Esi Tractebel Acquisition 10-Q 2009 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number Exact name of registrants as specified in their charters, State of organization, address of principal executive offices and registrants' telephone number IRS Employer Identification Number

333-52397	ESI TRACTEBEL ACQUISITION CORP. (a Delaware corporation)	65-0827005
333-52397-01	NORTHEAST ENERGY, LP (a Delaware limited partnership)	65-0811248

c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408

(561) 691-7171

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 and (2) have been subject to such filing requirements for the past 90 days.

Yes ¨No þ

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

Yes ¨No ¨

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies.  See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.  (Check one):

Large accelerated filers  [   ] Accelerated filers  [   ] Non-accelerated filers  þ (Do not check if a smaller reporting company) Smaller reporting companies  [   ]

Indicate by check mark whether the registrants are shell companies as defined in Rule 12b-2 of the Securities Exchange Act of 1934.

Yes ¨No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of October 31, 2009, there were issued and outstanding 20 shares of ESI Tractebel Acquisition Corp.'s common stock.

——————————————————————

This combined Form 10-Q represents separate filings by ESI Tractebel Acquisition Corp. (Acquisition Corp.) and Northeast Energy, LP (NE LP).  Information contained herein relating to an individual registrant is filed by that registrant on its own behalf.  Each registrant makes representations only as to itself and makes no representations whatsoever as to the other registrant.  The registrants make no representations whatsoever as to ESI Tractebel Funding Corp. (Funding Corp.), and Acquisition Corp. makes no representations whatsoever as to Northeast Energy Associates, a limited partnership (NEA) or North Jersey Energy Associates, a limited partnership (NJEA, and collectively with NEA, the Partnerships).

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions, future events or performance, climate change strategy or growth strategies (often, but not always, through the use of words or phrases such as "will," "will likely result," "are expected to," "will continue," "is anticipated," "aim," "believe," "could," "should," "would," "estimated," "may," "plan," "potential," "projection," "target," "outlook," "predict" and "intend" or words of similar meaning) are not statements of historical facts and may be forward-looking.  Forward-looking statements involve estimates, assumptions and uncertainties.  Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on the Acquisition Corp.'s and/or NE LP's (together the registrants) operations and financial results, and that could cause the Acquisition Corp.'s and/or NE LP's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of either or both of the registrants in this combined Form 10-Q, in presentations, in response to questions or otherwise.

·   The registrants are subject to complex laws and regulations and to changes in laws and regulations as well as changing governmental policies and regulatory actions, with respect to, among other things, initiatives regarding deregulation and restructuring of the energy industry and environmental matters, including matters related to the effects of climate change, operation of generation facilities, and present or prospective competition.  This substantial and complex framework exposes the registrants to increased compliance costs and potentially significant monetary penalties for non-compliance.

·   A substantial portion of the output from the Partnerships' power generation facilities is sold to two regulated utilities under five power purchase agreements, two of which terminate in 2011 and the other three in 2016.  The limited number of power purchasers creates a concentration of counterparty risk.  The remaining output from the power generation facilities is sold, from time to time, in the merchant markets.  Economic factors, such as the current downturn, could adversely affect energy consumption and could adversely affect the results of operations of the registrants.

·   The operation and maintenance of power generation facilities involve significant risks that could adversely affect the results of operations and financial condition of the registrants.

·   The use of derivative contracts by NE LP and the Partnerships in the normal course of business could result in financial losses that could adversely impact the results of operations of the registrants.

·   The competitive energy business is subject to risks, many of which are beyond the control of the registrants, including, but not limited to, the ability to efficiently operate generating assets, the successful and timely completion of project restructuring activities, the price and supply of fuel (including transportation) and equipment, transmission constraints, competition from other and new sources of generation, excess generation capacity and shifting demand for power, that may reduce the revenues and adversely impact the results of operations and financial condition of the registrants.

·   The registrants rely on contracts with vendors for the supply of fuel and equipment required for the operation of their facilities.  If vendors fail to fulfill their contractual obligations, the registrants may need to make arrangements with other suppliers, which could result in higher costs and/or a disruption to their operations.

·   Weather affects the registrants' results of operations, as can the impact of severe weather.  Weather conditions directly influence the demand for electricity and natural gas, affect the price of energy commodities, and can affect the production of electricity at power generation facilities.

·   The registrants are subject to costs and other potentially adverse effects of legal and regulatory proceedings, settlements, investigations and claims, as well as regulatory compliance and the effect of new, or changes in, tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements.

·   The Partnerships are subject to mandatory reliability standards promulgated by the North American Electric Reliability Corporation and enforced by the Federal Energy Regulatory Commission.  Noncompliance with these mandatory reliability standards could result in sanctions, including substantial monetary penalties.

·   Threats of terrorism and catastrophic events that could result from terrorism, cyber attacks, or individuals and/or groups attempting to disrupt NE LP’s and the Partnerships’ business may impact the operations of the registrants in unpredictable ways.

