through December 31, 1997 and 3.25 to 1 thereafter. At December 31,
1996, NU's common equity ratio was 34.4 percent and its operating income to
interest expense ratio was 0.87 to 1. As discussed above, NU has received a
waiver of these covenants through March 28, 1997. NU is also prohibited from
incurring additional debt in excess of CL&P, WMECO, PSNH and NAEC's aggregate
dividend paying ability. See below, for information regarding limitations on
dividend payments.
Additionally, under the New Credit Agreement, CL&P and WMECO are prohibited
from incurring additional debt unless they are able to demonstrate, on a pro
forma basis for the prior quarter and going forward, that their equity ratios
will be at least 32 percent of their total capitalizations through December 31,
1996, 33 percent through December 31, 1997 and 34 percent thereafter. At
December 31, 1996, CL&P'S and WMECO's common equity ratios were 36.6 percent and
40.6 percent. Beginning in the first quarter of 1997, CL&P must demonstrate
that its ratio of operating income to interest expense will be at least 3.00 to
1 through June 30, 1997 and 4.50 to 1 thereafter. WMECO also must demonstrate
that its ratio of operating income to interest expense will be at least 1.50 to
1 through June 30, 1997, 2.25 to 1 through December 31, 1997 and 2.50 to 1
thereafter. CL&P and WMECO are not expected to meet the requirements for either
of these covenants during 1997 and as discussed more fully above, will seek
waivers of these covenants.
PSNH and NAEC are parties to a variety of financing agreements providing
that the credit thereunder can be terminated or accelerated if they do not
maintain specified minimum ratios of common equity to capitalization (as defined
in each agreement). For PSNH, the minimum common equity ratio in a letter of
credit agreement and in a revolving credit agreement is not less than 28.5
percent through June 30, 1997 and 30 percent thereafter. At December 31, 1996,
PSNH's common equity ratio was 42.4 percent. For NAEC, the minimum common
equity ratio in a term loan agreement is 25 percent; at December 31, 1996,
NAEC's common equity ratio was 29.4 percent.
In addition, PSNH's revolving credit agreement requires that for PSNH to
obtain and maintain borrowings thereunder, it must demonstrate that its ratio of
operating income to interest expense will be at least 1.75 to 1 at the end of
each fiscal quarter for the remaining term of the agreement. The NAEC term loan
agreement requires a ratio of adjusted net income to interest expense of 1.35 to
1 through December 31, 1997 and 1.50 to 1 thereafter. For the 12-month periods
ended December 31, 1996 the corresponding ratios for PSNH were 3.59 to 1 and
1.75 to 1, respectively.
In addition, PSNH and NAEC are parties to a variety of financing agreements
providing in effect that the credit thereunder can be terminated or accelerated
if there are actions taken, either by PSNH or NAEC or by the State of New
Hampshire, that deprive PSNH and/or NAEC of the benefits of the Rate Agreement
and/or the Seabrook Power Contracts.
If the February 28, 1997 orders of the NHPUC described above under "Rates--
New Hampshire Retail Rates--Electric Industry Restructuring in New Hampshire"
become effective, they would, unless waived by the respective lenders, result in
(i) write-offs that would cause PSNH's common equity to fall below the
contractual minimums, (ii) reductions in income that would cause PSNH's income
to fall below the contractual minimums, (iii) potential violation of the
contractual provisions with respect to actions depriving PSNH and NAEC of the
benefits of the Rate Agreement and (iv) the potential for cross defaults to
other PSNH and NAEC financing documents. Substantially all of PSNH's and NAEC's
debt obligations ($686 million of PSNH debt and $515 million of NAEC debt) would
be affected. For these actions to be avoided, management believes that it is
essential that the March 10, 1997 temporary restraining order issued by a
federal court judge (see the "Rates" section described above) be extended and
made applicable to the foregoing issues.
The indentures securing the outstanding first mortgage bonds of CL&P,
PSNH, WMECO, and NAEC provide that additional bonds may not be issued, except
for certain refunding purposes, unless earnings (as defined in each indenture
and before income taxes, and, in the case of PSNH, without deducting the
amortization of PSNH's regulatory asset), are at least twice the pro forma
annual interest charges on outstanding bonds, and certain prior lien
obligations and the
bonds to be issued. While CL&P&P's and WMECO's 19961999 earnings do not
permit them to meet those earnings coverage tests, but as of March 31, 1997, CL&P and WMECO would be
able to issue up to $236 million and $153 milliontheir loan agreements
prohibit the issuance of additional first mortgage bonds, respectively, on the basis of previously issued but refunded bonds,
without having to meet the earnings coverage test. After the $193 million of
CL&P series UU bonds are retired on April 1, 1997, the amount issuable by CL&P
will increase by that amount.bonds.
The preferred stock provisions of CL&P's PSNH's and WMECO's charters also
prohibit the issuance of additional preferred stock (except for refinancing
purposes) unless income before interest charges (as defined and after income
taxes and depreciation) is at least 1.5 times the pro forma annual interest
charges on indebtedness and the annual dividend requirements on preferred
stock that will be outstanding after the additional stock is issued. CL&P
and WMECO are currently unable to issue additional preferred stock under
these provisions.
SEC rules under the 1935 Act require that dividends on NU's shares be based
on the amounts of dividends received from subsidiaries, not on the
undistributed retained earnings of subsidiaries. At the current indicated
annual dividend of $1.00 per share, NU's aggregate annual dividends on common
shares outstanding at December 31, 1996, including unallocated shares held by
the Employee Stock Option Plan, would be approximately $136 million.
The supplemental indentures under which CL&P's and WMECO's first mortgage
bonds and the indenture under which PSNH's first mortgage bonds have
been issued limit the amount of cash dividends and other distributions these
subsidiaries can make to NU out of their retained earnings. As of December
31, 1996,1999, CL&P had $11.3an accumulated deficit of approximately $359 million WMECO had $75.5 million and PSNH had $174.6that
must be made up before it is able to make such distributions to NU. CL&P,
however, has requested approval from the SEC permitting it to make up to $310
million of unrestricted retained earnings. CL&P is not expecteddistributions to be able to declare any
dividends under these provision in 1997.NU arising out of restructuring. The indenture
under which NAEC's Series A Bonds have been issued also limits the amount of
cash dividends or distributions NAEC can make to NU to retained earnings plus
$10 million. At December 31, 1996,1999, approximately $31.6$23 million was available
to be paid under this provision.
PSNH's revolvingletters of credit agreement prohibitsand reimbursement agreements prohibit it from
declaring or paying any cash dividends or distributions on any of its capital
stock, except for dividends on the preferred stock, unless minimum interest
coverage and common equity ratio tests discussed above are satisfied. These
agreements also require creditor approval for PSNH to pay more than an
aggregate of $40 million of certain restricted payments (dividends or other
distributions to NU and NUG settlement payments). PSNH's preferred stock
provisions also limit the amount of cash dividends and other distributions
PSNH can make to NU if, after taking the dividend or other distribution into
account, PSNH's common stock equity is less than 2520 percent of total
capitalization. At December 31, 1996,1999, approximately $172.8$1,047 million was
available to be paid under these provisions. If NAEC could not meet the common equity covenant referredis also subject to above, it would also be unable to pay common dividends.a
similar test under its term note agreement. At December 31, 1996,
$63.71999, $29
million was available to be paid by NAEC under this provision.
Certain subsidiariesIn March 2000, in connection with the approval of PSNH's extension of
certain letter of credit and reimbursement agreements, the NHPUC restated a
previous order requiring PSNH to obtain NHPUC approval before paying any
dividends on its common stock and before investing any PSNH funds in the NU
have established a system for pooling System
resources (Money Pool) to provide a more effective use of the cash resources of
the System and to reduce outside short-term borrowings. NUSCO administers the
Money Pool as agent for the participating companies. Short-term borrowing needs
of the participating companies (except NU) are first met with available funds of
other member companies, including funds borrowed by NU from third parties. NU
may lend to, but not borrow from, the Money Pool. Investing and borrowing
subsidiaries receive or pay interest based on the average daily Federal Funds
rate, except that borrowings based on loans from NU bear interest at NU's cost.
Funds may be withdrawn or repaid to the Money Pool at any time without prior
notice.
RRR is the obligor under financing arrangements for office facilities at
the System's Berlin (Connecticut) headquarters. Under those financing
arrangements, the holders of notes for $38 million would be entitled to request
the repurchase of the notes if any major subsidiary (as defined) of NU has debt
ratings below investment grade as of any year-endmoney pool during the expected 364-day term of the financing.facilities. It is
expected that the NHPUC will address this issue in connection with its decision
on the Settlement Agreement.
Applicable merger accounting rules require that upon acquisition by NU,
Yankee's and its subsidiaries' retained earnings are converted to capital
surplus. Also, the merger premium NU paid to acquire Yankee will be
allocated among Yankee and its subsidiaries, "pushed down" to their balance
sheets and amortized to expense. The notesmajority of the merger premium will be
amortized over 40 years. Under the 1935 Act, subsidiaries of registered
holding companies are securedonly allowed to pay dividends out of retained earnings
unless the SEC allows otherwise. The effect of this rule would be to prevent
Yankee from paying dividends to NU from any source other than post-merger
earnings, as reduced by real estate leases between RRRthe merger premium amortization. NU has sought
permission from the SEC for Yankee and NUSCO,
which provideits subsidiaries to pay dividends up
to the amount of Yankee's pre-merger retained earnings and post-merger
retained earnings and without regard to merger premium amortization
thereafter, and expects to receive this authorization during the second
quarter of 2000.
NU also intends to apply to the SEC for waivers of these rules so that,
following the merger with Con Edison, it and its subsidiaries, including
Yankee, will be able to pay dividends utilizing the pre-merger retained
earnings of the NU system and compute current earnings without regard to the
amortization of the NU merger premium. If this order is not granted NU's
ability to pay dividends to Con Edison would be constrained.
NU is required under the 1935 Act to maintain its consolidated common
equity at a level equal to at least 30 percent of its consolidated
capitalization. Following the issuance of rate reduction bonds by its
subsidiaries, NU will temporarily be unable to meet this standard because
such bonds, although nonrecourse to the NU system company issuers, are
considered to be indebtedness of the companies under generally accepted
accounting principles. The SEC has granted a waiver to NU allowing it to
maintain its consolidated common equity ratio below 30 percent for one year
following the date all of the NU system companies have issued the maximum
amount of rate reduction bonds. The 30 percent test also applies to NU's
electric operating subsidiaries. The SEC has granted them a waiver of this
test for 12 years following the issuance of their respective rate reduction
bonds.
NU provides credit assurance in the form of guarantees, letters of
credit, performance guarantees and other assurances for the accelerationfinancial
performance obligation of rent equalcertain of its unregulated subsidiaries,
particularly Select Energy. NU currently has authorization from the SEC to
RRR's note obligations if
RRRprovide up to $500 million of guarantees, but is unablelimited under certain loan
agreements to pay,$350 million of such arrangements without creditor approval.
As of December 31, 1999, NU had provided approximately $190 million of such
credit assurances.
Certain NU system financing agreements also have covenants or trigger
events tied to credit ratings of certain NU system companies.
CONSTRUCTION PROGRAM
The NU system's construction program expenditures, including allowance
for funds used during construction (AFUDC), in the period 2000 through 2004
are estimated to be as follows:
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
(Millions of Dollars)
CL&P $205.8 $217.2 $268.2 $302.3 $271.0
PSNH 51.6 48.1 68.2 79.1 67.3
WMECO 24.2 21.0 22.0 23.5 21.9
NAEC 4.5 5.1 - - -
NGC 3.3 9.1 8.9 12.4 1.3
Other 20.3 19.6 17.3 13.4 11.6
------ ------ ------ ------ ------
NU System Total $309.7 $320.1 $384.6 $430.7 $373.1
====== ====== ====== ====== ======
The construction program data shown above includes all anticipated
capital costs necessary for committed projects and NU has guaranteedfor those reasonably
expected to become committed, regardless of whether the notes. PSNHneed for the project
arises from environmental compliance, nuclear safety, reliability
requirements, or other causes. While the data assumes the sale of Millstone
and NAEC, whose debt
ratings were below investment grade at year end, will become major subsidiaries
of NU as ofSeabrook by June 30, 2001 and December 31, 2001, respectively, the
end of 1996, based oncompanies hope to close the financial statements incorporated in
this report. Accordingly, underMillstone sale by April 1, 2001. The
construction program's main focus is maintaining and upgrading the terms of the RRR financing arrangements,
the holders have 30 days in which to elect to require RRR to repurchase the
notes at par. If a noteholder makes such an election, RRR will have the option
to refinance the note(s) with an institutional investor (as defined) within
approximately 150 days of receipt of the notice of the event. If RRR is unable
or unwilling to refinance the note(s) it is required to repurchase the note(s)
within approximately 90 days of receipt of the notice. This notice will be given
within three days after the filing date of this report. RRR is engaged in
discussions with the noteholders about this issue.existing
transmission and distribution system and nuclear and hydroelectric generating
assets.
REGULATED ELECTRIC OPERATIONS
DISTRIBUTION AND LOAD
The System companies ownSALES
CL&P, PSNH and operate a fully integrated electric utility
business. The System companies' retail electric service territories cover
approximately 11,335 square miles (4,400 in CL&P's service area, 5,445 in PSNH's
service area and 1,490 in WMECO's service area) and have an estimated total
population of approximately 4 million (2.5 million in Connecticut, 963,000 in
New Hampshire and 582,000 in Massachusetts). The companiesWMECO furnish retail
electric franchise service in 149, 198 and 59
cities and towns in Connecticut, New Hampshire and Massachusetts,
respectively. In December 19961999, CL&P furnished retail electric franchise service to
approximately 1.11.12 million customers in Connecticut, PSNH provided retail
electric service to approximately 400,000428,000 customers in New Hampshire and WMECO served
approximately 195,000198,000 retail
electric franchise customers in Massachusetts. HWP
serves 3332 retail customers in Holyoke, Massachusetts.
The following table shows the sources of 19961999 electric franchise retail
revenues based on categories of customers:
CL&P PSNH**PSNH WMECO NAEC Total System
Residential................NU system
---- ---- ----- ---------------
Residential........... 46% 42% 30% 38% - 40%
Commercial................. 35 25 32 - 33
Industrial................. 13 16 19 - 16
Wholesale*................. 8 27 7 100% 9
Other...................... 2 2 4 - 2
Total......................41% 45%
Commercial............ 39% 35% 37% 37%
Industrial............ 13% 22% 21% 17%
Other................. 2% 1% 1% 1%
---- ---- ---- ----
Total................. 100% 100% 100% 100%
100%
* Includes capacity sales.
** Excludes sales related to the New Hampshire Pilot Program.
NAEC's 1996 electric revenues were derived entirely from sales to PSNH
under the Seabrook power contracts. See "Rates--New Hampshire Retail Rates---
Seabrook Power Contracts" for a discussion of the contracts.
Through December 31, 1996, the all-time peak demand on the System was 6,358
MW, which occurred on August 2, 1995. At the time of the peak, the System's
generating capacity, including capacity purchases, was 8035 MW.
System energy requirements were met in 1996 and 1995 as set forth below:
Source 1996 1995
Nuclear .................................... 28% 52%
Oil ........................................ 12 4
Coal ....................................... 11 10
Hydroelectric .............................. 5 3
Natural gas ................................ 3 5
NUGs ....................................... 13 13
Purchased-power............................. 28 13
100% 100%==== ==== ==== ====
The actual changes in retail KWhkWh sales for the last two years and the
forecasted retail sales growth estimates for the ten-year period 19961999 through
2006, in
each case exclusive of wholesale revenues and New Hampshire pilot program sales,2009 for the system, CL&P, PSNH and WMECO are set forth below:
19961999 over 19951998 over Forecast 1996-2006
1995 19941999-2009
1998 1997 Compound Rate of Growth
System.........--------- --------- -----------------------
NU system....... 3.8% 1.9% 1.4%
CL&P........... 2.9% 2.2% 1.5%
PSNH........... 5.3% 2.3% 1.6%
(.1)% 1.2%
CL&P........... 1.8% (.3)%WMECO.......... 3.6% 1.3% 1.1%
PSNH........... .4% .4 % 1.7%
WMECO.......... 2.7% (.1)% 0.4%
Retail electricConsolidated NU retail sales rosegrew by 1.63.8 percent in 19961999, compared to 1995,with
1998, primarily due to moderate growththe continued strengthening of the regional economy and
weather that was both hotter in the residentialsummer and commercial classes.colder in the winter than in
1998. Residential electric sales were up 2.0 percent in 1996 and commercial6.2 percent. Commercial sales were
up 2.3
percent. Industrial sales were essentially flat. Weather has had a minimal
effect on 1996 growth rates becauseby 3 percent for the increase in winter heating requirements
due to abnormally cold winter weather was offset by the decrease in summer
cooling requirements due to a relatively cool summer. Retail sales at CL&Pyear and WMECO increased by 1.8 percent and 2.7 percent, respectively. However, PSNH
retailindustrial sales increased by only 0.4 percent, partly due to the New Hampshire
Pilot Program.
In spite of further defense and insurance curtailments, moderate growth is
forecasted to resume over the next ten years. The forecasted annual growth rate
of one percent is significantly below historic rates due to a general slow down
of economic growth in the region and, in part, because of forecasted savings
from System-sponsored DSM programs that are designed to minimize operating
expenses1.5 percent.
Retail sales for System customers and reduce their demand for electricity. The
forecasted ten-year annual growth rate of System sales would be approximately
1.7 percent if the System did not pursue DSM programs at the forecasted levels.
See "Rates" for information about rate treatment of DSM costs.
The System also acts as both a buyer and a seller of electricity in the
highly competitive wholesale electricity market in the Northeastern United
States (Northeast). Although revenues from long-term contracts have been
declining, as a result of new contracts entered into in recent years, the
System's wholesale revenues of $300 million in 1996 were comparable to 1995 and
are expected to be constant in 1997. The System's most important wholesale
market at this time remains New England. Of the $300 million in total 1996
wholesale revenues, approximately $280 million came from sales to investor-
owned, cooperative and municipal utilities in New England.
With the System's generating capacity of 8034 MW as of January 1, 1997
(including the net of capacity sales to and purchases from other utilities, and
approximately 660 MW of capacity purchased from NUGs under existing contracts),
the System expects to meet reliably its projected annual peak load growth of 1.6
percent until at least the year 2010 without adding new capacity.
The System companies operate and dispatch their generation as provided in
the NEPOOL Agreement. In 1996, the peak demand on the NEPOOL system was 19,507
MW in August, which was 992 MW below the 1995 peak load of 20,499 MW in July of
that year. NEPOOL has projected that there will be an increase in demand in
1997 and estimates that the summer 1997 peak load could reach 21,390 MW.
Management expects that the System and NEPOOL will have sufficient capacity
to meet peak load demands for New England even if Millstone, the Maine Yankee
nuclear unit (MY) and the 300 MW Long Island Cable are not operational at any
time during the 1997 summer season, so long as the remaining generating units
and transmission systems in Connecticut and the New England region have normal
operability. If high levels of unplanned outages in New England were to occur,
or if anyall of the System's transmission lines used to import power from other
states were unavailable, at times of peak load demand, NU system electric operating companies increased
in 1999 with CL&P, WMECO and the other New
England utilities may have to resort to operating procedures designed to reduce
load. The System spent approximately $60 million in 1996 to reduce the risk of
unplanned outagesPSNH sales up 2.9 percent, 3.6 percent and expects to spend $47 million in 1997. Most of the money
budgeted for 1997 will be used to improve the System's network of transmission
lines to increase imports into Connecticut and for lease payments for additional
capacity.5.3
percent, respectively.
REGIONAL AND SYSTEM COORDINATION
The SystemNU system companies and most other New England utilities are parties
to an agreement (NEPOOL Agreement), which coordinates theprovides for coordinated planning
and operation of the region's generation and transmission facilities. System transmission lines
form part of the New England transmission system linking System generating
plants with one another and with the facilities of other utilities in the
Northeast and Canada. The generating facilities of all NEPOOL participants are
dispatched as a single system through the New England Power Exchange, a central
dispatch facility. The
NEPOOL Agreement provides for a determinationwas restated and revised as of the
generating capacity responsibilities of participants and certain transmission
rights and responsibilities. NEPOOL's objectives are to assure that the bulk
power supply of New England and adjoining areas conforms to proper standards of
reliability, to attain maximum practical economy in the bulk power supply system
consistent with such reliability standards andMarch 1997 to provide for equitable sharing
of the resulting benefits and costs.
Pursuant to the NEPOOL Agreement, if a participant is unable to meet its
capacity responsibility obligations, the participant is required to pay a
penalty. In the event that none of the Millstone units are returned to service
by November 1, 1997, the System companies could be required to pay a penalty
under the NEPOOL Agreement of approximately $10 million per month. This number
would decrease as each unit is returned to service. Management, however,
expects to meet its capacity responsibility even if the Millstone units do not
return to service as currently scheduled through purchased power contracts with
other utilities and/or reactivating System fossil generating units and thus
avoid the penalty. The costs of these alternative plans cannot be estimated at
this time.
A restated and revised NEPOOL Agreement, providing for
pool-wide open access transmission tariff and a proposal for the creation of an
Independent System Operator (ISO), became effective on March 1, 1997.. Under these new arrangements: (1)(i) the
ISO, a non-profitnonprofit corporation whose board of directors and staff willare not be
controlled by or affiliated with market participants, will
ensureensures the reliability
of the NEPOOL transmission system, administeradministers the NEPOOL tariff and overseeoversees
the efficient and competitive functioning of the regional power market; (2) The(ii)
the NEPOOL tariff will provideprovides for non-discriminatory open-nondiscriminatory open access to the regional
transmission network at one rate regardless of transmitting distance for all
transactions; and (3) The new NEPOOL Agreement
will establish(iii) a broader governance structure for NEPOOL and develop a more
open, competitive market structure.structure are established.
On April 7, 1999, the NEPOOL Executive Committee filed a comprehensive
settlement of all issues set for hearing concerning the NEPOOL transmission
tariff. The settlement resolves disputes concerning the calculation of
revenue requirements for transmission over NEPOOL facilities and resolves
disputes over alleged "double charges" under grandfathered transmission
contracts retained by individual transmission providers, including NU. The
settlement also includes a rate of return on equity ("ROE") component which
sets the ROE for each individual transmission provider owning NEPOOL
transmission facilities with respect to those facilities from March 1, 1997
through at least June 1, 2000, provided no changes to individual network
transmission tariff rates are made after December 31, 1999. NU's ROE has
been set at 11.75 percent.
There are two agreements that determine the manner in which costs and
savings are allocated among the SystemNU system electric operating companies.
Under an agreement (NUG&T) among CL&P, WMECO and HWP, (Initial System Companies)these companies pool
their electric production costs and the costs of their principal transmission
facilities (NUG&T).facilities. Pursuant to the merger agreement between NU and PSNH, the Initial System
Companiesthese
companies and PSNH entered into a ten-year sharing agreement (Sharing
Agreement), expiring in June 2002, that provides, among other things, for the
allocation of the capability responsibility savings and energy expense
savings resulting from a single-system dispatch through NEPOOL.
On June 10, 1999, NUSCO, on behalf of CL&P, HWP and WMECO submitted a
filing at the FERC to amend the NUG&T in order to eliminate the generation
aspects of the agreement. Interventions were submitted by the Massachusetts
attorney general and the DTE. While the DTE raised no issues with the
proposed amendment, the Massachusetts attorney general protested the
amendment, claiming that it would result in stranded costs being transferred
unfairly to WMECO. On July 28, 1999, the FERC approved the proposed amendment
subject to the outcome of a hearing which was held in abeyance pending the
outcome of state restructuring proceedings. The DTE rejected the
Massachusetts attorney general's arguments in an order dated December 1,
1999. While the FERC hearing continues to be held in abeyance, NUSCO and the
Massachusetts attorney general filed pleadings on February 1, 2000, regarding
the final disposition of the FERC proceeding.
Under the Settlement Agreement between PSNH and the state of New
Hampshire, if approved, the Sharing Agreement would be terminated.
TRANSMISSION ACCESS AND FERC REGULATORY CHANGES
OnPursuant to FERC Order 888 (issued in April 24, 1996,1996) NU system companies
operate their transmission system under an open access, nondiscrimatory
transmission tariff.
In December 1999, the FERC issued its final open access rule (the Rule)an order calling on all transmission
owners to promotevoluntarily join Regional Transmission Organizations (RTOs) in
order to boost competition in the electric industry. The Rule will require,markets. In general, these
organizations would be an independent operator over all transmission
facilities, and would perform, among other things, all public utilities that own, control or operate facilities usedfunctions, tariff administration,
construction planning and reliability management for transmitting electric energythe particular regional
transmission system. NU's active voting interest in interstate commercesuch an organization
would be limited to file an open-access,
non-discriminatory transmission tariff and to take transmission service for
their own new wholesale sales and purchases5 percent under the open-access tariffs. The
Rule also requires public utilitiesproposal.
NU system companies and other parties have requested rehearing of this
order. Of primary concern to developNU is the ratemaking authority granted to RTOs
and maintain a same-time
information system that will give existingits impact on the ability of transmission owners to earn appropriate
returns on their transmission investment under the organizational structure
and potential transmission users the
same access to transmission information that the public utility enjoys, and
requires public utilities to separate transmission from generation marketing
functions and communications. The Rule also supports full recovery of
legitimate, prudent and verifiable wholesale strandable investments. On
February 26, 1997, FERC reaffirmed the Rule with a few minor clarifications.
On July 8, 1996, NU refiled its transmission tariffs to conform with the minimum terms and conditions set forthfunctions proposed in the Rule. On December 31, 1996,order. The NU filed amendmentssystem companies are
required to its transmission tariff and several other compliance filings
to meet the Rule's year-end requirements, including standards of conduct
ensuring that transmission and wholesale generation personnel function
independently. As of January 3, 1997, NU operates pursuant to the requirements
of the standards of conduct and participatesparticipate in a NEPOOL-wide Open Access Same-
Time Information System, which provides transmission customers with electronic
accesscollaborative process established by the FERC
beginning in March of 2000. NU is also required to information on available capacity, tariffs and other information. On
January 22, 1997, NU refiled its transmission tariff to account for certain
transmission services that would be provided by NEPOOL undernotify the new NEPOOL
Agreement (discussed above), which was filed on December 31, 1996.
In 1996, the System companies collected approximately $45 million in
incremental transmission revenues from other electric utility generators.
FOSSIL FUELS
In 1996, 12 percent and 11 percent of the System's generation was oil and
coal-derived, respectively. The System's residual oil-fired generation stations
used approximately 7.8 million barrels of oil in 1996. The System obtained the
majorityFERC of its
oil requirements in 1996 through contractsplans with several large,
independent oil companies. Those contracts allow for some spot purchases when
market conditions warrant. Spot purchases represented approximatelyregard to joining one of these organizations no later than
January 15, percent
of the System's fuel oil purchases in 1996. The contracts expire annually or
biennially. The System currently does not anticipate any difficulties in
obtaining necessary fuel oil supplies on economic terms.
The System has nine generating stations, aggregating approximately 3,280
MW, which can fully or partially burn either residual oil or natural gas/coal,
as economics, environmental concerns or other factors dictate. CL&P plans to
convert two of the four units at its oil-fired Middletown Station in Connecticut
comprising approximately 350 MW of capacity to a dual-fuel generating facility
in the spring of 1997. CL&P, PSNH and WMECO have contracts with the local gas
distribution companies where the dual-fuel generating units are located, under
which natural gas is made available by those companies on an interruptible
basis. In addition, gas for CL&P'S Devon and Montville generating stations is
being purchased directly from producers and brokers on an interruptible basis
and transported through the interstate pipeline system and the local gas
distribution company. The System expects that interruptible natural gas will
continue to be available for its dual-fuel electric generating units on economic
terms and will continue to economically supplement fuel oil requirements.
The System companies obtain their coal through long-term supply contracts
and spot market purchases. The System companies currently have an adequate
supply of coal. Because of changes in federal and state air quality
requirements, the System may be required to use lower sulfur coal in its plants
in the future. See "Other Regulatory and Environmental Matters--Environmental
Regulation---ir Quality Requirements."2001.
NUCLEAR GENERATION
GENERAL
Certain SystemNU system companies have ownership interests in four operating nuclear
units, Millstone 1, 2 and 3 and Seabrook, 1, and equity interests in four
regional nuclear companies (the Yankee Companies)companies) that separately own CY,the
Connecticut Yankee nuclear unit (CY), the Maine Yankee nuclear unit (MY), the
Vermont Yankee nuclear unit (VY), and the Yankee Rowe. SystemRowe nuclear unit (Yankee
Rowe). NU system companies operate the threetwo Millstone units and Seabrook 1.Seabrook.
Yankee Rowe, wasCY, MY, and Millstone 1 have been permanently removed from
service in 1992, and CY was permanently removed from service on December 4,
1996. The System companies will have responsibility for administering the
decommissioning of CY.service.
CL&P and WMECO own 100 percent of Millstone 1 and 2 as tenants in
common. Their respective ownership interests in each unit are 81 percent and
19 percent.
CL&P, PSNH and WMECO have agreements with other New England utilities
covering their joint ownership as tenants in common of Millstone 3. CL&P's,
PSNH's and WMECO's ownership interestinterests in the unit isare 52.93, 2.85 and 12.24
percent, PSNH's ownership interest in
the unit is 2.85 percent and WMECO's interest is 12.24 percent.respectively. NAEC and CL&P have 35.98 percent and 4.06 percent
ownership interests, respectively, in Seabrook.
In 1996, one of the joint owners of Millstone 3, the Vermont Electric
Generation and Transmission Cooperative, Inc. (VEG&T), filed for bankruptcy.
The subsequent liquidation resulted in the offering of VEG&T's .35 percent
share of Millstone 3 for sale to the joint owners of Millstone 3. None of
the non-NU joint owners accepted the offer. CL&P intends, subject to approval
of the bankruptcy court and the DPUC, to include the VEG&T share in its
planned Millstone auction.
The Millstone 3 and Seabrook joint ownership agreements provide for pro-ratapro-
rata sharing by the owners of each unit of the construction and operating
costs, the electrical output and the associated transmission costs. CL&P and
WMECO, through NNECO as agent, operate Millstone 3 at cost, and without
profit, under a sharing agreement that obligates them to utilize good utility
operating practice and requires the joint owners to share the risk of
employee negligence and other risks pro ratapro-rata in accordance with their
ownership shares. The sharing agreement provides that CL&P and WMECO would
only be liable for damages to the non-NUminority owners for a deliberate breach of
the agreement pursuant to authorized corporate action.
For information regarding lawsuits filed against NU by the minority
owners of Millstone 3 regarding the sharing agreement and certain arbitration
proceedings related to the ongoing Millstone outages, see "Item 3. Legal
Proceedings."
CL&P, PSNH, WMECO, and other New England electric utilities are the
stockholders of the Yankee companies. Each Yankee company owns a single
nuclear generating unit. The stockholder-sponsors of each Yankee company are
responsible for proportional shares of the operating and decommissioning
costs of the respective Yankee company and are entitled to proportional
shares of the electrical output.output in the case of VY, which is the only
operating unit of the four Yankee companies set forth below. The relative
rights and obligations with respect to the Yankee companies are approximately
proportional to the stockholders' percentage stock holdings, but vary
slightly to reflect arrangements under which nonstockholder electric
utilities have contractual rights to some of the output of particular units.
The
Yankee companies and CL&P's, PSNH's and WMECO's stock ownership percentages in the Yankee companies
are set forth below:
CL&P PSNH WMECO SystemNU system
Connecticut Yankee Atomic
Power Company (CYAPC) ............. 34.5% 5.0% 9.5% 49.0%
Maine Yankee Atomic Power
Company (MYAPC) ......................... 12.0% 5.0% 3.0% 20.0%
Vermont Yankee Nuclear
Power Corporation (VYNPC)... 9.5% 4.0% 2.5% 16.0%
Yankee Atomic Electric
Company (YAEC) .......................... 24.5% 7.0% 7.0% 38.5%
On October 15, 1999, VYNPC agreed to sell VY for $22 million to
AmerGen Energy Company LLC (AmerGen). AmerGen, among other commitments,
agreed to assume the decommissioning cost of the unit after it is taken out
of service, and the VYNPC owners have agreed to fund the uncollected
decommissioning cost to a negotiated amount at the time of the closing of the
sale. VYNPC's owners have also agreed either to enter into a new purchased-
power agreement with AmerGen or to buy out such future power payment
obligations by making a fixed payment to AmerGen. CL&P, WMECO and PSNH have
elected the buyout option. The owners' obligations to close and WMECOpay such
amounts are obligated to provideconditioned upon their percentagesreceipt of any
additional equity capital necessarysatisfactory regulatory
approval of the transaction, including provision for the Yankee companies, but do not expect
to need to contribute additional equity capital in the future. CL&P, PSNH and
WMECO believe that the two remaining operating plants, MY and VY, could require
additional external financing in the next several years to finance construction
expenditures, nuclear fuel and for other purposes. Although the ways in which
MYAPC and VYAPC would attempt to financeadequate recovery of
these expenditures, if they are needed,
have not been determined, CL&P, PSNH and WMECO could be asked to provide further
direct or indirect financial support for these companies. For information
regarding additional capital requirements at MY and related watch list costs,
see "Electric Operations--Nuclear Generation--Nuclear Plant Performance and
Regulatory Oversight."payments.
The operators of Millstone 1, 2 and 3, MY, VY and Seabrook 1 hold full powerterm
operating licenses from the NRC. As holders of licenses to operate
nuclear reactors, CL&P, WMECO, NAESCO, NNECONRC and the Yankee companies are subject to the jurisdiction of the
NRC. The NRC has broad jurisdiction over the design, construction and
operation of nuclear generating stations, including matters of public health
and safety, financial qualifications, antitrust considerations, and
environmental impact. The NRC issues 40-year initial operating licenses to
nuclear units and NRC regulations permit renewal of licenses for an
additional 20-year period. The NRC also has jurisdiction over the
decommissioning activities at Yankee Rowe, CY, MY, and Millstone 1.
The NRC also regularly conducts generic reviews of technical and other
issues, a number of which may affect the nuclear plants in which SystemNU system
companies have interests. The cost of complying with any new requirements
that may result from these reviews cannot be estimated at this time, but such
costs could be substantial.
For more information regarding recent actions taken by
the NRC with respect to the System's nuclear units, see "Electric Operations---
Nuclear Generation--Nuclear Plant Performance and Regulatory Oversight."
NUCLEAR PLANT PERFORMANCE
AND REGULATORY OVERSIGHT
MILLSTONE UNITS3
Millstone 1, 2 and 3 are located in Waterford, Connecticut and havehas a license expirationsexpiration date of October 6, 2010, July 31, 2015 and November 25, 2025,
respectively and are currently out2025. In 1999,
Millstone 3 operated at a capacity factor of service. These units are presently on the
NRC's watch list as Category 3 plants, the lowest such category. Plants in this
category are required to receive formal NRC commissioners' approval to resume
operations.
Millstone 1 began81.7 percent. After a planned60-day
refueling and maintenance outage, Millstone 3 returned to service on November 4,
1995.June 29,
1999, and achieved a 98.1 percent capacity factor from that date to
December 31, 1999.
MILLSTONE 2
Millstone 2 was shut downhas a license expiration date of July 31, 2015. Millstone 2
returned to service on February 21, 1996 as a result of an
engineering evaluation that determined that some valves could be inoperable in
certain emergency scenarios. On March 30, 1996, Millstone 3, was shut down by
NNECOMay 11, 1999, following an engineering evaluationextended outage, which
determinedbegan in February 1996 and achieved a 90.3 percent capacity factor from that
four safety-
related valves would not be abledate to perform their design function during certain
postulated events.
EachDecember 31, 1999. For the full year 1999, Millstone 2 operated at a
capacity factor of these outages has been extended in order to respond to various NRC
requests to describe actions taken, including the resolution of specific
technical issues and to ensure that future operation of the units will be
conducted in accordance with the terms and conditions of their operating
licenses, NRC regulations and their Updated Final Safety Analysis Report. The
System also must demonstrate that it maintains an effective corrective action
program for Millstone, as required by NRC regulations, to identify and resolve
conditions that are adverse to safety or quality. For more information
regarding nuclear management changes and costs related to the outages, see
"Overview of Nuclear Matters and Related Financial Matters."
Based upon management's current plans, it is estimated that one of the
units will be ready for restart in the third quarter of 1997 with the second and
third units being ready for restart in the fourth quarter of 1997 and the first
quarter of 1998, respectively. Millstone 1 presently has the most aggressive
schedule, but there are no assurances it will be the first unit to restart.
Prior to and following notification to the NRC that the units are ready to
resume operations, management expects that the NRC staff will conduct extensive
reviews and inspections, and prior to such notification, independent corrective
action verification teams (as discussed more fully below) also will inspect each
unit. The System also will need to comply with an NRC order regarding the
development of a comprehensive employee concerns program, which will need to be
reviewed by an independent third-party (as discussed more fully below). The
units will not be allowed to restart without an affirmative vote of the NRC
commissioners following completion of these reviews and inspections. Management
cannot estimate when the NRC will allow any of the units to restart, but hopes
to have at least one unit operating in the second half of 1997. Furthermore,
because of the length of the outages, management cannot estimate the time it
will take for the units to resume full power after NRC approval to restart.
On August 14, 1996, the NRC issued an order confirming NNECO's agreement to
conduct an Independent Corrective Action Verification Program (ICAVP) prior to
the restart of each of the Millstone units. The order requires that an
independent, third party team, whose appointment is subject to NRC approval,
verify the results of the corrective actions taken to resolve identified design
and configuration management issues. NNECO has submitted to the NRC its
selection of an ICAVP contractor for each of the units. The NRC is evaluating
NNECO's selection.
In the Fall of 1996, the NRC established a Special Projects Office to
oversee inspection and licensing activities at Millstone. The Special Projects
Office is responsible for (1) licensing and inspection activities at Millstone;
(2) oversight of the independent corrective action verification program; (3)
oversight of NU's corrective actions related to safety issues involving employee
concerns; and (4) inspections necessary to implement NRC oversight of the
plants' restart activities.
On December 4 and 5, 1996, the NRC conducted enforcement conferences
regarding numerous apparent regulatory violations at Millstone and CY that were
discovered during routine and special inspections at the units during 1996. It
is likely that these proceedings will result in the issuance of Notices of
Violations and the imposition of significant civil penalties for each of the
units. For more information regarding the current status of CY, see "Yankee
Units-Connecticut Yankee" below.
