Mail Stop 3561
September 28, 2005
By Facsimile and U.S. Mail
Mr. John Cochrane
Chief Financial Officer
Niagara Mohawk Power Corporation
New England Power Company
25 Research Drive
Westborough, MA 01582
Re: Niagara Mohawk Power Corporation
Form 10-K for the fiscal year ended March 31, 2005
Filed June 29, 2005
File No. 1-2987
New England Power Company
Form 10-K for the fiscal year ended March 31, 2005
Filed July 14, 2005
File No. 1-6564
Dear Mr. Cochrane:
We have reviewed your filings and have the following
comments.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
Please be as detailed as necessary in your explanation. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Niagara Mohawk Power Corporation Form 10-K for the fiscal year
ended
March 31, 2005
Quantitative and Qualitative Disclosures about Market Risk, page
21
Gas Supply Price Risk, page 24
1. You indicate that you had 453 open futures contracts at March
31,
2004. Please confirm the date of your disclosure is correct. If
so,
tell us why the number of contracts at March 31, 2004 was relevant
whereas at the same date in 2005 it was not relevant.
Consolidated Statements of Comprehensive Income, page 27
2. Prospectively, separately report the amount of gains and losses
reclassified out of accumulated other comprehensive income into
earnings for the period related to your hedging activity. See
paragraph 47 of SFAS no. 133. In this regard, it appears that
"hedging activity" represents the net addition to OCI. If our
understanding is incorrect, please clarify it.
Consolidated Balance Sheets, page 29
3. Summarize for us what comprises other property and investments
totaling $55.048 million as of March 31, 2005.
Note B - Rate and Regulatory Issues, page 37
4. Regulatory assets are very significant to your balance sheet.
Prospectively, please ensure that you adhere to the disclosure
requirements of paragraph 20 of SFAS no. 71. If recovery of your
regulatory assets is provided without a return, or a return not
characteristic of the cost of capital, you should disclose the
amounts of such assets and the remaining recovery period
applicable
to them.
Note D - Commitments and Contingencies, page 39
Legal Matters - Retail Bypass, page 41
5. Please quantify for us the amount of payments withheld to date
regarding your station service delivery charges, and how you have
accounted for such amounts withheld in light of the FERC decision.
Furthermore, please quantify for us the amount of distribution
charges you have recorded in the past two years that could be
considered at risk of non-collection. A description of station
service charges and an example of how such charges are calculated
would be helpful to the staff`s understanding.
Note E - Long-Term Debt, page 42
6. Prospectively, enhance your long-term debt table to include the
month that your bonds will mature. Please also disclose any call
or
sinking fund terms or indicate which bonds are non-callable. See
Rule 5-02 of Regulation S-X as well as paragraph 4 to SFAS no.
129.
Tell us why you have not refinanced your higher rate debt given
current prevailing interest rates if such debt was callable.
Note H - Employee Benefits, page 51
Pension Benefits, page 52
7. Please explain to us why you are using different expected
returns
on plan assets for your postretirement benefit plans other than
pension (PBOP), and your pension benefits. We note the difference
in
the distribution of investment assets by type of plan. If this is
the reason for the difference, explain to us how you determined
your
expected return on plan assets for each benefit plan.
Medicare Act of 2003, page 58
8. Tell us the method and length of time over which you are
amortizing the gain associated with the adoption of FSP 106-2. In
this regard, explain how you determine the average remaining
service
period of active participants and correlate that period to the
reduction in pension expense relative to the decrease in the
benefit
obligation.
Note J - Segments, page 59
9. Please tell us how you are complying with the disclosure
requirements of paragraphs 26-28 of SFAS no. 131.
Item 14. Principal Accountant Fees and Services, page 70
10. Explain to us why your audit fees went down by approximately
49%
from 2004 to 2005.
Schedule II - Valuation and Qualifying Accounts and Reserves, page
73
11. Explain to us what comprised your miscellaneous reserve and
how
the reserve was written off.