·   The registrants' ability to obtain insurance, and the cost of and coverage provided by such insurance, could be adversely affected by international, national, state or local events as well as registrant-specific events.

·   The registrants, the Partnerships and the Funding Corp. are substantially leveraged and subject to restrictive covenants under their debt agreements that will limit their ability to borrow or otherwise have access to additional funds.

·   All obligations of the Partnerships are non-recourse to the direct and indirect owners of the registrants.

These and other risk factors are included in Part I, Item 1A. Risk Factors of the registrants' Annual Report on Form 10-K for the year ended December 31, 2008 (2008 Form 10-K).

Any forward-looking statement speaks only as of the date on which such statement is made, and the registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law.  New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars)

(Unaudited)

	September 30, 2009		December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	91,255	$	48,186
Accounts receivable		47,820		85,495
Spare parts inventories		9,533		5,943
Fuel inventories		8,750		10,877
Prepaid expenses and other current assets		4,442		1,299
Total current assets		161,800		151,800
Non-current assets:
Deferred debt issuance costs (net of accumulated amortization of $6,451 and $6,191, respectively)		509		769
Land		4,712		4,712
Cogeneration facilities (net of accumulated depreciation of $215,908 and $201,140, respectively)		322,135		319,420
Power purchase agreements (net of accumulated amortization of $759,800 and $697,324, respectively)		181,556		244,032
Other assets		3,438		3,578
Total non-current assets		512,350		572,511
TOTAL ASSETS	$	674,150	$	724,311
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable – the Funding Corp.	$	59,920	$	54,616
Current portion of note payable – the Acquisition Corp.		30,800		26,400
Current portion of note payable – affiliate		4,134		3,971
Accrued interest payable		4,725		-
Accounts payable		3,483		1,100
Due to related parties		9,835		30,616
Other accrued expenses		14,921		17,025
Total current liabilities		127,818		133,728
Non-current liabilities:
Deferred revenue		83,879		66,944
Notes payable – the Funding Corp.		32,612		65,223
Note payable – the Acquisition Corp.		83,600		101,200
Note payable – affiliate		4,484		6,595
Lease payable		184		319
Other liabilities		317		151
Total non-current liabilities		205,076		240,432
COMMITMENTS AND CONTINGENCIES
Partners' equity:
General partners		6,825		7,003
Limited partners		334,431		343,148
Total partners' equity		341,256		350,151
TOTAL LIABILITIES AND PARTNERS' EQUITY	$	674,150	$	724,311

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated and Combined Financial Statements appearing in the 2008 Form 10-K for NE LP and Subsidiaries.

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of Dollars)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
REVENUES	$	71,057		$	119,595		$	193,363		$	340,105
COSTS AND EXPENSES:
Fuel (net of fuel sales)		15,185			37,305			25,851			115,079
Operations and maintenance		4,538			3,282			14,772			12,158
Depreciation and amortization		26,483			26,402			78,380			78,387
General and administrative		2,264			2,399			6,760			7,342
Total costs and expenses		48,470			69,388			125,763			212,966
OPERATING INCOME		22,587			50,207			67,600			127,139
OTHER EXPENSE (INCOME):
Amortization of debt issuance costs		88			104			260			310
Interest expense		4,724			6,588			16,110			21,585
Interest income		(9	)		(379	)		(107	)		(1,329	)
Other expense (income)		-			-			-			(1,795	)
Total other expense – net		4,803			6,313			16,263			18,771
NET INCOME	$	17,784		$	43,894		$	51,337		$	108,368

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

	Nine Months Ended September 30,
	2009			2008
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	161,491		$	212,079
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(15,945	)		(6,481	)
Proceeds from insurance claim		211			-
Net cash used in investing activities		(15,734	)		(6,481	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on the Funding Corp. notes		(27,308	)		(25,901	)
Principal payments on the Acquisition Corp. note		(13,200	)		(11,000	)
Principal payments on the affiliate note		(1,948	)		(1,799	)
Distributions to partners		(60,232	)		(88,737	)
Net cash used in financing activities		(102,688	)		(127,437	)
Net increase in cash and cash equivalents		43,069			78,161
Cash and cash equivalents at beginning of period		48,186			45,257
Cash and cash equivalents at end of period	$	91,255		$	123,418
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	11,386		$	14,946
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Additions to cogeneration facilities	$	5,645		$	1,739
Transfer of cogeneration facilities to spare parts inventories	$	2,400		$	-
Transfer of cogeneration facilities to accounts receivable under warranty claim	$	189		$	-

This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated and Combined Financial Statements appearing in the 2008 Form 10-K for NE LP and Subsidiaries.