In addition to the various technical and design basis issues at Millstone,
the NRC continues to focus on the System's response to employee concerns at the
units. On October 24, 1996, the NRC issued an order that requires NNECO to
devise and implement a comprehensive plan for handling safety concerns raised by
Millstone employees and for assuring an environment free from retaliation and
discrimination. The NRC also ordered NNECO to contract for an independent third
party to oversee this comprehensive plan. The members of the independent third-
party organization must not have had any direct previous involvement with
activities at Millstone and must be approved by the NRC. Oversight by the
third-party group will continue until NNECO demonstrates, by performance, that
the conditions leading to this order have been corrected. NNECO has submitted
to the NRC its comprehensive employee concerns plan and its selection of the
third-party oversight organization, which are currently being reviewed by the
NRC.
On March 7, 1997, the NRC issued a letter to NNECO confirming NNECO's
commitment to evaluate and correct problems identified within its licensed
operator training programs at Millstone and CY. Management has already taken
certain steps to address the NRC's concerns in this area and is committed to
making additional significant improvements in its training program. Management
is evaluating this situation, but currently does not believe that the NRC's
action will have a material impact on its plans for restarting the Millstone
units.
For information regarding replacement power costs and incremental nuclear
O&M costs associated with the extended Millstone outages, see "Overview of
Nuclear Matters and Related Financial Matters." For information regarding the
recoverability of these costs, see "Rates." For information regarding the 1996
nuclear workforce reduction, see "Employees." For information regarding criminal
investigations by the NRC's Office of Investigations (OI) and the Office of the
U. S. Attorney for the District of Connecticut related to various matters at
Millstone and CY; two citizens petitions related to NU's nuclear operations; and
potential joint owner litigation related to the extended outages, see "Item 3.
Legal Proceedings."57.9 percent.
SEABROOK
Seabrook 1, a 1148-MW pressurized-water reactor, has a license expiration date of October 17, 2026. The Seabrook operating license expires 40 years from
the date of issuance of authorization to load fuel, which was about three and
one-half years before Seabrook's full-power operating license was issued. The
System will determine at the appropriate time whether to seek recapture of some
or all of this period from the NRC and thus add up to an additional three and
one-half years to the operating term for Seabrook. In 1996,1999,
Seabrook operated at a capacity factor of 96.586.4 percent. The unit expectsHowever, since
returning to beginservice on May 13, 1999, after a 49-day
planned48-day refueling and
maintenance outage, on May 10, 1997.
On October 9, 1996, the NRC issuedSeabrook achieved a request for information concerning all
nuclear plants in the United States, except the three Millstone units and CY,
which had previously received such requests. Such information will be used to
verify that these facilities are being operated and maintained in accordance
with NRC regulations and the unit's specific licenses. The NRC has indicated
that the information will be used to determine whether future inspection or
enforcement activities are warranted for any plant. NAESCO has submitted its
response to the NRC's request with respect to Seabrook. Seabrook's operations
have not been restricted by the request. The NRC's April 1996 comprehensive
review found Seabrook to be a well-operated facility without any major safety
issues or weaknesses and noted that it would reduce its future inspections in a
number of areas as a result of its findings.
YANKEE UNITS
CONNECTICUT YANKEE
CY, a 582-MW pressurized-water reactor, has a license expiration date of
June 29, 2007. On July 22, 1996 CY began an unscheduled outage as a
precautionary measure to evaluate the plant's service water system, which
provides cooling water to certain critical plant components. On August 8, 1996,
after evaluating certain other pending technical and regulatory issues, CY's
management decided to delay the restart of the unit and to begin a scheduled
September refueling outage. The refueling outage was accelerated in order to
allow time to resolve the pending issues.
On December 4, 1996, the board of directors of CYAPC voted unanimously to
retire CY. The decision to shut down CY was based on economic analyses that
showed that shutting down the unit prematurely and incurring replacement power
costs could produce potential savings to its purchasers compared to the costs of
operating it over the remaining period of the unit's operating license. These
analyses indicated that this shutdown decision could produce savings in excess
of $130 million on a net present value basis. These analyses did not consider
the costs of addressing concerns about CY's design and licensing basis raised by
the NRC this past summer similar to those raised at Millstone. If these costs
had been considered, the economic analyses would have favored shutdown by an
even greater margin. CYAPC has undertaken a number of regulatory filings
intended to implement the decommissioning. For more information regarding CYAPC
revised decommissioning estimate that was submitted to FERC in December 1996,
See "Decommissioning" below.
Based upon FERC regulatory precedent, CYAPC believes it will be allowed to
continue to collect from its power purchasers, including CL&P, WMECO and PSNH,
CYAPC's decommissioning costs, the owners' unrecovered investments in CYAPC, and
other costs associated with the permanent closure of the plant over the
remaining period of its NRC operating license. Management in turn expects that
CL&P, WMECO and PSNH will continue to be allowed to recover such FERC-approved
costs from their customers.
The preliminary estimate of the sum of future payments for the closing,
decommissioning and recovery of the remaining investment in CY is approximately
$762.8 million. The System's share of these remaining estimated costs is
approximately $374 million.
As confirmed by the NRC on March 4, 1997, CYAPC has agreed to undertake
various steps to resolve deficiencies and weaknesses in the radiation protection
program at CY. Management does not believe that this undertaking will have a
material adverse effect on the System companies or CYAPC.
MAINE YANKEE
MY, a 870-MW pressurized-water reactor, has a license expiration date of
October 21, 2008. MY's operating license expires 40 years from the date of
issuance of the construction permit, which was about four years before MY's
full-power operating license was issued. At the appropriate time, MYAPC will
determine whether to seek recapture of this construction period from the NRC and
add it to the term of the MY operating license. In 1996, MY operated at a99 percent capacity factor of 65.5 percent.
By order issued on January 3, 1996, the NRC suspended MY's authority to
operate at full power and limited MY to operating at 90 percent power pending
the NRC's review and approval of a computer code application used at MY. The
plant was taken out of service onthrough
December 5, 1996 after finding that certain
cables did not have the proper separation required by the plant's design and
licensing basis to protect them during accident conditions. MYAPC has agreed
not to restart the plant until it completes a number of actions required by the
NRC and prior to receiving NRC approval.
On January 29, 1997, the NRC announced that MY had been placed on the NRC's
watch list as a Category 2 plant. Plants in this category have been identified
as having weaknesses that warrant increased NRC attention until the licensee
demonstrates a period of improved performance. The NRC cited a number of
deficiencies in the engineering design to support operations at MY, which were
identified by an independent safety assessment team during the latter half of
1996. Although MY has developed a plan and initiated steps to correct the
problems, including entering into an agreement with Entergy Corporation to
acquire outside management expertise in the operation of the facility, the NRC
indicated that increased agency attention was still needed.
The System cannot estimate when MY will return to service and expects that
there will be substantial costs associated with the NRC's actions that cannot be
accurately estimated at this time.31, 1999.
VERMONT YANKEE
VY a 514-MW boiling water reactor, has a license expiration date of March 21, 2012. In 1996,1999, VY operated
at a capacity factor of 81.488.8 percent. VY had a
57-day planned refueling outage during 1996 that ended on November 1, 1996. The
unit expects to begin a 56-day planned refueling and maintenance outage on
September 28, 1998.
YANKEE ROWE
In 1992, YAEC's owners voted to shut down Yankee Rowe permanently based on
an economic evaluation of the cost of a proposed safety review, the reduced
demand for electricity in New England, the price of alternative energy sources
and uncertainty about certain regulatory requirements. The power contracts
between CL&P, PSNH, WMECO, and other owners, and YAEC permit YAEC to recover
from each its proportional share of the Yankee Rowe shutdown and decommissioning
costs. For more information regarding the decommissioning of Yankee Rowe, see
"Decommissioning," below.
NUCLEAR INSURANCE
The NRC requires nuclear plant licensees to maintain a minimum of $1.06
billion in nuclear property and decontamination insurance coverage. The NRC
requires that proceeds from the policy following an accident that exceed $100
million will first be applied to pay expenses. The insurance carried by the
licensees of the Millstone units, Seabrook 1, CY, MY and VY meets the NRC's
requirements. YAEC has obtained an exemption for Yankee Rowe from the $1.06
billion requirement and currently carries $25 million of insurance that
otherwise meets the requirements of the rule. CYAPC expects to seek a similar
exemption for CY in 1997. For more information regarding nuclear insurance, see "Commitments and
Contingencies--NuclearContingencies - Nuclear Insurance Contingencies" in the notes to NU's, CL&P's,
PSNH's, WMECO's, and NAEC's financial statements.
NUCLEAR FUEL
GENERAL
The supply of nuclear fuel for the System'sNU system's existing units requires
the procurement of uranium concentrates, followed by the conversion, enrichment
and fabrication of the uranium into fuel assemblies suitable for use in the System'sNU
system's units. The majorityFuel may also be purchased at a point after any of the System companies' uranium enrichment services
requirements is provided under a long-term contract with the United States
Enrichment Corporation (USEC), a wholly owned United States government
corporation.above
processes are completed. The majority of Seabrook's uranium enrichment services
requirements is furnished through a Russian trading company. The SystemNU system expects that uranium concentrates and
related services for the units operated by the SystemNU system and for the other
units in which the SystemNU system companies are participating that are not covered
by existing contracts, will be available for the foreseeable future on
reasonable terms and prices.
In August 1995, NAESCO filed a complaint in the United States Court of
Federal Claims challenging the propriety of the prices charged by the USEC for
uranium enrichment services procured for Seabrook Station in 1993. The
complaint is an appeal of the final decision rendered by the USEC contracting
officer denying NAESCO's claims, which range from $2.5 to $5.8 million, and will
likely be considered along with similar complaints that are pending before the
court on behalf of 13 other utilities. The NAESCO complaint has been suspended
pending the outcome of an appeal in another proceeding involving a similar
complaint.
As a result of the Energy Policy Act, the United States commercial
nuclear power industry is required to pay the United States Department of
Energy (DOE), through a special assessment, for the costs of the
decontamination and decommissioning of uranium enrichment plants owned by the
United States government, no more than $150 million per annum for 15 years
beginning in 1993. Each domestic nuclear utility's payment is based on its
pro ratapro-rata share of all enrichment services received by the United States
commercial nuclear power industry from the United States government through
October 1992. Each year, the DOE adjusts the annual assessment using the
Consumer Price Index. The Energy Policy Act provides that the assessments
are to be treated as reasonable and necessary current costs of fuel, which
costs shall be fully recoverable in rates in all jurisdictions. The System's totalNU
system's remaining share to be recovered, assuming no escalation, is
approximately $36.7 million as of the estimated assessment was
approximately $62.8 million.December 31, 1999. Management believes
that the DOE assessments against CL&P, WMECO, PSNH, and NAEC will be
recoverable in future rates. Accordingly, each of these companies has
recognized these costs as a regulatory asset, with a corresponding obligation
on its balance sheet.
In June 1995,On October 22, 1998, an action was initiated by the United Statesowners of Millstone
in the U.S. Court of Federal Claims heldagainst the DOE regarding the special
annual assessment that as
appliedthe DOE imposes on purchasers of enriched uranium to
YAEC,meet the Uranium Enrichment Decontaminationfuture costs of decontaminating and Decommissioning Fund
is an unlawful add-ondecommissioning (D&D) government
owned uranium enrichment facilities. Similar actions for Seabrook and CY
were filed on October 23, 1998. The lawsuits challenge the imposition of the
D&D assessment on federal constitutional grounds, and are similar to actions
filed by a number of other utilities against DOE. Proceedings in the
bargained-for contract price for enriched uranium.Millstone, Seabrook and CY cases are stayed pending the final resolution of a
similar claim brought against the DOE by MYAPC. In July 1999, the claims
court dismissed MYAPC's complaint. MYAPC has appealed this decision. As a result,of
December 31, 1999, the federal government must refund theNU system companies had paid approximately $3.0$32.6
million
that YAEC has paid into the fund since its inception. NU is evaluating the
applicability of this decision to the $21 million that the System companies have
already paid into the fund, and whether this alters the System companies'
obligation to pay such special assessments in the future. The decision as to
YAEC has been appealed by the federal government.fund.
Nuclear fuel costs associated with nuclear plant operations include
amounts for disposal of spent nuclear waste.fuel. The SystemNU system companies include
in their nuclear fuel expense spent fuel disposal costs accepted by the DPUC,
NHPUC and DPUDTE in rate case or fuel adjustment decisions. Spent fuel disposal
costs also are reflected in the FERC-approved wholesale charges.
HIGH-LEVEL RADIOACTIVE WASTE
The Nuclear Waste Policy Act of 1982 (NWPA) provides that the federal
government is responsible for the permanent disposal of spent nuclear reactor
fuel (SNF) and high-level waste. As required by the NWPA, electric utilities
generating spent nuclear fuel (SNF)SNF and high-level waste are obligated to pay fees into a fund
which would be used to cover the cost of siting, constructing, developing, and
operating a permanent disposal facility for this waste. The SystemNU system
companies have been paying for such services for fuel burned starting inon or after
April 7, 1983, on a quarterly basis since July 1983. The DPUC, NHPUC and DPUDTE
permit the fee to be recovered through rates. For nuclear fuel used to
generate electricity prior to April 7, 1983 (prior-period fuel), payment must
be made prior to the first delivery of spent fuel to the DOE. The DOE's
current estimate for an available site is 2010.
In return for payment of the fees prescribed by the NWPA, the federal
government is to take title to and dispose of the utilities' high-level
wastes and spent nuclear fuel. The NWPA provides that a disposal facility be
operationalSNF. There have been numerous litigation proceedings involving
the DOE's statutory and forcontractual obligation to accept high-level waste and
SNF. While the courts have declined to order the DOE to accept nuclear wastebegin accepting
spent fuel for permanent disposal in
1998.on January 31, 1998, the courts left open the
utilities' ability to bring damage claims against the DOE.
On March 3, 1997 CYAPCO, NAESCO and NUSCO intervened as parties inFebruary 18, 1998, YAEC filed a lawsuit broughtcomplaint against the DOE in the
U.S.United States Court of Appeals for the DistrictFederal Claims seeking damages in excess of Columbia
Circuit by 35 nuclear utilities in late January, seeking additional action based
on$70
million resulting from the DOE's assertion that it expectsfailure to be unable to begin acceptance ofaccept spent nuclear fuel for
disposal by January 31, 1998. Among other requests for relief,disposal. CYAPC and MYAPC filed similar complaints on March 4, 1998 and
June 2, 1998, seeking damages of over $90 million and $128 million,
respectively. On October 29, 1998, the lawsuit requests that utilities be relievedcourt found liability on the part
of their contractual obligation
withthe DOE to pay fees intoYAEC for breach of the Nuclear Waste Fundstandard contract, based upon the DOE's
failure to begin disposal of SNF. In separate orders dated October 30, 1998
and be authorizedNovember 3, 1998, respectively, the court extended its rulings in the YAEC
case to place such
fee payments into escrow "unlessthe damage claim cases filed by CYAPC and until"MYAPC. The DOE begins accepting spent fuel for
disposal. The DOE's current estimate for an available site is 2010.has appealed
the claims court decisions.
Until the federal government begins accepting nuclear waste for
disposal,
operating nuclear generating plants will need to retain high-level waste and
spent fuel onsite or make some other provisions for their storage. With the
addition of new storage racks, storage facilities for Millstone 3 isare
expected to be adequate for the projected life of the unit. With the
implementation of currently planned modifications, the storage facilities for
Millstone 1 and 2 are expected to be adequate (maintaining the capacity to
accommodate a full-core discharge from the reactor) until 2003 and 2004, respectively.2005. Fuel
consolidation, which has been licensed for Millstone 2, could provide
adequate storage capability for theits projected lives of Millstone 1 and 2. Adequate
storage capacity exists to accommodate all of the SNF at CY. In addition, other
licensed technologies, such as dry storage casks or on-site transfers, are being
considered to accommodate spent fuel storage requirements. With the current
installation of new racks in its existing spent fuel pool,life. Seabrook is expected to
have spent fuel storage capacity until at least 2010.
MYAPC believes it has adequate storage capacity through MY's current
licensed operating life. The storageavailable capacity of the VY spent fuel pool at VY is
expected to be reached in 2005 and the available capacity of the pool is expected to be able
to accommodate full-core removal untilthrough 2001. BecauseIn 1999, VYNPC received an NRC
license amendment allowing the Yankee Rowe plant was permanently shut downinstallation of additional storage racks in
February 1992,
YAEC is considering the constructionexisting spent fuel pool. When installed, the additional storage racks
will increase the capacity of a temporary facility to store the spent nuclear fuel produced bypool to allow full core
discharge capability through the 2008 refueling outage.
Adequate storage capacity exists to accommodate all of the SNF at
Millstone 1, CY, MY, and Yankee Rowe plant over its operating lifetime until that fuel is removed by the DOE.
LOW-LEVEL RADIOACTIVE WASTE
The SystemNU system currently has contracts to dispose of its low-level
radioactive waste (LLRW) at two privately operated facilities in Clive, Utah,
and in Barnwell, South Carolina. The NU system is also supporting efforts by
the Northeast Interstate Low Level Radioactive Waste Management Compact,
consisting of Connecticut and New Jersey, to accept South Carolina as a new
member. If successful, this arrangement would entitle Millstone and CY
access to Barnwell through their decommissioning. Such an arrangement may
exclude other nuclear plants from accessing Barnwell. This option is
expected to be decided by mid 2000. Because access to LLRW disposal may be
lost at any time, the SystemNU system has plans that will allow for onsite storage
of LLRW for at least five years.
Neither Connecticut nor New Hampshire have developed
alternatives to out-of-state disposal of LLRW to date. Both Maine and Vermont
are in the process of implementing an agreement with Texas to provide access to
a LLRW disposal facility that is to be developed in that state. All three
states plan to form a LLRW compact that is currently awaiting approval by
Congress.
DECOMMISSIONING
Based upon the System'sNU system's most recent comprehensive site-specific
updates of the decommissioning costs for each of the three Millstone units
and for Seabrook, the recommended decommissioning method continues to be
immediate and complete dismantlement of those units atas soon as practical
after their retirement. The table below sets forth the estimated Millstone
and Seabrook decommissioning costs for the SystemNU system companies. The
estimates are based on the latest site studies, escalated tostated in December 31, 19961999
dollars.
CL&P PSNH WMECO NAEC SystemNU system
---- ---- ----- ---- ---------
(Millions)
Millstone 1 $316.01*.... $ 580.3 $ - $136.1 $ - $ 74.1 $716.4
Millstone 2..... 334.9 - $ 390.178.5 - 413.4
Millstone 2 279.03..... 327.9 17.6 75.8 - 65.5 - 344.5
Millstone 3 244.9 13.2 56.6 - 314.7
Seabrook 18.3421.3
Seabrook........ 22.9 - - 162.1 180.4
Total $858.2 $ 13.2 $196.2 $162.1 $1,229.7
As203.3 226.2
-------- ----- ------ ------ --------
Total......... $1,266.0 $17.6 $290.4 $203.3 $1,777.3
======== ===== ====== ====== ========
* The costs shown include all of the expected future billings associated
with the funding of decommissioning, recovery of remaining assets and other
closure costs associated with the early retirement of Millstone 1 as of
December 31, 1996,1999, which have been recorded as an obligation on the System recorded balances (at market) in its
external decommissioning trust funds as follows:
CL&P PSNH WMECO NAEC System
(Millions)
Millstone 1 $141.1 $ - $ 40.0 $ - $ 181.1
Millstone 2 92.5 - 27.0 - 119.5
Millstone 3 61.2 3.2 16.6 - 81.0
Seabrook 2.2 - - 19.7 21.9
Total $297.0 $ 3.2 $ 83.6 $ 19.7 $ 403.5books of
the NU system companies.
In 1986, the DPUC approved the establishment of separate external trusts
for the currently tax-deductible portions of decommissioning expense accruals
for Millstone 1 and 2 and for all expense accruals for Millstone 3. The DPUC
has authorized CL&P to collect its current decommissioning estimate for the
three Millstone units from customers. This estimate includes an approximate 16
percent contingency factor for the decommissioning cost of each unit.
WMECO
has established independent trusts to hold all decommissioning expense
collections from customers. The DPUDTE has authorized WMECO to collect its
current decommissioning estimate for the three Millstone units.
New Hampshire enacted a law in 1981 requiring the creation of a state-
managed fund to finance decommissioning of any units in that state. NAEC's
costs for decommissioning Seabrook are billed by it to PSNH and recovered by
PSNH under the Rate Agreement. UnderDuring April 1999, the Rate Agreement,Nuclear Decommissioning
Finance Committee (NDFC) issued an order that adjusted the decommissioning
collection period and funding levels. The NDFC's order concluded that
Seabrook's anticipated energy producing life was 25 years from the date it
went into commercial operation, and accordingly Seabrook will end its energy
producing life in October 2015. This is 11 years earlier than the service life
established by Seabrook's NRC operating license. The order also updated
Seabrook's decommissioning estimate to $513 million (in 1998 dollars).
The cost of funding the decommissioning of Seabrook is now accrued over the
expected remaining service life of the plant, as determined by the NDFC,
and is included in depreciation expense.
As of December 31, 1999, the NU system recorded balances (at market) in
its external decommissioning trust funds are as follows:
CL&P PSNH is entitled to a base rate
increase to recover increased decommissioning costs. In its recent restructuring
orders, the NHPUC determined that PSNH would be allowed to recover
decommissioning costs through stranded cost charges. See "Rates--New Hampshire
Retail Rates" for further information on the Rate Agreement and restructuring.WMECO NAEC NU system
---- ---- ----- ---- ---------
(Millions)
Millstone 1... $234.6 $ - $ 67.1 $ - $301.7
Millstone 2... 164.3 - 47.3 - 211.6
Millstone 3... 113.1 6.9 30.1 - 150.1
Seabrook...... 4.8 - - 43.7 48.5
------ ---- ------ ----- ------
Total......... $516.8 $6.9 $144.5 $43.7 $711.9
====== ==== ====== ===== ======
The decommissioning cost estimates for the SystemNU system nuclear units are
reviewed and updated regularly to reflect inflation and changes in
decommissioning requirements and technology. Changes in requirements or
technology, or adoption of a different decommissioning method other than immediate
dismantlement, could change
these estimates. CL&P, PSNH and WMECO attemptexpect to recover sufficient amounts
through their allowed rates to cover their expected decommissioning costs. Only the portion of currently estimated total
decommissioning costs that has been accepted by regulatory agencies is reflected
in rates of the System companies.
Based on present estimates, and assuming its nuclear units operate to the end
of their respective license periods, the SystemNU system expects that the
decommissioning trust funds will be substantially funded when those
expenditures have to be made.
Under the restructuring legislation in Connecticut and Massachusetts,
CL&P and WMECO are permitted to recover their decommissioning obligations as
a stranded cost. It is not clear at this time how decommissioning will be
treated in connection with the auction of the Millstone units.
Pursuant to the PSNH Settlement Agreement, upon a successful sale of
NAEC's share of Seabrook, the existing Seabrook Power Contract between PSNH
and NAEC will be terminated. However, subsequent to such sale, PSNH shall
continue to be responsible for funding NAEC's former ownership share of its
decommissioning liability, calculated on the basis of full funding by
December 31, 2015, using an estimated decommissioning date of 2015 or as
otherwise determined by the NDFC. PSNH may enter into a new contract to
provide for the payment of Seabrook nuclear decommissioning costs, with full
recovery of the costs of that contract to be recoverable from PSNH's
customers. Under no circumstances will PSNH's customers have any
responsibility for increases in decommissioning funding above the amount
calculated based upon the payment schedule as of the sale date.
In June 1999, NNECO filed with the NRC the Post-Shutdown Decommissioning
Activities Report for Millstone 1. The total estimated decommissioning costs,
which have been updated to reflect the early shutdown of the unit, are
approximately $716.4 million as of December 31, 1999 ($580.3 million for CL&P
and $136.1 million for WMECO).
CYAPC, YAEC, VYNPC, and MYAPC are all collecting revenues for
decommissioning from their power purchasers. The table below sets forth the
SystemNU system companies' estimated share of decommissioning costs (and closure
costs where applicable) of the Yankee units. The estimates are based on the
latest site studies, escalated to December 31,
1996 dollars.studies. For information on the equity ownership of the SystemNU
system companies in each of the Yankee units and the proposed sale of VY, see
"Electric Operations--Nuclear Generation--Operations - Nuclear Generation - General."
CL&P PSNH WMECO SystemNU system
---- ---- ----- ---------
(Millions)
VYVY............ $ 34.840.8 $17.1 $10.7 $ 14.6 $ 9.1 $ 58.568.6
Yankee Rowe* 42.5 12.1 12.1 66.7.. 8.0 2.3 2.3 12.7
CY* 263.2 38.1 72.5 373.8
MY 44.3 18.5 11.1 73.9
Total $384.8 $ 83.3 $104.8 $572.9........... 153.2 22.2 42.2 217.5
MY*........... 76.9 32.1 19.2 128.2
------ ----- ----- ------
Total....... $278.9 $73.7 $74.4 $427.0
====== ===== ===== ======
* As discussed more fully below, theThe costs shown include all of the expected future billings
associated with the funding of decommissioning, recovery of remaining decommissioning costsassets
and other closingclosure costs associated with the early retirement of Yankee Rowe,
CY and CYMY as of December 31, 1996.1999, which have been recorded as an obligation
on the books of the NU system companies.
As of December 31, 1996,1999, the System'sNU system's share of the external decommissioning
trust fund balances (at market), which have been recorded on the books of the
Yankee Companies,nuclear companies, is as follows:
CL&P PSNH WMECO SystemNU system
---- ---- ----- ---------
(Millions)
VYVY.............. $ 15.123.5 $ 6.49.9 $ 4.06.2 $ 25.539.5
Yankee Rowe 29.4 8.4 8.4 46.2Rowe..... 39.3 11.2 11.2 61.8
CY.............. 64.3 9.3 17.7 91.3
MY.............. 21.7 9.1 5.4 36.2
------ ----- ----- ------
Total........... $148.8 $39.5 $40.5 $228.8
====== ===== ===== ======
In August 1998, the FERC released an initial decision regarding CY
70.6 10.2 19.4 100.2decommissioning. If upheld, CYAPC's management has estimated the effect of
the ALJ decision on CYAPC's earnings to be approximately $37.5 million, of
which the NU's share would be approximately $18.4 million. NU continues
to support CYAPC's efforts to contest this initial decision.
On June 1, 1999, the FERC accepted an offer of settlement, which
resolved all the issues in the FERC decommissioning rate case proceeding
related to MY. The settlement provides, among other things, the following:
(1) MYAPC will collect $33.1 million annually to pay for decommissioning and
spent fuel; (2) its return on equity will be set at 6.5 percent; (3) MYAPC is
permitted full recovery of all of its unamortized investment in MY, 19.6 8.2 4.9 32.7
Total $134.7 $33.2 $36.7 $204.6including
fuel; and (4) an incentive budget for decommissioning is set at $436.3
million.
Effective January 1996, YAEC began billing its sponsors, including CL&P,
WMECO and PSNH, amounts based on a revised decommissioning cost estimate
approved by the FERC. Under the terms of its rate settlement agreement with
the FERC, that
assumes decommissioning by the year 2000. ThisYAEC filed a revised estimate was based on
continued access to the Barnwell, South Carolina, low-level radioactive waste
facility, changes in assumptions about earnings on decommissioning trust
investments, and changes in other decommissioning cost assumptions.
CYAPC accrues decommissioning costs on the basis of immediate dismantlement
at retirement. In late December 1996, CYAPC made a filing with FERC to amend
the wholesale power contracts between the owners of the facility, and revise
decommissioning cost estimates and other cost estimates for the facility. The
amendments clarify the owners' entitlement to full recovery of sunk costs and
the ongoing costs of maintaining the plant in accordance with NRC rules until
decommissioning begins, and ensures that decommissioning will continue to be
funded through June 2007, the full license term, despite the unit's earlier
shutdown. On February 26, 1997, FERCestimate, which was
approved a draft order setting for hearing
the prudence of the decision to close CY. FERC will determine the prudence of
CYAPC's decision to retire the plant before it finally determines the justness
and reasonableness of CY's proposed amended power contract rates.
For more information regarding nuclear decommissioning, see "Nuclear
Decommissioning" in the notes to NU's, CL&P's, PSNH's, WMECO's and NAEC's
financial statements.
ENERGY-RELATED BUSINESSES
PRIVATE POWER DEVELOPMENT
The System participates as a developer and investor in domestic and
international private power projects through its subsidiary, Charter Oak.
Management currently does not permit Charter Oak to invest in facilities which
are located within the System service territory or sell electric output to any
of the System electric utility companies. Charter Oak is investing primarily in
projects outside of the United States.
Charter Oak owns, through wholly owned special-purpose subsidiaries, a 10
percent equity interest in a 220-MW natural gas-fired combined-cycle
cogeneration QF in Texas, a 56-MW interest in a 1,875-MW natural gas-fired
cogeneration facility in the United Kingdom, a 33 percent equity interest in a
114-MW natural gas-fired project in Argentina, a 20-MW wind-power project in
Costa Rica and an 83 percent interest in a 168 MW natural gas fired project in
Argentina.
Charter Oak is currently participating in the development of other projects
in Latin America and the Pacific Rim. Specifically, Charter Oak is engaged in
financing a 200-MW coal fired project in Inner Mongolia in the Peoples Republic
of China and in developing a 30-MW wind-power project in New Zealand and a 100-
MW natural gas fired project in Argentina. Charter Oak will own 50-MW, 15-MW and
51-MW interests in these respective projects.
Although Charter Oak has no full-time employees, 15 NUSCO employees are
dedicated to Charter Oak activities on a full-time basis. Other NUSCO employees
provide services as required. NU's Board of Trustees has authorized investments
up to $200 million in Charter Oak through December 31, 1998. NU's total
investment in Charter Oak was approximately $87 million as of December 31, 1996.
ENERGY MANAGEMENT SERVICES
In 1990, NU organized a subsidiary corporation, HEC, to acquire
substantially allMarch 1, 2000. The YAEC filing assumes NRC license
termination and completion of the assets and personnel of a nonaffiliated energy
management services company. In general, HEC contracts to reduce its customers'
energy costs and/or conserve energy and other resources. HEC also provides DSM
consulting services to utilities and others. HEC's energy management and
consulting services have primarily been directed to the commercial, industrial
and institutional markets and utilities in New England and New York. NU's
aggregate equity investment in HEC was approximately $4 million as of December
31, 1996.
TELECOMMUNICATIONS
In 1996, NU organized a telecommunications subsidiary, Mode 1. On May 30,
1996, the Federal Communications Commission approved Mode 1's application to
become an "exempt telecommunications company." The order will allow NU to
participate in a wide range of telecommunicationsdecommissioning activities both within and
outside New England. Mode 1 has filed to obtain a state-wide certificate of
public convenience and necessity in Connecticut and expects to make additional
state regulatory filings in 1997 for approval to engage in various
telecommunications activities. The System companies also may seek approval to
transfer certain of their telecommunications facilities and equipment to Mode 1
in 1997.
Mode 1 has acquired a 9.9 percent interest in FiveCom LLC (FiveCom) for
approximately $1.3 million and a 40 percent interest in NECOM LLC (NECOM) for
$5.3 million. FiveCom owns the remaining 60 percent interest in NECOM. NECOM is
constructing a 310 mile fiber optic communications system placed on the System's
transmission facilities. NU's total investment in Mode 1 was approximately $6.8
million as of December 31, 1996. NU expects to invest up to approximately $20
million in Mode 1 in 1997 for telecommunications activities, including the
construction and purchase of additional facilities as well as the development of
new business opportunities.
ENERGY PRODUCTS AND SERVICES
NU also organized another subsidiary, Energy Partners, in 1996. In late
1996, PSNH transferred its interest in PSNH Energy, a competitive supplier in
the New Hampshire retail electric competition pilot program, to Energy Partners.
See "Rates--New Hampshire Retail Rates--Electric Industry Restructuring in New
Hampshire". This subsidiary will be a vehicle for participation in other retail
pilot competition programs and open-access retail electric markets in the
Northeast and other areas of the country as appropriate. In addition, Energy
Partners is in the process of developing energy-related products and services in
order to enhance its core electric service and customer relationships. Energy
Partners has taken steps to establish strategic alliances with other companies
in various energy-related fields including fuel supply and management, power
quality, energy efficiency and load management services.by 2004.
OTHER REGULATORY AND ENVIRONMENTAL MATTERS
ENVIRONMENTAL REGULATION
GENERAL
The SystemNU system and its subsidiaries are subject to federal, state and
local regulations with respect to water quality, air quality, toxic
substances, hazardous waste, and other environmental matters. Similarly,Additionally,
the System'sNU system's major generation and transmission facilities may not be
constructed or significantly modified without a review by the applicable
state agency of the environmental impact of the proposed construction or
modification. Compliance with environmental laws and regulations,
particularly air and water pollution control requirements, may limit
operations or require substantial investments in new equipment at existing
facilities.
See "Resource Plans" for a discussion of the
System's construction plans.
SURFACE WATER QUALITY REQUIREMENTS
The federal Clean Water Act (CWA) requires every "point source" discharger of
pollutants into navigable waters to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the United States Environmental
Protection Agency (EPA) or state environmental agency specifying the
allowable quantity and characteristics of its effluent. SystemNU system facilities
haveare in the process of obtaining or renewing all required NPDES permits in
effect. Compliance with NPDES and state water discharge permits has
necessitated substantial expenditures, which are difficult to estimate, and
may require further expenditures because of additional requirements that
could be imposed in the future. For information regarding ongoing criminal investigations by the
Office of the U. S. Attorney for the District of Connecticutcivil lawsuits
related to allegations that there were somealleged violations of certain facilities' NPDES permits, see
"Item 3. Legal Proceedings."
In October 1995, the Connecticut Department of Environmental Protection
(CDEP) issued a consent order to CL&P and the Long Island Lighting Company
(LILCO) requiring those companies to address leaks of dielectric fluids from the
Long Island cable, which is jointly owned by CL&P and LILCO. This cable enables
CL&P to interchange up to 300 MW of capacity with LILCO. In May 1996, the
consent order was modified to address issues relating to a leak, which occurred
in January, 1996. The modified order requires CL&P and LILCO to study and
propose alternatives for the prevention, detection and mitigation of leaks from
the cable and to evaluate the ecological effects of leaks on the environment.
Alternatives to be studied include cable replacement and alternative dielectric
fluids. These studies are ongoing. The System will incur additional costs to
meet the requirements of the order and to meet any subsequent CDEP requirements
that may result from these studies. These costs, as well as the long-term
future and cost-effectiveness of the cable operation subsequent to any
additional CDEP requirements, cannot be estimated at this time.
The United States Attorney's Office in New Haven, Connecticut has
commenced an investigation and issued subpoenas to CL&P, NU, NUSCO, CONVEX and
LILCO seeking documents relating to operation and maintenance of the cable and
the most recent leaks from the cable described above. The government has not
revealed the scope of its investigation, so management cannot evaluate the
likelihood of a criminal proceeding being initiated at this time. However,
management is aware of nothing that would suggest that any System company,
officer or employee has engaged in conduct that would warrant a criminal
proceeding. For information regarding a lawsuit related to discharges from the
cable, see "Item 3. Legal Proceedings."
Merrimack Station's NPDES permit requires site work to isolate adjacent
wetlands from the station's wastewater system. Plans have been approved by the
New Hampshire Department of Environmental Services (NHDES). PSNH will submit the
permit application to begin construction in early 1997. The Merrimack permit
also requires PSNH to perform further biological studies because significant
numbers of migratory fish are being restored to lower reaches of the Merrimack
River. These studies have been completed and results have been reported to the
EPA. The findings from these studies indicate that Merrimack Station's once-
through cooling system does not interfere with the establishment of a balanced
aquatic community. However, if the agencies determine that interference exists,
PSNH could be required to construct a partially enclosed cooling water system
for Merrimack Station. The amount of capital expenditures relating to the
foregoing cannot be determined at this time. However, if such expenditures were
required, they would likely be substantial and/or a reduction of Merrimack
Station's net generation capability could result.
The ultimate cost impact of the CWA and state water quality regulations on
the System cannot be estimated because of uncertainties such as the impact of
changes to the effluent guidelines or water quality standards. Additional
modifications, in some cases extensive and involving substantial cost, may
ultimately be required for some or all of the System's generating facilities.
The Federal Oil Pollution Act of 1990 (OPA 90) sets out the requirements
for facility response plans and periodic inspections of spill response
equipment at facilities that can cause substantial harm to the environment by
discharging oil or hazardous substances into the navigable waters of the
United States and onto adjoining shorelines. The System CompaniesNU system companies are
currently in compliance with the requirements of OPA 90. OPA 90 includes
limits on the liability that may be imposed on persons deemed responsible for
release of oil. The limits do not apply to oil spills caused by negligence
or violation of laws or regulations. OPA 90 also does not preempt state laws
regarding liability for oil spills. In general, the laws of the states in
which the SystemNU system owns facilities and through which the SystemNU system
transports oil could be interpreted to impose strict liability for the cost
of remediating releases of oil and for damages caused by releases. The SystemNU
system currently carries general liability insurance in the total amount of
$100 million per occurrenceannual coverage for oil spills. This amount may decrease in the
future as a result of generation asset sales due to restructuring.
AIR QUALITY REQUIREMENTS
The Clean Air Act Amendments of 1990 (CAAA) impose stringent requirements
on emissions of sulfur dioxide (SO2) and nitrogen oxide (NOX) for the purpose
of controlling acid rain and ground level ozone. In addition, the CAAA address
the control of toxic air pollutants. Installation of continuous emissions
monitors (CEMs) and expanded permitting provisions also are included. Existing and future federal and state air quality regulations, including
recently proposed standards, could hinder or possibly preclude the construction
of new, or the modification of existing, fossil units in the System's service
area and could raise the capital and operating cost of existing units. The
ultimate cost impact of these requirements on the System cannot be estimated
because of uncertainties about how EPA and the states will implement various
requirements of the CAAA.
Nitrogen Oxide. Title I of the CAAA identifies NOX emissions as a
precursor of ambient ozone. Connecticut, Massachusetts and New Hampshire, as
well as other Northeastern states, currently exceed the ambient air quality
standard for ozone. Pursuant to the CAAA, states exceeding the ozone standard
must implement plans to address ozone nonattainment. All three states have
issued final regulations to implement Phase I reduction requirements and the
System has met these requirements. Compliance
with Phase ICAAA requirements has cost the System a totalNU system approximately $48 million as of
approximately $41 million: $10December 31, 1999: $11 million for CL&P, $27$33 million for PSNH, $1 million for
WMECO, and $3 million for HWP. Compliance has
been achieved usingIn addition, PSNH expects to spend
approximately $2 million a combination of currently available technology, combustion
efficiency improvements and emissions trading. Compliance costsyear for Phase II,SO2 allowances.