Niagara Mohawk Power Corporation Form 10-Q for the quarter ended
June
30, 2005
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 15
12. Please explain to us if you were granted regulatory approval
to
record the regulatory asset and related revenue associated with
accounts receivable that were previously fully reserved. If not
granted regulatory approval please tell us the entries that were
made
and explain your reasoning for recording as revenue.
New England Power Company Form 10-K for the fiscal year ended
March
31, 2005
General
13. Explain to us why you have not presented Schedule II as a
financial statement schedule to your Form 10-K showing the detail
of
your reserves recorded against your accounts receivable. If other
than no reserve, please provide a roll-forward of your accounts
receivable reserve for the past two years.
Business, page 4
Compliance with Environmental Requirements, page 6
14. You indicate that you have initiated a program to investigate
and
remediate certain properties which you have determined may be
contaminated with industrial waste. Describe to us the properties
in
question and, if available, please quantify for us the estimated
potential range of remediation costs. Tell us why no apparent
disclosure exists in the financial statements pursuant to SFAS no.
5.
Legal Proceedings, page 7
15. Explain to us how you have accounted for the uncollected
charges
assessed under the Norwood Contract.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 9
Results of Operations, page 11
16. Please quantify all changes you discuss in your results of
operations. For example, you state that operating revenues
decreased
for the year ended March 31, 2005, as a result of decreased
transmission operation and maintenance expense and decreased
benefit
costs billed to transmission customers, partially offset by higher
CTC revenues; however, you do not quantify each change.
17. You indicate in your business discussion that the Regional
Transmission Organization (RTO) commenced operations effective
February 1, 2005, and the company has become a Participating
Transmission Owner (PTO). Provide us an understanding of whether
and
how this change will affect your results of operations. If the
effect relates to the control of your transmission assets, please
help us understand how the change will affect how you bill users
of
your transmission system.
Quantitative and Qualitative Disclosures About Market Risk, page
15
18. Your discussion involving the remarketing of your variable
rate
debt could suggest that this debt may be short-term in nature.
Please provide to us an example of how the remarketing process
operates. Please specifically address the consequences associated
with a failed remarketing including the possibility of repurchase
of
the debt. Also, provide us a detailed discussion of how you
concluded such debt is long-term in nature. Please reference any
applicable accounting literature used to make your classification
decision. Lastly, tell us whether you have hedged your interest
rate
exposure for any portion of your variable rate debt or whether
natural hedges exist.
Note C - Nuclear Investments, page 29
19. Explain to us why your equity in net income disclosed in this
note does not agree with your statements of income; especially for
2005. Please supplementally reconcile.
Note D - Commitments and Contingencies, page 30
20. Given you are conducting decommissioning operations, tell us
whether and where you have classified the current portion of
decommissioning costs. If not, tell us why. We note disclosure
of a
long-term liability for nuclear plant costs.
Note H - Employee Benefits, page 48
21. As part of our review, we compared your assumptions used to
determine your pension and PBOP expense with the assumptions
disclosed in Niagara Mohawk`s Form 10-K. We note differences in
the
discount rates used to determine your 2003 pension and PBOP
expenses.
We also noted a difference in the expected long-term return on
plan
assets used to determine your pension expense for 2003. Please
explain why such differences exist.
Note J - Segments, page 46
22. Please see our prior comment relating to the above caption
issued
with respect to Niagara Mohawk Power Corporation.
Please respond to these comments within 10 business days
or
tell us when you will provide us with a response. Please furnish
a
letter with your responses to our comments and provide any
requested
supplemental information. Please understand that we may have
additional comments after reviewing your responses to our
comments.
Please file your response letter on EDGAR as a correspondence
file.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please provide, in
writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.
If you have any questions regarding this comment, please
direct them to Robert Babula, Staff Accountant, at (202) 551-3339
or,
in his absence, to the undersigned at (202) 551-3849. Any other
questions regarding disclosures issues may be directed to H.
Christopher Owings, Assistant Director at (202) 551-3725.
Sincerely,
Jim Allegretto
Senior Assistant Chief Accountant
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Mr. John Cochrane
Niagara Mohawk Power Corporation
New England Power Company
September 28, 2005
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