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

CONDENSED COMBINED BALANCE SHEETS

(Thousands of Dollars)

(Unaudited)

	September 30, 2009		December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	71,937	$	48,184
Accounts receivable		47,820		85,495
Spare parts inventories		9,533		5,943
Fuel inventories		8,750		10,877
Prepaid expenses and other current assets		4,440		1,298
Total current assets		142,480		151,797
Non-current assets:
Land		4,712		4,712
Cogeneration facilities (net of accumulated depreciation of $215,908 and $201,140, respectively)		322,135		319,420
Power purchase agreements (net of accumulated amortization of $759,800 and $697,324, respectively)		181,556		244,032
Other assets		3,437		3,578
Total non-current assets		511,840		571,742
TOTAL ASSETS	$	654,320	$	723,539
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable – the Funding Corp.	$	59,920	$	54,616
Accrued interest payable		2,260		-
Accounts payable		3,483		1,100
Due to related parties		9,835		30,616
Other accrued expenses		14,921		17,025
Total current liabilities		90,419		103,357
Non-current liabilities:
Deferred revenue		83,879		66,944
Notes payable – the Funding Corp.		32,612		65,223
Lease payable		184		319
Other liabilities		166		-
Total non-current liabilities		116,841		132,486
COMMITMENTS AND CONTINGENCIES
Partners' equity:
General partners		4,470		4,877
Limited partners		442,590		482,819
Total partners' equity		447,060		487,696
TOTAL LIABILITIES AND PARTNERS' EQUITY	$	654,320	$	723,539

This report should be read in conjunction with the Notes to Condensed Combined Financial Statements herein and the Notes to Consolidated and Combined Financial Statements appearing in the 2008 Form 10-K for NEA and NJEA.

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

CONDENSED COMBINED STATEMENTS OF OPERATIONS

(Thousands of Dollars)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
REVENUES	$	71,057		$	119,595		$	193,363		$	340,105
COSTS AND EXPENSES:
Fuel (net of fuel sales)		15,185			37,305			25,851			115,079
Operations and maintenance		4,538			3,282			14,772			12,158
Depreciation and amortization		26,483			26,402			78,380			78,387
General and administrative		2,258			2,399			6,754			7,342
Total costs and expenses		48,464			69,388			125,757			212,966
OPERATING INCOME		22,593			50,207			67,606			127,139
OTHER EXPENSE (INCOME):
Interest expense		2,260			3,559			8,114			11,995
Interest income		(9	)		(373	)		(99	)		(1,298	)
Other expense (income)		-			-			-			(1,795	)
Total other expense – net		2,251			3,186			8,015			8,902
NET INCOME	$	20,342		$	47,021		$	59,591		$	118,237

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

	Nine Months Ended September 30,
	2009			2008
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	167,022		$	218,609
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(15,945	)		(6,481	)
Proceeds from insurance claim		211			-
Net cash used in investing activities		(15,734	)		(6,481	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment on the Funding Corp. notes		(27,308	)		(25,901	)
Distributions to partners		(100,227	)		(126,974	)
Net cash used in financing activities		(127,535	)		(152,875	)
Net increase in cash and cash equivalents		23,753			59,253
Cash and cash equivalents at beginning of period		48,184			45,246
Cash and cash equivalents at end of period	$	71,937		$	104,499
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION:
Cash paid for interest	$	5,854		$	8,385
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Additions to cogeneration facilities	$	5,645		$	1,739
Transfer of cogeneration facilities to spare parts inventories	$	2,400		$
Transfer of cogeneration facilities to accounts receivable under warranty claim	$	189		$

This report should be read in conjunction with the Notes to Condensed Combined Financial Statements herein and the Notes to Consolidated and Combined Financial Statements appearing in the 2008 Form 10-K for NEA and NJEA.

ESI TRACTEBEL FUNDING CORP.

CONDENSED BALANCE SHEETS

(Thousands of Dollars)

(Unaudited)

	September 30, 2009			December 31, 2008
ASSETS
Current assets:
Cash	$	1	$	1
Current portion of notes receivable from the Partnerships		59,920		54,616
Interest receivable from the Partnerships		2,260		-
Total current assets		62,181		54,617
Notes receivable from the Partnerships		32,612		65,223
TOTAL ASSETS	$	94,793	$	119,840
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt securities payable	$	59,920	$	54,616
Accrued interest payable		2,260		-
Total current liabilities		62,180		54,616
Debt securities payable		32,612		65,223
COMMITMENTS AND CONTINGENCIES
Stockholders’ equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding		1		1
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	94,793	$	119,840

CONDENSED STATEMENTS OF OPERATIONS

(Thousands of Dollars)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Interest income – affiliate	$	2,260		$	3,560		$	8,114		$	11,945
Interest expense		(2,260	)		(3,560	)		(8,114	)		(11,945	)
NET INCOME	$	-		$	-		$	-		$	-

This report should be read in conjunction with the Notes to Condensed Financial Statements herein and the Notes to Financial Statements appearing in the 2008 Form 10-K for the Funding Corp.

ESI TRACTEBEL FUNDING CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

	Nine Months Ended September 30,
	2009			2008
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	-		$	-
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payment received from the Partnerships		27,308			25,901
Net cash provided by investing activities		27,308			25,901
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payment on debt		(27,308	)		(25,901	)
Net cash used in financing activities		(27,308	)		(25,901	)
Net change in cash		-			-
Cash at beginning of period		1			1
Cash at end of period	$	1		$	1
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	5,854		$	8,385

This report should be read in conjunction with the Notes to Condensed Financial Statements herein and the Notes to Financial Statements appearing in the 2008 Form 10-K for the Funding Corp.