Further requirements for NOX reductions became effective in 1999, are expected to result in an additional cost of1999. PSNH
spent approximately $5$20 million for CL&P, butimprovements at its Merrimack and
Schiller Stations to meet these requirements. These costs were offset by the
sale of $16 million of emission credits. Following divestiture of the NU
system's fossil units, these federal and state air quality regulations are
not expected to be material for PSNH, WMECO and
HWP.
Sulfur Dioxide. The CAAA mandates reductions in SO2 emissions to
control acid rain. These reductions are to occur in two phases. First, certain
high SO2 emitting plants were required to reduce their emissions beginning in
1995. All Phase I units have been allocated SO2 allowances for the period 1995-
1999. These allowances are freely tradable. One allowance entitles a source to
emit one ton of SO2. No unit may emit more SO2 than the amount for which it has
allowances. The only System units subject to the Phase I reduction requirements
are PSNH's Merrimack Units 1 and 2. Newington Station in New Hampshire and Mt.
Tom Station in Massachusetts are conditional Phase I units, which means that the
System can decide to include these plants as Phase I units during any year and
obtain allowances for that year. The System included these plants as Phase I
units in 1996.
On January 1, 2000, the start of Phase II, a nationwide cap of 8.9 million
tons per year of utility SO2 emissions will be imposed and existing units will
be granted allowances to emit SO2. Most of the System companies' allocated
allowances will substantially exceed their expected SO2 emissions for 2000 and
subsequent years, except for PSNH, which expects to purchase additional SO2
allowances.
New Hampshire and Massachusetts have each instituted acid rain control laws
that limit SO2 emissions. The System is meeting the new SO2 limitations by
using natural gas and/or lower sulfur coal in its plants. Under the existing
fuel adjustment clauses in Connecticut, New Hampshire and Massachusetts, the
System should be able to recover the additional fuel costs of compliance with
the CAAA and state laws from its customers. For more information regarding a
prudence hearing in New Hampshire on costs associated with PSNH's capital
expenditures to comply with Phase I reduction requirements, see "Rates--New
Hampshire Retail Rates--FPPAC and Prudence."
Management does not believe that the acid rain provisions of the CAAA will
have a significantmaterial impact on the System's overall costs or rates due to the very
strict limits on SO2 emissions already imposed by Connecticut, New Hampshire and
Massachusetts. In addition, management believes that Title IV of the CAAA (acid
rain) requirements for NOX limitations will not have a significant impact on
System costs due to the more stringent NOX limitations resulting from Title I of
the CAAA discussed above.
EPA, Connecticut, New Hampshire and Massachusetts regulations also include
other air quality standards, emission standards and monitoring and testing and
reporting requirements that apply to the System's generating stations. They
require new or modified fossil fuel-fired electric generating units to operate
within stringent emission limits. The System could incur additional costs to
meet these requirements, which costs cannot be estimated at this time.
Air Toxics. Title III of the CAAA directed EPA to study air toxics and
mercury emissions from fossil fired steam electric generation units to determine
if they should be regulated. EPA exempted these plants from the hazardous air
pollutant program pending completion of the studies, expected in 1997 or 1998.
Should EPA determine that such generating plants' emissions must be controlled
to the same extent as emissions from other sources under Title III, the System
could be required to make substantial capital expenditures to upgrade or replace
pollution control equipment, but the amount of these expenditures cannot be
readily estimated.
TOXIC SUBSTANCES ANDNU system companies.
HAZARDOUS WASTE REGULATIONS
PCBs. Under the federal Toxic Substances Control Act of 1976 (TSCA), EPA
has issued regulations that control the use and disposal of polychlorinated
biphenyls (PCBs). PCBs had been widely used as insulating fluids in many
electric utility transformers and capacitors before TSCA prohibited any further
manufacture of such PCB equipment. System companies have taken numerous steps
to comply with these regulations and have incurred increased costs for disposal
of used fluids and equipment that are subject to the regulations.
In general, the System sends fluids with concentrations of PCBs equal to or
higher than 500 ppm to an unaffiliated company to dispose of using approved
methods. Electrical capacitors that contain PCB fluid are sent off-site to
dispose of through burning in high temperature incinerators approved by EPA.
The System disposes of solid wastes containing PCBs in secure chemical waste
landfills.
Asbestos. Federal, Connecticut, New Hampshire and Massachusetts asbestos
regulations have required the System to expend significant sums in the past on
removal of asbestos, including measures to protect the health of workers and the
general public and to properly dispose of asbestos wastes. Asbestos removal
costs for the System are not expected to be material in 1997.
RCRA. Under the federal Resource Conservation and Recovery Act of 1976, as
amended (RCRA), the generation, transportation, treatment, storage and disposal
of hazardous wastes are subject to EPA regulations. Connecticut, New Hampshire
and Massachusetts have adopted state regulations that parallel RCRA regulations
but in some cases are more stringent. The procedures by which System companies
handle, store, treat and dispose of hazardous wastes are regularly revised,
where necessary, to comply with these regulations.
Hazardous Waste Liability.
As many other industrial companies have done in the past, Systemthe NU system
companies disposed of residues from operations by depositing or burying such
materials on-site or disposing of them at off-site landfills or facilities.
Typical materials disposed of include coal gasification waste, fuel oils,
gasoline, and other hazardous materials that might contain PCBs.polychlorinated
biphenyls (PCBs). It has since been determined that deposited or buried
wastes, under certain circumstances, could cause groundwater contamination or
create other environmental risks. The SystemNU system has recorded a liability for
what it believes is, based upon currently available information, its
estimated environmental remediation costs for waste disposal sites for which
the SystemNU system companies expect to bear legal liability, and continues to
evaluate the environmental impact of its former disposal practices. Under
federal and state law, government agencies and private parties can attempt to
impose liability on SystemNU system companies for such past disposal. As ofAt
December 31, 1996,1999, the liability recorded by the SystemNU system for its estimated
environmental remediation costs for known sites needing remediation including
those sites described below, exclusive of recoveries from insurance or from
third parties, was approximately $13$24.8 million. These costs could be
significantly higher if alternative remedies become necessary.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly known as Superfund, the EPA has
the authority to cleanupclean up or order cleanupthe clean up of hazardous waste sites and
to impose the cleanupclean up costs on parties deemed responsible for the hazardous
waste activities on the sites. Responsible parties include the current owner
of a site, past owners of a site at the time of waste disposal, waste
transporters, and waste generators. It is EPA's position that all responsible parties are jointly and
severally liable, so that any single responsible party can be required to pay
the entire costs of cleaning up the site. As a practical matter, however, the
costs of cleanup are usually allocated by agreement of the parties, or by the
courts on an equitable basis among the parties deemed responsible, and several
federal appellate court decisions have rejected EPA's position on strict joint
and several liability. Superfund also contains provisions that require System
companies to report releases of specified quantities of hazardous materials and
require notification of known hazardous waste disposal sites. System companies
are in compliance with these reporting and notification requirements.
The SystemNU system currently is involved in
twoone Superfund sitessite in Connecticut,New Jersey, one in New York, one in New Hampshire, and
one in Kentucky, onewhich could have a material impact on the NU system. The NU
system has committed in New Jerseythe aggregate approximately $1.9 million to its share
of the clean up of these sites.
As discussed below, in addition to the remediation efforts for the
above-mentioned Superfund sites, the NU system has been named as a
potentially responsible party (PRP) and twois monitoring developments in
New Hampshire.connection with several state environmental actions. The level of study of
each site and the information about the waste contributed to the site by the
SystemNU system and other parties differs from site to site. Where reliable
information is available that permits the SystemNU system to make a reasonable
estimate of the expected total costs of remedial action and/or the System'sNU
system's likely share of remediation costs for a particular site, those cost
estimates are provided below. All cost estimates were made in accordance
with generally accepted accounting principles where remediation costs were
probable and reasonably estimable.
Any estimated costs disclosed for cleaning upIn 1987, the sites discussed
below were determined without consideration of possible recoveries from third
parties, including insurance recoveries. Where the System has not accrued a
liability, the costs either were not material or there was insufficient
information to accurately assess the System's exposure.
At two Connecticut sites, the Beacon Heights and Laurel Park landfills, the
major parties formed coalitions and joined as defendants a number of other
parties including "Northeast Utilities (Connecticut Light and Power)" (NU
[CL&P]). Litigation on both sites was consolidated in a single case in the
federal district court. In 1993, the coalitions' claims against a number of
defendants including NU (CL&P) were dismissed. In 1994, the Beacon Heights
Coalition indicated that they would not pursue NU (CL&P) as a defendant. As a
result, CL&P does not expect to incur cleanup costs for the Beacon Heights site.
Meanwhile, the coalitions appealed the 1993 federal district court dismissal,
which was overturned. A petition for rehearing was filed and it is unlikely the
district court will take further action until the petition is resolved. In any
event, CL&P's liability at the Laurel Park site is expected to be minimal
because of the non-hazardous nature and small volume of the materials that were
sent there.
The System had sent a substantial volume of LLRW from Millstone 1,
Millstone 2 and CY to the Maxey Flats nuclear waste disposal site in Fleming
County, Kentucky. On April 18, 1996, the U.S. District Court for the Eastern
District of Kentucky approved a consent decree between EPA and members of the
Maxey Flats PRP Steering Committee, including System companies, and several
federal government agencies, including DOE and the Department of Defense as well
as the Commonwealth of Kentucky. The System has recorded a liability for future
remediation costs for this site based on its share of ultimate remediation costs
under the tentative agreement. The System's liability at the site has been
assessed at slightly over $1 million.
PSNH has committed in the aggregate approximately $300,000 to its share of
the clean up of two municipal landfill Superfund sites in Dover and North
Hampton, New Hampshire. Some additional costs may be incurred at these sites,
but they are not expected to be significant.
CL&P, as successor to The Hartford Electric Light Company (HELCO), has been
named as one of over 100 defendants in a cost recovery action filed in the
federal district court in New Jersey. Plaintiffs have not disclosed the amount
of the recovery they are seeking and, due to the nature of HELCO's limited
dealings with the plaintiffs, CL&P believes its liability is minimal.
As discussed below, in addition to the remediation efforts for the above-
mentioned Superfund sites, the System has been named as a PRP and is monitoring
developments in connection with several state environmental actions.
In 1987, CDEPEnvironmental Protection (CDEP)
published a list of 567 hazardous waste disposal sites in Connecticut. The
SystemNU system owns two sites, in Stamford and Rockville, which are on this list. The System has spent
approximately $2.7 million, as of December 31, 1996, completing investigations
and limited remediation at these sites.
Both sites were formerly used by CL&P predecessor companies for the
manufacture of coal gas (also known as town gas sites) from the late 1800s to
the 1950s. This process resulted in the
production of coal tar and creosote residues and other byproducts, which, when
not sold for other industrial or commercial uses, were frequently deposited on
or near the production facilities. Site investigations have been completed at these sites and
discussions with state regulators are in progress to address the need for and
extent of remediation necessary to protect public health and the environment.
OneThe total reserve established for these two sites is $6.5 million.
CL&P owns a section of an abandoned railroad bed in Ridgefield,
Connecticut. Past studies of portions of the sites is a 25.8-acre site locatedrailroad bed have indicated
elevated levels of arsenic in the south endupper two to three feet of Stamford,
Connecticut. Site investigations have located coal tar deposits coveringsoil at the
location. The NU system has reserved approximately 5.5 acres and having a volume of approximately 45,000 cubic yards.$1.2 million for future
remediation efforts. A final risk assessment report for the site was completed in January 1994. The
System is currently considering redevelopment of thesimilar site in cooperation with
the local municipality as part of the State of Connecticut's Urban Sites
Program. Several remedial options havePortland, Connecticut has been
evaluated to remediate the site, if
necessary to accommodate redevelopment. The estimated cost of remediation and
institutional controls range from $5 to $8 million.
The second site is a 3.5-acre former coal gasification facility that
currently serves as an active substation in Rockville, Connecticut. Site
investigations have located creosote and other polyaromatic hydrocarbon
contaminants that may require remediation. Several options are being evaluated
to remediate the site, if necessary. Meetings with the CDEP and local officials
will take place in 1997. CL&P will present a long-term plan for the site.
As part of the 1989 divestiture of CL&P's gas business, site investigations
were performed for properties that were transferred to Yankee Gas Services
Company (Yankee Gas). CL&P agreed to accept liability for any required cleanup
for the three sites it retained. These three sites include Stamford and
Rockville (discussed above) and Torrington, Connecticut. At the Torrington
site, investigations have been completed and the cost of any remediation, if
necessary, is not expected to be material. CL&P and Yankee Gas also share a
site in Winsted, Connecticut and any liability for required cleanup there. CL&P
and Yankee Gas will share the costs of cleanup of sites formerly used in CL&P's
gas business but not currently owned by either of them.remediated.
PSNH contacted NHDESthe New Hampshire Department of Environmental Services
(NHDES) in December 1993 concerning possible coal tar contamination in
Laconia, New Hampshire, in Lake Opechee and the Winnipesaukee River near an
area where PSNH and a second PRP formerly owned and operated a coal
gasification plant from the late 1800's to the 1950's. A comprehensive site
investigation was completed in December 1996. This study has shown that
byproducts from the operation of the former manufactured gas plant are
present in groundwater, subsurface soil and in the sediments of the adjacent
Winnipesaukee River. Remediation estimates range from $3 to $4 million.
DiscussionsA remediation action plan was approved by the NHDES in
March of 1999. PSNH entered into a cash settlement with the other PRP at the
site. A reserve of $8.4 million has been established for this site,
including amounts received in the settlement.
PSNH has also received requests from NHDES will take place early in 1997 to determine the extent
of remediation necessary. An interim cost sharing agreement with a second PRP
wherein this PRP contributed 25% to the cost of theconduct site
investigations has
ended. PSNH will enter into negotiations to reassess future cost allocation.
A second coal gasification facility formerly owned and operated by a
predecessor company to PSNH isat three additional former manufactured gas plant sites.
These sites are located in Keene, Nashua, and Dover, New Hampshire. The NHDES has
been notified of the presence of coal tar contaminationStudies
are now being planned to understand site conditions and furtherany environmental
impacts. PSNH is also involved in other site
investigations were completed in 1996. The NHDES has requested additional studies to be completed in 1997. PSNH also will inform a second PRP who
formerly owned and operated the gas facility of site conditions. Additional New
Hampshire sites include several former manufactured gasification facilities, an
inactive ash landfill located at Dover Point and a municipal landfill in
Peterborough. Historic reviews of these sites are ongoing. Studies are ongoing
at the Dover Point site and plans to further determine if metals are migrating
from the site to the adjacent Piscataqua River are being developed. These
results will be discussed with the NHDES in 1997 to determine the scope of these
investigations.assess
contamination, but PSNH's liability at these sites cannotis not expected to be
estimatedmaterial.
Environmental contaminants have been identified at the former Manchester
Steam generating station in Manchester, New Hampshire. A reserve of $4.1
million has been established to abate and remediate this time.station.
In Massachusetts, SystemNU system companies have been designated by the
Massachusetts Department of Environmental Protection (MDEP) as PRPs for
twelve12 sites under the MDEP's hazardous waste and spill remediation program. At
two sites, the SystemNU system may incur remediation costs that may be material to
HWP depending on the remediation requirements. At one site, HWP has been
identified by the MDEP as one of three PRPs in a coal tar site in Holyoke,
Massachusetts. HWP owned and operated the Holyoke Gas Works from 1859 to
1902. The site is located on the east side of Holyoke, adjacent to the
Connecticut River and immediately downstream of HWP's Hadley Falls Station.
MDEP has designated both the land and river deposit areas as priority waste
disposal sites. Due to the presence of
tar patches in the vicinity of the spawning habitat of the shortnose sturgeon---
an endangered species--the National Oceanographic and Atmospheric Administration
(NOAA) and National Marine Fisheries ServiceThe PRPs have taken an active role in
overseeing site activities. Both MDEP and NOAA havebeen notified the PRPs of the need to remove tar
deposits from the river. During 1996, HWP conducted a pilot
project to assess the feasibility and costs of tar removal. Results of this
project are currently being evaluated. To date, HWP has spent approximately $1
million for river studies and construction costs related to the site. The total estimated costs for remediationremoval of tar
patches in the river range from $2 million to $3 million. DiscussionsHWP has agreed to
complete the removal of the resultstar patches subject to negotiations of the pilot study will be presented to the
MADEP in early 1997.an acceptable
consent decree with various state and federal regulatory agencies.
The second site is a former manufactured gas plant facility in
Easthampton, Massachusetts. WMECO predecessor companies owned and operated
the Easthampton Gas Works from 1864 to 1924. Previous investigations have
identified coal tar deposits on the land portion of the site. During fall, 1996, WMECO conducted
additional investigative work in an adjacent pond. The resultsAn analysis of
this work are
currently being analyzed. A report will bethe human, health and ecological risks at the site and a remedial action plan
was submitted to the MDEP in 1997 which
will better define the extent of coal tar deposits in the pond. To date,1999. WMECO has spentreserved approximately $200,000 dollars$4.3
million for investigative work. The total
estimated remediation costs for the site are estimatedsite.
Environmental contaminants have been identified at the former Riverside
generating station in Holyoke, Massachusetts. A reserve of $2.3 million has
been established for HWP to range from $1abate and remediate fuel oil outside the former
generating station, asbestos inside the station and to $4.6
million.demolish a section of
the existing structure.
In the past, the SystemNU system has received other claims from government
agencies and third parties for the cost of remediating sites not currently
owned by the SystemNU system but affected by past SystemNU system disposal activities and
may receive more such claims in the future. The SystemNU system expects that the
costs of resolving claims for remediating sites about which it has been
notified will not be material, but cannot estimate the costs with respect to
sites about which it has not been notified.
ELECTRIC AND MAGNETIC FIELDS
In recent years, publishedPublished reports have discussed the possibility of adverse health
effects from electric and magnetic fields (EMF) associated with electric
transmission and distribution facilities and appliances and wiring in
buildings and homes. Most researchers, as well as numerous scientific review
panels considering all significant EMF epidemiological and laboratory researchstudies
to date, agree that current information remains inconclusive, inconsistent
and insufficient for risk assessment ofcharacterizing EMF exposures. Most recently,as a review
issued in October 1996 by the U.S. National Academy of Sciences concluded "that
the current body of evidence does not show that exposure to these fields
presents a human-health hazard."health risk.
Based on this information, management does not believe that a causal
relationship between EMF exposure and adverse health effects has been
established or that significant capital expenditures are appropriate to
minimize unsubstantiated risks. The NU issystem companies have closely
monitoringmonitored research and government policy developments.
The System supports further research into the subjectdevelopments for many years and is voluntarily
participating in the funding of the ongoing National EMF Research and Public
Information Dissemination Program.will
continue to do so.
If further investigation were to demonstrate that the present
electricity delivery system is contributing to increased risk of cancer or
other health problems, the industry could be faced with the difficult problem
of delivering reliable electric service in a cost-effective manner while
managing EMF exposures. In addition, if theTo date, no courts were to
concludehave concluded that individuals
have been harmed and thatby EMF from electric utility facilities, but if utilities
arewere to be found liable for damages, the potential monetary exposure for all
utilities, including the SystemNU system companies, could be enormous. Without
definitive scientific evidence of a causal relationship between EMF and
health effects, and without reliable information about the kinds of changes
in utilities' transmission and distribution systems that might be needed to
address the problem, if one is found, no estimates of the cost impacts of
remedial actions and liability awards are available.
The Connecticut Interagency EMF Task Force (Task Force) last provided a
report to the state legislature in January 1995. The Task Force advocated a
policy of "voluntary exposure control," which involves providing people with
information to enable them to make individual decisions about EMF exposure.
Neither the Task Force, nor any Connecticut state agency, has recommended
changes to the existing electrical supply system. The Task Force is required to
provide another report to the legislature by 1998. The Connecticut Siting
Council (Siting Council) previously adopted a set of EMF "Best Management
Practices," which are now considered in the justification, siting and design of
new or modified transmission lines and substations. In 1996, the Siting Council
concluded a generic proceeding in which it conducted a comparative life-cycle
cost analysis of overhead and underground transmission lines, pursuant to a law
that was adopted in 1994 in part due to public EMF concerns. This proceeding is
expected to be referenced in future comparisons of overhead and underground
alternatives to proposed transmission line projects.
EMF has become increasingly important as a factor in facility siting
decisions in many states, and local EMF concerns occasionally make the news when
utilities propose new or changed facilities. In prior years, various bills
involving EMF were introduced in the Massachusetts and Connecticut legislatures
with no action taken. No such bills were introduced in either state in 1996.
CL&P has been the focus of media reports since 1990 charging that EMF
associated with a substation and related distribution lines in Guilford,
Connecticut are linked with various cancers and other illnesses in several
nearby residents. See "Item 3. Legal Proceedings", for information about two
suits brought by plaintiffs who now or formerly lived near that substation.
FERC HYDROHYDROELECTRIC PROJECT LICENSING
Federal Power Act licenses may be issued for hydroelectric projects for
terms of 30 to 50 years as determined by the FERC. Upon the expiration of a
license, any hydroelectric project so licensed is subject to reissuance by
the FERC to the existing licensee or to others upon payment to the licensee
of the lesser of fair value or the net investment in the project plus
severance damages less certain amounts earned by the licensee in excess of a
reasonable rate of return.
The SystemNU system companies currently hold FERC licenses for 1912 hydroelectric
projects aggregating approximately 1,3751,411 MW of capacity, located in
Connecticut, Massachusetts and New Hampshire. FourCL&P's and WMECO's five
licenses with approximately 1,302 MW of capacity were transferred to NGC in
March 2000. As part of the System licenses expired on
December 31, 1993 (WMECO's Gardners Falls project and PSNH's Ayers Island, Smith
and Gorham projects). On August 1, 1994, FERC issued new 30-year licensesSettlement Agreement, PSNH has proposed to PSNH for the continued operationauction
its six hydroelectric projects with approximately 65 MW of capacity upon
approval of the Smith and Gorham projects. Rehearing
requests on these new licenses were filed with FERC by several intervenors and
were subsequently denied in 1996. On April 29, 1996, FERC issued a new 40 year
license to PSNH for continued operation or the Ayers Island Project. FERC has
issued an annual license allowing the Gardners Falls project to continue
operations pending completion of the relicensing process. The Final
Environmental Impact Statement for the Gardners Falls Project indicated that
minimum flow requirements, downstream fish passage facilities and recreational
enhancements are needed at the project and were recommended as conditions of a
new license.agreement.
The license for HWP's Holyoke Project expiresexpired in late 1999. The
relicensing processOn August 20,
1999, the FERC issued a new 40-year license to HWP. HWP was the successful
co-applicant in a contested license application proceeding for thisthe project,
began in 1994. In November 1995,winning over co-applicants, the City of Holyoke Gas and& Electric Department, initiated the
processMassachusetts Municipal Wholesale Electric Company and the Ashburnham
Municipal Light Plant. HWP filed a motion for stay and motion for rehearing
of applying tothe FERC's order, requesting that the FERC forreconsider various aspects of
the license, onincluding mandatory Section 18 fishway prescriptions, bypass reach
minimum flows and compliance schedules. Motions for rehearing of the Holyoke ProjectFERC's
order were also filed by various other parties. The FERC issued an order
granting rehearing. HWP is awaiting further action by the FERC. In a
separate but related proceeding, HWP filed an appeal of the state water
quality certificate conditions and requested an adjudicatory hearing with the
MDEP. Settlement discussions in competition with HWP. Absent
significant differences in the competing license applications, the Federal Power
Act gives a preference to an existing licensee for the new license. License
applications must be filed with FERC by August 1997.
CL&P'sthis proceeding are ongoing.
NGC's FERC licenses for operation of the Falls Village and Housatonic
Hydro Projectshydroelectric projects expire in 2001. The relicensing processA license application, which proposed
to combine both projects under one license, was initiated in August
of 1996 with the issuance of a Notice of Intent (NOI)submitted to the FERC indicating the
intention of CL&P to relicense both projects. An Initial Consultation Document
(ICD) was issued to consulting agencies in September 1996 and two public
meetings were held in early November 1996 to discuss relicensing issues. CL&P is
awaiting the submittal of resource agency comments.on
August 31, 1999.
The FERC has issued a notice indicating that it has authority to order
project licensees to decommission projects that are no longer economic to
operate. FERC
has not required any such project decommissioning to date. The potential costs of decommissioning a project, however, could be
substantial. The FERC has recently ordered its first project decommissioning
under this authority. It is likely that this FERC decision will be appealed if, and when, they attempt to exercise this
authority.appealed.
EMPLOYEES
As of December 31, 1996,1999, the SystemNU system companies had 8,8429,099 full and
part-time employees on their payrolls, of which 2,1942,377 were employed by CL&P,
1,2791,258 by PSNH, 497482 by WMECO, 9278 by HWP, 1,2741,859 by NNECO, 2,6922,220 by NUSCO, and
814825 by NAESCO. NU, NAEC, Charter Oak, Mode 1, NUEI, NGC, NGS, SEPPI, and Select Energy Partners
have no employees. In 1995 and early 1996, the System implemented a programOn March 5, 2000, approximately 119 employees of NUSCO
were transferred to reduce the
nuclear organization's total workforce by approximately 220 employees, which
included both early retirements and involuntary terminations. The pretax cost
of the program was approximately $8.7 million. For information regarding the
criminal investigations by the NRC's Office of Investigations and the Office of
the U. S. Attorney for the District of Connecticut related to this workforce
reduction, see "Item 3. Legal Proceedings."
In December 1996, the System announced a voluntary separation program
affecting approximately 1100 employees. Eligible employees must decide whether
to elect the program by March 11, 1997, and the separations will be effected
between April 1, 1997 and March 1, 1998. The estimated cost of the program is
approximately $7 million.Select Energy.
Approximately 22002,379 employees of CL&P, PSNH, WMECO, NAESCO, and HWP are
covered by 11ten union agreements, which expire between October 1, 19972000 and
May 31, 1999.2002.
YEAR 2000
For information regarding the NU system's efforts to address this issue,
see "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 2. PropertiesPROPERTIES
The physical properties of the SystemNU system are owned or leased by
subsidiaries of NU. CL&P's principal plants and other properties are
located either on land which is owned in fee or on land, as to which CL&P
owns perpetual occupancy rights adequate to exclude all parties except
possibly state and federal governments, which has been reclaimed and filled
pursuant to permits issued by the United States Army Corps of Engineers.
The principal properties of PSNH are held by it in fee. In addition, PSNH
leases space in an office building under a 30-year lease expiring in 2002.
WMECO's principal plants and a major portion of its other properties are
owned in fee, although one hydroelectric plant is leased. NAEC owns a 35.98
percent interest in Seabrook 1 and approximately 560 acres of exclusion area
land located around the unit. In addition, CL&P, PSNH and WMECO have
certain substation equipment, data processing equipment, nuclear fuel,
gas turbines, nuclear control room simulators, vehicles, and office space that are leased.
With few exceptions, the SystemNU system companies' lines are located on or under
streets or highways, or on properties either owned or leased, or in which
the company has appropriate rights, easements or permits from the owners.
CL&P's properties are subject to the lien of its first mortgage indenture.and PSNH's properties are subject to the lien of itseach company's
respective first mortgage indenture. In
addition, any PSNH outstanding revolving credit agreement borrowings are
secured by a second lien, junior to the lien of the first mortgage indenture,
on PSNH's property located in New Hampshire. WMECO's properties are subject to the
lien of its first mortgage indenture. NAEC's First Mortgage Bonds are
secured by a lien on the Seabrook 1 interest described above, and all rights
of NAEC under the Seabrook Power Contracts. In addition, CL&P's and WMECO's
interests in Millstone 1 are subject to second liens for the benefit of
lenders under agreements related to pollution control revenue bonds. Also,
CL&P and WMECO granted, as collateral, their second mortgage ownership
interests in Millstone 2 and 3 that secure their borrowings under the New
Credit Agreement. Various of these properties are also subject to minor
encumbrances which do not substantially impair the usefulness of the
properties to the owning company.
The SystemNU system companies' and NAEC's properties are well maintained and are in good
operating condition.
Transmission and Distribution SystemTRANSMISSION AND DISTRIBUTION SYSTEM
At December 31, 1996,1999, the SystemNU system companies owned 103104 transmission
and 416373 distribution substations that had an aggregate transformer capacity
of 25,200,06923,573,489 kilovoltamperes (kVa) and 9,127,3678,933,772 kVa, respectively; 3,0573,075
circuit miles of overhead transmission lines ranging from 69 kilovolt (kV)
to 345 kV, and 192196 cable miles of underground transmission lines ranging
from 69 kV to 138 kV; 32,64933,069 pole miles of overhead and 1,9582,119 conduit bank
miles of underground distribution lines; and 398,452419,651 line transformers in
service with an aggregate capacity of 16,472,22118,068,000 kVa.
Electric Generating PlantsELECTRIC GENERATING PLANTS
As of December 31, 1996,1999, the electric generating plants of the SystemNU system
companies and NAEC, and the NU System companies' entitlementsentitlement in the generating plantsplant of
the two operating Yankee regional nuclear generating companiesVYnpc were as follows (See "Item 1. Business - Electric Operations - Nuclear
Generation" for information on ownership and operating results for the year.)year):
Claimed
Year Capability*
Owner Plant Name (Location) Type Installed (kilowatts)
- ----- -------------------- ---- --------- -----------
CL&P Millstone (Waterford, CT)
Unit 1 Nuclear 1970 524,637
Unit 2 Nuclear 1975 708,345705,814
Unit 3 Nuclear 1986 606,453603,436
Seabrook (Seabrook, NH) Nuclear 1990 47,175
ME Yankee (Wiscasset, ME) Nuclear 1972 94,83247,135
VT Yankee (Vernon, VT) Nuclear 1972 45,35345,189
---------
Total Nuclear-Steam Plants (6( 4 units) 2,026,795
Total Fossil-Steam Plants (10 units) 1954-73 1,877,3701,401,574
Total Hydro-Conventional (25 units) 1903-55 98,970
Total Hydro-Pumped Storage (7( 7 units) 1928-73 905,150905,200
Total Internal Combustion (20( 5 units) 1966-96 567,9401969-70 216,400
---------
Total CL&P Generating Plant (68(41 units) 5,476,2252,622,144
=========
PSNH Millstone (Waterford, CT)
Unit 3 Nuclear 1986 32,624
ME Yankee (Wiscasset, ME) Nuclear 1972 39,51432,461
VT Yankee (Vernon, VT) Nuclear 1972 19,06818,999
---------
Total Nuclear-Steam Plants (3( 2 units) 91,20651,460
Total Fossil-Steam Plants (7( 7 units) 1952-78 1,004,0881,060,398
Total Hydro-Conventional (20 units) 1917-83 69,06067,930
Total Internal Combustion (5( 5 units) 1968-70 108,450104,530
---------
Total PSNH Generating Plant (35(34 units) 1,272,8041,284,318
=========
WMECO Millstone (Waterford, CT)
Unit 1 Nuclear 1970 123,063
Unit 2 Nuclear 1975 166,155165,561
Unit 3 Nuclear 1986 140,216
ME Yankee (Wiscasset, ME) Nuclear 1972 23,708139,519
VT Yankee (Vernon, VT) Nuclear 1972 11,94811,904
---------
Total Nuclear-Steam Plants (5( 3 units) 465,090
Total Fossil-Steam Plants (1 unit) 1957 107,000316,984
Total Hydro-Conventional (27(14 units) 1904-34 110,910*1905-30 93,210**
Total Hydro-Pumped Storage (4( 4 units) 1972-73 205,200
Total Internal Combustion (3 units) 1968-69 60,500---------
Total WMECO Generating Plant (40(21 units) 948,700615,394
=========
NAEC Seabrook (Seabrook, NH) Nuclear 1990 418,111417,751
=========
HWP Mt. Tom (Holyoke, MA) Fossil-Steam 1960 147,000
Total Hydro-Conventional (15 units) 1905-831905-1983 43,560
---------
Total HWP Generating Plant (16 units) 190,560
=========
NU System Millstone (Waterford, CT)
System Unit 1 Nuclear 1970 647,700
Unit 2 Nuclear 1975 874,500871,375
Unit 3 Nuclear 1986 779,239775,416
Seabrook (Seabrook, NH) Nuclear 1990 465,286
ME Yankee (Wiscasset, ME) Nuclear 1972 158,054464,886
VT Yankee (Vernon, CT)VT) Nuclear 1972 76,36976,092
---------
Total Nuclear-Steam Plants (6( 4 units) 3,001,2022,187,769
Total Fossil-Steam Plants (19( 8 units) 1952-78 3,135,4581,207,398
Total Hydro-Conventional (87(74 units) 1903-83 322,500303,670
Total Hydro-Pumped Storage (7( 7 units) 1928-73 1,110,3501,110,400
Total Internal Combustion (28(10 units) 1966-96 736,8901968-70 320,930
---------
Total NU Systemsystem
Generating Plant
Including Regional Yankees (147Vermont Yankee (103 units) 8,306,4005,130,167
=========
Excluding Regional Yankees (145Vermont Yankee (102 units) 8,071,977
*Claimed5,054,075
=========
* Claimed capability represents winter ratings as of December 31, 1996.1999.
**Total Hydro-Conventional capability includes the Cobble Mtn. plant's
33,960 kW which is leased from the City of Springfield, MA.
Franchises
NU's operating subsidiaries hold numerous franchises in the territories
served by them. For more information regarding recent judicial, regulatory and
legislative decisions and initiatives that may affect the terms under which the
System companies provide electric service in their franchised territories, see
"Connecticut Retail Rates - Electric Industry Restructuring in Connecticut;"
"New Hampshire Retail Rates - Electric Industry Restructuring in New Hampshire;"
and "Massachusetts Retail Rates - Electric Industry Restructuring in
Massachusetts," and "Item 3. Legal Proceedings."FRANCHISES
CL&P. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, CL&P has,
subject to certain exceptions not deemed material, valid franchises free from
burdensome restrictions to provide electric transmission and distribution
services, and, until January 2000, to sell electricity, in the respective
areas in which it is now supplying such service.
In addition to the right to sell electricityprovide electric transmission and
distribution services as set forth above, the franchises of CL&P include,
among others, limited rights and powers, as set forth in Title 16 of the
Connecticut General Statutes and the special act of the General Assembly
constituting its charter, to manufacture, generate, purchase, transmit and distributesell
electricity at retail, including to provide standard offer, backup and
default service, to sell electricity at wholesale to other utility companies
and municipalities and to erect and maintain certain facilities on public
highways and grounds, all subject to such consents and approvals of public
authority and others as may be required by law. The franchises of CL&P
include the power of eminent domain.
PSNH. SubjectThe NHPUC, pursuant to the power of alteration, amendment or repeal by the
General Court (legislature) of the State of New Hampshire and subject to certain
approvals, permits and consents of public authority and others prescribed by
statute,statutory requirement, has issued orders
granting PSNH has, subject to certain exceptions not deemed material, validexclusive franchises free from burdensome restrictions to sell
electricity in the respective areas in which it is now supplying such
service.
In addition to the right to sell electricity as set forth above, the
franchises of PSNH include, among others, rights and powers to manufacture,
generate, purchase, transmit, and distribute electricity, to sell electricity
at wholesale to other utility companies and municipalities and to erect and
maintain certain facilities on certain public highways and grounds, all
subject to such consents and approvals of public authority and others as may
be required by law. The franchises of PSNH include the power of eminent
domain.
NNECO. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, NNECO has a
valid franchise free from burdensome restrictions to sell electricity to
utility companies doing an electric business in Connecticut and other states.
In addition to the right to sell electricity as set forth above, the
franchise of NNECO includes, among others, rights and powers to manufacture,
generate and transmit electricity, and to erect and maintain facilities on
certain public highways and grounds, all subject to such consents and
approvals of public authority and others as may be required by law.
WMECO. WMECO is authorized by its charter to conduct its electric
business in the territories served by it, and has locations in the public
highways for transmission and distribution lines. Such locations are granted
pursuant to the laws of Massachusetts by the Department of Public Works of
Massachusetts or local municipal authorities and are of unlimited duration,
but the rights thereby granted are not vested. Such locations are for
specific lines only, and, for extensions of lines in public highways, further
similar locations must be obtained from the Department of Public Works of
Massachusetts or the local municipal authorities. In addition, WMECO has
been granted easements for its lines in the Massachusetts Turnpike by the
Massachusetts Turnpike Authority.
Pursuant to the Massachusetts restructuring legislation, the DTE is
required to define service territories for each distribution company,
including WMECO, based on the service territories actually served on July 1,
1997, and following to the extent possible municipal boundaries. The DTE has
not yet defined service territories. After established by the DTE, until
terminated by effect of law or otherwise, the distribution company shall have
the exclusive obligation to provide distribution service to all retail
customers within its service territory, and no other person shall provide
distribution service within such service territory without the written
consent of such distribution company.
HWP and Holyoke Power and Electric Company (HP&E). HWP, and its wholly
owned subsidiary HP&E, are authorized by their charters to conduct their
businesses in the territories served by them. HWP's electric business is
subject to the restriction that sales be made by written contract in amounts
of not less than 100 horsepower except for municipal customersto purchasers who use the electricity in
their own business in the counties of Hampden or Hampshire, Massachusetts and
except forcities and towns in these counties, and customers who occupy property in
which HWP has a financial interest, by ownership or purchase money mortgage.
HWP also has certain dam and canal and related rights, all subject to such
consents and approvals of public authorities and others as may be required by
law. The two companies have locations in the public highways for their
transmission and distribution lines. Such locations are granted pursuant to
the laws of Massachusetts by the Department of Public Works of Massachusetts
or local municipal authorities and are of unlimited duration, but the rights
thereby granted are not vested. Such locations are for specific lines only
and, for extensions of lines in public highways, further similar locations
must be obtained from the Department of Public Works of Massachusetts or the
local municipal authorities. The two companies haveHP&E has no other utility franchises.
NAEC. NAEC is authorized by the NHPUC to ownretail service territory area and
operate its interest in
Seabrook 1.sells electric power exclusively at wholesale.
ITEM 3 -3. LEGAL PROCEEDINGS
1. Litigation Relating to Electric and Magnetic Fields
NU and CL&P are currently involved in two lawsuits alleging physical and
emotional damages from exposure to "electromagnetic radiation" generatedConnecticut Attorney General - Civil Environmental Lawsuit
On October 5, 1998, the Connecticut Superior Court, after hearing
arguments, approved a settlement which resolved a civil lawsuit by the defendants. Management believes thatCDEP
against NNECO and NUSCO for violations of the allegations that EMF caused or
contributedMillstone water permit and
Connecticut water discharge regulations. The settlement required NNECO to
pay a $700,000 civil penalty and expend $500,000 to fund three supplemental
environmental projects. NNECO is also required to perform and have a third-
party review of two environmental audits of its water compliance program and
to inform the plaintiffs' illnesses are not supported by scientific
evidence. OneCDEP of these casesmajor changes to its environmental management system.