ESI TRACTEBEL ACQUISITION CORP.

CONDENSED BALANCE SHEETS

(Thousands of Dollars)

(Unaudited)

	September 30, 2009		December 31, 2008
ASSETS
Current assets:
Current portion of note receivable from NE LP	$	30,800	$	26,400
Interest receivable from NE LP		2,285		-
Total current assets		33,085		26,400
Non-current assets:
Due from NE LP		152		152
Note receivable from NE LP		83,600		101,200
Total non-current assets		83,752		101,352
TOTAL ASSETS	$	116,837	$	127,752
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Income taxes payable	$	50	$	48
Accrued interest payable		2,285		-
Current portion of debt securities payable		30,800		26,400
Total current liabilities		33,135		26,448
Non-current liabilities:
Debt securities payable		83,600		101,200
Other		11		17
Total non-current liabilities		83,611		101,217
TOTAL LIABILITIES		116,746		127,665
COMMITMENTS AND CONTINGENCIES
Stockholders’ equity:
Common stock, $.10 par value, 100 shares authorized, 20 shares issued and outstanding		-		-
Retained earnings		91		87
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	116,837	$	127,752

CONDENSED STATEMENTS OF OPERATIONS

(Thousands of Dollars)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

	2009			2008			2009			2008
Interest income – affiliate	$	2,286		$	2,768		$	7,383		$	8,745
Interest expense		(2,284	)		(2,766	)		(7,377	)		(8,738	)
Income before income taxes		2			2			6			7
Income tax expense		-			(1	)		(2	)		(3	)
NET INCOME	$	2		$	1		$	4		$	4

This report should be read in conjunction with the Notes to Condensed Financial Statements herein and the Notes to Financial Statements appearing in the 2008 Form 10-K for the Acquisition Corp.

ESI TRACTEBEL ACQUISITION CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

	Nine Months Ended September 30,
	2009			2008
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	-		$	-
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payment received from NE LP		13,200			11,000
Net cash provided by investing activities		13,200			11,000
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payment on debt		(13,200	)		(11,000	)
Net cash used in financing activities		(13,200	)		(11,000	)
Net change in cash		-			-
Cash at beginning of period		-			-
Cash at end of period	$	-		$	-
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	5,097		$	5,977

This report should be read in conjunction with the Notes to Condensed Financial Statements herein and the Notes to Financial Statements appearing in the 2008 Form 10-K for the Acquisition Corp.

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

ESI TRACTEBEL FUNDING CORP.

ESI TRACTEBEL ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The accompanying Condensed Consolidated Financial Statements, Condensed Combined Financial Statements and Condensed Financial Statements should be read in conjunction with the 2008 Form 10-K for the registrants.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made.  The results of operations for an interim period generally will not give a true indication of results for the year.  The registrants have evaluated subsequent events through November 11, 2009.

1.  Combined Statement of Partners' Equity

Equity balances of the general partner (GP) and limited partner (LP) of Northeast Energy Associates, a limited partnership (NEA) and North Jersey Energy Associates, a limited partnership (NJEA), are comprised of the following:

	NEA						NJEA						Combined
	GP		LP		Total		GP		LP		Total		GP		LP		Total
	(Thousands of Dollars)
Balances, December 31, 2008	$	1,331	$	131,767	$	133,098	$	3,546	$	351,052	$	354,598	$	4,877	$	482,819	$	487,696
Balances, September 30, 2009	$	1,147	$	113,513	$	114,660	$	3,323	$	329,077	$	332,400	$	4,470	$	442,590	$	447,060

NEA and NJEA, (the Partnerships) paid distributions to Northeast Energy, LP (NE LP) totaling $100.2 million and $127.0 million for the nine months ended September 30, 2009 and 2008, respectively.  NE LP paid distributions totaling $60.2 million and $88.7 million to its partners for the nine months ended September 30, 2009 and 2008, respectively.

2.  Financial Instruments and Hedging Activities

Derivative instruments are recorded on NE LP's and the Partnerships' condensed consolidated and combined balance sheets as either an asset or liability (in prepaid expenses and other current assets, other assets, other accrued expenses and other liabilities) measured at fair value.  NE LP and the Partnerships use derivative instruments (primarily swaps, options, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity and to optimize the value of power generation assets and related contracts.  To a lesser extent, NE LP and the Partnerships also engage in limited trading activities to take advantage of expected favorable price movements.

Essentially all changes in the derivatives' fair value (unrealized mark-to-market gains and losses) for power purchases and sales and trading activities are recognized on a net basis in revenues, and fuel purchases and sales are recognized on a net basis in fuel expense unless hedge accounting is applied.  While substantially all of NE LP's and the Partnerships' derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria are met and it is practicable to do so.  In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective in offsetting the hedged risk.  Additionally, for hedges of commodity price risk, physical delivery for forecasted commodity transactions must be probable.  NE LP and the Partnerships believe that where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes.  Transactions for which physical delivery is deemed not to have occurred are presented on a net basis.  Generally, the hedging instrument's effectiveness is assessed using regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life.  At September 30, 2009, no cash flow hedges existed at NE LP and the Partnerships.  The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income (OCI) and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings.  The ineffective portion of net unrealized gains (losses) on these hedges is reported in earnings in the current period.  Settlement gains and losses are included within the line items in the statements of operations to which they relate.  There were no net gains/losses on cash flow hedges in comprehensive income for the three and nine months ended September 30, 2009 and 2008.  As a result, there were no differences between comprehensive income and net income for the three and nine months ended September 30, 2009 and 2008, respectively.

Unrealized mark-to-market gains on derivative transactions were $1.6 million and $4.3 million for the quarters ended September 30, 2009 and 2008, respectively, and are included in fuel expense (net of fuel sales) on the condensed consolidated and combined statements of operations.  Unrealized mark-to-market gains (losses) on derivative transactions were $2.7 million and $(1.4) million for the nine months ended September 30, 2009 and 2008, respectively, and are included in fuel expense (net of fuel sales) on the condensed consolidated and combined statements of operations.  The current portion of the derivative liabilities was approximately $0.2 million at September 30, 2009 and is included in the condensed consolidated and combined balance sheets under other accrued expenses.  The non-current portion of the derivative liabilities at September 30, 2009 was approximately $0.2 million and is included in the condensed consolidated and combined balance sheets under other liabilities.  The current portion of the derivative assets at September 30, 2009 was $2.2 million and is included in the condensed consolidated and combined balance sheets under prepaid expenses and other current assets.

NE LP and the Partnerships adopted new accounting and disclosure provisions related to the fair value of financial instruments beginning the quarter ended June 30, 2009.

Accordingly, the following estimates of the fair value of financial instruments have been made using available market information and other valuation methodologies.  However, the use of different market assumptions or methods of valuation could result in different estimated fair values.

	September 30, 2009				December 31, 2008
	Carrying Amount(b)		Estimated Fair Value(c)		Carrying Amount(b)		Estimated Fair Value(c)
	(Thousands of Dollars)
Long-term debt, including current maturities, of NE LP/Acquisition Corp. (a)	$	123,018	$	125,852	$	138,166	$	138,682
Long-term debt, including current maturities, of Partnerships/Funding Corp.	$	92,532	$	96,509	$	119,839	$	125,396

——————————

(a) Includes affiliate note for NE LP and Acquisition Corp. secured notes (Acquisition Corp. Securities).

(b) Based on the book value of the Acquisition Corp. Securities ($114,400 and $127,600) and the affiliate note ($8,618 and $10,566) as of September 30, 2009 and December 31, 2008, respectively.  Based on the book value of the Funding Corp.’s secured notes (Funding Corp. Securities) as of September 30, 2009 and December 31, 2008, respectively.

(c) Based on an internally developed model for the Acquisition Corp. Securities ($117,234 and $128,116) and the book value of the affiliate note ($8,618 and $10,566) as of September 30, 2009 and December 31, 2008, respectively.  Based on an internally developed model for the Funding Corp. Securities as of September 30, 2009 and December 31, 2008, respectively.  Bid prices were not available for 2009 and 2008 due to recent changes in the market.

3.  Fair Value Measurements

As of September 30, 2009, NE LP and the Partnerships had cash equivalents with a fair value of $89.9 million and $70.6 million, respectively (excluding cash of $1.4 million).  As of December 31, 2008, NE LP and the Partnerships each had cash equivalents with a fair value of $30.3 million (excluding cash of $17.9 million).  The value of these assets is based upon quoted prices in active markets for identical assets and equals the carrying value.  In addition, the carrying value of accounts receivable and accounts payable, accrued expenses and due to related parties approximate their fair market value due to the short maturity of these instruments.  As of September 30, 2009, all other financial assets, liabilities and other fair value measurements made on a recurring basis at NE LP and the Partnerships were deemed to be immaterial.

4.  Commitments and Contingencies

The long-term contractual obligations of NE LP and the Partnerships at September 30, 2009 are as follows:

NE LP AND THE PARTNERSHIPS

September 30, 2009

(Thousands of Dollars)

	Total		2009		2010 – 11		2012 – 13		Thereafter
CONTRACTUAL OBLIGATIONS
The Partnerships:
Funding Corp. debt(a)	$	101,830	$	31,828	$	70,002	$	-	$	-
Operating leases		846		81		678		87		-
Other long-term obligations:
Administrative agreement(b)		4,950		150		1,200		1,200		2,400
Operations and maintenance agreement(b)		9,375		375		3,000		3,000		3,000
Fuel management agreement(b)		11,925		225		1,800		1,800		8,100
Natural gas, including transportation and storage		19,777		2,607		16,626		544		-
Total Partnerships		148,703		35,266		93,306		6,631		13,500
NE LP:
Acquisition Corp. debt(a)		130,308		17,770		112,538		-		-
Affiliate debt(a)		9,531		2,384		7,147		-		-
Total NE LP		139,839		20,154		119,685		-		-
Total contractual obligations	$	288,542	$	55,420	$	212,991	$	6,631	$	13,500

——————————

(a) Includes principal and interest.