An intervening party has been resolved in NU and CL&P's favor atappealed the trial level, but it has been appealed and is now pending atapproval of the settlement to
Connecticut Appellate Court. On March 3, 2000, the Connecticut Supreme Court.Court
assumed jurisdiction over this matter.
2. Southeastern Connecticut Regional Resources Recovery Authority (SCRRRA) -
Application of the Municipal Rate
This matter involves three separate disputes over the rates that apply to
CL&P's purchases of the generation of the SCRRRA project in Preston,
Connecticut. A favorable ruling on all of these matters could result in savings
to CL&P customers of approximately $20 million over the terms of the agreement
with the SCRRRA. FERC has ruled in CL&P's favor in one of these matters, but
this decision has been appealed to the United States D. C. Circuit Court of
Appeals. A final ruling in this decision in favor of CL&P would also resolve
the second dispute. A Connecticut Superior Court however,- Fish Unlimited Lawsuits
On March 11, 1999, Fish Unlimited and several other parties brought a
civil suit in Connecticut Superior Court against NNECO and NUSCO seeking a
temporary and a permanent injunction to prevent the restart of Millstone 2
until a fish return system and cooling tower are installed. On April 27,
1999, a temporary restraining order (TRO) was issued to prevent NNECO from
starting up Millstone 2 until the temporary injunction request was heard. On
May 7, 1999, the TRO was dissolved and the applications for both temporary
and permanent injunctions were denied. Fish Unlimited has ruled in favor
of the SCRRRA in the final dispute. CL&P has appealed this decision to the
Connecticut Appellate Court.
3.On June 2, 1999, Fish Unlimited and eight other plaintiffs filed another
suit in Connecticut DPUC - CL&P's Petition for Declaratory Ruling Regarding
Proposed Retail Sales of Electricity by Texas-Ohio Power, Inc. (TOP)
On August 3, 1995, CL&P filed a petition for declaratory rulings with the
DPUC to determine whether TOP, which built a small cogeneration plant in
Manchester, Connecticut, can sell electricity from the facility to two CL&P
retail customers in Manchester. On December 6, 1995, the DPUC ruled that,
because TOP's project would not use the public streets, it did not require
specific legislative authorization to make retail sales of electricity. In
February 1997 the Hartford Superior Court upheld the DPUC's decision. CL&P
plansagainst NNECO and NUSCO. The plaintiffs'
primary claim was that Millstone is discharging pollutants into navigable
waters without a valid NPDES permit. On July 15, 1999, NUSCO and NNECO's
motion to appealdismiss this lawsuit was granted. Fish Unlimited has appealed the
decision to the Connecticut Appellate Court.
4. New Hampshire Office of Consumer Advocate andOn March 3, 2000, the Campaign for
Ratepayers Rights Case
Two petitions are currently pending at the New HampshireConnecticut Supreme Court alleging that all of PSNH's special contracts are void and constitute a breach
of the Rate Agreement by PSNH, thereby estopping PSNH from claiming benefits
under the Rate Agreement. The case has been briefed and oral argument is not
expected before the summer of 1997. While NU believesassumed jurisdiction
over these petitions should
be denied, it cannot predict the outcome of this proceeding or its ultimate
effect on the System.
5. Tax Litigation
In 1991, the Town of Haddam performed a town-wide revaluation of the CY
property in that town. Based on the report of the engineering firm hired by the
town to perform the revaluation, Haddam determined that the full fair-market
value of the property, as of October 1, 1991, was $840 million. At that time,
CY's net-book value was $245 million. On September 5, 1996, a Connecticut court
ruled that Haddam had over-assessed CY at three and a half times its proper
assessment. The decision set the plant's fair market value at $235 million. CY
estimates that the town owes it approximately $16.2 million in refunds,
including accrued interest, for taxes that were overpaid from July 31, 1992
through July 31, 1996. The Town may defer an appeal of the court's decision
until all matters, including the deferred claim on the 1995 tax assessment, are
resolved. The parties are currently involved in settlement discussions.
6. Long Island Cable - Citizen's Suit
On April 4, 1996, a citizen's suit against Long Island Lighting Company
(LILCO), a non-affiliate of NU, CL&P (collectively, the "Companies") and NUSCO
was filed in Federal District Court in Connecticut. The suit alleges the
Companies are in violation of the Federal Clean Water Act because they are
maintaining an unpermitted discharge of pollutants from the Long Island Cable
and claims the pollutants are an imminent danger to the environment and public
health. The suit asks the Court, among other things, to enjoin further
operation of the Long Island Cable without a permit and to impose a civil
penalty of $25,000 for each violation.
7. Shareholder Litigation
Shareholder Demand Letter: On April 10, 1996, NU received a letter from a
representative of a shareholder demanding that it commence legal action against
NU's CEO, Bernard M. Fox, and certain unnamed officers and directors with regard
to operations at Millstone Station. On April 23, 1996, the NU Board created a
special committee to, among other responsibilities, conduct an independent
review and investigation of the allegations contained in the letter and make
recommendations as to how the NU Board should respond to the letter. This
investigation is ongoing.
Derivative Actions: NU has been served with seven civil complaints naming
as defendants certain current and former trustees and officers seeking to
recover unspecified damages for alleged losses purportedly arising out of NU's
operations at Millstone.matters.
3. Shareholder Securities Class Actions - Nuclear Matters
Consolidated Federal Court Actions: NU has been served with fourPursuant to a court order dated
October 1, 1997, the six class actions separately filed against NU in 1996
were consolidated for pre-trial and trial purposes. The actions are based on
various Federal and statefederal securities lawslaw and common law theories alleging
misrepresentations and omissions in public disclosures related to the System'sNU
system's nuclear situation.problems, which resulted in extended outages at Millstone
and impacted the financial condition of NU and certain of its subsidiaries.
These complaints represent classes of plaintiffs who purchased or otherwise
acquired NU common stock during periods ranging from NovemberMarch 1994 to April
1996.
The parties have reached an agreement in principal to settle all of the
shareholder class actions. Final settlement is subject to the plaintiffs'
completion of discovery to confirm the reasonableness of the proposed
settlement and approval by the court. Discovery has been completed, and court
approval is expected in the spring of 2000.
State Court Actions: NU has been served with two separately filed class
actions based on various state securities law and common law theories
alleging misrepresentations and omissions in public disclosures related to
the NU system's nuclear problems. These complaints represent classes of
plaintiffs who purchased or otherwise acquired NU common stock during periods
ranging from December 1993 to April 1996. Plaintiffs' counsel in both state
actions agreed to stay the actions pending the outcome of the consolidated
federal court actions described above.
4. Shareholder Securities Class Actions - Con Edison Merger
On October 13, 1999 and October 19, 1999, virtually identical complaints
were filed in the Supreme Court of New York against NU and its trustees.
Both complaints purport to be "class action complaints" and allege that the
trustees have breached their fiduciary duties to the plaintiffs and other
members of the class by not (i) obtaining the best price for NU's assets and
businesses and (ii) entrenching themselves and their corporate offices. The
plaintiffs seek equitable relief, including an order that the trustees
maximize shareholder value and award attorneys' fees. NU removed the cases
from the state court to federal court in New York City and has filed motions
to dismiss the actions on various grounds. NU believes that all of these
class actions are without merit and intends to vigorously defend inagainst all
such actions.
8. Connecticut Municipal Electric Energy Cooperative (CMEEC) Dispute
This matter involves a dispute with CMEEC over its obligations under its
Millstone Units 1 & 2 contract with CL&P, under which CMEEC has a 3.49 percent
life-of-unit interest in each of the units. CMEEC and CL&P have been negotiating
since May 1996 over issues related to Millstone Units 1 & 2. Since October
1996, CMEEC has failed to make payment on its obligations of approximately $1.6
million per month, claiming that CL&P materially breached its contractual
obligations, and requesting arbitration of the issues. CL&P has denied the
allegations and requested payment.
9.5. Millstone 3 - Potential Joint Owner Litigation
This matter involves claims that the non-NU owners of Millstone 3 could
potentially bring against the NU System companies for the costs associated with
the current extended outage of this facility.
The non-NU owners of Millstone 3 have been paying their monthly shares of
the cost of that unit since it went out of service in March 1996, but have
reserved their rights to contest whether the NU System companies have any
responsibility for the additional costs the non-NU owners have borne as a result
of the extended outage. No formal claims have been made, but it is possible
that some or all of the non-NU owners will assert liability on the part of the
NU System companies.
CL&P and WMECO, through NNECO as agent, operate Millstone 3, at cost and
without profit, under a Sharing Agreement that obligates them to
utilize good utility operating practices and requiressharing agreement. On August 7, 1997, the jointnon-NU
owners to share
the risk of employee negligence and other risks pro-rata in accordanceMillstone 3 (minority owners) filed demands for arbitration with
their ownership shares. The Sharing Agreement also provides that
CL&P and WMECO as well as three lawsuits in Massachusetts Superior Court
against NU and its current and many of its former trustees. The minority
owners raise a number of contract, tort and statutory claims, arising out of
the operation of Millstone 3. The demands and lawsuits seek to recover
compensatory damages totaling approximately $300 million, punitive damages,
treble damages, and attorneys' fees.
Hearings in the arbitration proceeding commenced on November 16, 1999,
and an initial decision on liability is not expected before the third quarter
of 2000. One of the three lawsuits has been dismissed as a result of the
settlements discussed below. The remaining lawsuits have been consolidated,
but no firm trial date has been set.
NU, CL&P and WMECO have reached settlements with three of the minority
owners, who hold approximately 58 percent of the minority owners' interest.
The agreements involve the payment of $36.4 million and certain contingent
payments, and provide for the inclusion of their Millstone 3 interests in
CL&P's nuclear auction process. No agreements have been reached with the
other seven minority owners.
6. Maine Yankee - Secondary Purchasers Dispute
A number of municipalities and cooperatives (Secondary Purchasers)
notified the sponsors of MY, including CL&P, WMECO and PSNH, that they
consider their purchase and payment obligations under their purchase
agreements to have been terminated as a result of the August 6, 1997 decision
by the MYAPC Board of Directors (MY Board) to retire MY. Accordingly, these
Secondary Purchasers informed the sponsors that they would only be liablemaking no
further payments under the contracts for damagesthe period following the MY Board's
decision. Through such contracts, the sponsors agreed to deliver a portion
of the non-NU ownerscapacity and electrical output from MY until the year 2003 in exchange
for payment by the Secondary Purchasers of a deliberate breachpro-rata share of the plant's
costs and expenses.
Following a series of regulatory and legal proceedings related to this
matter at the FERC and in Maine state courts, on February 5, 1999, the
parties have filed settlements with the FERC in this matter, which the FERC
accepted on June 1, 1999. As a result, the Secondary Purchasers will make a
total settlement payment of $16.5 million in full satisfaction of their
obligations with respect to all past and future MY-related operations and
decommissioning costs.
7. Amended Partial Requirements Agreement
On September 30, 1999, PSNH announced that it reached a settlement
agreement with the New Hampshire Electric Cooperative (NHEC), the state's
second largest utility. The agreement resolves all outstanding issues
between PSNH and NHEC, its largest wholesale electric customer. As part of
the agreement, pursuantPSNH has opened its transmission and distribution facilities
to authorized corporate action. The non-NU owners have
retainedNHEC, which provides NHEC members the opportunity to purchase power from
a teamcompetitive energy supplier. NHEC paid PSNH a one-time payment of technical and regulatory experts$18
million as a contract termination payment which will be used to review and monitor
activities at Millstone 3. As representatives of Millstone 3 joint owners, NU
is cooperating fullyreduce PSNH's
stranded costs. In connection with the team.
10. NRC - Section 2.206 Petitions
Spent Fuel Pool Off-Load Practices 2.206 Petition: In August 1995,settlement, PSNH recorded a petition was filed with the NRC under Section 2.206loss of
the NRC's regulations by
the organization We the People and a NUSCO employee. The petitioners maintained
that NU's historic practice of off-loading the full reactor core at Millstone 1
resulted in spent fuel pool heat loads in excess of the pool's NRC-approved
cooling capability, and asserted that the practice was a knowing and willful
violation of NRC requirements. The petitioners also filed a supplemental
petition concerning refueling practices at Millstone 2 and 3 and Seabrook
Station.
On December 26, 1996, the Acting Director of the Office of Nuclear Reactor
Regulation issued a partial decision granting, in part, the petition. The
decision, which is limited to the NRC staff's technical review of the issues
raised by petitioners, concluded that the design of the spent fuel pool and
related system at Millstone 1 was adequate,and that the full core offload
practices at that unit, Millstone 3 and Seabrook were safe. The petitioners'
assertions regarding Millstone 2 were not substantiated. The Director further
concluded that the regulatory actions taken by the NRC to date regarding the
three Millstone units, including the imposition of an Independent Corrective
Action Verification Program prior to restart, were broader than the actions
requested by petitioners and thus constituted a partial grant of petitioners'
request. Issues of wrongdoing raised in the petition remain under consideration
by the NRC staff, and will not be addressed until after the U.S. Attorney has
concluded its investigation of the spent fuel pool issues and decided whether to
commence criminal proceedings. See paragraph 11 below.
Other 2.206 Petitions: Two additional petitions under Section 2.206 have
been filed with the NRC requesting various actions be taken with respect to the
operating licenses for Millstone Units 1, 2 and 3 and CY, including revocation
and suspension, and other enforcement action due to alleged mismanagement of the
units and violations of NRC regulations that petitioners allege have jeopardized
public health and safety. While management believes that the NRC is already
addressing a number of issues raised in these petitions, it cannot predict the
ultimate outcome of these petitions.
11. NRC Office of Investigations and U.S. Attorney Investigations and
Related Matters
The NRC's Office of Investigations (OI) has been examining various matters
at Millstone and CY, including but not limited to procedural and technical
compliance matters and employee concerns. One of these matters has been
referred, and others may be referred, to the Office of the U.S. Attorney for the
District of Connecticut (U.S. Attorney) for possible criminal prosecution. The
referred matter concerns full core off-load procedures and related matters at
Millstone (see item 10 above). The U.S. Attorney is also reviewing possible
criminal violations arising out of certain of NNECO's other activities at
Millstone and CY, including the 1996 nuclear workforce reduction and its
licensed operator training programs.
The U.S. Attorney, together with the U.S. EPA and the Connecticut Attorney
General, is also investigating possible criminal violations of federal
environmental laws at certain NU facilities, including Millstone. NU has been
informed by the government that it is a target of the investigation, but that no
one in senior management is either a target or a subject of the investigation.
Management does not believe that any System company or officer has engaged
in conduct that would warrant a federal criminal prosecution. NU intends to
fully cooperate with the OI and the U.S. Attorney in their ongoing
investigations.
12.approximately $6 million.
8. Other Legal Proceedings
The following sections of Item 1. "Business" discuss additional legal
proceedings: See "Overview of Nuclear Matters"Rates and Related Financial Matters"Electric Industry Restructuring" for information
regarding NRC watch list issues; "Rates" for information about
CL&P's rate and fuel clause adjustment clause proceedings, various state restructuring proceedings and civil lawsuits related
thereto and NHPUC
proceedings involving Freedom Energy Company and PSNH's franchise rights;
"Electric Operations--Transmissionthereto; "Regulated Electric Operations- Transmission Access and FERC
Regulatory Changes" for information about proceedings relating to power and
transmission issues; "Electric Operations--Nuclear"Regulated Electric Operations - Nuclear Generation" and
"Electric Operations-Nuclear"Regulated Electric Operations - Nuclear Plant Performance and Regulatory Oversight"Performance" for information
related to nuclear plant performance, nuclear fuel enrichment pricing,
high-level and low-level radioactive waste disposal, decommissioning matters,
and NRC regulation; "Other Regulatory and Environmental Matters" for
information about proceedings involving surface water and air quality, toxic
substances and hazardous waste, electric and magnetic fields, licensing of
hydroelectric projects, and other matters.
ItemITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No Eventevent that would be described in response to this item occurred
with respect to NU, CL&P, PSNH, WMECO, PSNH, or NAEC.
In a written Consent in Lieu of a Meeting of Common Shareholders of
CL&P ("Consent") dated December 18, 1996, shareholders voted to amend CL&P's
Restated Certificate of Incorporation to include the following language
regarding the indemnification of directors, officers, employees, and agents:
RESOLVED, that Section IX of the Part Two of Article IV of the
Restated Certificate of Incorporation of the Company is hereby amended to read
as follows:
SECTION IX
IMMUNITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS, AND AGENTS
No director, officer or agent of the Company shall be held personally
responsible for any action in good faith through subsequently adjudged to be in
violation of these Sections.
Effective January 1, 1997, the Company shall indemnify and advance
expenses to an individual made a party to a proceeding because he/she is or was
a Director of the Company under Section 33-771 of the Connecticut General
Statutes, Revision of 1958, as amended. The Company shall also indemnify and
advance expenses under Sections 33-770 to 33-778, inclusive, of the Connecticut
General Statutes, to any officer, employee or agent of the company who is not a
director to the same extent as provided to a director.
The vote to amend the Restated Certificate of Incorporation was
12,222,930 shares in favor, representing 100 percent of the issued
and outstanding shares of common stock of CL&P.
PART II
ItemITEM 5. Market for the Registrants' Common Equity and Related
Shareholder MattersMARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
NU. The common shares of NU are listed on the New York Stock Exchange.
The ticket symbol is "NU," although it is frequently presented as "Noeast
Util" and/or "NE Util" in various financial publications. The high and low
sales prices for the past two years, by quarters, are shown below.
Year Quarter High Low
1996---- ------- ---- ---
1999 First $25 1/$16 7/16 $ 13 3/4
Second 18 5/16 13 9/16
Third 19 17 3/8
Fourth 22 17 3/4
1998 First $14 5/16 $ 11 11/16
Second 20 1/4 11 7/17 13 5/8
Third 1317 1/16 14 3/8
11 1/2
Fourth 13 1/2 9 1/2
1995 First $2417 1/4 21
Second 2315 7/8 21 3/8
Third 24 1/2 22
Fourth 25 3/8 23 1/216
As of January 31, 1997,2000, there were 114,81881,132 common shareholders of record
of NU. As of the same date, there were a total of 135,051,939137,388,633 common shares
issued, including 7,540,8025,483,268 million unallocated ESOP shares held in the ESOP
trust.
NU declared and paid quarterly dividends of $0.44 per share during all of
1995 and forOn September 14, 1999, the first two quarters of 1996. On July 23, 1996, theNU Board of Trustees reduced dividends to $0.25 perapproved the payment of
NU's first common share for the third quarter. The fourth
quarter dividend was also declared andsince March 1997. NU paid at the $0.25 per share level. On
January 28, 1997, the Board of Trustees declared a dividend of $0.2510
cents per share payable on March 31, 1997December 30, 1999, to holdersshareholders of record on Marchas of the
close of business December 1, 1996. The
declaration of future1999.
No dividends may vary depending on capital requirements and
income as well as financial and other conditions existing at the time.were declared or paid in 1998.
Information with respect to dividend restrictions for NU and its
subsidiaries is contained in Item 1. Business under the caption "Financing
Program - Financing Limitations" and in Note (b)(a) to the "Consolidated
Statements of Common Shareholders' Equity" on page 2534 of NU's 19961999 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P, PSNH, WMECO, and NAEC. The information required by this item is
not applicable because the common stock of CL&P, PSNH, WMECO, and NAEC, is
held solely by NU.
ItemITEM 6. Selected Financial DataSELECTED FINANCIAL DATA
NU. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 4554 of NU's 19961999 Annual Report
to Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the heading "Selected
Financial Data" contained on page 5044 of CL&P's 19961999 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading "Selected
Financial Data" contained on pages 49 and 50page 43 of PSNH's 19961999 Annual Report, which
information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Selected
Financial Data" contained on page 4541 of WMECO's 19961999 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Selected
Financial Data" contained on page 3230 of NAEC's 19961999 Annual Report, which
information is incorporated herein by reference.
ItemITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of OperationsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS; AND
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NU. Reference is made to information under the heading "Management's
Discussion and Analysis"Analysis and Results of Operations" contained on pages 1121
through 1929 in NU's 19961999 Annual Report to Shareholders, which information is
incorporated herein by reference.
CL&P. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 381 through 4911 in CL&P's 19961999 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained on pages 391 through 489 in PSNH's 19961999
Annual Report, which information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 341 through 4410 in WMECO's 19961999 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 251 through 317 in NAEC's 19961999 Annual Report, which
information is incorporated herein by reference.
ItemITEM 8. Financial Statements and Supplementary DataFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NU. Reference is made to information under the headings "Company
Report," "Report of Independent Public Accountants," "Consolidated Statements
of Income," "Consolidated Statements of Comprehensive Income," "Consolidated
Balance Sheets," "Consolidated Statements of Shareholders' Equity,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Income
Taxes," "Consolidated Balance Sheets," "Consolidated Statements of Capitalization," "Consolidated Statements of Common Shareholders' Equity," "Notes to Consolidated
Financial Statements," and "Consolidated Statements of Quarterly Financial
Data" contained on pages 2030 through 4453 in NU's 19961999 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the headings "Consolidated
Balance Sheets,"Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Cash Flows,Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," "Report of Independent Public
Accountants," and "Statements of Quarterly Financial Data" contained on pages
212 through 37 and page 5044 in CL&P's 19961999 Annual Report, which information is incorporated
herein by reference.
PSNH. Reference is made to information under the headings "Balance
Sheets,"Report of
Independent Public Accountants," "Statements of Income," "Statements of
Cash Flows,Comprehensive Income," "Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," "Report of Independent Public
Accountants," "Independent Auditors' Report," and
"Statements of Quarterly Financial Data" contained on pages 210 through 38 and page 5143 in
PSNH's 19961999 Annual Report, which information is incorporated herein by
reference.
WMECO. Reference is made to information under the headings "Balance
Sheets,"Report of
Independent Public Accountants," "Statements"Consolidated Statements of Income,"
"Statements"Consolidated Statements of Cash Flows,Comprehensive Income," "Statements"Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," "Report of
Independent Public Accountants," and "Statements of Quarterly Financial Data" contained on pages
211 through 33 and page 4541 in WMECO's 19961999 Annual Report, which information is incorporated
herein by reference.
NAEC. Reference is made to information under the headings "Balance Sheet,"Report of
Independent Public Accountants," "Statement"Statements of Income," "Statement"Statements of
Cash Flows,Comprehensive Income," "Statement"Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," "Report of Independent
Public Accountants," and
"Statement"Statements of Quarterly Financial Data" contained on pages 28 through 24 and page 3230 in
NAEC's 19961999 Annual Report, which information is incorporated herein by
reference.
ItemITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial DisclosureCHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
No event that would be described in response to this item has occurred
with respect to NU, CL&P, PSNH, WMECO, or NAEC.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
NU.
In addition to the information provided below concerning the executive
officers of NU, incorporated herein by reference is the information contained
in the sections "Proxy Statement",Statement," "Committee Composition and Responsibility",Responsibility,"
"Common Stock Ownership of Certain Beneficial Owners",Owners," "Common Stock Ownership
of Management",Management," "Compensation of Trustees", "SummaryTrustees," "Executive Compensation, Table",
"Section 16 Compliance"," "Pension
Benefits",Benefits," and "Report on Executive Compensation" of the definitive proxy
statement for solicitation of proxies by NU's Board of Trustees, dated
April 30, 1997,March 31, 2000, which will be filed with the Commission pursuant to Rule
14a-6 under the Securities Exchange Act of 1934 (the Act).
First First
Positions Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
John H. Forsgren EVP, CFO 02/01/96 -
Bernard M. Fox CHB, P, CEO, T 05/01/83 05/20/86n/a
William T. Frain, Jr. OTH - -02/01/94 n/a
Cheryl W. Grise OTHSVP, SEC, GC 06/01/91 -
Barry Ilberman OTH 02/01/89 -n/a
Bruce D. Kenyon P 09/03/96 -
Francis L. Kinney OTH 04/24/74 -n/a
Hugh C. MacKenzie P 07/01/88 -
Johnn/a
Michael G. Morris CHB, P, CEO, T 08/19/97 08/19/97
Gary D. Simon OTH 04/15/98 n/a
Lisa J. Roman VP, CONT 04/Thibdaue OTH 01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -98 n/a
CL&P.
First First
Positions Elected Elected
Name Positions Held an Officer a Director
Robert G. AbairTrustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D - 01/01/8909/09/96 06/30/99
John H. Forsgren EVP, CFO, D(1) OTH 02/01/96 06/10/96 Bernard M. Fox CH, D 05/15/81 05/01/83
William T. Frain, Jr. D - 02/01/94n/a
Cheryl W. Grise SVP, CAO, D(2) OTH 06/01/91 01/01/94
Barry Ilberman VP 02/01/89 -
John B. Keane VP, TR, D 08/01/92 08/01/92n/a
Bruce D. Kenyon P, D(3) OTH 09/03/96 09/03/96
Francis L. Kinney SVP 04/24/74 -n/a
Hugh C. MacKenzie P, D 07/01/88 06/06/90
JohnMichael G. Morris (4) OTH 08/19/97 n/a
Rodney O. Powell VP, D 10/18/98 06/30/99
Lisa J. Roman VP, CONT 04/Thibdaue (5) OTH 01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -98 n/a
PSNH.
First First
Positions Elected Elected
Name Positions Held an Officer a DirectorTrustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 06/05/92 06/30/99
John C. Collins D -n/a 10/19/92
John H. Forsgren EVP, CFO,(1) OTH, D 02/01/96 08/05/96
Bernard M. Fox CH, CEO, D 06/05/92 06/05/92
William T. Frain, Jr. P, COO, D 03/18/71 02/01/94
Cheryl W. Grise D 02/(2) OTH 06/95
Barry Ilberman VP 07/01/94 -91 n/a
Bruce D. Kenyon P(3) OTH 09/03/96 -n/a
Gerald Letendre D -n/a 10/19/92
Hugh C. MacKenzie (6) D -n/a 02/01/94
Michael G. Morris CH, CEO, D 08/19/97 08/19/97
Jane E. Newman D -n/a 10/19/92
JohnLisa J. Roman VP, CONT 04/Thibdaue (5) OTH 01/92 -
Robert P. Wax SVP,SEC,GC 08/01/92 02/01/9398 n/a
WMECO.
First First
Positions Elected Elected
Name Positions Held an Officer a Director
Robert G. AbairTrustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, CAO, D 09/09/96 06/88 01/01/8930/99
James E. Byrne D n/a 09/17/99
John H. Forsgren EVP, CFO,(1) OTH, D 02/01/96Note 1 06/10/96
Bernard M. Fox C, D 05/15/81 05/01/83
William T. Frain, Jr. D - 02/01/94
Cheryl W. Grise SVP, D(2) OTH 06/01/91 01/01/94
Barry Ilberman VP 02/01/89 -
John B. Keane VP, TR, D 08/01/92 08/01/92n/a
Bruce D. Kenyon P, D(3) OTH 09/03/96 09/03/96
Francis L. Kinney SVPn/a
Kerry J. Kuhlman P, COO, D 10/18/98 04/24/74 -01/99
Hugh C. MacKenzie P,(6) OTH, D 07/01/88Note 2 06/06/90
JohnPaul J. Roman VP, CONT 04/McDonald D n/a 09/17/99
Michael G. Morris CH, CEO, D 08/19/97 08/19/97
Melinda M. Phelps D n/a 09/17/99
Lisa J. Thibdaue (5) OTH 01/92 -
Robert P. Wax SVP, SEC, AC, GC 08/01/92 -98 n/a
NAEC.
First First
Positions Elected Elected
Name Positions Held an Officer a DirectorTrustee
- ------------------------- -------------- ---------- ---------
William A. DiProfio D n/a 06/30/99
Ted C. Feigenbaum EVP, CNO, D 10/21/91 10/16/9106/30/99
John H. Forsgren EVP, CFO(1) OTH 02/01/96 -
Bernard M. Fox C, CEO, D 10/21/91 10/16/91
William T. Frain, Jr. D - 02/01/94n/a
Cheryl W. Grise SVP, CAO, D 10/21/(2) OTH 06/01/91 01/01/94
Barry Ilberman VP 01/29/92 -
Francis L. Kinney SVP 10/21/91 -
John B. Keane VP, TR, D 08/01/92 08/01/92n/a
Bruce D. Kenyon P, CEO, D 09/03/96 09/03/96
Hugh C.Michael G. Morris (4) OTH 08/19/97 n/a
1. Mr. Forsgren resigned as Executive Vice President and Chief Financial
Officer of CL&P, PSNH, WMECO, and NAEC and as a Director of CL&P and
NAEC, effective June 30, 1999. He is considered an Executive Officer of
CL&P, PSNH, WMECO, and NAEC because of his policy-making function for the
NU system.
2. Mrs. Grise resigned as Senior Vice President, Secretary and General Counsel
of CL&P, PSNH and NAEC and as Senior Vice President, Secretary, Assistant
Clerk, and General Counsel of WMECO, effective June 30, 1999. She is
considered an Executive Officer of CL&P, PSNH, WMECO, and NAEC because of
her policy-making function for the NU system.
3. Mr. Kenyon resigned as President-Generation Group and as a Director of
CL&P, PSNH and WMECO, effective June 30, 1999. He is considered an
Executive Officer of CL&P, PSNH and WMECO because of his policy-making
function for the NU system.
4. Mr. Morris resigned as Chairman and as a Director of CL&P and NAEC,
effective June 30, 1999. He is considered an Executive Officer of CL&P
and NAEC because of his policy-making function for the NU system.
5. Ms. Thibdaue resigned as Vice President of CL&P, PSNH and WMECO, effective
June 30, 1999. She is considered an Executive Officer of CL&P, PSNH and
WMECO because of her policy-making function for the NU system.
6. Mr. MacKenzie D - 01/01/94
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -resigned as President of WMECO, effective April 1, 1999.
He is considered an Executive Officer of PSNH and WMECO because of
his policy-making function for the NU system.
Key:
AC - Assistant Clerk EVP - Executive Vice President
CAO - Chief Administrative Officer EVPGC - Executive Vice PresidentGeneral Counsel
CEO - Chief Executive Officer GC - General Counsel
CFO - Chief Financial Officer OTH - Executive Officer of Registrant
because of policy-making function
for NU systemSystem
CFO - Chief Financial Officer P - President
CH - Chairman PSEC - PresidentSecretary
CHB - Chairman of the Board SEC - Secretary
CNO - Chief Nuclear Officer SVP - Senior Vice President
COO - Chief Operating Officer T - Trustee
CONT - Controller TR - Treasurer
D - Director VP - Vice President
Name Age Business Experience During Past 5 Years
Robert G. Abair (1) 58 Elected- ------------------------- --- ---------------------------------------
David H. Boguslawski 45 Vice PresidentPresident-Energy Delivery of CL&P, PSNH
and Chief
Administrative OfficerWMECO, since 1996; previously Vice
President-Customer Operations of WMECO in 1988.PSNH from
January 1994 to September 1996.
James E. Byrne 45 Partner, Finneran, Byrne & Dreshsler, L.L.P.,
since 1982.
John C. Collins (2) 52 Executive Vice President, Lahey Clinic,
since 1995. Previously(1) 54 Chief Executive Officer, The HitchcockDartmouth-Hitchcock
Clinic, Dartmouth - Hitchcock Medical Center
from 1977 to 1995.since 1977.
William A. DiProfio 57 Seabrook Station Director, North Atlantic
Energy Service Corporation since 1992.
Ted C. Feigenbaum (3) 46 Elected(2) 49 Executive Vice President and Chief Nuclear
Officer of NAEC since February, 1996;
previously Senior Vice President of NAEC
since 1991; Senior Vice President and Chief
Nuclear Officer of PSNH from June 1992 to
August 1992; President and Chief Executive
Officer -
NewOfficer-New Hampshire Yankee Division of PSNH
October,from 1990 to June, 1992 and Chief Nuclear
Production Officer of PSNH January,from 1990 to June, 1992.
John H. Forsgren (4) 50 Elected(3) 53 Executive Vice President and Chief Financial
Officer of NU CL&P, PSNH, WMECO
and NAECsince February 1996; previously
Managing
Director of Chase Manhattan Bank since 1995;
and SeniorExecutive Vice President-Chief Financial
Officer of Euro Disney, The Walt Disney
Company.
Bernard M. Fox (5) 54 Elected Chairman of the Board, President and Chief ExecutiveFinancial
Officer of NU, Chairman of CL&P, PSNH, WMECO, and NAEC from
February 1996 to June 1999; Managing Director
of the Chase Manhattan Bank from 1995 to 1996
and Chief
Executive OfficerSenior Vice President of PSNH and NAEC in 1995;
previously Vice Chairman of CL&P and WMECO,
and Vice Chairman and Chief Executive Officer
of NAEC since 1994; Chief Executive Officer
of NU, CL&P, PSNH, WMECO and NAEC in 1993;
President and Chief Operating Officer of NU,
CL&P and WMECO inThe Walt Disney
Company from 1990 and NAEC since 1991;
Vice Chairman of PSNH since 1992.to 1994.
William T. Frain, Jr.(6) 55 Elected(4) 58 President and Chief Operating Officer of PSNH
insince February 1994; previously Senior Vice
President of PSNH since 1992.from 1992 to 1994.
Cheryl W. Grise 44 Elected47 Senior Vice President, Secretary and General
Counsel of NU since July 1998; previously
Senior Vice President, Secretary and General
Counsel of CL&P, PSNH and NAEC and Senior
Vice President, Secretary, Assistant Clerk
and General Counsel of WMECO from July 1998
to June 1999; Senior Vice President and Chief
Administrative Officer of CL&P, PSNH and
NAEC, and Senior Vice President of WMECO in 1995; previouslyfrom
1995 to 1998; Senior Vice resident-HumanPresident-Human
Resources and Administrative Services of
CL&P,WMECO and NAEC since 1994;from 1994 to 1995 and
Vice President-Human Resources of NAEC since
1992.
Barry Ilberman (7) 47 Elected Vice President-Corporate and
Environmental Affairs of CL&P, PSNH, WMECO
and NAEC in 1994; previously Vice President-
Corporate Planning of CL&P, WMECO since 1992.
John B. Keane (8) 50 Elected Vice President and Treasurer of NU,
CL&P, PSNH, WMECO and NAEC in 1993;
previously Vice President, Secretary and
General Counsel-Corporate of NU, CL&P and
WMECO since 1992; Vice President, Assistant
Secretary and General Counsel-Corporate of
PSNH and NAEC, Vice President, Secretary and
General Counsel-Corporate of NU and CL&P,
and Vice President, Secretary,Assistant
Clerk and General Counsel-Corporate of
WMECO since 1992.from 1992 to 1994.
Bruce D. Kenyon (9) 54(5) 57 President and Chief Executive Officer of NAEC
since September 1996 and President-Generation
Group of NU since March 1999; previously
President-Generation Group of CL&P, PSNH and
WMECO from March 1999 to June 1999;
President-Nuclear Group of NU, CL&P,PSNH, and
WMECO since 1996; previouslyfrom September 1996 to March 1999;
President and Chief Operating Officer of
South Carolina Electric and Gas Company from
1990.
Francis L. Kinney (10) 64 Elected Senior1990 to 1996.
Kerry J. Kuhlman 49 President and Chief Operating Officer of
WMECO since April 1999; previously Vice
President-Governmental
AffairsPresident-Customer Operations of WMECO from
October 1998 to April 1999; Vice President-
Central Region of CL&P WMECOfrom August 1997 to
October 1998; and NAEC in 1994;
previously Vice President-Public AffairsPresident-Eastern
Region of NAEC since 1992.CL&P from July 1994 to August 1997.
Gerald Letendre 5658 President, Diamond Casting & Machine Co.,
Inc. since 1972.
Hugh C. MacKenzie (11) 54 Elected57 President-Retail Business Group of NU since
February 1996 and President of CL&P andsince
January 1994; previously President of WMECO
in 1994; previouslyfrom January 1994 to April 1999; Senior Vice
President-Customer Service Operations of CL&P
and WMECO from 1990 to 1994.
Paul J. McDonald (6) 56 Advisor to the Board of Directors, Friendly
Ice Cream Corporation since 1990.January 2000;
previously Senior Executive Vice President
and Chief Financial Officer, Friendly Ice
Cream Corporation, from 1986 to 1999.
Michael G. Morris 53 Chairman of the Board, President and Chief
Executive Officer of NU, Chairman and Chief
Executive Officer of PSNH, and Chairman of
WMECO since August 1997; previously Chairman
of CL&P and NAEC from August 1997 to June
1999; President and Chief Executive Officer
of Consumers Power Company from 1994 to 1997
and Executive Vice President and Chief
Operating Officer of Consumers Power Company
from 1992 to 1994.
Jane E. Newman (12) 51(7) 54 Managing Director, The CommerceGroup, LLC,
since January 1999; previously Dean,
Whittemore School of Business and Economics
of the University of New Hampshire from
January 1998 to January 1999; Executive Vice
President and Director, Exeter Trust Company
since 1995. Previouslyfrom 1995 to 1997 and President, Coastal
Broadcasting Corporation from 1992 to 1995.
Melinda M. Phelps 56 Partner, Keyes and Donnellan, P.C., since
1992.
John J. Roman 43 Elected Vice President1992 and ControllerPolice Commissioner, City of
NU,Springfield, Massachusetts since 1998.
Rodney O. Powell 47 Vice-President-Central Region of CL&P PSNH, WMECOsince
October 1998; previously General Manager-
Simsbury of CL&P from October 1997 to October
1998; Manager-Regulatory Relations of NUSCO
from December 1995 to October 1997 and NAEC in 1995;Senior
Customer Engineering and Marketing Services
Consultant of NUSCO from January 1994 to
December 1995.
Gary D. Simon (8) 51 Senior Vice President-Strategy and
Development of NUSCO since April 1998.
Lisa J. Thibdaue 46 Vice President-Rates, Regulatory Affairs and
Compliance of Northeast Utilities Service
Company since January 1998; previously Assistant ControllerVice
President-Rates, Regulatory Affairs and
Compliance of CL&P, PSNH WMECO and NAEC since 1992.
Robert P. Wax 48 Elected Senior Vice President, Secretary and
General Counsel of NU, CL&P, PSNH, NAEC and WMECO in 1997. Previously elected Vice
President, Secretaryfrom
January 1998 to June 1999; Executive
Director, Rates and General CounselRegulatory Affairs,
Consumers Power Company from 1996 to 1998
and Director of PSNHRegulatory Affairs, Consumers
Power Company from 1991 to 1996.