(b) Represents the minimum obligation under the terms of the agreement.  The minimum obligation is subject to an annual inflation factor adjustment, which is excluded from the minimum obligation included in the table.

The Northeast Power Coordinating Council, Inc. (NPCC), the regional entity responsible for compliance with the North American Electric Reliability Corporation (NERC) standards, is investigating certain operating subsidiaries and affiliates of NextEra Energy Resources, LLC (NextEra Energy Resources), including NEA, operating in New England for potential noncompliance with certain NERC standards self-reported by NextEra Energy Resources.  NextEra Energy Resources owns subsidiaries that own 50% of NE LP.  NEA has not been notified of a formal claim, but a similar claim regarding this matter has been filed by NPCC with a NextEra Energy Resources’ power plant station located in New England.  Any penalty ultimately determined or accepted by NextEra Energy Resources pursuant to a settlement would be shared among its operating subsidiaries and affiliates in the New England region that the NPCC found to be in noncompliance with certain NERC standards.  Although NEA is unable to predict with certainty the outcome of this matter, it is expected that the ultimate resolution will not have a material adverse effect on NE LP's and the Partnerships' results of operations or financial condition.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the Notes to Condensed Consolidated Financial Statements, Notes to Condensed Combined Financial Statements and Notes to Condensed Financial Statements contained herein (the Notes) and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2008 Form 10-K for the registrants.  The results of operations for an interim period generally will not give a true indication of results for the year.  In the following discussion, all comparisons are with the corresponding items in the prior year.

Results of Operations

NE LP and the Partnerships – NE LP's consolidated net income for the three months ended September 30, 2009 was $17.8 million compared to $43.9 million for the same period in 2008, and the Partnerships' net income for the three months ended September 30, 2009 was $20.3 million compared to $47.0 million for the same period in 2008.  The decrease in net income was primarily due to a decrease in revenues of $48.5 million partially offset by a decrease in fuel expense (net of fuel sales) of $22.1 million, both driven primarily by market conditions.

Revenues for the three months ended September 30, 2009 and 2008 were comprised of $71.1 million and $119.6 million of power sales to utilities, net of purchased power, respectively.  The $48.5 million decrease in revenues resulted from decreased pricing of $52.3 million partially offset by slightly increased generation of power at the two generating facilities of $3.8 million.

Fuel expense (net of fuel sales) decreased $22.1 million for the three months ended September 30, 2009 compared to the same period in 2008 primarily due decreased fuel prices of $27.5 million partially offset by $5.4 million related to increased generation of power at the two generating facilities.

NE LP's consolidated net income for the nine months ended September 30, 2009 was $51.3 million compared to $108.4 million for the same period in 2008, and the Partnerships' net income for the nine months ended September 30, 2009 was $59.6 million compared to $118.2 million for the same period in 2008.  The decrease in net income was primarily due to a decrease in revenues of $146.7 million partially offset by a decrease in fuel expense (net of fuel sales) of $89.2 million both driven primarily by market conditions.

Revenues for the nine months ended September 30, 2009 and 2008 were comprised of $193.4 million and $340.1 million of power sales to utilities, net of purchased power, respectively.  The $146.7 million decrease in revenues was primarily the result of decreased pricing of $120.4 million coupled with decreased generation of power at the two generating facilities of $26.3 million.

Fuel expense (net of fuel sales) decreased $89.2 million for the nine months ended September 30, 2009 compared to the same period in 2008 primarily due to decreased fuel prices of $73.1 million coupled with $16.1 million related to decreased generation of power at the two generating facilities.

Operations and maintenance expense for the three and nine month periods ended September 30, 2009 compared to the same periods in 2008 increased primarily due to scheduled maintenance outages at the NEA facility during the second and third quarters of 2009 coupled with estimated carbon dioxide (CO2) emissions costs which reflect the cost of required CO2 allowances resulting from the emission of CO2 into the air due to power generation.  The required acquisition of CO2 allowances became effective in January 2009 and relate to the Regional Greenhouse Gas Initiative (RGGI) greenhouse gas initiative.  RGGI is a greenhouse gas reduction initiative whereby ten Northeast and mid-Atlantic member states, including Massachusetts and New Jersey, have established a cap and trade program (a system by which affected generators buy and trade allowances under a set cap) for covered electric generating units.  RGGI members have agreed to stabilize power plant CO2 emissions at 2009 levels through the end of 2014 and to further reduce the sector’s emissions another 10% by the end of 2018.  The RGGI greenhouse gas reduction requirements affect NE LP’s and the Partnerships’ two facilities, requiring those facilities to acquire CO2 allowances for emissions of CO2 beginning in 2009.  All RGGI states have enacted legislation and regulations and NE LP and the Partnerships, through NEPM (NextEra Power Marketing LLC), began participating in quarterly CO2 emissions allowance auctions in 2008.