(1) Director of Blue Cross and NAEC in 1994; elected Vice
President, Secretary and General CounselBlue Shield of NU and CL&P and Vice President, Secretary,
Assistant Clerk and General Counsel of WMECO
in 1993; previously Vice President, Assistant
Secretary and General Counsel of PSNH and
NAEC since 1993; previously Vice President
and General Counsel-Regulatory of NU, CL&P,
PSNH, WMECO and NAEC since 1992.
(1) Member-Advisory Committee, Bank of Boston Springfield/Pioneer Valley.
(2) Director ofVermont, Fleet Bank -
New Hampshire, and Hamden Assurance Company Limited.
(3)Limited and the Business and
Industry Association of New Hampshire.
(2) Director of Connecticut Yankee Atomic Power Company, and Maine Yankee Atomic
Power Company, Vermont Yankee Nuclear Power Corporation, and Yankee
Atomic Electric Company.
(4)(3) Director of Connecticut Yankee Atomic Power Company.
(5) Director of The Institute of Living, the Institute of Nuclear Power
Operations, the Connecticut Business and Industry Association, Fleet
Financial Group,NorthEast Optic Network, Inc., CIGNA Corporation, Connecticut Yankee Atomic Power
Company, Edison Electric Institute, Hartford Hospital, The Dexter
Corporation, a Trustee of Mount Holyoke College and The Hartford Courant
Foundation and a Fellow and Founder of the American Leadership Forum.
(6)
(4) Director of the Business and Industry Association of New Hampshire and
the Greater Manchester Chamber of Commerce; Trustee of Optima Health, Inc.
and Saint Anselm
College.
(7) Director of Connecticut Yankee Atomic Power Company.
(8) Director of Maine Yankee Atomic Power Company, Vermont Yankee Nuclear
Power Corporation, Yankee Atomic Electric Company and Connecticut Yankee
Atomic Power Company, Member - Advisory Committee, Fleet Bank
Connecticut.
(9)(5) Trustee of Columbia College and Director of Connecticut Yankee Atomic
Power Company.
(10)(6) Director of Mid-Conn Bank.
(11) Director of Connecticut Yankee Atomic Power Company.
(12)CIGNA Investments, Inc.
(7) Director of Exeter Trust Company and Perini Corporation, NYNEX
Telecommunications and Consumers Water Company.Corporation.
(8) Director of NorthEast Optic Network, Inc.
There are no family relationships between any director or executive
officer and any other director or executive officer of NU, CL&P, PSNH, WMECO,
or NAEC.
ITEM 11. EXECUTIVE COMPENSATION
NU.
Incorporated herein by reference is the information contained in the
sections "Executive Compensation," "Summary Compensation Table",Table," "Option/SAR
Grants in Last Fiscal Year," "Fiscal Year End Option/SAR Values," "Pension
Benefits",Benefits," and "Report on Executive Compensation" of the definitive proxy
statement for solicitation of proxies by NU, dated April 30, 1997,March 31, 2000, which will
be filed with the Commission pursuant to Rule 14a-6 under the Act.
SUMMARY COMPENSATION TABLE
CL&P, PSNH, WMECO and NAEC
The following table presents the cash and non-cash compensation received by the
CEO and the next four highest paid executive officers of the System, and by two
retired executive officers who would have been among the five highest paid
executive officers but for their retirement, in accordance with rules of the
Securities and Exchange Commission (SEC):
CL&P, PSNH, WMECO, AND NAEC SUMMARY COMPENSATION TABLE
The following tables present the cash and non-cash compensation received by the Chief Executive Officer
and the next four highest paid executive officers of CL&P, PSNH, WMECO and NAEC, in accordance with rules of
the SEC:
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation Long TermLong-Term Compensation
------------------- -----------------------------------------------
Awards Payouts
Options/ Long
Re-------------------------- ---------------------
Restricted Securities Long-Term All
Stock Term All
Other stricted Appreci-Underlying Incentive Other
Other Annual Award(s) Options/Stock ation Program Compen-
Name and Salary Compensa- Awards RightsCompensation ($) Appreciation Payouts sation ($)
Principal Position Year ($) Bonus($) tionBonus ($) ($) Note 1) (Note 2) Rights (#) ($) (Note 1)
3)
- ---------------------------------------------------------------------------------------------------------------
Bernard M. Fox 1996 551,300 None None None None 65,420 7,500
(Note 2) 1995 551,300 246,168 None None None 130,165 7,350
1994 544,459 308,896 None None None 115,771 4,500
Michael G. Morris 1999 783,173 1,253,300 92,243 348,611 118,352 - 23,210
Chairman of the
Board, President 1998 757,692 891,000 134,376 255,261 64,574 - 22,731
and Chief Executive
Officer 1997 258,333 1,350,000 - - 500,000 - -
Bruce D. Kenyon 1996 144,231 400,000 None 499,762 None None None
(Note 2) (Note 3)
1995 None None None None None None None
1994 None None None None None None None1999 500,000 - - 77,690 20,804 462,500 15,000
President -
Generation Group 1998 500,000 300,000 - - 21,236 - 14,800
1997 500,000 300,000 - 306,522 139,745 - -
John H. Forsgren 1996 305,577 None 62,390 80,380 None None None
(Note 2) (Note 4) (Note 4)
1995 None None None None None None None
1994 None None None None None None None1999 429,904 400,000 - 122,682 32,852 87,003 12,888
Executive Vice
President and 1998 373,077 - - - 73,183 - 104,800
Chief Financial
Officer 1997 350,000 - - 378,787 184,382 - 50,000
Hugh C. MacKenzie 1996 264,904 None None None None 19,8341999 270,000 250,000 - 73,612 19,712 - 108,100
President - Retail
Business Group 1998 270,000 - - - 15,496 42,972 7,500
(Note 2) 1995 247,665 128,841 None None None 46,789 7,350
1994 245,832 113,416 None None None 40,449 4,5001997 270,000 - - 189,778 142,549 26,998 4,800
Cheryl W. Grise 1999 244,712 250,000 - 73,612 19,712 - 82,247
Senior Vice
President, 1998 209,231 - - - 12,916 20,720 6,123
Secretary and
General Counsel 1997 200,000 - - 119,109 89,467 15,188 4,800
(in CL&P, PSNH and
WMECO tables only)
Ted C. Feigenbaum 1996 248,8581999 260,000 130,000 - 28,620 7,664 24,827 5,849
Executive Vice
President and 1998 260,000 48,750 - 40,961 10,044 20,723 7,800
Chief Nuclear Officer
of NAEC 1997 260,000 30,119 - - - 21,498 4,800
(in NAEC table only)
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------
Individual Grants Grand Date Value
----------------- ----------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees Base Price Expiration Present
Name Granted (#) in Fiscal Year ($/sh) Date Value ($)
- ----------------------------------------------------------------------------------------------------
Michael G. Morris 93,352 (Note 4) 14.7% 14.9375 2/23/2009 620,791
25,000 (Note 5) None None None 14,770 7,2223.9% 17.5625 9/13/2009 198,000
Bruce D. Kenyon 20,804 (Note 2) 1995 185,300 126,002 None None None None 5,553
1994 183,331 47,739 None None None None 4,500
Robert E. Busch 1996 300,385 None None None None 26,747 2,637,500
Formerly President-5) 3.3% 14.9375 2/23/2009 138,347
John H. Forsgren 32,852 (Note 6)
Energy Resources Group 1995 350,000 147,708 None None None 63,100 7,3504) 5.2% 14.9375 2/23/2009 218,466
Hugh C. MacKenzie 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Cheryl W. Grise 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Ted C. Feigenbaum 7,664 (Note 4) 1.2% 14.9375 2/23/2009 50,966
AGGREGATED OPTIONS/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------------
Shares With
Respect to Number of NU,Securities Value of Unexercised
Which Underlying Unexercised In-the-Money
SARs Were Value Options/SARs Options/SARs
Exercised Realized at Fiscal Year End (#) at Fiscal Year End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
Michael G. Morris - - 318,049 364,877 2,992,333 3,350,961
Bruce D. Kenyon 98,509 332,468 52,410 27,883 344,674 147,108
John H. Forsgren 129,974 438,662 99,259 57,247 582,727 288,471
Hugh C. MacKenzie 100,486 339,140 49,351 24,877 334,118 132,831
Cheryl W. Grise 63,067 212,851 33,101 24,017 218,741 129,176
Ted C. Feigenbaum - - 6,696 11,012 28,458 57,339
Notes to Summary Compensation and Option/SAR Grants Tables:
1. Other annual compensation for Mr. Morris consists of 1998 and 1999 relocation expense
reimbursements.
2. At December 31, 1999, the aggregate restricted stock holdings by the five individuals named in
the table for CL&P, WMECO and 1994 346,122 173,366 None None None 44,073 4,500PSNH were 51,989 shares with a value of $1,069,024 and for NAEC
were 49,814 shares with a value of $1,024,301. Awards shown for 1997 have vested. Awards
shown for 1999 vest one-third on February 23, 2000, one-third on February 23, 2001, and one-
third on February 23, 2002. During 1999, a total of 51,989 restricted shares were awarded to
the individuals shown in the table for CL&P, WMECO and PSNH, and formerly
Presidenta total of NAEC (Note 6)48,977 restricted
shares were awarded to the individuals shown in the table for NAEC. Dividends paid on
restricted stock are either paid out or reinvested into additional shares.
3. "All Other Compensation" for 1999 consists of employer matching contributions under the
Northeast Utilities Service Company 401k Plan, generally available to all eligible employees
($4,800 for each named officer), matching contributions under the Deferred Compensation Plan
for Executives (Mr. Morris - $18,710, Mr. Kenyon - $10,200, Mr. Forsgren - $8,088,
Mr. MacKenzie - $3,300, Mrs. Grise - $2,447, and Mr. Feigenbaum - $1,049), and retention
payments (Mr. MacKenzie - $100,000 and Mrs. Grise - $75,000).
4. These options were granted on February 23, 1999, under the Incentive Plan. All options granted
vest one-third on February 23, 2000, one-third on February 23, 2001, and one-third on February 23,
2002. Valued using the Black-Scholes option pricing model, with the following assumptions:
Volatility: 36.52 percent (36 months of monthly data); Risk-free rate: 5.61 percent; Dividend
yield: 1.89 percent; Exercise date: February 23, 2009.
5. These options were granted on September 14, 1999, and were fully exercisable on the date of
grant. Valued using the Black-Scholes option pricing model, with the following assumptions:
Volatility: 34.66 percent (36 months of monthly data); Risk-free rate: 6.45 percent; Dividend
yield: 1.89 percent; Exercise date: September 13, 2009.
Notes:
1. "All Other Compensation" consists of employer matching
contributions under the Northeast Utilities Service Company
401(k) Plan, generally available to all eligible employees. It
also includes, in the case of Mr. Busch, certain payments made
to him pursuant to the terms of his separation agreement with
Northeast Utilities Service Company (see Note 6).
2. See "Item 10. Directors and Executive Officers of the
Registrants" for information on the directorships and officer
positions held by each active individual named in the summary
compensation table with each of the registrants.
3. The restricted stock will vest when Millstone Station is
removed from the Nuclear Regulatory Commission's "watch list",
provided that this occurs within three years of Mr. Kenyon's
commencement of employment and the SRLP and INPO ratings of
Seabrook Station have not materially changed from their 1996
levels. Dividends accruing on these shares are reinvested in
additional shares subject to the same restrictions. At the end
of 1996, Mr. Kenyon owned 39,585 restricted shares with a
market value of $519,555, plus a $9,896 dividend that was
reinvested into an additional 740 restricted shares on January
2, 1997.
4. The "other annual compensation" consists of tax payments on a
restricted stock award. The restricted stock will vest on
January 1, 1999. Dividends accruing on these shares are
reinvested in additional shares subject to the same
restrictions. At the end of 1996, Mr. Forsgren owned 5,305
restricted shares with a market value of $69,621, plus a $1,326
dividend that was reinvested into an additional 99 restricted
shares on January 2, 1997.
5. Awards under the 1996 short term incentive program of the
Northeast Utilities Executive Incentive Plan have not yet been
made. Based on preliminary estimates of corporate performance,
no short term awards will be made.
6. Mr. Busch left the Company during 1996. Pursuant to his
separation agreement with Northeast Utilities Service Company,
Mr. Busch received cash payments of $880,000 during 1996 and
$220,000 during 1997, a supplemental retirement benefit with a
present value of $1,400,000, continued medical coverage for
himself and his family with a present value of $100,000 and
career planning with a value of $30,000. See Employment
Contracts and Termination of Employment Arrangements, below.COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
[Note:Overview and Strategy
The Committee on Organization, Compensation and Board AffairsCommittee of the Board of Trustees of Northeast Utilities is the administrator of executive
compensation for the executives of the registrants with authority to establish
and interpret the terms of the registrants' executive salary and incentive
programs and to make payment of awards.]
The Committee on Organization, Compensation and Board Affairs of the Board
of Trustees(the Committee) is
the administrator of executive compensation for the executives of the
Northeast Utilities system (the Company) with authority to establish and
interpret the terms of the Company's executive salary and incentive programs and
to make paymentprograms.
The goal of awards.
Compensation Strategy: The Company'sthe Committee's executive compensation goalsprogram for 1996 were1999 was to
provide a competitive compensation package to enable the Company to attract
and retain key executives andwith an eye towards the future in a more
competitive environment. The Committee further sought to align executive
interests with those of Northeast Utilities' shareholders and with Company
performance. The 1996
compensationperformance by continuing with the increased use of the Company's executives was comprised primarily of base salary,
annual incentive awards and long-term incentive awards.share-based incentives.
To help achieve the compensation goal of providing a competitive package,these goals, the Committee drawsdrew upon information from a
variety of sources, including compensation consultants, utility and general
industry surveys, and other publicly-availablepublicly available information, including proxy
statements. In 1996,1999, the Company's comparison groups for purposes of
executive compensation continued to
consistconsisted of a consultant's database of roughly 1,000
companies from a broad variety of industries, a consultant's database of over
600 industrial75 electric and more than 50combination electric and gas utilities, as well asand a smaller group
of ten electric utilities whose operating characteristics were substantially
similar to those of the Company in terms of generation mix revenues and customer size.
SevenNine of the ten companies are included in the Standard & Poor's (S&P)
Electric Companies Index, which is the Indexindex used in the share performance
chart shown in Northeast
Utilities' proxy statement.the NU Proxy Statement.
Base Salary:Salary
The target level for the base salary of each executive
reflects the median base salary level for that position within the market
comparison groups. The Committee periodically adjusts the level of base salary
to reflect considerations such as changes in responsibility, market sensitivity,
individual performance and internal equity. Any portion of base salary in
excess of the salary range upper limit (the going rate) is paid in a lump sum,
and is not counted as base salary in determining future salary increases. The
Committee sets base salary ranges for most Company officers and sets the annual base salary for each suchexecutive officer
except for the Chief Executive Officer (CEO), whose base salary is set by the
Board of Trustees following a recommendation by the Committee. During 1996,Committee pursuant to an
evaluation process developed by the Committee approved a 2.75 percent increase in conjunction with the
1996 base salary range structure over 1995. Because 1996Corporate Governance Committee of the Board of Trustees. In 1999 the
Committee reviewed the base salary levels were generally within targeted pay levels of the Company's entire officer
group against those of the 75 utility market comparison group only certain
officers received 1996with a goal of
targeting aggregate officer base salary adjustments.
Incentive Pay: Incentive awards for the executive officers are made in
accordance with the Company's Executive Incentive Plan (the Plan). Under the
Plan during 1996, the Committee established a one-year short-term program and a
three-year long-term program with target awards (expressed as a percentage of
going rate) commensurate with incentive awards for the position within the
comparison groups.
The programs calculate payouts based on actual Company performance against
target goals with respect to two equally-weighted corporate measures. Each
measure has a threshold performance limit (under which no amount is awarded) and
an upper limit (which will yield the maximum payout of twice the target amount).
The corporate performance measures for the 1996 short-term incentive program
were 1996 earnings per share and Company operations and maintenance budget. The
corporate performance measures for the 1996-1998 long-term incentive program
were total shareholder return and cost of service (COS) over the three-year
period. The total shareholder return goal will be met at target if the total
return on a Northeast Utilities common share for the performance period equals
the return on the S&P Electric Companies Index for the same period. The COS
goal will be met at target if the Company's average COS changes by the same
percentage as the COS average of an 18 utility company comparison group. Awards
under the 1996 short-term program, if any, will be made in cash in the Spring of
1997 and, under the 1996-1998 long-term program, awards will be made in
Northeast Utilities common shares in the Spring of 1999.
For 1996, target awards for participants in the short-term program ranged
from 25 percent to 35 percent, and for participants in the long-term program
from 15 percent to 45 percent, of the going rate for their positions. Awards
under the short-term program can vary from those determined solely by corporate
performance depending on individual achievement of a set of assigned goals
established for the performance year. These assigned goals vary as appropriate
from officer to officer and include employee safety; service reliability;
nuclear operations; economic development; operating, maintenance and capital
expenditure levels; environmental initiatives; and generating unit capacity and
availability.
During 1996, the Committee determined that establishing a Stock Price
Recovery Program for certain senior officers, including the CEO, was in the best
interest of the Company and its shareholders. The purpose of this program is to
focus key officers on achieving fundamental business goals relative to the challenges of nuclear operations and industry restructuring, with a net effect
of advancing shareholder interests with regard to share price recovery. In
connection with the commencement of this new incentive program, themedian. The Committee
terminated the participation of these officers in the 1996 short-term program
and the 1996-1998 long-term program and resolved that these officers would not
participate in other incentive programs that begin in 1997 or 1998. Awards
under the Stock Price Recovery Incentive Program will be based on appreciation
of the price of Northeast Utilities common shares between December 31, 1996 and
December 31, 1998 against a targeted share price goal, indexedperiodically adjusts officers' base salaries to reflect the
relative performance of a Northeast Utilities common share compared to the
performance of the S&P Electric Companies Index during the same period. The
target award of each participant is equal to the value of the 1996, 1997, and
1998 short-term and long-term incentive programs at target, assuming that there
had been noconsiderations such
as changes in the 1997 and 1998 program target payout opportunities for
these executives. There are noresponsibility, market sensitivity, individual performance goalsand
internal equity. The CEO's base salary was increased by 3.23 percent in the program.
Awards under the program are made in restricted stock units and stock
appreciation rights (SARs). The SARs are exercisable from January 1, 1999
through December 31, 2001.
At the same time, the Committee modified the short and long-term program
design for officers not participating in the Stock Price Recovery Incentive
Program to recognize the importance of retaining key executive talent and to
help assure the officers' continuing dedication to their duties to the Company
and its shareholders. Consistent with these views, the Committee established
for 1997 a short-term program that calculates payouts based on performance
against goals that vary by division and a 1997-1999 long-term program that
measures corporate performance solely on total shareholder return exceeding the
S&P Electric Companies Index return for the same period by a specified
percentage.
Also during 1996, the Committee made awards under the 1993-1995 long-term
incentive program. Awards, in Northeast Utilities common shares, were
based on the Company's relative ranking against a group of electric utilities with
respectmarket review and the Committee's judgment as to shareholder returnhis past and
COS. Achievement of goals was less than
target and resulted in awards that were 69.1 percent of target.
CEO Pay: Despite a base salary that is below the median market level for
the position, the Committee did not increase Mr. Fox's base salary in 1996
because of companyexpected future performance.
Annual Incentive Bonus. In 1996,Awards
The Committee again implemented an Annual Incentive Program during 1999.
The incentive payout target was 80 percent of base salary for the Committee established a program
governingCEO, and
varied from 25 to 50 percent of base salary for the payment of the 25-percent holdback of Mr. Fox's award under the
1995 short-term program. Under this program, the holdback will be forfeited
unless nuclear goals with respectother officers. The
Annual Incentive Program was designed to removal from the watch list and improvement
in the area of employee concerns are fulfilled within a specified time period,
as determined by the Board with the assistance of the Nuclear Committee of the
Board.
Long-Term Incentive Award. During 1996, Mr. Fox was granted 4,108
Northeast Utilities common shares in conformance with the provisions of the
1993-1995 program whosecalculate actual aggregate payouts were
based on the Company's performance against an earnings per share goal and
pre-established individual goals. Individual awards were made in cash in
February 2000. The CEO received an award under COSthis program of $1,253,300, or
20 percent of target, determined solely on the fulfillment of the earnings-
per-share goal. In addition, during September 1999, the Board approved an
award of 25,000 stock options for the CEO on account of a highly successful
year in 1999 including the sale of the fossil/hydroelectric plants and shareholder return measures as described above.the
restart of Millstone Unit 2.
Long-Term Incentive Grants
Long-term stock-based incentive grants were made in February 1999 to
each executive officer and other officers and certain key employees of the
Company. The Committee does not believe it is necessarytargeted these awards such that the total of base
pay, target annual incentive awards, and long-term incentive awards for the
officer group would be at the 75th percentile of the utility market
comparison group. Approximately one-half of the grants' intended value was
made in restricted stock and one-half was made in stock options. The CEO's
grant was targeted at 110 percent of base salary based upon the consultant's
survey database of utilities and general industry and the Committee's goal of
making long-term incentive awards competitive with these companies.
Internal Revenue Service Limitation on Deductibility of Executive
Compensation
The Committee believes that its compensation program adequately responds
to make any changes in the
Company's executive compensation programs at this time in response toissues raised by the deductibility cap placed on executive salaries by
Section 162(m) of the Internal Revenue Code. The Committee believes thatCode because of the executiveuse of stock
options and qualified performance-based compensation programs
appropriately balance shareholder and customer interests. It continues to
evaluate options for dealing with the issues raised by Section 162 (m).
Dated: January 28, 1997in Company incentive
programs.
Respectfully submitted,
Elizabeth T. Kennan,Robert E. Patricelli, Chairman
William J. Pape II, Vice Chairman
John F. Curley
Cotton Mather Cleveland
Gaynor N. Kelley
Robert E. PatricelliGail de Planque
Elizabeth T. Kennan
John F. Swope
Dated: February 22, 2000
PENSION BENEFITS
The following table shows the estimated annual retirement benefits
payable to an executive officer of the registrantsNortheast Utilities upon retirement,
assuming that retirement occurs at age 65 and that the officer is at that
time not only eligible for a pension benefit under the Northeast Utilities
Service Company Retirement Plan (the Retirement Plan) but also eligible for
the make-whole benefit and the target benefit under the Supplemental
Executive Retirement Plan for Officers of Northeast Utilities System
Companies (the Supplemental Plan). The Supplemental Plan is a non-qualified
pension plan providing supplemental retirement income to system officers.
The make-whole benefit under the Supplemental Plan, available to all
officers, makes up for benefits lost through application of certain tax code
limitations on the benefits that may be provided under the Retirement Plan,
and includes as "compensation" awards under the Executive Incentive Compensation Program and the Executive Incentive Planexecutive incentive plans and
deferred compensation (as earned). The target benefit further supplements
these benefits and is available to officers at the Senior Vice President
level and higher who are selected by the Board of Trustees of Northeast Utilities to participate in
the target benefit and who remain in the employ of Northeast Utilities
companies until at least age 60 (unless the Board of Trustees sets an earlier
age).
Each of the executive officers of Northeast Utilities named in
the Summary Compensation Table is currently eligible for a target benefit,
except Mr. Kenyon, whose Employment Agreement provides a specially calculated
retirement benefit, based on his previous arrangement with South Carolina
Electric and Gas. If Mr. Kenyon retires with at least three but less than five
years of service with the Company, he will be deemed to have five years of
service. In addition, if Mr. Kenyon retires with at least three years of
service with the Company, he will receive a lump sum payment of $500,000.
The benefits presented below are based on a straight life annuity
beginning at age 65 and do not take into account any reduction for joint and
survivorship annuity payments. Final average compensation for purposes of
calculating the target benefit is the highest average annual compensation of
the participant during any 36 consecutive months compensation was earned.
Compensation taken into account under the target benefit described above
includes salary, bonus, restricted stock awards, and long-term incentive
payouts shown in the Summary Compensation Table, but does not include
employer matching contributions under the 401k Plan. In the event that an
officer's employment terminates because of disability, the retirement
benefits shown above would be offset by the amount of any disability benefits
payable to the recipient that are attributable to contributions made by
Northeast Utilities and its subsidiaries under long term disability plans and
policies.
ANNUAL TARGET BENEFIT
FINAL AVERAGE
COMPENSATION YEARS OF CREDITED SERVICEFinal Average Years of Credited Service
Compensation
15 20 25 30 35
$200,000 $72,000$ 72,000 $96,000 $120,000 $120,000 $120,000
250,000 90,000 120,000 150,000 150,000 150,000
300,000 108,000 144,000 180,000 180,000 180,000
350,000 126,000 168,000 210,000 210,000 210,000
400,000 144,000 192,000 240,000 240,000 240,000
450,000 162,000 216,000 270,000 270,000 270,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
Final average compensation for purposes of calculating the target benefit
is the highest average annual compensationEach of the participant during any 36
consecutive months compensation was earned. Compensation taken into account
under the target benefit described above includes salary, bonus, restricted
stock awards, and long-term incentive payouts shownexecutive officers of Northeast Utilities named in the
Summary Compensation Table but does not include employer matching contributions under the 401(k)
Plan. In the event that an officer's employment terminates because of
disability, theis currently eligible for a target benefit, except
Messrs. Morris and Kenyon, whose Employment Agreements provide specially
calculated retirement benefits, shown above wouldbased on their previous arrangements with CMS
Energy/Consumers Energy Company (CMS) and South Carolina Electric and Gas,
respectively. Mr. Morris's agreement provides that upon retirement after
reaching the fifth anniversary of his employment date (or upon disability or
termination without cause or following a change in control, as defined) he
will be offsetentitled to receive a special retirement benefit calculated by
applying the amountbenefit formula of any disability benefits payablethe CMS Supplemental Executive Retirement
Plan to all compensation earned from the NU system and to all service rendered
to the recipientCompany and CMS. If Mr. Kenyon retires with at least three years of
service with the Company, he will be deemed to have two extra years of service
for purpose of his special retirement benefit. If after achieving three years
of service he voluntarily terminates employment following a "substantial
change, in responsibilities resulting from a material change in the business
of Northeast Utilities", he will be deemed to have an additional year of
service for purpose of his special retirement benefit, and if he retires with
at least three years of service with the Company, he will receive a lump sum
payment of $500,000.
In addition, Mr. Forsgren's Employment Agreement provides for
supplemental pension benefits based on crediting up to ten years additional
service and providing payments equal to 25 percent of salary for up to 15
years following retirement, reduced by four percentage points for each year
that are attributable to
contributions made by Northeast Utilities and its subsidiaries under long term
disability plans and policies.his age is less than 65 years at retirement.
As of December 31, 1996,1999, the five executive officers named in the Summary
Compensation Table had the following years of credited service for purposes
of calculating target benefits under the Supplemental Plan (or in the case of
Messrs. Morris and Kenyon, for purposes of calculating the special retirement
compensation purposes:benefits under their respective Employment Agreements): Mr. FoxMorris - 32,21,
Mr. Kenyon - 0,5, Mr. Forsgren - 0,3, Mr. MacKenzie - 31,34, Mrs. Grise - 19, and
Mr. Feigenbaum 10.- 14. In addition, Mr. Forsgren had 6 years of service for
purposes of his supplemental pension benefit and would have 25 years of
service for such purpose if he were to retire at age 65. Assuming that
retirement were to occur at age 65 for these officers, retirement would occur
with 43, 11,33, 13, 15, 41, 37, and 29 years of credited service, respectively.
Mr. Fox has announced that he will
retire in the second half of 1997.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Officer Agreements
Northeast Utilities Service Company (NUSCO)NUSCO has entered into employment agreements (the Officer Agreements)
with each of the named executive officers
(except for Mr. Fox - see separate description below) and certain other
executive officers and directors of the registrants.officers. The Officer Agreements are also
binding on Northeast Utilities and on each majority-owned subsidiary of
Northeast Utilities with at least fifty employees on its direct payroll.Utilities.
Each Officer Agreement obligates the officer to perform such duties as
may be directed by the NUSCO Board of Directors or the Northeast Utilities
Board of Trustees, protect the Company's confidential information, and
refrain, while employed by the Company and for a period of time thereafter,
from competing with the Company in a specified geographic area. Each Officer
Agreement provides that the officer's base salary will not be reduced below
certain levels without the consent of the officer, and that the officer will
participate in specified benefits under the Supplemental Executive Retirement
Plan or other supplemental retirement programs (see Pension Benefits, above),
and/or in the applicable divisional officercertain executive incentive programs or the
Stock Price Recovery Program, as the case may be, under the Executive Incentive
Plan (see Report on Executive Compensation, above), and, beginning on January 1,
1999, if the employment term has not ended, in each short-term and long-term
incentive compensation program established by the Company for such senior level
executives generally, at anspecified incentive
opportunity level not less than that in
effect for the officer as of January 1, 1996 (or January 1, 1997 for certain
officers).levels.
Each Officer Agreement provides for a specified employment term and for
automatic one-year extensions of the employment term unless at least six
months' notice of non-renewal is given by either party. The employment term
may also be ended by the Company for "cause", as defined, at any time (in
which case no targetsupplemental retirement benefit, if any, shall be due
the officer under the Supplemental Executive Retirement Plan)due), or by
the officer on thirty30 days' prior written notice for any reason. Absent
"cause", the Company may remove the officer from his or her position on sixty60
days' prior written notice, but in the event the officer is so removed and
signs a release of all claims against the Company, the officer will receive
one or two years' base salary and annual incentive payments, specified
employee welfare and pension benefits, and vesting of stock appreciation
rights, options and restricted stock.
Under the terms of an Officer Agreement, upon any termination of
employment following a change of control, as defined, between (a) the earlier
of the officer withindate shareholders approve a change of control transaction or a change
of control transaction occurs and (b) the earlier of the date, if any, on
which the Board of Trustees abandons the transaction or the date two years
following athe change inof control, as defined, if the officer signs a release of all claims
against the Company, the officer will be entitled to certain payments
including two or three timesa multiple (not to exceed four) of annual base salary, and annual
incentive payments, specified employee welfare and pension benefits, and
vesting of stock appreciation rights, options and restricted stock. Certain
of the change in control provisions may be modified by the Board of Trustees
prior to a change in control, on at least two years' notice to the affected
officer(s).
Besides the terms described above, Mr. Forsgren'sthe Officer Agreement providesAgreements of Messrs.
Morris, Kenyon and Forsgren provide for a startingspecified salary, of $350,000 per year and a $100,000cash, restricted
stock grant.
Mr. Feigenbaum'sand/or stock options upon employment, special incentive programs, and/or
special retirement benefits. See Pension Benefits, above, for further
description of these provisions. During 1999, the Officer Agreement provides forAgreements of
Messrs. Morris, Kenyon and Forsgren and Mrs. Grise were amended to provide
that a starting salarytermination of $250,000
per year. Mr. Kenyon's Officer Agreement provides for an initial starting
salaryemployment initiated by such officer upon the
imposition of at $500,000 per year, a $500,000 restricted stock grant andlimitation of scope of the officer's responsibilities
following a $400,000
cash signing bonus (See Summary Compensation Table, above).change of control such that the officer's responsibilities relate
primarily to a company whose common equity is not publicly held shall
constitute a termination upon a change of control. Mr. Kenyon's Officer
Agreement also provides for a special retirement benefit (described
above in Pension Benefits) instead of a target benefit and a make-whole benefit
under the Supplemental Plan, and a special short term incentive compensation
program in lieu of a portion of the Stock Price Recovery Incentive Program.
Under this incentivespecial program Mr. Kenyon will beis eligible to receive a payment up to
100 percent of base salary depending on his fulfillment of certain incentive
goals for each of the years ending August 31, 1997 and August 31, 1998, and
for the 16 month period ending December 31, 1999.
Transition and Retirement Agreement
In 1992, Northeast Utilities entered into an agreement with Mr. Fox (the "1992
Agreement") to provide for an orderly chief executive officer succession. The
agreement states that if Mr. Fox is terminated without cause, he will be
entitled to two years' base pay; specified employee welfare benefits; a
supplemental retirement benefit equal to the difference between the target
benefit he would be entitled to receive if he had reached the age of 55 on the
termination date and the actual target benefit to which he is entitled as of the
termination date; and a target benefit under the Supplemental Executive
Retirement Plan, notwithstanding that he might not have reached age 60 on the
termination date and notwithstanding other forfeiture provisions of that plan.
In January, 1997, Northeast Utilities entered into a Transition and Retirement
Agreement (the "Transition Agreement") with Mr. Fox to reflect his election to
retire on the later of August 1, 1997 and the date his successor is elected.
The Transition Agreement is intended to supersede the 1992 Agreement at the time
of Mr. Fox's retirement. The Transition Agreement obligates Mr. Fox to maintain
the confidentiality of Company information during his employment and following
his retirement, and not to compete with the Company for certain periods of time
in specified geographic areas.
The Transition Agreement provides that Mr. Fox will be engaged as a consultant
to the Board of Trustees of Northeast Utilities for 24 months following his
retirement, with a fee of $500,000 for the first 12 months and $300,000 for the
second 12 months, payable in full notwithstanding Mr. Fox's death or disability
during such period or the occurrence of a change in control, as defined. The
Transition Agreement also provides that Mr. Fox will be entitled to a target
benefit under the Supplemental Executive Retirement Plan (actuarially reduced,
if applicable, to reflect payments beginning prior to age 57), and for vesting
of all stock appreciation rights granted to him in the Stock Price Recovery
Program. All payments and benefits under the Transition Agreement are
conditioned on Mr. Fox signing a release of claims against the Company "and all
related parties" with respect to matters arising out of his employment with the
Company, and the Company releasing Mr. Fox from all civil liability which may
arise from his being or having been a Trustee or officer of Northeast Utilities
and its subsidiaries, except for any liability which has been or may be asserted
against Mr. Fox by the Company as the result of an investigation conducted upon
the demand of a shareholder or by a shareholder on behalf of the Company. Both
the 1992 Agreement and the Transition Agreement are binding on each majority-
owned subsidiary of Northeast Utilities with at least fifty employees on its
direct payroll.
Separation Agreement
NUSCO entered into a Separation Agreement with Mr. Busch in August 1996 in
connection with the termination of Mr. Busch's employment. The agreement
provided for a severance payment of two times annual compensation, and specified
supplemental employee welfare and pension benefits. It provides for
confidentiality restrictions on Mr. Busch and a two year non-competition period
in specified geographic locations. It includes a release by Mr. Busch of claims
against the Company and a release by the Company of claims against Mr. Busch,
except such as might be brought as the result of an investigation conducted upon
the demand of a shareholder or on behalf of the Company by shareholders.
NUSCO's obligations under this agreement are binding on each majority-owned
subsidiary of Northeast Utilities with at least fifty employees on its direct
payroll.
The descriptions of the various agreements set forth above are for
purpose of disclosure in accordance with the proxy and other disclosure rules
of the SEC and shall not be controlling on any party; the actual terms of the
agreements themselves determine the rights and obligations of the parties.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
NU.
Incorporated herein by reference is the information contained in the
sections "Common Stock Ownership of Certain Beneficial Owners",Owners," "Common Stock
Ownership of Management",Management," "Compensation of Trustees", "SummaryTrustees," "Executive
Compensation,
Table"," "Pension Benefits",Benefits," and "Report on Executive Compensation" of
the definitive proxy statement for solicitation of proxies by NU, dated
April 30,
1997March 31, 1999 which will be filed with the Commission pursuant to Rule 14a-6
under the Act.
CL&P, PSNH, WMECO, ANDand NAEC.
NU owns 100% of the outstanding common stock of registrants CL&P, PSNH,
WMECO, and NAEC. As of February 25, 1997,24, 2000, the Directors and Executive
Officers of CL&P, PSNH, WMECO, and NAEC beneficially owned the number of
shares of each class of equity securities of NU listed below. No equity
securities of CL&P, PSNH, WMECO, or NAEC are owned by the Directors and
Executive Officers of CL&P, PSNH, WMECO, and NAEC. CL&P, PSNH, WMECO, and NAEC DIRECTORS AND EXECUTIVE OFFICERS
Amount and
Nature of
Title Of Name of Beneficial Percent of
Class Beneficial Owner Ownership (1) Class (2)
NU Common Robert G. Abair(3) 7,761
NU Common John C. Collins(4) 0
NU Common Ted C. Feigenbaum(5) 1,917
NU Common John H. Forsgren(6) 5,404
NU Common Bernard M. Fox(7) 27,532
NU Common William T. Frain, Jr.(8) 2,726
NU Common Cheryl W. Grise(9) 4,553
NU Common Barry Ilberman(10) 8,124
NU Common John B. Keane(11) 2,971
NU Common Bruce D. Kenyon(12) 41,075
NU Common Francis L. Kinney(13) 4,949
NU Common Gerald Letendre(4) 0
NU Common Hugh C. MacKenzie(14) 9,962
NU Common Jane E. Newman(4) 0
NU Common Robert P. Wax(15) 3,815
Amount beneficially owned by Directors and Executive Officers
as a group - CL&P 118,872 shares (11 persons)
- PSNH 103,191 shares ( 8 persons)
- WMECO 118,872 shares (11 persons)
- NAEC 113,028 shares (11 persons)
(1) Unless otherwise noted,
each Director and Executive Officer of CL&P, PSNH, WMECO, and NAEC has sole
voting and investment power with respect to the listed shares.
CL&P, PSNH, WMECO, and NAEC DIRECTORS AND EXECUTIVE OFFICERS
- ------------------------------------------------------------------------------
Title of Amount and Nature of Percent of
Class Name Beneficial Ownership Class (1)
- ------------------------------------------------------------------------------
NU Common David H. Boguslawski 14,981 (2)
NU Common James E. Byrne 0
NU Common John C. Collins 0
NU Common William A. DiProfio 4,648 (3)
NU Common Ted C. Feigenbaum 36,357 (4)
NU Common John H. Forsgren 78,746 (5)
NU Common William T. Frain, Jr. 17,516 (6)
NU Common Cheryl W. Grise 32,347 (7)
NU Common Bruce D. Kenyon 87,377 (8)
NU Common Kerry J. Kuhlman 9,457 (9)
NU Common Gerald Letendre 0
NU Common Hugh C. MacKenzie 35,034 (10)
NU Common Paul J. McDonald 500
NU Common Michael G. Morris 400,496 (11)
NU Common Jane E. Newman 0
NU Common Melinda M. Phelps 0
NU Common Rodney O. Powell 4,094 (12)
Amount beneficially owned by Directors and Executive Officers as a group:
Amount and Nature of
Company Number of Persons Beneficial Ownership
- ------- ----------------- --------------------
CL&P 8 667,240 (13)
PSNH 11 680,027 (13)
WMECO 11 671,968 (13)
NAEC 6 639,971
(1) As of February 25, 199724, 2000, there were 136,052,050137,388,633 common shares of NU
outstanding. The percentage of such shares beneficially owned by any
Director or Executive Officer, orand by all Directors and Executive
Officers of CL&P, PSNH, WMECO, and NAEC as a group, does not exceed one
percent.
(3) Mr. Abair is a Director of CL&P and WMECO.
(4) Messrs. Collins, Letendre and Ms. Newman are Directors of PSNH.
(5) Mr. Feigenbaum is a Director and Executive Officer of NAEC.
(6) Mr. Forsgren is a Director and Executive Officer of CL&P, WMECO and
PSNH and an Executive Officer of NAEC. Mr. Forsgren's shares are
restricted. See Note 3 of the Summary Compensation Table.
(7) Mr. Fox is a Director and Executive Officer of CL&P, PSNH, WMECO and
NAEC. Mr. Fox shares voting and investment power with his wife for
5,745 of these shares. In addition, Mr. Fox's wife has sole voting and
investment power for 140(2) Includes 2,016 restricted shares, as to which Mr. Fox disclaims
beneficial ownership.
(8)Boguslawski has sole
voting power but no dispositive power. Includes 7,368 shares that could
be acquired by Mr. Boguslawski pursuant to currently exercisable options.
(3) Includes 879 shares that could be acquired by Mr. DiProfio pursuant to
currently exercisable options.
(4) Includes 2,114 restricted shares, as to which Mr. Feigenbaum has sole
voting power but no dispositive power. Includes 9,251 shares that could
be acquired by Mr. Feigenbaum pursuant to currently exercisable options.
(5) Includes 174 shares held in an employee stock ownership plan and 5,475
restricted shares, as to which Mr. Forsgren has sole voting power but no
dispositive power. Includes 59,739 shares that could be acquired by
Mr. Forsgren pursuant to currently exercisable options.
(6) Includes 2,149 restricted shares, as to which Mr. Frain is a Director of CL&P, PSNH, WMECO and NAEC and an Executive
Officer of PSNH.
(9)has sole voting
power but no dispositive power. Includes 7,892 shares that could be
acquired by Mr. Frain pursuant to currently exercisable options.
(7) Includes 3,285 restricted shares, as to which Mrs. Grise is a Director of CL&P, PSNH, WMECO and NAEC and an Executive
Officer of CL&P, WMECO and NAEC.
(10) Mr. Ilberman is an Executive Officer of CL&P, PSNH, WMECO and NAEC.
Mr. Ilbermanhas sole voting
power, but no dispositive power. Includes 15,182 shares that could be
acquired by Mrs. Grise pursuant to currently exercisable options.
Includes 261 shares held by Mrs. Grise's husband as custodian for her
children, with whom she shares voting and investmentdispositive power.
(8) Includes 305 shares held in an employee stock ownership plan and 3,467
restricted shares, as to which Mr. Kenyon has sole voting power withbut no
dispositive power. Includes 21,092 shares that could be acquired by
Mr. Kenyon pursuant to currently exercisable options.
(9) Includes 947 restricted shares, as to which Ms. Kuhlman has sole voting
power but no dispositive power. Includes 3,474 shares that could be
acquired by Ms. Kuhlman pursuant to currently exercisable options.
(10) Includes 3,285 restricted shares, as to which Mr. MacKenzie has sole
voting power but no dispositive power. Includes 16,902 shares that
could be acquired by Mr. MacKenzie pursuant to currently exercisable
options.
(11) Includes 265 shares held in an employee stock ownership plan and 20,939
restricted shares, as to which Mr. Morris has sole voting power but no
dispositive power. Includes 349,167 shares that could be acquired by
Mr. Morris pursuant to currently exercisable options. Includes 13,095
shares held jointly by Mr. Morris and his wife, for 319
of these shares andwho share voting and
investment power.
(12) Includes 631 restricted shares, as to which Mr. Powell has sole voting
power with his mother for
1,277 of these shares.
(11)but no dispositive power. Includes 2,946 shares that could be
acquired by Mr. Keane is a Director of CL&P, WMECOPowell pursuant to currently exercisable options.
(13) Includes 196 shares held in an employee stock ownership plan and NAEC.
(12) Mr. Kenyon is a Director and Executive Officer of CL&P, NAEC and WMECO
and1,995
restricted shares held by an Executive Officer of PSNH. 40,325 of Mr. Kenyon'sexecutive officer other than those named in
the table above as to which such officer has sole voting power but no
dispositive power. Includes 7,759 shares are
restricted. See Note 2 of the Summary Compensation Table.
(13) Mr. Kinney is an Executive Officer of CL&P, WMECO and NAEC. Mr. Kinney
shares voting and investment power with his wife for 2,243 of these
shares.
(14) Mr. MacKenzie is a Director of CL&P, PSNH, WMECO and NAEC and an
Executive Officer of CL&P and WMECO. Mr. MacKenzie shares voting and
investment power with his wife for 1,584 of these shares.
(15) Mr. Wax is an Executive Officer of CL&P, PSNH, WMECO and NAEC.that could be acquired by such
officer pursuant to currently exercisable options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NU.
Incorporated herein by reference is the information contained in the
section "Certain Relationships and Related Transactions" of the definitive
proxy statement for solicitation of proxies by NU's Board of Trustees, dated
April 30,
1997,March 31, 2000, which will be filed with the Commission pursuant to Rule
14a-6 under the Act.
CL&P, PSNH, WMECO, ANDand NAEC.
No relationships or transactions that would be described in response to
this item exist now or existed during 19961999 with respect to CL&P, PSNH, WMECO,
and NAEC.
ItemITEM 14. Exhibits, Financial Statement Schedules, and Reports on
FormEXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements:
The Report of Independent Public Accountants and financial statements
of NU, CL&P, PSNH, WMECO, and NAEC are hereby incorporated by
reference and made a part of this report (see "Item 8. Financial
Statements and Supplementary Data").
Report of Independent Public Accountants on Schedules S-1
Consent of Independent Public Accountants S-3
2. Schedules:
Financial Statement Schedules for NU (Parent), NU and
Subsidiaries, CL&P and Subsidiaries, PSNH, and WMECO
and Subsidiary are listed in the Index to Financial
StatementStatements Schedules S-4
3. Exhibits Index E-1
(b) Reports on Form 8-K:
NU and CL&P filed 8-Ks dated January 28, 1999, disclosing terms
contained within the January 1999 issued Connecticut DPUC draft
decision, and its proposed effects on the NU system companies.
NU filed a Form 8-K dated February 23, 1999, disclosing the NU
Board of Trustees adopted a shareholder rights plan (subject to
regulatory approval) together with a brief summary of the terms of
the Rights Plan.
NU, CL&P and WMECO filed Form 8-Ks dated April 27, 1999, disclosing:
o On April 27, 1999, the Connecticut Superior Court granted a
plaintiff's request for a temporary restraining order to prevent
Millstone 2 from resuming operations until at least June 15, 1999;
o On April 29, 1999, the NRC notified NNECO that it could restart
Millstone 2; although NNECO received NRC approval, the unit
could not commence operations, until the temporary restraining
order initiated by Fish Unlimited is lifted.
o NU filed a Form 8-K dated May 7, 1999, announcing the distribution
of rights to shareholders under its shareholder rights plan dated
February 23, 1999.
NU filed a Form 8-K dated June 14, 1999, disclosing:
o On June 15, 1999, NU and Yankee announced that they have agreed
to a merger in which Yankee will become a subsidiary of NU.
NU, PSNH and NAEC filed Form 8-Ks dated June 14, 1999, disclosing:
o NU, its subsidiary, PSNH, and the state of New Hampshire signed
a Memorandum of Understanding intended to settle a number of
pending regulatory and court proceedings related to PSNH.
NU, CL&P and WMECO filed Form 8-Ks dated July 6, 1999, disclosing:
o The results of the auction of CL&P's and the remainder of
WMECO's nonnuclear generation assets held in conformity with
the electric utility restructuring laws of Connecticut and
Massachusetts, respectively.
NU filed a Form 8-K dated September 14, 1999, disclosing:
o On September 14, 1999, the NU Board of Trustees approved the
payment of NU's first common stock dividend since March 1997.
NU, CL&P, PSNH, and WMECO filed Form 8-Ks dated November 25,1996September 14, 1999,
disclosing:
o On September 15, 1999, NU announced that the Millstone Station
nuclear power plant assets of its subsidiaries, CL&P and WMECO,
will be put up for public auction as soon as practical. The
35.98 percent share of the Seabrook Nuclear Station in New
Hampshire owned by NU's subsidiary NAEC also will put up for
public auction.
NU filed a Form 8-K dated October 13, 1999, disclosing:
o On October 13, 1999, NU and Con Edison announced that they have
agreed to a merger to combine the two companies.
o On October 13, 1999, a NU shareholder class action complaint
was filed in New York Supreme Court for the County of New York.
An additional class action complaint was filed with the SECsame
court on December 19, 1996. This 8-K filing disclosed that:
*NNECO informed the NRCOctober 18, 1999. The complaints name as defendants
NU and ten individual Trustees of its comprehensive plan for restarting
the Millstone units.
*The Board of Directors of CYAPCO voted unanimously to retire the
CY power plant.
*The NRC conducted enforcement conferences at MillstoneNU.
NU, CL&P and CY.
*One of the two outside consulting firms retained by the DPUC to
audit the NU system's nuclear operations issued its final report.
*The Citizens Awareness Network filed a petition with the NRC
requesting that the NRC suspend or revoke NNECO's license to
operate Millstone.
*The non-NU owners of Millstone 3 have reserved their rights to
contest whether the NU system companies have any responsibility
for the additional costs borne by the non-NU owners as a result
of the current outage of the unit.
*CMEEC has advised CL&P that it was terminating its contract to
receive approximately 3.51 percent of each of Millstone 1 and 2's
capacity and energy for cause due to the extended outages.
*NU system companies expect to have sufficient capacity, assuming
expected system load and expected operations of system
facilities, to meet peak demands in their service areas through
the winter of 1996-1997 and the summer of 1997.
*NU and certain present and former officers and employees of the
company were served with a purported class action lawsuit filed
on behalf of certain shareholders.
*Storm Bernice is expected to cost NU about $20-$30 million. After
payment of a $10 million deductible, up to $15 million of
insurance is available to cover restoration costs.
NU, PSNH, and NAECWMECO filed Form 8-Ks dated January 17, 1997 with the
SEC on January 17, 1997. This filing disclosed the testimony of NU's
chief financial officer before the NHPUC regarding the potential
impact of a stranded cost methodology that the NHPUC was considering.October 27, 1999,
disclosing:
o On October 27, 1999, NU and its subsidiaries, CL&P and WMECO,
agreed to settle various arbitration and litigation claims
arising out of the operation of the Millstone 3 nuclear power
plant.
o NU, CL&P, WMECO, and PSNH filed Form 8-Ks dated January 20, 1997December 2,
1999, disclosing:
o On December 2, 1999, NU and its subsidiaries CL&P, WMECO and
PSNH, agreed in principle with a non-NU joint owner to settle
various arbitration and litigation claims arising out of the
SECoperation of Millstone 3.
o On December 15, 1999, CL&P completed the sale of 2,235 MW of
fossil-fueled generation in Connecticut to an unaffiliated
company.
o On December 15, 1999, the DPUC issued a supplemental decision
in Docket No. 99-03-36 approving the components of CL&P's rates
for standard offer service commencing on January 21, 1997. This filing disclosed a preliminary earnings
outlook for NU.1, 2000.
o On December 20, 1999, the DTE issued an order related to WMECO's
October 18, 1999, compliance filing.
o On December 29, 1999, the DPUC approved the merger between NU
CL&P, PSNH, WMECO, and NAECYankee.
o As of January 11, 2000, NU and Con Edison entered into an
amended and restated agreement and plan of merger replacing the
agreement and plan of merger executed on October 12, 1999.
NU filed Form 8-Ks8-K dated February 20,
1997 with29, 2000, disclosing:
o The 1999 financial statements for NU Consolidated and notes
thereto. In addition, it includes, Management's Discussion and
Analysis of Financial Condition and Results of Operations
relating to the SEC on February 24, 1997. This filing disclosed that1999 financial statements.
o The completion of the Chairmanmerger of NU and Chief Executive Officer had announced his intention
to retire.
NU, CL&P, PSNH, WMECO, and NAEC filed Form 8-Ks dated February 28,
1997 with the SEC on March 3, 1997. This filing disclosed the NHPUC's
issuance of a decision regarding the restructuring of New Hampshire's
electric utility industry.Yankee.
NORTHEAST UTILITIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NORTHEAST UTILITIES
-------------------
(Registrant)
Date: March 21, 199715, 2000 By /s/Bernard M. Fox
Bernard M. Fox Michael G. Morris
-----------------------------------------
Michael G. Morris
Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 21, 1997 A Trustee,15, 2000 Chairman /s/Bernard M. Fox of the Board, Bernard M. Fox/s/ Michael G. Morris
President and Michael G. Morris
Chief Executive Officer
and a Trustee
March 21, 199715, 2000 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
March 21, 199715, 2000 Vice President and /s/John J. Roman
Controller John J. Roman
Trustee
Cotton Mather Cleveland
Trustee
John F. Curley
March 21, 199715, 2000 Trustee /s/ Cotton M. Cleveland
Cotton M. Cleveland
March 15, 2000 Trustee /s/ William F. Conway
William F. Conway
March 15, 2000 Trustee /s/ E. Gail de Planque
E. Gail de Planque
Trustee
Gaynor N. Kelley
March 21, 199715, 2000 Trustee /s/ Raymond L. Golden
Raymond L. Golden
March 15, 2000 Trustee /s/ Elizabeth T. Kennan
Elizabeth T. Kennan
March 21, 199715, 2000 Trustee /s/William J. Pape II
William J. Pape II
March 15, 2000 Trustee /s/ Robert E. Patricelli
Robert E. Patricelli
March 21, 199715, 2000 Trustee /s/Norman C. Rasmussen
Norman C. Rasmussen
March 21, 1997 Trustee /s/John F. Swope
John F. Swope
March 21, 199715, 2000 Trustee /s/John F. Turner
John F. Turner
THE CONNECTICUT LIGHT AND POWER COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
---------------------------------------
(Registrant)
March 21, 199715, 2000 By /s/Bernard M. Fox
Bernard M. Fox
Chairman Hugh C. MacKenzie
---------------------
Hugh C. MacKenzie
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 21, 1997 Chairman and /s/Bernard M. Fox
a Director Bernard M. Fox
March 21, 199715, 2000 President and Director /s/Hugh C. MacKenzie
a Director
Hugh C. MacKenzie
March 21, 1997 Executive Vice15, 2000 Treasurer /s/ Randy A. Shoop
Randy A. Shoop
March 15, 2000 Controller /s/ John H. Forsgren
President and ChiefP. Stack
John H. Forsgren
Financial Officer
and a DirectorP. Stack
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
March 21, 199715, 2000 Director /s/Robert G. Abair
Robert G. Abair David H. Boguslawski
David H. Boguslawski
March 21, 199715, 2000 Director /s/William T. Frain, Jr.
William T. Frain, Jr.
March 21, 1997 Director /s/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/John B. Keane
John B. Keane
March 21, 1997 Director /s/Bruce D. Kenyon
Bruce D. Kenyon Rodney O. Powell
Rodney O. Powell
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
---------------------------------------
(Registrant)
Date: March 21, 199715, 2000 By /s/Bernard M. Fox
Bernard M. Fox Michael G. Morris
----------------------------------------
Michael G. Morris
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 21, 199715, 2000 Chairman and Chief /s/Bernard M. Fox Michael G. Morris
Executive Officer Bernard M. FoxMichael G. Morris
and a Director
March 21, 199715, 2000 President and Chief /s/William T. Frain, Jr.
Operating Officer and William T. Frain, Jr.
and a Director
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
and a Director
March 21, 199715, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
Controller
John J. Roman
March 21, 199715, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ John C. Collins
John C. Collins
March 21, 199715, 2000 Director /s/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/Gerald Letendre
Gerald Letendre
March 21, 199715, 2000 Director /s/ John H. Forsgren
John H. Forsgren
March 15, 2000 Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 21, 199715, 2000 Director /s/Jane E. Newman
Jane E. Newman
WESTERN MASSACHUSETTS ELECTRIC COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
--------------------------------------
(Registrant)
Date: March 21, 199715, 2000 By /s/Bernard M. Fox
Bernard M. Fox Michael G. Morris
----------------------------------------
Michael G. Morris
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 21, 199715, 2000 Chairman and Chief Executive /s/Bernard M. Fox Michael G. Morris
Officer and a Director Bernard M. FoxMichael G. Morris
March 21, 199715, 2000 President and Chief Operating /s/ Kerry J. Kuhlman
Officer and a Director Kerry J. Kuhlman
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ James E. Byrne
James E. Byrne
March 15, 2000 Director /s/ John H. Forsgren
John H. Forsgren
March 15, 2000 Director /s/ Hugh C. MacKenzie
a Director
Hugh C. MacKenzie
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
and a Director
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
March 21, 199715, 2000 Director /s/Robert G. Abair
Robert G. Abair Paul J. McDonald
Paul J. McDonald
March 21, 199715, 2000 Director /s/William T. Frain,Jr
William T. Frain,Jr
March 21, 1997 Director /s/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/John B. Keane
John B. Keane
March 21, 1997 Director /s/Bruce D. Kenyon
Bruce D. Kenyon Melinda M. Phelps
Melinda M. Phelps
NORTH ATLANTIC ENERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NORTH ATLANTIC ENERGY CORPORATION
---------------------------------
(Registrant)
Date: March 21, 199715, 2000 By /s/Bernard M. Fox
Bernard M. Fox
Chairman Bruce D. Kenyon
---------------------------------
Bruce D. Kenyon
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 21, 1997 Chairman,15, 2000 President and Chief /s/Bernard M. Fox
Executive /s/ Bruce D. Kenyon
Officer Bernard M. Fox and a Director March 21, 1997 President, Chief /s/Bruce D. Kenyon
Executive Officer Bruce D. Kenyon
and a Director
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
March 21, 199715, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
Controller
John J. Roman
March 21, 199715, 2000 Director /s/ William A. DiProfio
William A. DiProfio
March 15, 2000 Director /s/ Ted C. Feigenbaum
Ted C. Feigenbaum
March 21, 1997 Director /s/William T. Frain,Jr.
William T. Frain,Jr.
March 21, 1997 Director /2/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/John B. Keane
John B. Keane
March 21, 1997 Director /s/Hugh C. MacKenzie
Hugh C. MacKenzie
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
We have audited in accordance with generally accepted auditing standards, the
financial statements included in Northeast Utilities' annual report to
shareholders and The Connecticut Light and Power Company's and Western
Massachusetts Electric Company's annual reports, incorporated by reference in
this Form 10-K, and have issued our reports thereon dated February 21, 1997
(except with respect to the matter discussed in the "Subsequent Event" footnote
of Northeast Utilities' annual report to shareholders, as to which the date is
March 10, 1997).January 25, 2000.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in the accompanying indexIndex to
Financial Statements Schedules are the responsibility of the companies'
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit of
he basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited in accordance with generally accepted auditing standards, the
financial statements included in North Atlantic Energy Corporation's and Public
Service Company of New Hampshire's annual reports, incorporated by reference in
this Form 10-K and have issued our reports thereon dated February 21, 1997
(except with respect to the matter discussed in the "Subsequent Event" footnote,
as to which the date is March 10, 1997). Our reports included an explanatory
paragraph regarding the existence of conditions which raise substantial doubt
about the companies' abilities to continue as going concerns. Our audit was
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedules listed in the accompanying index are the
responsibility of the companies' management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSENArthur Andersen LLP
ARTHUR ANDERSENArthur Andersen LLP
Hartford, Connecticut
February 21, 1997January 25, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
We have audited in accordance with generally accepted auditing standards, the
financial statements included in North Atlantic Energy Corporation's and
Public Service Company of New Hampshire's annual reports, incorporated by
reference in this Form 10-K and have issued our reports thereon dated January
25, 2000. Our reports on the financial statements included an explanatory
paragraph regarding the existence of conditions which raise substantial doubt
about the companies' abilities to continue as going concerns. Our audit was
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedules listed in the accompanying Index to
Financial Statements Schedules are the responsibility of the companies'
management and are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not a part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
January 25, 2000
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of
our reports dated January 25, 2000, included or(or incorporated by referencereference) in
this Form 10-K into the Company's previously filed Registration StatementStatements
No. 33-55279 of The Connecticut Light and Power Company, No. 33-56537 of CL&P
Capital, LP No. 33-
51185 of Western Massachusetts Electric Company, and No. 33-34622, No. 33-44814, No. 33-63023, No. 33-40156,
No. 333-52413, No. 333-52415, and No. 33-40156333-85613 of Northeast Utilities. It
should be noted that we have not audited any financial statements of the
Company subsequent to December 31, 1999 or performed any audit procedures
subsequent to the date of our report.
/s/ ARTHUR ANDERSENArthur Andersen LLP
ARTHUR ANDERSENArthur Andersen LLP
Hartford, Connecticut
March 20, 199723, 2000
INDEX TO FINANCIAL STATEMENTSSTATMENTS SCHEDULES
Schedule Page
I. Financial Information of Registrant:
Northeast Utilities (Parent) Balance
Sheets 19961999 and 19951998 S-5
Northeast Utilities (Parent) Statements
of Income 1996, 1995,1999, 1998, and 19941997 S-6
Northeast Utilities (Parent) Statements
of Cash Flows 1996, 1995,1999, 1998, and 19941997 S-7
II. Valuation and Qualifying Accounts and Reserves
1996, 1995,1999, 1998, and 1994:1997:
Northeast Utilities and Subsidiaries S-8 - S-10
The Connecticut Light and Power Company
and Subsidiaries S-11 - S-13
Public Service Company of New Hampshire S-14 - S-16
Western Massachusetts Electric Company
and Subsidiary S-17 - S-19
All other schedules of the companies' for which provision is made in the
applicable regulations of the Securities and Exchange CommissionSEC are not required under the related
instructions or are not applicable, and therefore have been omitted.
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AT DECEMBER 31, 19961999 AND 19951998
(Thousands of Dollars)
1996 19951999 1998
---------- ----------
ASSETS
- ------
Other Property and Investments:
Investments in subsidiary companies, at
equity............................................... $2,506,254 $2,701,866equity................................................... $2,252,175 $2,161,901
Investments in transmission companies, at equity...... 21,186 23,557equity.......... 16,460 17,692
Other, at cost........................................ 413 250cost............................................ 54 67
----------- -----------
2,527,853 2,725,6732,268,689 2,179,660
----------- -----------
Current Assets:
Cash.................................................. 10 18
Notes receivable from affiliated companies............ 5,475 9,675companies................ 45,300 34,400
Notes and accounts receivable......................... 813 0receivable............................ 625 723
Receivables from affiliated companies................. 7,106 607
Prepayments........................................... 224 138companies..................... 8,351 1,033
Taxes receivable...................................... 418 7,969
Prepayments............................................... 1,192 96
----------- -----------
13,628 10,43855,886 44,221
----------- -----------
Deferred Charges:
Accumulated deferred income taxes..................... 5,293 6,984taxes......................... - 5,236
Unamortized debt expense.............................. 524 11
Other................................................. 46expense.................................. 6 101
Other..................................................... 122 256
Deferred Yankee Energy System, Inc. acquisition expenses.. 3,427 -
----------- -----------
5,863 7,1173,555 5,593
----------- -----------
Total Assets..................................... $2,547,344 $2,743,228Assets......................................... $2,328,130 $2,229,474
=========== ===========
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common Shareholders' Equity:
Common shares, $5 par value--Authorized
225,000,000 shares; 136,051,938137,393,829 shares issued and
128,444,373131,870,284 shares outstanding in 19961999 and
135,611,166137,031,264 shares issued and
127,050,647130,954,740 outstanding in 1995.....................1998......................... $ 680,260686,969 $ 678,056685,156
Capital surplus, paid in.............................. 940,446 936,308in.................................. 940,726 940,661
Deferred benefitcontribution plan--employee stock ownership plan.. (176,091) (198,152)plan. (127,725) (140,619)
Retained earnings..................................... 832,520 1,007,340earnings......................................... 581,817 560,769
Accumulated other comprehensive income.................... 1,524 1,405
----------- -----------
Total common shareholders' equity................... 2,277,135 2,423,552equity....................... 2,083,311 2,047,372
Long-term debt........................................ 194,000 210,000debt............................................ 138,000 158,000
----------- -----------
Total capitalization................................ 2,471,135 2,633,552capitalization.................................... 2,221,311 2,205,372
----------- -----------
Current Liabilities:
Long-term debt--current portion........................... 20,000 19,000
Notes payable to banks................................ 38,750 57,500
Long-term debt and preferred stock--current portion... 16,000 14,000banks.................................... 65,000 -
Accounts payable...................................... 15,504 18,213payable.......................................... 7,258 1,882
Accounts payable to affiliated companies.............. 600 1,074companies.................. 1,201 714
Accrued taxes......................................... 2,158 6,539taxes............................................. - 15
Accrued interest...................................... 2,602 2,864
Dividend reinvestment plan............................ 0 8,995
Other................................................. 2 2interest.......................................... 1,705 2,097
Accrued Con Edison/Northeast Utilities merger fees........ 6,143 -
----------- -----------
75,616 109,187101,307 23,708
----------- -----------
Accumulated deferred income taxes........................... 5,302 -
Other Deferred Credits.................................. 593 489Credits...................................... 210 394
----------- -----------
5,512 394
----------- -----------
Total Capitalization and Liabilities $2,547,344 $2,743,228$2,328,130 $2,229,474
=========== ===========
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995,1999, 1998, AND 19941997
(Thousands of Dollars Except Share Information)
1996 1995 19941999 1998 1997
------------- ------------- -------------
Operating Revenues...............Revenues................ $ - $ - $ -
------------- ------------- -------------
Operating Expenses:
Other.......................... 8,920 14,267 13,114Other........................... 19,126 7,674 8,657
Federal income taxes........... (10,390) (8,585) (10,736)taxes............ (4,849) 1,569 (10,697)
------------- ------------- -------------
Total operating expenses...... (1,470) 5,682 2,378expenses....... 14,277 9,243 (2,040)
------------- ------------- -------------
Operating Income (Loss).......... 1,470 (5,682) (2,378)/Income........... (14,277) (9,243) 2,040
------------- ------------- -------------
Other Income:Income/(Loss):
Equity in earnings of
subsidiaries.................. 18,272 310,025 309,769subsidiaries................... 56,812 (145,874) (118,195)
Equity in earnings of
transmission companies........ 3,306 3,561 3,418companies......... 2,608 2,903 2,968
Other, net..................... 368 329 679net...................... 2,628 21,995 2,184
Income taxes.................... 2,057 - -
------------- ------------- -------------
Other income, net............ 21,946 313,915 313,866income/(loss), net...... 64,105 (120,976) (113,043)
------------- ------------- -------------
IncomeIncome/(loss) before interest
charges..................... 23,416 308,233 311,488charges...................... 49,828 (130,219) (111,003)
------------- ------------- -------------
Interest Charges 21,585 25,799 24,614Charges.................. 15,612 16,534 18,959
------------- ------------- -------------
EarningsEarnings/(Loss) for Common SharesShares. $ 1,83134,216 $ 282,434(146,753) $ 286,874(129,962)
============= ============= =============
EarningsEarnings/(Loss) Per Common Share........Share--
Basic and Diluted............... $ 0.010.26 $ 2.24(1.12) $ 2.30(1.01)
============= ============= =============
Common Shares Outstanding
(average)....................... 127,960,382 126,083,645 124,678,192........................ 131,415,126 130,549,760 129,567,708
============= ============= =============
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, 19941999, 1998, AND 1997
(Thousands of Dollars)
1996 1995 1994
--------------1999 1998 1997
------------ -------------- --------------
Operating Activities:
Net incomeincome\(loss)........................................ $ 1,83134,216 $ 282,434(146,753) $ 286,874(135,708)
Adjustments to reconcile to net cash
fromprovided by operating activities:
Equity in earnings of subsidiary companies (18,272) (310,025) (309,769)companies............. (56,812) 145,874 123,941
Cash dividends received from subsidiary companies 247,101 272,350 201,403companies...... 66,000 47,000 132,994
Deferred income taxes 3,868 772 (1,890)taxes.................................. 74 777 1,558
Other sources of cash 17,961 6,916 3,007
Other uses of cash (3,065) (528) (169)cash.................................. 16,655 20,926 9,637
Changes in working capital:
Receivables (7,312) 1,991 30,525Receivables.......................................... (7,220) (84) 6,247
Accounts payable (3,183) 15,381 (43,601)payable..................................... 5,863 523 (14,031)
Other working capital (excludes cash) (13,724) 7,396 7,615
--------------................ 12,191 (15,981) 5,490
------------ -------------- --------------
Net cash flows fromprovided by operating activities 225,205 276,687 173,995
--------------activities............ 70,967 52,282 130,128
------------ -------------- --------------
Financing Activities:
Issuance of common shares 10,622 47,218 14,551shares................................ 5,318 2,659 6,502
Net increase/(decrease) increase in short-term debt (18,750) (46,500) 31,500debt............... 65,000 - (38,750)
Reacquisitions and retirements of long-term debt (14,000) (12,000) (9,000)debt......... (19,000) (17,000) (16,000)
Cash dividends on common shares (176,276) (221,701) (219,317)
--------------shares.......................... (13,168) - (32,134)
------------ -------------- --------------
Net cash flows used forin financing activities (198,404) (232,983) (182,266)
--------------activities................ 38,150 (14,341) (80,382)
------------ -------------- --------------
Investment Activities:
NU Systemsystem Money Pool 4,200 (7,700) 17,650Pool..................................... (10,900) (200) (28,725)
Investment in subsidiaries (33,217) (38,963) (10,912)subsidiaries............................... (99,462) (40,029) (22,583)
Other investment activities, net 2,208 2,935 1,503
--------------net......................... 1,245 2,278 1,562
------------ -------------- --------------
Net cash flows (used for) from investments (26,809) (43,728) 8,241
--------------used in investing activities................ (109,117) (37,951) (49,746)
------------ -------------- --------------
Net decrease in cash for the period (8) (24) (30)period........................ 0 (10) 0
Cash - beginning of period 18 42 72
--------------period................................. 0 10 10
------------ -------------- --------------
Cash - end of periodperiod....................................... $ 0 $ 0 $ 10
$ 18 $ 42
========================== ============== ==============
Supplemental Cash Flow Information
Cash paidpaid/(refunded) during the year for:
Interest, net of amounts capitalizedcapitalized..................... $ 21,77015,724 $ 26,43016,610 $ 24,235
==============18,960
============ ============== ==============
Income taxes (refund)taxes............................................. $ (7,700)28,982 $ (8,418)16,929 $ (16,786)
==============(16,000)
============ ============== ==============
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19961999
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance atChargedat Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 14,3792,417 $ 21,7618,026 $ - $ 19,0785,548 (a) $ 17,062
========= ========= ========= ========== ==========
Asset valuation reserves $ 10,266 $ $ - $ 10,266 $ 0
========= ========= ========= ========== ==========4,895
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 38,409 $ 8,397$40,438 $18,597 $ - $ 10,546$14,040 (b) $ 36,260
========= ========= ========= ========== ==========$44,995
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19951998
(Thousands of Dollars)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 16,8262,052 $ 18,0103,042 $ - $ 20,4582,677 (a)$ 14,378
========= ========= ========= ========= =========
Asset valuation reserves $ 8,684 $ 1,582 $ - $ - $ 10,266
========= ========= ========= ========= =========2,417
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 34,721 $ 11,475$34,437 $12,427 $ - $ 7,7876,426 (b)$ 38,409
========= ========= ========= ========= ========= $40,438
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19941997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 14,629 $ 23,194$17,062 $14,854 $ - $ 20,997$29,864 (a) $ 16,826
========= ========= ========= ========= =========
Asset valuation reserves $ 797 $ 7,887 $ - $ -(b) $ 8,684
========= ========= ========= ========= =========2,052
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $36,260 $ 28,286 $ 13,1509,542 $ - $ 6,715 (c) $ 34,721
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.$11,365 (b) Principally the reduction in the carrying amounts of assets.
(c) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1996
(Thousands of Dollars)
- ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance atCharged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ----------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 10,567 $ 15,704 $ - $ 13,030 (a) $ 13,241
========= ========= ========= ========== ==========
Asset valuation reserves $ 10,266 $ -$ - $ 10,266 $ 0
========= ========= ========= ========== ==========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 19,874 $ 5,709 $ - $ 6,704 (b) $ 18,879
========= ========= ========= ========== ==========$34,437
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19951999
(Thousands of Dollars)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 12,778300 $ 12,722290 $ - $ 14,933290 (a)$ 10,567
========= ========= ========= ========= =========
Asset valuation reserves $ 8,684 $ 1,582 $ - $ - $ 10,266
========= ========= ========= ========= =========300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $16,656 $ 19,529 $ 5,6335,422 $ - $ 5,2886,009 (b)$ 19,874
========= ========= ========= ========= ========= $16,069
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19941998
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 10,816300 $ 17,177183 $ - $ 15,215183 (a) $ 12,778
========= ========= ========= ========= =========
Asset valuation reserves $ 797 $ 7,887 $ - $ (b) $ 8,684
========= ========= ========= ========= =========300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $14,962 $ 14,905 $ 9,9245,612 $ - $ 5,300 (c) $ 19,529
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.3,918 (b) Principally the reduction in the carrying amounts of assets.
(c) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1996
(Thousands of Dollars)
- ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance atCharged to other Balance
beginning costs and accounts- Deductions- at end
Description of period(expenses describe describe of period
- ----------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,582 $ 2,906 $ - $ 2,788 (a) $ 1,700
========= ========= ========= ========== ==========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 8,142 1,040 $ - $ 1,917 (b) $ 7,265
========= ========= ========= ========== ==========$16,656
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19951997
(Thousands of Dollars)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 12,778 $ 12,722$13,241 $10,509 $ - $23,450 (a) $ 14,933 (a)$ 10,567
========= ========= ========= ========= =========
Asset valuation reserves $ 8,684 $ 1,582 $ - $ - $ 10,266
========= ========= ========= ========= =========300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $18,879 $ 19,529 $ 5,6334,458 $ - $ 5,2888,375 (b)$ 19,874
========= ========= ========= ========= ========= $14,962
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWERPUBLIC SERVICE COMPANY AND SUBSIDIARIESOF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19941999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 10,8162,041 $ 17,1771,590 $ - $ 15,2152,272 (a) $ 12,778
========= ========= ========= ========= =========
Asset valuation reserves $ 797 $ 7,887 $ - $ (b) $ 8,684
========= ========= ========= ========= =========1,359
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 14,9059,906 $ 9,9247,268 $ - $ 5,300 (c) $ 19,529
========= ========= ========= ========= =========5,769 (b) $11,405
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally the reduction in the carrying amounts of assets.
(c) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
WESTERN MASSACHUSETTS ELECTRICPUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19961998
(Thousands of Dollars)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance atChargedat Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,2301,702 $ 3,0972,726 $ - $ 3,2062,387 (a) $ 2,121
========= ========= ========= ========== ==========2,041
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,1447,788 $ 1,2224,136 $ - $ 7912,018 (b) $ 5,575
========= ========= ========= ========== ==========9,906
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,700 $ 3,259 $ - $ 3,257 (a) $ 1,702
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 7,265 $ 1,647 $ - $ 1,124 (b) $ 7,788
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19951999
(Thousands of Dollars)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,03250 $ 2,8364,564 $ - $ 2,6382,974 (a)$ 2,230
========= ========= ========= ========= =========1,640
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 4,6745,960 $ 1,3403,085 $ - $ 8701,857 (b)$ 5,144
========= ========= ========= ========= =========7,188
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 19941998
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-------------------------------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,99750 $ 3,017106 $ - $ 2,982106 (a) $ 2,032
========= ========= ========= ========= =========50
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 3,8425,503 $ 1,473816 $ - $ 641359 (b) $ 4,674
========= ========= ========= ========= =========5,960
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
EXHIBIT INDEX
Each document described below is incorporated by reference to the files of
the Securities and Exchange Commission, unless the reference to the document is
marked as follows:
* - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Reports on Form 10-K for CL&P, PSNH, WMECO and NAEC.
# - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Report on Form 10-K for CL&P.
@ - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Report on Form 10-K for PSNH.
** - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Report on Form 10-K for WMECO.
## - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 Form 10-K, File No. 1-5324 into the
1996 Annual Report on Form 10-K for NAEC.
Exhibit
Number Description
3. Articles of Incorporation and By-Laws
3.1 Northeast Utilities
3.1.1 Declaration of Trust of NU, as amended
through May 24, 1988. (Exhibit 3.1.1, 1988 NU Form 10-K,
File No. 1-5324)
3.2 The Connecticut Light and Power Company
3.2.1 Certificate of Incorporation of CL&P, restated to March 22,
1994. (Exhibit 3.2.1, 1993 NU Form 10-K, File No. 1-5324)
# 3.2.2 Certificate of Amendment to Certificate of Incorporation of
CL&P, dated December 26, 1996.
# 3.2.3 By-laws of CL&P, as amended to January 1, 1997.
3.3 Public Service Company of New Hampshire
3.3.1 Articles of Incorporation, as amended to May 16, 1991.
(Exhibit 3.3.1, 1993 NU Form 10-K, File No. 1-5324)
3.3.2 By-laws of PSNH, as amended to November 1, 1993. (Exhibit
3.3.2, 1993 NU Form 10-K, File No. 1-5324)
3.4 Western Massachusetts Electric Company
3.4.1 Articles of Organization of WMECO, restated to February 23,
1995. (Exhibit 3.4.1, 1994 NU Form 10-K, File No. 1-5324)
3.4.2 By-laws of WMECO, as amended to February 13, 1995. (Exhibit
3.4.2, 1994 NU Form 10-K, File No. 1-5324)
3.5 North Atlantic Energy Corporation
3.5.1 Articles of Incorporation of NAEC dated September 20, 1991.
(Exhibit 3.5.1, 1993 NU Form 10-K, File No. 1-5324)
3.5.2 Articles of Amendment dated October 16, 1991 and June 2,
1992 to Articles of Incorporation of NAEC. (Exhibit 3.5.2,
1993 NU Form 10-K, File No. 1-5324)
3.5.3 By-laws of NAEC, as amended to November 8, 1993. (Exhibit
3.5.3, 1993 NU Form 10-K, File No. 1-5324)
4 Instruments defining the rights of security holders, including indentures
4.1 Northeast Utilities
4.1.1 Indenture dated as of December 1, 1991 between Northeast
Utilities and IBJ Schroder Bank & Trust Company, with
respect to the issuance of Debt Securities. (Exhibit 4.1.1,
1991 NU Form 10-K, File No. 1-5324)
4.1.2 First Supplemental Indenture dated as of December 1, 1991
between Northeast Utilities and IBJ Schroder Bank & Trust
Company, with respect to the issuance of Series A Notes.