Depreciation and amortization expense increased slightly for the three months ended September 30, 2009 compared to the same period in 2008 due primarily to increased depreciation on assets, measured on a unit of production basis, resulting from increased generation at the NEA and NJEA facilities.  For the 2009 nine month period, depreciation and amortization was relatively unchanged compared to the same period in 2008.

NE LP and the Partnerships make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30.  Interest expense for NE LP and the Partnerships decreased in the three and nine months of 2009 due to decreasing principal balances on their outstanding debt.

Interest income decreased for the three and nine month periods ended September 30, 2009 compared to the same period in 2008 primarily due to decreased rates of return on lower cash balances.

In connection with repair work performed on one of NEA's combustion turbines in November 2007, NE LP and the Partnerships recognized a loss on disposal of assets of $2.8 million in 2007.  In March 2008 NEA entered into an agreement with a supplier (the Replacement Parts Agreement) under which NEA would recover up to $2.1 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts.  In March 2008 NEA placed orders with the supplier for $3.6 million of replacement turbine parts, which used all of the credits under the Replacement Parts Agreement, and a $1.8 million recovery under that agreement was recorded in other expense (income) for the nine months ended September 30, 2008.

Transcontinental Gas Pipeline Corporation (Transco) filed a new general rate case in August 2006 with the Federal Energy Regulatory Commission (FERC).  The rate case proposed rate increases for most services, fueled largely by a proposed increase of approximately $250 million in the cost of service.  NEA currently holds 50,508 MMBtu/day of capacity on Transco's system, and the proposed rates would have resulted in an annual increase of approximately $0.7 million in transportation costs for NEA.  NextEra Energy Resources, LLC (NextEra Energy) on behalf of NEA and other plants operated by NextEra Energy, filed a protest of the rate increase with the FERC in September 2006.  The filed rates went into effect on March 1, 2007.  In August 2007, an agreement in principal was reached by the parties whereby the settled rates will result in an annual savings of $0.3 million in transportation costs for NEA from the filed rates, with the difference between any amounts paid on the filed rates and the settled rates through the date of the final settlement to be refunded to NEA.  The proposed settlement agreement was submitted to the FERC for review and approval and in March 2008 the FERC accepted the settlement agreement.  NEA received a refund of $0.3 million under the settlement in July 2008.

The Funding Corp. and the Acquisition Corp. – Both the Funding Corp. and the Acquisition Corp. use interest income and principal payments received from the notes receivable from the Partnerships and NE LP, respectively, to make scheduled interest and principal payments on their outstanding debt.  Both entities are scheduled to make semi-annual principal and interest payments on June 30 and December 30.  Interest expense for both the Funding Corp. and Acquisition Corp. decreased in the three and nine months ended September 30, 2009 as a result of decreasing principal balances on their outstanding debt.

Liquidity and Capital Resources

NE LP and the Partnerships – Net cash provided by operating activities for NE LP and the Partnerships for the nine months ended September 30, 2009 and 2008 was $161.5 million and $212.1 million, respectively.  The $50.6 million decrease resulted from a reduction in net income of $57.0 million, offset in part by $6.4 million in working capital changes, primarily collections of accounts receivable in excess of payments on accounts payable.

Capital expenditures for NE LP and the Partnerships were $15.9 million and $6.5 million for the nine months ended September 30, 2009 and 2008, respectively.  The increase relates to various upgrades of equipment at the two generating facilities.  Noncash additions to the facilities were $5.6 million for the nine months ended September 30, 2009, and the Partnerships anticipate making cash payments of $2.4 million, and receiving credit from the equipment manufacturer for the remaining amounts, to fund for these additions in the fourth quarter of 2009.

NE LP and each of the Partnerships make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30.

The Funding Corp. and the Acquisition Corp. – Both the Funding Corp. and the Acquisition Corp. use interest income and principal payments received from the notes receivable from the Partnerships and NE LP, respectively, to make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30.

Market Risk Sensitivity

Commodity Price Risk – The prices received by the Partnerships for power sales under their long-term contracts do not move precisely in tandem with the prices paid by the Partnerships for natural gas.  To manage the price risk associated with purchases of natural gas and purchases of power, the Partnerships may, from time to time, enter into certain transactions either through public exchanges or by means of over-the-counter transactions with specific counterparties.  The Partnerships manage their risk associated with purchases of natural gas and power through the use of natural gas and power swap agreements.  The swap agreements require the Partnerships to pay a fixed price (absolutely or within a specified range) in return for a variable price on specified notional quantities of natural gas and power.