(Exhibit 4.1.2, 1991 NU Form 10-K, File No. 1-5324)
4.1.3 Second Supplemental Indenture dated as of March 1, 1992
between Northeast Utilities and IBJ Schroder Bank & Trust
Company with respect to the issuance of 8.38% Amortizing
Notes. (Exhibit 4.1.3, 1992 NU Form 10-K, File No. 1-5324)
4.1.4 Warrant Agreement dated as of June 5, 1992 between
Northeast Utilities and the Service Company. (Exhibit
4.1.4, 1992 NU Form 10-K, File No. 1-5324)
4.1.4.1 Additional Warrant Agent Agreement dated as of
June 5, 1992 between Northeast Utilities and State
Street Bank and Trust Company. (Exhibit 4.1.4.1,
1992 NU Form 10-K, File No. 1-5324)
4.1.4.2 Exchange and Disbursing Agent Agreement dated as
of June 5, 1992 among Northeast Utilities, Public
Service Company of New Hampshire and State Street
Bank and Trust Company. (Exhibit 4.1.4.2, 1992
NU Form 10-K, File No. 1-5324)
4.1.5 Credit Agreements among CL&P, NU, WMECO, NUSCO (as Agent)
and 3 Commercial Banks dated December 3, 1992 (Three-Year
Facility). (Exhibit C.2.38, 1992 NU Form U5S, File No. 30-
246)
4.1.6 Credit Agreements among CL&P, WMECO, NU, Holyoke Water Power
Company, RRR, NNECO and NUSCO (as Agent) and 1 commercial
banks dated December 3, 1992 (Three-Year Facility).
(Exhibit C.2.39, 1992 NU Form U5S, File No. 30-246)
4.1.7 Credit Agreement among NU, CL&P and WMECO and several
commercial banks, dated as of November 21, 1996. (Exhibit
No. B.1, File No. 70-8875)
4.2 The Connecticut Light and Power Company
4.2.1 Indenture of Mortgage and Deed of Trust between CL&P and
Bankers Trust Company, Trustee, dated as of May 1, 1921.
(Composite including all twenty-four amendments to May 1,
1967.) (Exhibit 4.1.1, 1989 NU Form 10-K, File No. 1-5324)
Supplemental Indentures to the Composite May 1, 1921
Indenture of Mortgage and Deed of Trust between
CL&P and Bankers Trust Company, dated as of:
4.2.2 April 1, 1967. (Exhibit 4.16, File No. 2-60806)
4.2.3 January 1, 1968. (Exhibit 4.18, File No. 2-60806)
4.2.4 December 1, 1969. (Exhibit 4.20, File No. 2-60806)
4.2.5 June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.2.6 December 1, 1989. (Exhibit 4.1.26, 1989 NU Form
10-K, File No. 1-5324)
4.2.7 April 1, 1992. (Exhibit 4.30, File No. 33-59430)
4.2.8 July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.2.9 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.10 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.11 December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K,
File No. 1-5324)
4.2.12 February 1, 1994. (Exhibit 4.2.15, 1993 NU Form 10-K,
File No. 1-5324)
4.2.13 February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K,
File No. 1-5324)
4.2.14 June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K,
File No. 1-5324)
4.2.15 October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K,
File No. 1-5324)
# 4.2.16 June 1, 1996.
# 4.2.17 January 1, 1997.
4.2.18 Financing Agreement between Industrial Development Authority
of the State of New Hampshire and CL&P (Pollution Control
Bonds, 1986 Series) dated as of December 1, 1986. (Exhibit
C.1.47, 1986 NU Form U5S, File No. 30-246)
4.2.18.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds, 1986 Series) dated as of
August 1, 1994. (Exhibit 1 (Execution Copy),
File No. 70-7320)
4.2.19 Financing Agreement between Industrial Development Authority
of the State of New Hampshire and CL&P (Pollution Control
Bonds, 1988 Series) dated as of October 1, 1988. (Exhibit
C.1.55, 1988 NU Form U5S, File No. 30-246)
4.2.19.1 Letter of Credit (Pollution Control Bonds,
1988 Series) dated October 27, 1988.
(Exhibit 4.2.17.1, 1995 NU Form 10-K,
File No. 1-5324)
4.2.19.2 Reimbursement and Security Agreement
(Pollution Control Bonds, 1988 Series)
dated as of October 1, 1988.
(Exhibit 4.2.17.2, 1995 NU form 10-K,
File No. 1-5324)
4.2.20 Financing Agreement between Industrial Development Authority
of the State of New Hampshire and CL&P (Pollution Control
Bonds) dated as of December 1, 1989. (Exhibit C.1.39, 1989
NU Form U5S, File No. 30-246)
4.2.21 Loan and Trust Agreement among Business Finance Authority
of the State of New Hampshire, CL&P and the Trustee
(Pollution Control Bonds, 1992 Series A) dated as of
December 1, 1992.(Exhibit C.2.33, 1992 NU Form U5S, File No.
30-246)
4.2.21.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds, 1992 Series A)
dated as of December 1, 1992. (Exhibit
4.2.19.1, 1995 NU Form 10-K, File No.
1-5324)
4.2.22 Loan Agreement between Connecticut Development Authority
and CL&P (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.21,
1993 NU Form 10-K, File No. 1-5324)
4.2.22.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds - Series A, Tax
Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.23, 1993 NU Form 10-K,
File No. 1-5324)
4.2.23 Loan Agreement between Connecticut Development Authority and
CL&P (Pollution Control Bonds - Series B, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.22,
1993 NU Form 10-K, File No. 1-5324)
4.2.23.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds - Series B, Tax
Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.24, 1993 NU Form 10-K,
File No. 1-5324)
# 4.2.24 Amended and Restated Loan Agreement between Connecticut
Development Authority and CL&P (Pollution Control Revenue
Bond - 1996A Series) dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997.
# 4.2.24.1 Amended and Restated Indenture of Trust
between Connecticut Development Authority
and the Trustee (CL&P Pollution Control
Revenue Bond-1996A Series), dated as of
May 1, 1996 and Amended and Restated as of
January 1, 1997.
# 4.2.24.2 Standby Bond Purchase Agreement among CL&P,
Societe Generale, New York Branch and the
Trustee, dated January 23, 1997.
# 4.2.24.3 AMBAC Municipal Bond Insurance Policy issued
by the Connecticut Development Authority
(CL&P Pollution Control Revenue Bond-1996A
Series), effective January 23, 1997.
4.2.25 Amended and Restated Limited Partnership Agreement (CL&P
Capital, L.P.) among CL&P, NUSCO, and the persons who became
limited partners of CL&P Capital, L.P. in accordance with
the provisions thereof dated as of January 23, 1995 (MIPS).
(Exhibit A.1 (Execution Copy), File No. 70-8451)
4.2.26 Indenture between CL&P and Bankers Trust Company, Trustee
(Series A Subordinated Debentures), dated as of January 1,
1995 (MIPS). (Exhibit B.1 (Execution Copy), File No. 70-
8451)
4.2.27 Payment and Guaranty Agreement of CL&P dated as of January
23, 1995 (MIPS). (Exhibit B.3 (Execution Copy), File No.
70-8451)
4.3 Public Service Company of New Hampshire
4.3.1 First Mortgage Indenture dated as of August 15, 1978
between PSNH and First Fidelity Bank, National Association,
New Jersey, Trustee, (Composite including all amendments to
May 16, 1991). (Exhibit 4.4.1, 1992 NU Form 10-K, File No.
1-5324)
4.3.1.1 Tenth Supplemental Indenture dated as of May 1,
1991 between PSNH and First Fidelity Bank,
National Association. (Exhibit 4.1, PSNH
Current Report on Form 8-K dated February 10,
1992, File No. 1-6392).
@ 4.3.2 Amended and Restated Revolving Credit Agreement, dated as of
April 1, 1996.
4.3.3 Series A (Tax Exempt New Issue) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.2, PSNH
Current Report on Form 8-K dated February 10, 1992, File No.
1-6392)
4.3.4 Series B (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.3, PSNH
Current Report on Form 8-K dated February 10, 1992, File No.
1-6392)
4.3.5 Series C (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.4, PSNH
Current Report on Form 8-K dated February 10, 1992, File No.
1-6392)
4.3.6 Series D (Taxable New Issue) PCRB Loan and Trust Agreement
dated as of May 1, 1991. (Exhibit 4.5, PSNH Current Report
on Form 8-K dated February 10, 1992, File No. 1-6392)
4.3.6.1 First Supplement to Series D (Tax Exempt
Refunding Issue) PCRB Loan and Trust Agreement
dated as of December 1, 1992. (Exhibit 4.4.5.1,
1992 NU Form 10-K, File No. 1-5324)
4.3.6.2 Second Series D (May 1, 1991 Taxable New Issue and
December 1, 1992 Tax Exempt Refunding Issue) PCRB
Letter of Credit and Reimbursement Agreement dated
as of May 1, 1995 (Exhibit B.4, Execution Copy,
File No. 70-8036)
4.3.7 Series E (Taxable New Issue) PCRB Loan and Trust Agreement
dated as of May 1, 1991. (Exhibit 4.6, PSNH Current Report
on Form 8-K dated February 10, 1992, File No. 1-6392)
4.3.7.1 First Supplement to Series E (Tax Exempt
Refunding Issue) PCRB Loan and Trust Agreement
dated as of December 1, 1993. (Exhibit 4.3.8.1,
1993 NU Form 10-K, File No. 1-5324)
4.3.7.2 Second Series E (May 1, 1991 Taxable New Issue and
December 1, 1993 Tax Exempt Refunding Issue) PCRB
Letter of Credit and Reimbursement Agreement dated
as of May 1, 1995. (Exhibit B.5, Execution Copy,
File No. 70-8036)
4.4 Western Massachusetts Electric Company
4.4.1 First Mortgage Indenture and Deed of Trust between WMECO
and Old Colony Trust Company, Trustee, dated as of August
1, 1954. (Exhibit 4.4.1, 1993 NU Form 10-K, File No. 1-
5324)
Supplemental Indentures thereto dated as of:
4.4.2 March 1, 1967. (Exhibit 2.5, File No. 2-68808)
4.4.3 September 1, 1990. (Exhibit 4.3.15, 1990 NU Form 10-K,
File No. 1-5324.)
4.4.4 December 1, 1992. (Exhibit 4.15, File No. 33-55772)
4.4.5 January 1, 1993. (Exhibit 4.5.13, 1992 NU Form 10-K,
File No. 1-5324)
4.4.6 March 1, 1994. (Exhibit 4.4.11, 1993 NU Form 10-K,
File No. 1-5324)
4.4.7 March 1, 1994. (Exhibit 4.4.12, 1993 NU Form 10-K,
File No. 1-5324)
4.4.8 Loan Agreement between Connecticut Development Authority and
WMECO, (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.4.13,
1993 NU Form 10-K, File No. 1-5324)
4.4.8.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993.
(Exhibit 4.4.14, 1993 NU Form 10-K, File No. 1-
5324)
4.5 North Atlantic Energy Corporation
4.5.1 First Mortgage Indenture and Deed of Trust between NAEC and
United States Trust Company of New York, Trustee, dated as
of June 1, 1992. (Exhibit 4.6.1, 1992 NU Form 10-K, File
No. 1-5324)
4.5.2 Term Credit Agreement dated as of November 9, 1995.
(Exhibit 4.5.2, 1995 NU Form 10-K, File No. 1-5324)
10 Material Contracts
10.1 Stockholder Agreement dated as of July 1, 1964 among the stockholders
of Connecticut Yankee Atomic Power Company (CYAPC). (Exhibit 10.1,
1994 NU Form 10-K, File No. 1-5324)
10.2 Form of Power Contract dated as of July 1, 1964 between CYAPC and each
of CL&P, HELCO, PSNH and WMECO. (Exhibit 10.2, 1994 NU Form 10-K,
File No. 1-5324)
10.2.1 Form of Additional Power Contract dated as of April 30,
1984, between CYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.2.1, 1994 NU Form 10-K, File No. 1-5324)
10.2.2 Form of 1987 Supplementary Power Contract dated as of April
1, 1987, between CYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.2.6, 1987 NU Form 10-K, File No. 1-5324)
10.3 Capital Funds Agreement dated as of September 1, 1964 between CYAPC
and CL&P, HELCO, PSNH and WMECO. (Exhibit 10.3, 1994 NU Form 10-K,
File No. 1-5324)
10.4 Stockholder Agreement dated December 10, 1958 between Yankee Atomic
Electric Company (YAEC) and CL&P, HELCO, PSNH and WMECO. (Exhibit
10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 Form of Amendment No. 3, dated as of April 1, 1985, to Power Contract
between YAEC and each of CL&P, PSNH and WMECO, including a composite
restatement of original Power Contract dated June 30, 1959 and
Amendment No. 1 dated April 1, 1975 and Amendment No. 2 dated October
1, 1980. (Exhibit 10.5, 1988 NU Form 10-K, File No. 1-5324.)
10.5.1 Form of Amendment No. 4 to Power Contract, dated May 6,
1988, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.1, 1989 NU Form 10-K, File No. 1-5324)
10.5.2 Form of Amendment No. 5 to Power Contract, dated June 26,
1989, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.2, 1989 NU Form 10-K, File No. 1-5324)
10.5.3 Form of Amendment No. 6 to Power Contract, dated
July 1,1989, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.3, 1989 NU Form 10-K, File No. 1-5324)
10.5.4 Form of Amendment No. 7 to Power Contract, dated February
1, 1992, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.4, 1993 NU Form 10-K, File No. 1-5324)
10.6 Stockholder Agreement dated as of May 20, 1968 among stockholders of
MYAPC. (Exhibit 4.15, File No. 2-30018)
10.7 Form of Power Contract dated as of May 20,1968 between MYAPC and each
of CL&P, HELCO, PSNH and WMECO. (Exhibit 4.14, File No. 2-30018)
10.7.1 Form of Amendment No. 1 to Power Contract dated as of March
1, 1983 between MYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.7.1, 1993 NU Form 10-K, File No. 1-5324)
10.7.2 Form of Amendment No. 2 to Power Contract dated as of
January 1, 1984 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.7.2, 1993 NU Form 10-K, File No. 1-
5324)
10.7.3 Form of Amendment No. 3 to Power Contract dated as of
October 1, 1984 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.7.3, 1994 NU Form 10-K, File No. 1-
5324)
10.7.4 Form of Additional Power Contract dated as of February 1,
1984 between MYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.7.4, 1993 NU Form 10-K, File No. 1-5324)
10.8 Capital Funds Agreement dated as of May 20, 1968 between Maine Yankee
Atomic Power Company (MYAPC) and CL&P, PSNH, HELCO and WMECO.
(Exhibit 4.13, File No. 2-30018)
10.8.1 Amendment No. 1 to Capital Funds Agreement, dated as of
August 1, 1985, between MYAPC, CL&P, PSNH and WMECO.
(Exhibit No. 10.8.1, 1994 NU Form 10-K, File No. 1-5324)
10.9 Sponsor Agreement dated as of August 1, 1968 among the sponsors of
VYNPC. (Exhibit 4.16, File No. 2-30285)
10.10 Form of Power Contract dated as of February 1, 1968 between VYNPC
and each of CL&P, HELCO, PSNH and WMECO. (Exhibit 4.18, File No.
2-30018)
10.10.1 Form of Amendment to Power Contract dated as of June 1, 1972
between VYNPC and each of CL&P, HELCO, PSNH and WMECO.
(Exhibit 5.22, File No. 2-47038)
10.10.2 Form of Second Amendment to Power Contract dated as of
April 15, 1983 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.2, 1993 NU Form 10-K, File No. 1-
5324)
10.10.3 Form of Third Amendment to Power Contract dated as of April
24, 1985 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit No. 10.10.3, 1994 NU Form 10-K, File No. 1-5324)
* 10.10.4 Form of Fourth Amendment to Power Contract dated as of
June 1, 1985 between VYNPC and each of CL&P, PSNH and
WMECO.
10.10.5 Form of Fifth Amendment to Power Contract dated as of May 6,
1988 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.5, 1990 NU Form 10-K, File No. 1-5324)
10.10.6 Form of Sixth Amendment to Power Contract dated as of May
6, 1988 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.6, 1990 NU Form 10-K, File No. 1-5324)
10.10.7 Form of Seventh Amendment to Power Contract dated as of June
15, 1989 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.7, 1990 NU Form 10-K, File No. 1-5324)
10.10.8 Form of Eighth Amendment to Power Contract dated as of
December 1, 1989 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.8, 1990 NU Form 10-K, File No. 1-
5324)
10.10.9 Form of Additional Power Contract dated as of February 1,
1984 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.9, 1993 NU Form 10-K, File No. 1-5324)
10.11 Capital Funds Agreement dated as of February 1, 1968 between Vermont
Yankee Nuclear Power Corporation (VYNPC) and CL&P, HELCO, PSNH and
WMECO. (Exhibit 4.16, File No. 2-30018)
10.11.1 Form of First Amendment to Capital Funds Agreement dated as
of March 12, 1968 between VYNPC and CL&P, HELCO, PSNH and
WMECO. (Exhibit 4.17, File No. 2-30018)
10.11.2 Form of Second Amendment to Capital Funds Agreement dated
as of September 1, 1993 between VYNPC and CL&P, HELCO, PSNH
and WMECO. (Exhibit 10.11.2, 1993 NU Form 10-K, File No. 1-
5324)
10.12 Amended and Restated Millstone Plant Agreement dated as of December
1, 1984 by and among CL&P, WMECO and Northeast Nuclear Energy Company
(NNECO). (Exhibit 10.12, 1994 NU Form 10-K, File No. 1-5324)
10.13 Sharing Agreement dated as of September 1, 1973 with respect to 1979
Connecticut nuclear generating unit (Millstone 3). (Exhibit 6.43,
File No. 2-50142)
10.13.1 Amendment dated August 1, 1974 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 5.45, File No. 2-52392)
10.13.2 Amendment dated December 15, 1975 to Sharing Agreement -
1979 Connecticut Nuclear Unit. (Exhibit 7.47, File No. 2-
60806)
10.13.3 Amendment dated April 1, 1986 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 10.17.3, 1990 NU Form
10-K, File No. 1-5324)
10.14 Agreement dated July 19, 1990, among NAESCO and Seabrook Joint owners
with respect to operation of Seabrook. (Exhibit 10.53, 1990 NU Form
10-K, File No. 1-5324)
10.15 Sharing Agreement between CL&P, WMECO, HP&E, HWP and PSNH dated as of
June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K, File No. 1-5324)
10.16 Rate Agreement by and between NUSCO, on behalf of NU, and the
Governor of the State of New Hampshire and the New Hampshire Attorney
General dated as of November 22, 1989. (Exhibit 10.44, 1989 NU Form
10-K, File No. 1-5324)
10.16.1 First Amendment to Rate Agreement dated as of December 5,
1989. (Exhibit 10.16.1, 1995 NU Form 10-K, File No. 1-5324)
10.16.2 Second Amendment to Rate Agreement dated as of December 12,
1989. (Exhibit 10.16.2, 1995 NU Form 10-K, File No. 1-5324)
10.16.3 Third Amendment to Rate Agreement dated as of December 3,
1993. (Exhibit 10.16.3, 1995 NU Form 10-K, File No. 1-5324)
10.16.4 Fourth Amendment to Rate Agreement dated as of September 21,
1994. (Exhibit 10.16.4, 1995 NU Form 10-K, File No. 1-5324)
10.16.5 Fifth Amendment to Rate Agreement dated as of September 9,
1994. (Exhibit 10.16.5, 1995 NU Form 10-K, File No. 1-5324)
10.17 Form of Seabrook Power Contract between PSNH and NAEC, as amended and
restated. (Exhibit 10.45, NU 1992 Form 10-K, File No. 1-5324)
10.18 Agreement (composite) for joint ownership, construction and operation
of New Hampshire nuclear unit, as amended through the November 1,
1990 twenty-third amendment. (Exhibit No. 10.17, 1994 NU Form 10-K,
File No. 1-5324)
10.18.1 Memorandum of Understanding dated November 7, 1988 between
PSNH and Massachusetts Municipal Wholesale Electric Company
(Exhibit 10.17, PSNH 1989 Form 10-K, File No. 1-6392)
10.18.2 Agreement of Settlement among Joint Owners dated as of
January 13, 1989. (Exhibit 10.13.21, 1988 NU Form 10-K,
File No. 1-5324)
10.18.2.1 Supplement to Settlement Agreement, dated as
of February 7, 1989, between PSNH and
Central Maine Power Company.
(Exhibit 10.18.1, PSNH 1989
Form 10-K, File No. 1-6392)
10.19 Amended and Restated Agreement for Seabrook Project Disbursing Agent
dated as of November 1, 1990. (Exhibit 10.4.7, File No. 33-35312)
10.19.1 Form of First Amendment to Exhibit 10.19. (Exhibit 10.4.8,
File No. 33-35312)
10.19.2 Form (Composite) of Second Amendment to Exhibit 10.19.
(Exhibit 10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.20 Agreement dated November 1,1974 for Joint Ownership, Construction and
Operation of William F. Wyman Unit No. 4 among PSNH, Central Maine
Power Company and other utilities. (Exhibit 5.16 , File No. 2-52900)
10.20.1 Amendment to Exhibit 10.20 dated June 30, 1975. (Exhibit
5.48, File No. 2-55458)
10.20.2 Amendment to Exhibit 10.20 dated as of August 16, 1976.
(Exhibit 5.19, File No. 2-58251)
10.20.3 Amendment to Exhibit 10.20 dated as of December 31, 1978.
(Exhibit 5.10.3, File No. 2-64294)
10.21 Form of Service Contract dated as of July 1, 1966 between each of NU,
CL&P and WMECO and the Service Company. (Exhibit 10.20, 1993 NU Form
10-K, File No. 1-5324)
10.21.1 Service Contract dated as of June 5, 1992 between PSNH and
the Service Company. (Exhibit 10.12.4, 1992 NU Form 10-K,
File No. 1-5324)
10.21.2 Service Contract dated as of June 5, 1992 between NAEC and
the Service Company. (Exhibit 10.12.5, 1992 NU Form 10-K,
File No. 1-5324)
10.21.3 Form of Annual Renewal of Service Contract. (Exhibit
10.20.3, 1993 NU Form 10-K, File No. 1-5324)
10.22 Memorandum of Understanding between CL&P, HELCO, HP&E, HWP and WMECO
dated as of June 1, 1970 with respect to pooling of generation and
transmission. (Exhibit 13.32, File No. 2-38177)
10.22.1 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of February 2, 1982 with
respect to pooling of generation and transmission. (Exhibit
10.21.1, 1993 NU Form 10-K, File No. 1-5324)
10.22.2 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of January 1, 1984 with
respect to pooling of generation and transmission. (Exhibit
10.21.2, 1994 NU Form 10-K, File No. 1-5324)
10.23 New England Power Pool Agreement effective as of November 1, 1971, as
amended to December 1, 1996. (Exhibit 10.15, 1988 NU Form 10-K, File
No. 1-5324.)
10.23.1 Twenty-sixth Amendment to Exhibit 10.23 dated as of March
15, 1989. (Exhibit 10.15.1, 1990 NU Form 10-K, File No. 1-
5324)
10.23.2 Twenty-seventh Amendment to Exhibit 10.23 dated as of
October 1, 1990. (Exhibit 10.15.2, 1991 NU Form 10-K, File
No. 1-5324)
10.23.3 Twenty-eighth Amendment to Exhibit 10.23 dated as of
September 15, 1992. (Exhibit 10.18.3, 1992 NU Form 10-K,
File No. 1-5324)
10.23.4 Twenty-ninth Amendment to Exhibit 10.23 dated as of May 1,
1993. (Exhibit 10.22.4, 1993 NU Form 10-K, File No. 1-5324)
10.23.5 Thirty-second Amendment (Amendments 30 and 31 were
withdrawn) to Exhibit 10.23 dated as of September 1, 1995.
(Exhibit 10.23.5, 1995 NU Form 10-K, File No. 1-5324)
* 10.23.6 Thirty-third Amendment to Exhibit 10.23 dated as of December
31, 1996 and Form of Interim Independent System Operator
(ISO) Agreement.
10.24 Agreements among New England Utilities with respect to the Hydro-
Quebec interconnection projects. (See Exhibits 10(u) and 10(v);
10(w), 10(x), and 10(y), 1990 and 1988, respectively, Form 10-K of New
England Electric System, File No. 1-3446.)
10.25 Trust Agreement dated February 11, 1992, between State Street Bank and
Trust Company of Connecticut, as Trustor, and Bankers Trust Company,
as Trustee, and CL&P and WMECO, with respect to NBFT. (Exhibit 10.23,
1991 NU Form 10-K, File No. 1-5324)
10.25.1 Nuclear Fuel Lease Agreement dated as of February 11, 1992,
between Bankers Trust Company, Trustee, as Lessor, and CL&P
and WMECO, as Lessees. (Exhibit 10.23.1, 1991 NU Form 10-K,
File No. 1-5324)
10.26 Simulator Financing Lease Agreement, dated as of February 1, 1985, by
and between ComPlan and NNECO. (Exhibit 10.25, 1994 NU Form 10-K,
File No. 1-5324)
10.27 Simulator Financing Lease Agreement, dated as of May 2, 1985, by and
between The Prudential Insurance Company of America and NNECO.
(Exhibit No. 10.26, 1994 NU Form 10-K, File No. 1-5324)
10.28 Lease dated as of April 14, 1992 between The Rocky River Realty
Company (RRR) and Northeast Utilities Service Company (NUSCO) with
respect to the Berlin, Connecticut headquarters (office lease).
(Exhibit 10.29, 1992 NU Form 10-K, File No. 1-5324)
10.28.1 Lease dated as of April 14, 1992 between RRR and NUSCO with
respect to the Berlin, Connecticut headquarters (project
lease). (Exhibit 10.29.1, 1992 NU Form 10-K, File No. 1-
5324)
10.29 Millstone Technical Building Note Agreement dated as of December 21,
1993 between, by and between The Prudential Insurance Company of
America and NNECO. (Exhibit 10.28, 1993 NU Form 10-K, File No. 1-
5324)
10.30 Lease and Agreement, dated as of December 15, 1988, by and between
WMECO and Bank of New England, N.A., with BNE Realty Leasing
Corporation of North Carolina. (Exhibit 10.63, 1988 NU Form 10-K,
File No. 1-5324.)
10.31 Note Agreement dated April 14, 1992, by and between The Rocky River
Realty Company (RRR) and Purchasers named therein (Connecticut General
Life Insurance Company, Life Insurance Company of North America, INA
Life Insurance Company of New York, Life Insurance Company of
Georgia), with respect to RRR's sale of $15 million of guaranteed
senior secured notes due 2007 and $28 million of guaranteed senior
secured notes due 2017. (Exhibit 10.52, 1992 NU Form 10-K, File No.
1-5324)
10.31.1 Note Guaranty dated April 14, 1992 by Northeast Utilities
pursuant to Note Agreement dated April 14, 1992 between RRR
and Note Purchasers, for the benefit of The Connecticut
National Bank as Trustee, the Purchasers and the owners of
the notes. (Exhibit 10.52.1, 1992 NU Form 10-K, File No. 1-
5324)
10.31.2 Assignment of Leases, Rents and Profits, Security Agreement
and Negative Pledge, dated as of April 14, 1992 among RRR,
NUSCO and The Connecticut National Bank as Trustee, securing
notes sold by RRR pursuant to April 14, 1992 Note Agreement.
(Exhibit 10.52.2, 1992 NU Form 10-K, File No. 1-5324)
* 10.32 Master Trust Agreement dated as of September 2, 1986 between CL&P and
WMECO and Colonial Bank as Trustee, with respect to reserve funds for
Millstone 1 decommissioning costs.
10.32.1 Notice of Appointment of Mellon Bank, N.A. as Successor
Trustee, dated November 20, 1990, and Acceptance of
Appointment. (Exhibit 10.41.1, 1992 NU Form 10-K, File No.
1-5324)
* 10.33 Master Trust Agreement dated as of September 2, 1986 between CL&P and
WMECO and Colonial Bank as Trustee, with respect to reserve funds for
Millstone 2 decommissioning costs.
10.33.1 Notice of Appointment of Mellon Bank, N.A. as Successor
Trustee, dated November 20, 1990, and Acceptance of
Appointment. (Exhibit 10.42.1, 1992 NU Form 10-K, File No.
1-5324)
* 10.34 Master Trust Agreement dated as of April 23, 1986 between CL&P and
WMECO and Colonial Bank as Trustee, with respect to reserve funds for
Millstone 3 decommissioning costs.
10.34.1 Notice of Appointment of Mellon Bank, N.A. as Successor
Trustee, dated November 20, 1990, and Acceptance of
Appointment. (Exhibit 10.43.1, 1992 NU Form 10-K, File No.
1-5324)
10.35 NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.36 Supplemental Executive Retirement Plan for Officers of NU System
Companies, Amended and Restated effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30, 1992,
File No. 1-5324)
10.36.1 Amendment 1 to Exhibit 10.36, effective as of August 1,
1993. (Exhibit 10.35.1, 1993 NU Form 10-K, File No. 1-5324)
10.36.2 Amendment 2 to Exhibit 10.36, effective as of January 1,
1994. (Exhibit 10.35.2, 1993 NU Form 10-K, File No. 1-5324)
10.36.3 Amendment 3 to Exhibit 10.36, effective as of January 1,
1996. (Exhibit 10.36.3, 1995 NU Form 10-K, File No. 1-5324)
10.37 Loan Agreement dated as of December 2, 1991, by and between NU and
Mellon Bank, N.A., as Trustee, with respect to NU's loan of $175
million to an ESOP Trust. (Exhibit 10.46, NU 1991 Form 10-K, File No.
1-5324)
10.37.1 First Amendment to Exhibit 10.37 dated February 7, 1992.
(Exhibit 10.36.1, 1993 NU Form 10-K, File No. 1-5324)
10.37.2 Loan Agreement dated as of March 19, 1992 by and between NU
and Mellon Bank, N.A., as Trustee, with respect to NU's loan
of $75 million to the ESOP Trust. (Exhibit 10.49.1, 1992 NU
Form 10-K, File No. 1-5324)
10.37.3 Second Amendment to Exhibit 10.37 dated April 9, 1992.
(Exhibit 10.36.3, 1993 NU Form 10-K, File No. 1-5324)
10.38 Employment Agreement with Bernard M. Fox. (Exhibit 10.48, NU Form
10-Q for the Quarter Ended June 30, 1992, File No. 1-5324)
* 10.39 Transition and Retirement Agreement with Bernard M. Fox.
* 10.40 Employment Agreement with Bruce M. Kenyon.
* 10.41 Employment Agreement with John H. Forsgren.
* 10.42 Employment Agreement with Hugh C. MacKenzie.
* 10.43 Employment Agreement with Ted C. Feigenbaum.
10.44 Employment Agreement with Robert E. Busch. (Exhibit 10, NU Form 10-Q
for the Quarter Ended September 30, 1996, File No. 1-5324)
10.45 Northeast Utilities Deferred Compensation Plan for Trustees, Amended
and Restated December 13, 1994. (Exhibit 10.39, 1995 NU Form 10-K,
File No. 1-5324)
10.46 Deferred Compensation Plan for Officers of Northeast Utilities System
Companies adopted September 23, 1986. (Exhibit 10.40, 1995 NU Form
10-K, File No. 1-5324)
10.47 Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC and
NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form 10K, File
No. 1-5324)
* 10.48 Receivables Purchase and Sale Agreement (CL&P), dated as of July
11, 1996.
* 10.49 Receivables Purchase and Sale Agreement (WMECO), dated as of
September 11, 1996 and First Amendment dated as of January 15,
1997.
* 10.50 Master Lease Agreement between General Electric Capital Corporation
and CL&P, dated as of June 21, 1996.
13 Annual Report to Security Holders (Each of the Annual Reports is filed
only with the Form 10-K of that respective registrant.)
* 13.1 Portions of the Annual Report to Shareholders of NU (pages 11 -
46)
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,121 $ 1,086 $ - $ 3,157 (a) $ 50
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,575 $ 1,093 $ - $ 1,165 (b) $ 5,503
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
EXHIBIT INDEX
Each document described below is incorporated by reference to the files
of the Securities and Exchange Commission, unless the reference to the
document is marked as follows:
* - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Reports on Form 10-K for CL&P, PSNH, WMECO, and NAEC.
# - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for CL&P.
@ - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for PSNH.
** - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for WMECO.
## - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for NAEC.
Exhibit
Number Description
2 Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Agreement and Plan of Merger (Exhibit 1 in NU's Current Report
on Form 8-K dated June 14, 1999, File No. 1-5324)
2.2 Agreement and Plan of Merger (Exhibit 1 to NU's Current Report
on Form 8-K dated October 13, 1999, File No. 1-5324).
3 Articles of Incorporation and By-Laws
3.1 Northeast Utilities
3.1.1 Declaration of Trust of NU, as amended through May 24,
1988. (Exhibit 3.1.1, 1988 NU Form 10-K, File No.
1-5324)
3.2 The Connecticut Light and Power Company
3.2.1 Certificate of Incorporation of CL&P, restated to
March 22, 1994. (Exhibit 3.2.1, 1993 NU Form 10-K,
File No. 1-5324)
3.2.2 Certificate of Amendment to Certificate of
Incorporation of CL&P, dated December 26, 1996.
(Exhibit 3.2.2, 1996 NU Form 10-K, File No. 1-5324)
3.2.3 Certificate of Amendment to Certificate of
Incorporation of CL&P, dated April 27, 1998. (Exhibit
3.2.3, 1998 NU Form 10-K, File No. 1-5324)
3.2.4 By-laws of CL&P, as amended to January 1, 1997.
(Exhibit 3.2.3, 1996 NU Form 10-K, File No. 1-5324)
3.3 Public Service Company of New Hampshire
3.3.1 Articles of Incorporation, as amended to May 16, 1991.
(Exhibit 3.3.1, 1993 NU Form 10-K, File No. 1-5324)
3.3.2 By-laws of PSNH, as amended to November 1, 1993.
(Exhibit 3.3.2, 1993 NU Form 10-K, File No. 1-5324)
3.4 Western Massachusetts Electric Company
3.4.1 Articles of Organization of WMECO, restated to
February 23, 1995. (Exhibit 3.4.1, 1994 NU Form 10-K,
File No. 1-5324)
3.4.2 By-laws of WMECO, as amended to April 1, 1999.
(Exhibit 3.1, 1999 NU Form 10-Q for the Quarter Ended
June 30, 1999, File No. 1-5324)
3.5 North Atlantic Energy Corporation
3.5.1 Articles of Incorporation of NAEC dated September 20,
1991. (Exhibit 3.5.1, 1993 NU Form 10-K, File No.
1-5324)
3.5.2 Articles of Amendment dated October 16, 1991, and
June 2, 1992, to Articles of Incorporation of NAEC.
(Exhibit 3.5.2, 1993 NU Form 10-K, File No. 1-5324)
3.5.3 By-laws of NAEC, as amended to November 8, 1993.
(Exhibit 3.5.3, 1993 NU Form 10-K, File No. 1-5324)
4 Instruments defining the rights of security holders, including
indentures
4.1 Northeast Utilities
4.1.1 Indenture dated as of December 1, 1991, between
Northeast Utilities and IBJ Schroder Bank & Trust
Company, with respect to the issuance of Debt
Securities. (Exhibit 4.1.1, 1991 NU Form 10-K,
File No. 1-5324)
4.1.2 First Supplemental Indenture dated as of December 1,
1991, between Northeast Utilities and IBJ Schroder
Bank & Trust Company, with respect to the issuance
of Series A Notes. (Exhibit 4.1.2, 1991 NU Form 10-K,
File No. 1-5324)
4.1.3 Second Supplemental Indenture dated as of March 1,
1992 between Northeast Utilities and IBJ Schroder
Bank & Trust Company with respect to the issuance of
8.38% Amortizing Notes. (Exhibit 4.1.3, 1992 NU Form
10-K, File No. 1-5324)
4.1.4 Credit Agreements among NU, CL&P, WMECO, and the Co-
Agents and Banks named therein, dated as of November
19, 1999 (includes Open End Mortgages), (Exhibits No.
B.13, B.14, B.15, and B.16, File No. 70-8875)
4.1.5 First Amendment and Waiver dated as of May 30, 1997,
to Credit Agreement dated as of November 21, 1996,
among NU, CL&P, WMECO, and the Co-Agents and Banks
named therein. (Exhibit B.4(a) (Execution Copy),
File No. 70-8875)
4.1.6 Second Amendment and Waiver dated as of September 11,
1998, to Credit Agreement dated as of November 21,
1996, among NU, CL&P, WMECO, and the Co-Agents and
Banks named therein. (Exhibit B.10 (Execution Copy),
File No. 70-8875)
4.1.7 Third Amendment and Waiver dated as of March 3, 1999
to Credit Agreement dated as of November 21, 1996
among NU, CL&P, WMECO, and the Co-Agents and Banks
named therein. (Exhibit B.11 (Execution Copy), File
No. 70-8875)
4.1.8 Credit Agreement dated as of February 10, 1998, among
NU, the Lenders named therein, and Toronto Dominion
(Texas), Inc., as Administrative Agent, TD Securities
(USA) Inc., as Arranger. (Exhibit B.9 (Execution
Copy), File No. 70-8875)
4.1.9 First Amendment dated as of February 8, 1999, to
Credit Agreement dated as of February 10, 1998,
among NU, the Lenders named therein, and Toronto
Dominion (Texas), Inc., as Administrative Agent,
TD Securities (USA) Inc., as Arranger. (Exhibit A
(Execution Copy), File No. 70-8875)
4.1.10 Second Amendment dated as of March 9, 1999 to Credit
Agreement dated as of February 10, 1998 among NU, the
Lenders named therein, and Toronto Dominion (Texas),
Inc., as Administrative Agent, TD Securities (USA)
Inc., as Arranger. (Exhibit B.12 (Execution Copy),
File No. 70-8875)
4.2 The Connecticut Light and Power Company
4.2.1 Indenture of Mortgage and Deed of Trust between CL&P
and Bankers Trust Company, Trustee, dated as of May 1,
1921. (Composite including all twenty-four amendments
to May 1, 1967.) (Exhibit 4.1.1, 1989 NU Form 10-K,
File No. 1-5324)
Supplemental Indentures to the Composite May 1, 1921,
Indenture of Mortgage and Deed of Trust between CL&P
and Bankers Trust Company, dated as of:
4.2.2 December 1, 1969. (Exhibit 4.2.2, 1998 NU Form 10-K,
File No. 1-5324)
4.2.3 June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.2.4 December 1, 1989. (Exhibit 4.1.26, 1989 NU Form 10-K,
File No. 1-5324)
4.2.5 July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.2.6 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.7 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.8 December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K,
File No. 1-5324)
4.2.9 February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K,
File No. 1-5324)
4.2.10 June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K, File
No. 1-5324)
4.2.11 October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K,
File No. 1-5324)
4.2.12 June 1, 1996. (Exhibit 4.2.16, 1996 NU Form 10-K, File
No. 1-5324)
4.2.13 January 1, 1997. (Exhibit 4.2.17, 1996 NU Form 10-K,
File No. 1-5324)
4.2.14 May 1, 1997. (Exhibit 4.19, File No. 333-30911)
4.2.15 June 1, 1997. (Exhibit 4.20, File No. 333-30911)
4.2.16 June 1, 1997. (Exhibit 4.2.17, 1997 NU Form 10-K, File
No. 1-5324)
4.2.17 May 1, 1998. (Exhibit 4.2.17, 1998 NU Form 10-K, File
No. 1-5324)
4.2.18 May 1, 1998. (Exhibit 4.2.18, 1998 NU Form 10-K, File
No. 1-5324)
4.2.19 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds, 1986 Series) dated as of
December 1, 1986. (Exhibit C.1.47, 1986 NU Form U5S,
File No. 30-246)
4.2.20 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds, 1988 Series) dated as of
October 1, 1988. (Exhibit C.1.55, 1988 NU Form U5S,
File No. 30-246)
4.2.21 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds) dated as of December 1,
1989. (Exhibit C.1.39, 1989 NU Form U5S, File No.
30-246)
4.2.22 Loan and Trust Agreement among Business Finance
Authority of the State of New Hampshire, CL&P and the
Trustee (Pollution Control Bonds, 1992 Series A) dated
as of December 1, 1992. (Exhibit C.2.33, 1992 NU
Form U5S, File No. 30-246)
4.2.23 Loan Agreement between Connecticut Development
Authority and CL&P (Pollution Control Bonds -
Series A, Tax Exempt Refunding) dated as of
September 1, 1993. (Exhibit 4.2.21, 1993 NU Form
10-K, File No. 1-5324)
4.2.24 Loan Agreement between Connecticut Development
Authority and CL&P (Pollution Control Bonds -
Series B, Tax Exempt Refunding) dated as of
September 1, 1993. (Exhibit 4.2.22, 1993 NU
Form 10-K, File No. 1-5324)
4.2.25 Amended and Restated Loan Agreement between
Connecticut Development Authority and CL&P (Pollution
Control Revenue Bond - 1996A Series) dated as of
May 1, 1996 and Amended and Restated as of January 1,
1997. (Exhibit 4.2.24, 1996 NU Form 10-K, File No.
1-5324)
4.2.25.1 Amended and Restated Indenture of Trust
between Connecticut Development Authority
and the Trustee (CL&P Pollution Control
Revenue Bond-1996A Series), dated as of
May 1, 1996, and Amended and Restated as of
January 1, 1997. (Exhibit 4.2.24.1, 1996
NU Form 10-K, File No. 1-5324)
4.2.25.2 Standby Bond Purchase Agreement among CL&P,
Societe Generale, New York Branch and the
Trustee, dated January 23, 1997. (Exhibit
4.2.24.2, 1996 NU Form 10-K, File No.
1-5324)
4.2.25.3 Amendment No. 1, dated January 21, 1998, to
the Standby Bond Purchase Agreement, dated
January 23, 1997. (Exhibit 4.2.24.3, 1997
NU Form 10-K, File No. 1-5324)
4.2.25.4 Amendment No. 2, dated December 9, 1998, to
the Standby Bond Purchase Agreement, dated
January 23, 1997. (Exhibit 4.2.25.4, 1998
NU Form 10-K, File No. 1-5324)
4.2.25.5 Amendment No. 3, dated November 5, 1999, to
the Standby Bond Purchase Agreement, dated
January 23, 1997.
4.2.25.6 AMBAC Municipal Bond Insurance Policy
issued by the Connecticut Development
Authority (CL&P) Pollution Control Revenue
Bond-1996A Series), effective January 23,
1997. (Exhibit 4.2.24.3, 1996 NU Form 10-K,
File No. 1-5324)
4.2.26 Amended and Restated Limited Partnership Agreement
(CL&P Capital, L.P.) among CL&P, NUSCO, and the
persons who became limited partners of CL&P Capital,
L.P. in accordance with the provisions thereof dated
as of January 23, 1995 (MIPS). (Exhibit A.1 (Execution
Copy), File No. 70-8451)
4.2.27 Indenture between CL&P and Bankers Trust Company,
Trustee (Series A Subordinated Debentures), dated as
of January 1, 1995 (MIPS). (Exhibit B.1 (Execution
Copy), File No. 70-8451)
4.2.28 Payment and Guaranty Agreement of CL&P dated as of
January 23, 1995 (MIPS). (Exhibit B.3 (Execution
Copy), File No. 70-8451)
4.3 Public Service Company of New Hampshire
4.3.1 First Mortgage Indenture dated as of August 15, 1978,
between PSNH and First Fidelity Bank, National
Association, New Jersey, Trustee, (Composite including
all amendments to May 16, 1991). (Exhibit 4.4.1, 1992
NU Form 10-K, File No. 1-5324)
4.3.1.1 Tenth Supplemental Indenture dated as of
May 1, 1991, between PSNH and First
Fidelity Bank, National Association.
(Exhibit 4.1, PSNH Current Report on
Form 8-K dated February 10, 1992, File
No. 1-6392)
4.3.3 Series A (Tax Exempt New Issue) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.2, PSNH
Current Report on Form 8-K dated February 10, 1992,
File No. 1-6392)
4.3.4 Series B (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.3, PSNH
Current Report on Form 8-K dated February 10, 1992,
File No. 1-6392)
4.3.5 Series C (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.4, PSNH
Current Report on Form 8-K dated February 10, 1992,
File No. 1-6392)
4.3.6 Series D (Taxable New Issue) Amended and Restated PCRB
Loan and Trust Agreement dated as of April 1, 1999.
4.3.6.1 Third Series D Letter of Credit and
Reimbursement Agreement dated as of
April 14, 1999.
4.3.6.2 Amended and Restated Second Series D
(May 1, 1991 Taxable New Issue) PCRB Letter
of Credit and Reimbursement Agreement dated
as of April 23, 1998. (Exhibit 4.3.6.3,
1998 NU Form 10-K, File No. 1-5324)
4.3.7 Series E (Taxable New Issue) Amended & Restated PCRB
Loan and Trust Agreement dated as of April 14, 1999.
4.3.7.1 Third Series E Letter of Credit and
Reimbursement Agreement dated as of
April 14, 1999.
4.3.7.2 Amended and Restated Second Series E
(May 1, 1991 Taxable New Issue) PCRB Letter
of Credit and Reimbursement Agreement dated
as of April 23, 1998. (Exhibit 4.3.7.3,
1998 NU Form 10-K, File No. 1-5324)
4.4 Western Massachusetts Electric Company
4.4.1 First Mortgage Indenture and Deed of Trust between
WMECO and Old Colony Trust Company, Trustee, dated as
of August 1, 1954. (Exhibit 4.4.1, 1993 NU Form 10-K,
File No. 1-5324)
Supplemental Indentures thereto dated as of:
4.4.2 October 1, 1954. (Exhibit 4.4.2, 1998 NU Form 10-K,
File No. 1-5324)
4.4.3 March 1, 1967. (Exhibit 4.4.3, 1997 NU Form 10-K,
File No. 1-5324)
4.4.4 July 1, 1973. (Exhibit 2.10, File No. 2-68808)
4.4.5 December 1, 1992. (Exhibit 4.15, File No. 33-55772)
4.4.6 January 1, 1993. (Exhibit 4.5.13, 1992 NU Form 10-K,
File No. 1-5324)
4.4.7 March 1, 1994. (Exhibit 4.4.12, 1993 NU Form 10-K,
File No. 1-5324)
4.4.8 May 1, 1997. (Exhibit 4.11, File No. 33-51185)
4.4.9 July 1, 1997. (Exhibit 4.4.10, 1997 NU Form 10-K,
File No. 1-5324)
4.4.10 May 1, 1998. (Exhibit 4.4.10, 1998 NU Form 10-K, File
No. 1-5324)
4.4.11 May 1, 1998. (Exhibit 4.4.11, 1998 NU Form 10-K, File
No. 1-5324)
4.4.12 Loan Agreement between Connecticut Development
Authority and WMECO, (Pollution Control Bonds -
Series A, Tax Exempt Refunding) dated as of
September 1, 1993. (Exhibit 4.4.13, 1993 NU Form
10-K, File No. 1-5324)
4.5 North Atlantic Energy Corporation
4.5.1 First Mortgage Indenture and Deed of Trust between
NAEC and United States Trust Company of New York,
Trustee, dated as of June 1, 1992. (Exhibit 4.6.1,
1992 NU Form 10-K, File No. 1-5324)
4.5.2 Term Credit Agreement dated as of November 9, 1995.
(Exhibit 4.5.2, 1995 NU Form 10-K, File No. 1-5324)
10 Material Contracts
10.1 Stockholder Agreement dated as of July 1, 1964, among the
stockholders of Connecticut Yankee Atomic Power Company
(CYAPC). (Exhibit 10.1, 1994 NU Form 10-K, File No. 1-5324)
10.2 Form of Power Contract dated as of July 1, 1964, between CYAPC
and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.2, 1994
NU Form 10-K, File No. 1-5324)
10.2.1 Form of Additional Power Contract dated as of
April 30, 1984, between CYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.2.1, 1994 NU Form 10-K, File
No. 1-5324)
10.2.2 Form of 1987 Supplementary Power Contract dated as of
April 1, 1987, between CYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.2.6, 1987 NU Form 10-K, File
No. 1-5324)
10.3 Capital Funds Agreement dated as of September 1, 1964, between
CYAPC and CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.3, 1994 NU
Form 10-K, File No. 1-5324)
10.4 Stockholder Agreement dated December 10, 1958, between Yankee
Atomic Electric Company (YAEC) and CL&P, HELCO, PSNH, and WMECO.
(Exhibit 10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 Form of Amendment No. 3, dated as of April 1, 1985, to Power
Contract between YAEC and each of CL&P, PSNH and WMECO,
including a composite restatement of original Power Contract
dated June 30, 1959 and Amendment No. 1 dated April 1, 1975, and
Amendment No. 2 dated October 1, 1980. (Exhibit 10.5, 1988 NU
Form 10-K, File No. 1-5324.)
10.5.1 Form of Amendment No. 4 to Power Contract, dated
May 6, 1988, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.1, 1989 NU Form 10-K,
File No. 1-5324)
10.5.2 Form of Amendment No. 5 to Power Contract, dated
June 26, 1989, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.2, 1989 NU Form 10-K,
File No. 1-5324)
10.5.3 Form of Amendment No. 6 to Power Contract, dated
July 1, 1989, between YAEC and each of CL&P, PSNH and
WMECO. (Exhibit 10.5.3, 1989 NU Form 10-K, File
No. 1-5324)
10.5.4 Form of Amendment No. 7 to Power Contract, dated
February 1, 1992, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.4, 1993 NU Form 10-K, File
No. 1-5324)
10.6 Stockholder Agreement dated as of May 20, 1968 among
stockholders of MYAPC. (Exhibit 10.6, 1997 NU Form 10-K, File
No. 1-5324)
10.7 Form of Power Contract dated as of May 20, 1968, between MYAPC
and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.7, 1997
Form 10-K, File No. 1-5324)
10.7.1 Form of Amendment No. 1 to Power Contract dated as of
March 1, 1983 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.7.1, 1993 NU Form 10-K, File No.
1-5324)
10.7.2 Form of Amendment No. 2 to Power Contract dated as of
January 1, 1984, between MYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.7.2, 1993 NU Form 10-K, File
No. 1-5324)
10.7.3 Form of Amendment No. 3 to Power Contract dated as of
October 1, 1984, between MYAPC and each of CL&P, PSNH
and WMECO. (Exhibit No. 10.7.3, 1994 NU Form 10-K,
File No. 1-5324)
10.7.4 Form of Additional Power Contract dated as of
February 1, 1984, between MYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.7.4, 1993 NU Form 10-K,
File No. 1-5324)
10.8 Capital Funds Agreement dated as of May 20, 1968 between MYAPC
and CL&P, PSNH, HELCO, and WMECO. (Exhibit 10.8, 1997 NU Form
10-K, File No. 1-5324)
10.8.1 Amendment No. 1 to Capital Funds Agreement, dated as
of August 1, 1985, between MYAPC, CL&P, PSNH, and
WMECO. (Exhibit No. 10.8.1, 1994 NU Form 10-K,
File No. 1-5324)
10.9 Sponsor Agreement dated as of August 1, 1968, among the sponsors
of Vermont Yankee Nuclear Power Corporation (VYNPC).
(Exhibit 10.9, 1997 NU Form 10-K, File No. 1-5324)
10.10 Form of Power Contract dated as of February 1, 1968, between
VYNPC and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.10,
1997 NU Form 10-K, File No. 1-5324)
10.10.1 Form of Amendment to Power Contract dated as of
June 1, 1972, between VYNPC and each of CL&P, HELCO,
PSNH, and WMECO. (Exhibit 5.22, File No. 2-47038)
10.10.2 Form of Second Amendment to Power Contract dated as
of April 15, 1983, between VYNPC and each of CL&P,
PSNH and WMECO. (Exhibit 10.10.2, 1993 NU Form 10-K,
File No. 1-5324)
10.10.3 Form of Third Amendment to Power Contract dated as
of April 24, 1985, between VYNPC and each of CL&P,
PSNH and WMECO. (Exhibit No. 10.10.3, 1994 NU Form
10-K, File No. 1-5324)
10.10.4 Form of Fourth Amendment to Power Contract dated as of
June 1, 1985, between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.10.4, 1996 NU Form 10-K, File
No. 1-5324)
10.10.5 Form of Fifth Amendment to Power Contract dated as of
May 6, 1988, between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.5, 1990 NU Form 10-K, File
No. 1-5324)
10.10.6 Form of Sixth Amendment to Power Contract dated as of
May 6, 1988. between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.6, 1990 NU Form 10-K, File No.
1-5324)
10.10.7 Form of Seventh Amendment to Power Contract dated as
of June 15, 1989, between VYNPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.10.7, 1990 NU Form 10-K,
File No. 1-5324)
10.10.8 Form of Eighth Amendment to Power Contract dated as
of December 1, 1989, between VYNPC and each of CL&P,
PSNH and WMECO. (Exhibit 10.10.8, 1990 NU Form 10-K,
File No. 1-5324)
10.10.9 Form of Additional Power Contract dated as of
February 1, 1984, between VYNPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.10.9, 1993 NU Form 10-K, File
No. 1-5324)
10.11 Capital Funds Agreement dated as of February 1, 1968, between
VYNPC and CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.11, 1997
NU Form 10-K, File No. 1-5324)
10.11.1 Form of First Amendment to Capital Funds Agreement
dated as of March 12, 1968, between VYNPC and CL&P,
HELCO, PSNH, and WMECO. (Exhibit 10.11.1, 1997 NU
Form 10-K, File No. 1-5324)
10.11.2 Form of Second Amendment to Capital Funds Agreement
dated as of September 1, 1993, between VYNPC and CL&P,
HELCO, PSNH, and WMECO. (Exhibit 10.11.2, 1993 NU
Form 10-K, File No. 1-5324)
10.12 Amended and Restated Millstone Plant Agreement dated as of
December 1, 1984, by and among CL&P, WMECO and Northeast Nuclear
Energy Company (NNECO). (Exhibit 10.12, 1994 NU Form 10-K,
File No. 1-5324)
10.13 Sharing Agreement dated as of September 1, 1973, with respect to
1979 Connecticut nuclear generating unit (Millstone 3). (Exhibit
6.43, File No. 2-50142)
10.13.1 Amendment dated August 1, 1974, to Sharing Agreement -
1979 Connecticut Nuclear Unit. (Exhibit 5.45, File
No. 2-52392)
10.13.2 Amendment dated December 15, 1975, to Sharing
Agreement - 1979 Connecticut Nuclear Unit. (Exhibit
7.47, File No. 2-60806)
10.13.3 Amendment dated April 1, 1986, to Sharing
Agreement - 1979 Connecticut Nuclear Unit. (Exhibit
10.17.3, 1990 NU Form 10-K, File No. 1-5324)
10.14 Agreement dated July 19, 1990, among NAESCO and Seabrook Joint
owners with respect to operation of Seabrook. (Exhibit 10.53,
1990 NU Form 10-K, File No. 1-5324)
10.15 Sharing Agreement between CL&P, WMECO, HP&E, HWP, and PSNH dated
as of June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K, File
No. 1-5324)
10.16 Rate Agreement by and between NUSCO, on behalf of NU, and the
Governor of the State of New Hampshire and the New Hampshire
Attorney General dated as of November 22, 1989. (Exhibit 10.44,
1989 NU Form 10-K, File No. 1-5324)
10.16.1 First Amendment to Rate Agreement dated as of
December 5, 1989. (Exhibit 10.16.1, 1995 NU Form
10-K, File No. 1-5324)
10.16.2 Second Amendment to Rate Agreement dated as of
December 12, 1989. (Exhibit 10.16.2, 1995 NU Form
10-K, File No. 1-5324)
10.16.3 Third Amendment to Rate Agreement dated as of
December 3, 1993. (Exhibit 10.16.3, 1995 NU Form 10-K,
File No. 1-5324)
10.16.4 Fourth Amendment to Rate Agreement dated as of
September 21, 1994. (Exhibit 10.16.4, 1995 NU Form
10-K, File No. 1-5324)
10.16.5 Fifth Amendment to Rate Agreement dated as of
September 9, 1994. (Exhibit 10.16.5, 1995 NU Form
10-K, File No. 1-5324)
10.17 Agreement to Settle PSNH Restructuring (Exhibit 10.2, 1999
NU Form 10-Q for the Quarter Ended June 30, 1999, File No.
1-5324)
10.18 Form of Seabrook Power Contract between PSNH and NAEC, as
amended and restated. (Exhibit 10.45, 1992 NU Form 10-K,
File No. 1-5324)
10.19 Agreement (composite) for joint ownership, construction and
operation of New Hampshire nuclear unit, as amended through the
November 1, 1990 twenty-third amendment. (Exhibit No. 10.17,
1994 NU Form 10-K, File No. 1-5324)
10.19.1 Memorandum of Understanding dated November 7, 1988,
between PSNH and Massachusetts Municipal Wholesale
Electric Company (Exhibit 10.17, PSNH 1989 Form 10-K,
File No. 1-6392)
10.19.2 Agreement of Settlement among Joint Owners dated as of
January 13, 1989. (Exhibit 10.13.21, 1988 NU Form
10-K, File No. 1-5324)
10.19.2.1 Supplement to Settlement Agreement, dated
as of February 7, 1989, between PSNH and
Central Maine Power Company. (Exhibit
10.18.1, PSNH 1989 Form 10-K, File No.
1-6392)
10.20 Amended and Restated Agreement for Seabrook Project Disbursing
Agent dated as of November 1, 1990. (Exhibit 10.4.7, File No.
33-35312)
10.20.1 Form of First Amendment to Exhibit 10.19. (Exhibit
10.4.8, File No. 33-35312)
10.20.2 Form (Composite) of Second Amendment to Exhibit 10.19.
(Exhibit 10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.21 Agreement dated November 1, 1974, for Joint Ownership,
Construction and Operation of William F. Wyman Unit No. 4 among
PSNH, Central Maine Power Company and other utilities. (Exhibit
5.16 , File No. 2-52900)
10.21.1 Amendment to Exhibit 10.20 dated June 30, 1975.
(Exhibit 5.48, File No. 2-55458)
10.21.2 Amendment to Exhibit 10.20 dated as of August 16,
1976. (Exhibit 5.19, File No. 2-58251)
10.21.3 Amendment to Exhibit 10.20 dated as of December 31,
1978. (Exhibit 5.10.3, File No. 2-64294)
10.22 Form of Service Contract dated as of July 1, 1966 between each
of NU, CL&P and WMECO, and the Service Company. (Exhibit 10.20,
1993 NU Form 10-K, File No. 1-5324)
10.22.1 Service Contract dated as of June 5, 1992 between PSNH
and the Service Company. (Exhibit 10.12.4, 1992 NU
Form 10-K, File No. 1-5324)
10.22.2 Service Contract dated as of June 5, 1992 between NAEC
and the Service Company. (Exhibit 10.12.5, 1992 NU
Form 10-K, File No. 1-5324)
10.22.3 Form of Service Agreement dated as of June 29, 1992,
between PSNH and North Atlantic Energy Service
Corporation, and the First Amendment thereto.
(Exhibits B.7 and B.7.1, File No. 70-7787)
10.22.4 Form of Annual Renewal of Service Contract. (Exhibit
10.20.3, 1993 NU Form 10-K, File No. 1-5324)
10.23 Memorandum of Understanding between CL&P, HELCO, HP&E, HWP, and
WMECO dated as of June 1, 1970, with respect to pooling of
generation and transmission. (Exhibit 13.32, File No. 2-38177)
10.23.1 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of February 2,
1982, with respect to pooling of generation and
transmission. (Exhibit 10.21.1, 1993 NU Form 10-K,
File No. 1-5324)
10.23.2 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP, and WMECO dated as of January 1,
1984, with respect to pooling of generation and
transmission. (Exhibit 10.21.2, 1994 NU Form 10-K,
File No. 1-5324)
#** 10.23.3 Second Amendment to Memorandum of Understanding
between CL&P, HELCO, HP&E, HWP, and WMECO dated as of
June 8, 1999 with respect to pooling of generation and
transmission.
10.24 New England Power Pool (NEPOOL) Agreement effective as of
November 1, 1971, as amended to December 1, 1996. (Exhibit
10.15, 1988 NU Form 10-K, File No. 1-5324.)
10.24.1 Form of Interim Independent System Operator (ISO)
Agreement (Attachment to Thirty-third Amendment to
Exhibit 10.23 dated as of December 31, 1996).
(Exhibit 10.23.6, 1996 NU Form 10-K, File No. 1-5324)
10.24.2 Restated NEPOOL Power Pool Agreement (restated by the
Thirty-Sixth Agreement dated as of July 20, 1998, and
includes the Restated NEPOOL Open Access Transmission
Tariff). (Exhibit 10.23.2, 1998 NU Form 10-K, File
No. 1-5324)
10.24.3 Thirty-Seventh Agreement dated as of August 15, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.3, 1998 NU
Form 10-K, File No. 1-5324)
10.24.4 Thirty-Eighth Agreement dated as of October 30, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.4, 1998 NU
Form 10-K, File No. 1-5324)
10.24.5 Thirty-Ninth Agreement dated as of November 13, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.5, 1998 NU
Form 10-K, File No. 1-5324)
10.24.6 Fortieth Agreement dated as of December 15, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.6, 1998 NU
Form 10-K, File No. 1-5324)
10.24.7 ISO New England Inc., FERC Tariff for Transmission
Dispatch and Power Administration Services. (Exhibit
10.23.7, 1998 NU Form 10-K, File No. 1-5324)
* 10.24.8 Restated NEPOOL Power Pool Agreement (restated by
the fifty-first Agreement dated as of May 7, 1999, and
includes the Restated NEPOOL Open Access Transmission
Tariff).
10.25 Agreements among New England Utilities with respect to the
Hydro-Quebec interconnection projects. (See Exhibits 10(u) and
10(v); 10(w), 10(x), and 10(y), 1990 and 1988, respectively,
Form 10-K of New England Electric System, File No. 1-3446.)
10.26 Trust Agreement dated February 11, 1992, between State Street
Bank and Trust Company of Connecticut, as Trustor, and Bankers
Trust Company, as Trustee, and CL&P and WMECO, with respect to
NBFT. (Exhibit 10.23, 1991 NU Form 10-K, File No. 1-5324)
10.26.1 Nuclear Fuel Lease Agreement dated as of February 11,
1992, between Bankers Trust Company, Trustee, as
Lessor, and CL&P and WMECO, as Lessees. (Exhibit
10.23.1, 1991 NU Form 10-K, File No. 1-5324)
#** 10.26.2 Modification and Amendment to Nuclear Fuel Lease
Agreement dated as of May 17, 1999, between Bankers
Trust Company, Trustee, as Lessor, and CL&P and WMECO,
as Lessees.
10.27 Simulator Financing Lease Agreement, dated as of February 1,
1985, by and between ComPlan and NNECO. (Exhibit 10.25, 1994
NU Form 10-K, File No. 1-5324)
10.28 Simulator Financing Lease Agreement, dated as of May 2, 1985,
by and between The Prudential Insurance Company of America and
NNECO. (Exhibit No. 10.26, 1994 NU Form 10-K, File No. 1-5324)
10.29 Lease dated as of April 14, 1992, between The Rocky River Realty
Company (RRR) and Northeast Utilities Service Company (NUSCO)
with respect to the Berlin, Connecticut headquarters (office
lease). (Exhibit 10.29, 1992 NU Form 10-K, File No. 1-5324)
10.29.1 Lease dated as of April 14, 1992, between RRR and
NUSCO with respect to the Berlin, Connecticut
headquarters (project lease). (Exhibit 10.29.1,
1992 NU Form 10-K, File No. 1-5324)
10.30 Millstone Technical Building Note Agreement dated as of
December 21, 1993, between, by and between The Prudential
Insurance Company of America and NNECO. (Exhibit 10.28, 1993
NU Form 10-K, File No. 1-5324)
10.31 Lease and Agreement, dated as of December 15, 1988, by and
between WMECO and Bank of New England, N.A., with BNE Realty
Leasing Corporation of North Carolina. (Exhibit 10.63, 1988 NU
Form 10-K, File No. 1-5324.)
10.32 Note Agreement dated April 14, 1992, by and between The Rocky
River Realty Company (RRR) and Purchasers named therein
(Connecticut General Life Insurance Company, Life Insurance
Company of North America, INA Life Insurance Company of New
York, Life Insurance Company of Georgia), with respect to RRR's
sale of $15 million of guaranteed senior secured notes due 2007
and $28 million of guaranteed senior secured notes due 2017.
(Exhibit 10.52, 1992 NU Form 10-K, File No. 1-5324)
10.32.1 Amendment to Note Agreement, dated September 26, 1997.
(Exhibit 10.31.1, 1997 NU Form 10-K, File No. 1-5324)
10.32.2 Note Guaranty dated April 14, 1992, by Northeast
Utilities pursuant to Note Agreement dated April 14,
1992 between RRR and Note Purchasers, for the benefit
of The Connecticut National Bank as Trustee, the
Purchasers and the owners of the notes. (Exhibit
10.52.1, 1992 NU Form 10-K, File No. 1-5324)
10.32.2.1 Extension of Note Guaranty, dated
September 26, 1997. (Exhibit 10.31.2.1,
1997 NU Form 10-K, File No. 1-5324)
10.32.3 Assignment of Leases, Rents and Profits, Security
Agreement and Negative Pledge, dated as of April 14,
1992 among RRR, NUSCO and The Connecticut National
Bank as Trustee, securing notes sold by RRR pursuant
to April 14, 1992 Note Agreement. (Exhibit 10.52.2,
1997 NU Form 10-K, File No. 1-5324)
10.32.3.1 Modification of and Confirmation of
Assignment of Leases, Rents and Profits,
Security Agreement and Negative Pledge,
dated as of September 26, 1997. (Exhibit
10.31.3.1, 1997 NU Form 10-K, File No.
1-5324)
10.32.4 Purchase and Sale Agreement, dated July 28, 1997, by
and between RRR and the Sellers and Purchasers named
therein. (Exhibit 10.31.4, 1997 NU Form 10-K, File No.
1-5324)
10.32.5 Purchase and Sale Agreement, dated September 26, 1997,
by and between RRR and the Purchaser named therein.
(Exhibit 10.31.5, 1992 NU Form 10-K, File No. 1-5324)
10.33 Master Trust Agreement dated as of September 2, 1986, between
CL&P and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 1 decommissioning costs. (Exhibit
No. 10.32, 1996 NU Form 10-K, File No. 1-5324)
10.33.1 Notice of Appointment of Mellon Bank, N.A. as
Successor Trustee, dated November 20, 1990, and
Acceptance of Appointment. (Exhibit 10.41.1, 1992 NU
Form 10-K, File No. 1-5324)
10.34 Master Trust Agreement dated as of September 2, 1986, between
CL&P and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 2 decommissioning costs. (Exhibit
No. 10.33, 1996 NU Form 10-K, File No. 1-5324)
10.34.1 Notice of Appointment of Mellon Bank, N.A. as
Successor Trustee, dated November 20, 1990, and
Acceptance of Appointment. (Exhibit 10.42.1, 1992
NU Form 10-K, File No. 1-5324)
10.35 Master Trust Agreement dated as of April 23, 1986, between CL&P
and WMECO and Colonial Bank as Trustee, with respect to reserve
funds for Millstone 3 decommissioning costs. (Exhibit No. 10.34,
1996 NU Form 10-K, File No. 1-5324)
10.35.1 Notice of Appointment of Mellon Bank, N.A. as
Successor Trustee, dated November 20, 1990, and
Acceptance of Appointment. (Exhibit 10.43.1, 1992 NU
Form 10-K, File No. 1-5324)
10.36 Rights Agreement dated as of February 23, 1999, between
Northeast Utilities and Northeast Utilities Service Company, as
Rights Agent (Exhibit 1 to NU's Registration Statement on
Form 8-A, filed on 4/12/99, File No. 001-05324).
10.36.1 Amendment to Rights Agreement (Exhibit 3 to NU's
Current Report on Form 8-K dated October 13, 1999,
File No. 1-5324).
10.37 NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.37.1 NU Incentive Plan, effective as of January 1, 1998.
(Exhibit 10.35.1, 1998 NU Form 10-K, File No. 1-5324)
10.37.1.1 Amendment to Exhibit 10.35.1, effective as
of February 23, 1999. (Exhibit 10.35.1.1,
1998 NU Form 10-K, File No. 1-5324)
10.38 Supplemental Executive Retirement Plan for Officers of NU system
companies, Amended and Restated effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30,
1992, File No. 1-5324)
10.38.1 Amendment 1 to Exhibit 10.38, effective as of
August 1, 1993. (Exhibit 10.35.1, 1993 NU Form 10-K,
File No. 1-5324)
10.38.2 Amendment 2 to Exhibit 10.38, effective as of
January 1, 1994. (Exhibit 10.35.2, 1993 NU Form 10-K,
File No. 1-5324)
10.38.3 Amendment 3 to Exhibit 10.38, effective as of
January 1, 1996. (Exhibit 10.36.3, 1995 NU Form
10-K, File No. 1-5324)
10.39 Special Severance Program for Officers of NU system companies,
as adopted on July 15, 1998. (Exhibit 10.37, 1998 NU Form 10-K,
File No. 1-5324)
10.39.1 Amendment to Exhibit 10.39, effective as of
February 23, 1999. (Exhibit 10.37.1, 1998 NU Form
10-K, File No. 1-5324)
10.39.2 Amendment to Exhibit 10.39, effective as of
September 14, 1999. (Exhibit 10.3, 1999 NU Form 10-Q
for the Quarter Ended September 30, 1999, File No.
1-5324)
10.40 Loan Agreement dated as of December 2, 1991, by and between NU
and Mellon Bank, N.A., as Trustee, with respect to NU's loan of
$175 million to an ESOP Trust. (Exhibit 10.46, 1991 NU Form
10-K, File No. 1-5324)
10.40.1 First Amendment to Exhibit 10.40 dated February 7,
1992. (Exhibit 10.36.1, 1993 NU Form 10-K, File No.
1-5324)
10.40.2 Loan Agreement dated as of March 19, 1992, by and
between NU and Mellon Bank, N.A., as Trustee, with
respect to NU's loan of $75 million to the ESOP
Trust. (Exhibit 10.49.1, 1992 NU Form 10-K,
File No. 1-5324)
10.40.3 Second Amendment to Exhibit 10.40 dated April 9,
1992. (Exhibit 10.36.3, 1993 NU Form 10-K, File
No. 1-5324)
10.41 Employment Agreement with Michael G. Morris. (Exhibit 10.39,
1997 NU Form 10-K, File No. 1-5324)
10.41.1 Amendment to Exhibit 10.41, dated as of February 23,
1999. (Exhibit 10.39.1, 1998 NU Form 10-K, File No.
1-5324)
10.42 Transition and Retirement Agreement with Bernard M. Fox.
(Exhibit 10.39, 1996 NU Form 10-K, File No. 1-5324)
10.43 Employment Agreement with Bruce M. Kenyon. (Exhibit 10.40,
1996 NU Form 10-K, File No. 1-5324)
10.43.1 Amendment to Exhibit 10.43, dated as of January 13,
1998. (Exhibit 10.41.1, 1998 NU Form 10-K, File
No. 1-5324)
10.43.2 Amendment to Exhibit 10.43, dated as of February 23,
1999. (Exhibit 10.41.2, 1998 NU Form 10-K, File
No. 1-5324)
10.43.3 Amendment to Exhibit 10.43, dated as of May 14,
1999. (Exhibit 10.3, 1999 NU Form 10-Q for the Quarter
Ended June 30, 1999, File No. 1-5324)
10.44 Employment Agreement with John H. Forsgren. (Exhibit 10.41, 1996
NU Form 10-K, File No. 1-5324)
10.44.1 Amendment to Exhibit 10.44, dated as of January 13,
1998. (Exhibit 10.42.1, 1998 NU Form 10-K, File
No. 1-5324)
10.44.2 Amendment to Exhibit 10.44, dated as of February 23,
1999. (Exhibit 10.42.2, 1998 NU Form 10-K, File No.
1-5324)
10.44.3 Amendment to Exhibit 10.44, dated as of May 10, 1999.
(Exhibit 10.1, 1999 NU Form 10-Q for the Quarter Ended
March 31, 1999, File No. 1-5324)
10.44.4 Amendment to Exhibit 10.44, dated as of September 14,
1999. (Exhibit 10.4, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.45 Employment Agreement with Hugh C. MacKenzie. (Exhibit 10.42,
1996 NU Form 10-K, File No. 1-5324)
10.45.1 Amendment to Exhibit 10.45, dated as of January 13,
1998. (Exhibit 10.43.1, 1998 NU Form 10-K, File
No. 1-5324)
10.45.2 Amendment to Exhibit 10.45, dated as of February 23,
1999. (Exhibit 10.43.2, 1998 NU Form 10-K, File No.
1-5324)
10.46 Employment Agreement with Cheryl W. Grise. (Exhibit 10.44, 1998
NU Form 10-K, File No. 1-5324)
10.46.1 Amendment to Exhibit 10.46, dated as of January 13,
1998. (Exhibit 10.44.1, 1998 NU Form 10-K, File
No. 1-5324)
10.46.2 Amendment to Exhibit 10.46, dated as of February 23,
1999. (Exhibit 10.44.2, 1998 NU Form 10-K, File
No. 1-5324)
10.46.3 Amendment to Exhibit 10.46, dated as of September 14,
1999. (Exhibit 10.5, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.47 Northeast Utilities Deferred Compensation Plan for Trustees,
Amended and Restated December 13, 1994. (Exhibit 10.39, 1995 NU
Form 10-K, File No. 1-5324)
10.48 Deferred Compensation Plan for Officers of Northeast Utilities
system companies adopted September 23, 1986. (Exhibit 10.40,
1995 NU Form 10-K, File No. 1-5324)
10.49 Northeast Utilities Deferred Compensation Plan for Executives,
adopted January 13, 1998. (Exhibit A.5, File No. 70-09185)
10.50 Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC,
and NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form
10-K, File No. 1-5324)
10.51 Receivables Purchase and Sale Agreement (CL&P and CL&P
Receivables Corporation), dated as of September 30, 1997.
(Exhibit 10.49, 1997 NU Form 10-K, File No. 1-5324)
10.51.1 Amendment to Exhibit 10.51 dated September 29, 1998.
(Exhibit 10.49.1, 1998 NU Form 10-K, File No. 1-5324)
10.51.2 Purchase and Contribution Agreement (CL&P and CL&P
Receivables Corporation), dated as of September 30,
1997. (Exhibit 10.49.1, 1997 NU Form 10-K, File No.
1-5324)
10.52 Receivables Purchase Agreement (WMECO and WMECO Receivables
Corporation), dated as of May 22, 1997. (Exhibit 10.50, 1997 NU
Form 10-K, File No. 1-5324)
10.52.1 Purchase and Sale Agreement (WMECO and WMECO
Receivables Corporation), dated as of May 22, 1997.
(Exhibit 10.50.1, 1997 NU Form 10-K, File No. 1-5324)
10.53 Master Lease Agreement between General Electric Capital
Corporation and CL&P, dated as of June 21, 1996. (Exhibit
10.50, 1996 NU Form 10-K, File No. 1-5324)
10.53.1 Amendment No. 1 to Master Lease Agreement, dated as
of August 29, 1997. (Exhibit 10.51.1, 1997 NU Form
10-K, File No. 1-5324)
10.54 NU Guaranty, dated as of November 30, 1998, made by NU, in
favor of the Participating Banks, the Issuing Banks and the
Administrative Agent, all named in a $50,000,000 Letter of
Credit and Reimbursement Agreement, dated as of November 30,
1998, among Select Energy, Inc., the Participating Banks,
the Administrative Agent, the Issuing Bank and Documentation
Agent, and the Syndication Agent named therein. (Exhibit B.1
(Execution Copy), File No. 70-9343)
10.54.1 Amendment No. 1 dated as of November 30, 1998 to
Exhibit 10.52. (Exhibit B.1 (Execution Copy), File
No. 70-9343)
*10.55 Confirmation Agreement between Credit Suisse First Boston and
NU, dated as of November 3, 1999.
*10.56 Confirmation Agreement between Bank One and NU, dated as of
December 9, 1999.
13 Annual Report to Security Holders (Each of the Annual Reports is filed
only with the Form 10-K of that respective registrant.)
* 13.1 Portions of the Annual Report to Shareholders of NU
(pages 21-55) that have been incorporated by reference into
this Form 10-K.
13.2 Annual Report of CL&P.
13.3 Annual Report of WMECO.
13.4 Annual Report of PSNH.
13.5 Annual Report of NAEC.
*21 Subsidiaries of the Registrant.
27 Financial Data Schedules (Each Financial Data Schedule is filed only
with the Form 10-K of that respective registrant.)
27.1 Financial Data Schedule of NU.
27.2 Financial Data Schedule of CL&P.
27.3 Financial Data Schedule of WMECO.
27.4 Financial Data Schedule of PSNH.
27.5 Financial Data Schedule of NAEC.