NE LP and the Partnerships use a value-at-risk (VaR) model to measure market risk in their trading and mark-to-market portfolios.  The VaR is the estimated nominal loss of market value based on a one-day holding period at a 95% confidence level using historical simulation methodology.  As of September 30, 2009 and December 31, 2008, the VaR figures (in thousands) are as follows:

	Trading and Managed Hedges(a)		Non-Qualifying Hedges (b)		Total
December 31, 2008	$	-	$	3	$	3
September 30, 2009	$	-	$	86	$	86
Average for the nine months ended September 30, 2009	$	-	$	30	$	30

——————————

(a) Trading and managed hedges are essentially all changes in the derivatives' fair value for power purchases and sales and trading activities, which are recognized on a net basis in operating revenues and for fuel purchases and sales which are recognized on a net basis in fuel expense.

(b) Non-qualifying hedges are employed to reduce the market risk exposure to physical assets which are not marked to market.  The VaR figures for the non-qualifying hedges do not represent the economic exposure to commodity price movements.

Concentration of Credit Risk – At September 30, 2009 and December 31, 2008, a majority of NE LP's and the Partnerships' trade receivables were derived from electricity sales to two utilities under long-term power purchase agreements.  If one or both of these customers' receivable balances should be deemed uncollectible, it could have a material adverse effect on NE LP's and the Partnerships' results of operations and financial condition.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

See Management's Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Sensitivity.

Item 4T.  Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of September 30, 2009, each of the Acquisition Corp. and NE LP had performed an evaluation, under the supervision and with the participation of its management, including the chief executive officer and chief financial officer of each of the Acquisition Corp. and NE LP or their equivalent (Principal Officers), of the effectiveness of the design and operation of each of the Acquisition Corp.'s and NE LP's disclosure controls and procedures (as defined in Securities Exchange Act of 1934 (Exchange Act) Rule 13a-15(e) or 15d-15(e)).  Based upon that evaluation, the Principal Officers of each of the Acquisition Corp. and NE LP concluded that the Acquisition Corp.'s and NE LP's disclosure controls and procedures are effective in timely alerting them to material information relating to the Acquisition Corp. and NE LP and its consolidated subsidiaries required to be included in the Acquisition Corp.'s and NE LP's reports filed or submitted under the Exchange Act and ensuring that information required to be disclosed in the Acquisition Corp.'s and NE LP's reports filed or submitted under the Exchange Act is accumulated and communicated to management, including its Principal Officers, to allow timely decisions regarding required disclosure.  The Acquisition Corp. and NE LP each have a Disclosure Committee, which is made up of several key management employees of NextEra Energy Resources involved in the management of the Acquisition Corp. and NE LP and reports directly to the Principal Officers of each of the Acquisition Corp. and NE LP, to monitor and evaluate these disclosure controls and procedures.  Due to the inherent limitations of the effectiveness of any established disclosure controls and procedures, management of the Acquisition Corp. and NE LP cannot provide absolute assurance that the objectives of their disclosure controls and procedures will be met.

(b) Changes in Internal Control over Financial Reporting

The Acquisition Corp. and NE LP are continuously seeking to improve the efficiency and effectiveness of their operations and of their internal controls.  This results in refinements to processes.  However, there has been no change in the Acquisition Corp.'s or NE LP's internal control over financial reporting that occurred during the Acquisition Corp.'s and NE LP's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Acquisition Corp.'s or NE LP's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A.  Risk Factors

There were no material changes from the risk factors disclosed in the registrants' 2008 Form 10-K.  The factors discussed in Part 1, Item 1A. Risk Factors in the Acquisition Corp.'s and NE LP's 2008 Form 10-K, as well as other information set forth in this report, which could materially adversely affect the Acquisition Corp.'s and NE LP's business, financial condition and/or future operating results should be carefully considered.  The risks described in the registrants' 2008 Form 10-K are not the only risks facing the registrants.  Additional risks and uncertainties not currently known to the registrants, or that are currently deemed to be immaterial, also may materially adversely affect the registrants' business, financial condition and/or future operating results.

Item 6.  Exhibits

Exhibit Number Description

31(a) Rule 13a-14(a)/15d-14(a) Certification of President (equivalent to the Chief Executive Officer) of Acquisition Corp.

31(b) Rule 13a-14(a)/15d-14(a) Certification of Treasurer (equivalent to the Chief Financial Officer) of Acquisition Corp.

31(c) Rule 13a-14(a)/15d-14(a) Certification of President (equivalent to the Chief Executive Officer) of ESI Northeast Energy GP, Inc. as Administrative General Partner of NE LP

31(d) Rule 13a-14(a)/15d-14(a) Certification of Vice President and Treasurer (equivalent to the Chief Financial Officer) of ESI Northeast Energy GP, Inc. as Administrative General Partner of NE LP

32(a) Section 1350 Certification of Acquisition Corp.

32(b) Section 1350 Certification of NE LP

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

NORTHEAST ENERGY, LP

(ESI Northeast Energy GP, Inc. as Administrative General Partner)

ESI TRACTEBEL ACQUISITION CORP.

(Registrants)

Date:  November 12, 2009

MARK R. SORENSEN

Mark R. Sorensen

Vice President and Treasurer of ESI Northeast Energy GP, Inc.

Treasurer of ESI Tractebel Acquisition Corp.

(Principal Financial and Principal Accounting Officer of the Registrants)