SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission Registrants, State of Incorporation I.R.S. Employer
File Number Address; and Telephone Number Identification
No.
1-5366 EASTERN UTILITIES ASSOCIATES 04-1271872
(A Massachusetts voluntary association)
One Liberty Square
Boston, Massachusetts 02109
Telephone (617) 357-9590
0-2602 Blackstone Valley Electric Company 05-0108587
(A Rhode Island Corporation)
Washington Highway
Lincoln, Rhode Island 02865
Telephone (401) 333-1400
0-8480 Eastern Edison Company 04-1123095
(A Massachusetts Corporation)
110 Mulberry Street
Brockton, Massachusetts 02403
Telephone (508) 580-1213
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Registrant Title of Each Class on which registered
Eastern Utilities Common Shares, New York Stock Exchange
Associates par value $5 per share Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Each Class
Blackstone Valley 4.25% Non-Redeemable Preferred Stock,
Electric Company $100 Par Value
5.60% Non-Redeemable Preferred Stock,
$100 Par Value
Eastern Edison 6.625% Redeemable Preferred Stock,
Company $100 Par Value
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. Yes [X] No [ ]
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 registrants' 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]
State the aggregate market value of the voting stock held by non-affiliates of
the registrants. As of March 18, 1996:
Eastern Utilities Associates Common Shares, $5 par value - $102,183,775
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Eastern Utilities Associates Common Shares
Outstanding at March 18, 1996: 20,436,755
Blackstone Valley Electric Company Common Shares
Outstanding at March 18, 1996: 184,062
Eastern Edison Company Common Shares
Outstanding at March 18, 1996: 2,891,357
Portions of the Annual Reports to Shareholders of Eastern Utilities Associates,
Blackstone Valley Electric Company, and Eastern Edison Company for the year
ended December 31, 1995, are incorporated by reference into Part II. Portions
of the Eastern Utilities Associates Proxy Statement dated March 27, 1996 are
incorporated by reference into Part III.
EASTERN UTILITIES ASSOCIATES
BLACKSTONE VALLEY ELECTRIC COMPANY
EASTERN EDISON COMPANY
1995 Annual Report on Form 10-K
Table of Contents
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . .I
GLOSSARY OF DEFINED TERMS. . . . . . . . . . . . . . . . . . . IV
Item 1. BUSINESS . . . . . .. . . . . . . . . . . . . . . . . .1
System Overview. . . . . . . . . . . . . . . . . . . . . . . .1
General - Core Electric Business . . . . . . . . . . . . . . .1
Electric Utility Industry Restructuring . . . . . . . . .4
General - EUA Cogenex. . . . . . . . . . . . . . . . . . . . .6
Construction . . . . . . . . . . . . . . . . . . . . . . . . .9
Construction Program - EUA. . . . . . . . . . . . . . . .9
Construction Program - Blackstone . . . . . . . . . . . 10
Construction Program - Eastern Edison . . . . . . . . . 10
Fuel for Generation. . . . . . . . . . . . . . . . . . . . . 10
Nuclear Power Issues . . . . . . . . . . . . . . . . . . . 13
General . . . . . . . . . . . . . . . . . . . . . . . 13
Decommissioning . . . . . . . . . . . . . . . . . . . . 14
Yankee Atomic . . . . . . . . . . . . . . . . . . . . . 14
Maine Yankee . . . . . . . . . . . . . . . . . . . . . 15
Recent NRC Actions . . . . . . . . . . . . . . . . . . 15
Public Utility Regulation. . . . . . . . . . . . . . . . . . 15
Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
FERC Proceedings. . . . . . . . . . . . . . . . . . . . 18
Massachusetts Proceedings . . . . . . . . . . . . . . . 19
Rhode Island Proceedings. . . . . . . . . . . . . . . . 21
Environmental Regulation . . . . . . . . . . . . . . . . . . 23
General . . . . . . . . . . . . . . . . . . . . . . . . 23
Electric and Magnetic Fields. . . . . . . . . . . . . . 24
Water Regulation. . . . . . . . . . . . . . . . . . . . 24
Air Regulation. . . . . . . . . . . . . . . . . . . . . 25
Environmental Regulation of Nuclear Power. . . . . . . . . . 27
Item 2. PROPERTIES . . . . . .. . . . . . . . . . . . . . . . 27
Power Supply . . . . . . . . . . . . . . . . . . . . . . . . 27
Other Property . . . . . . . . . . . . . . . . . . . . . . . 30
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . 30
Rate Proceeding . . . . . . . . . . . . . . . . . . . . . . 30
Environmental Proceedings . . . . . . . . . . . . . . . . . 30
EUA WestCoast L.P. . . . . . . . . . . . . . . . . . . . . . 34
Other Proceedings. . . . . . . . . . . . . . . . . . . . . . 34
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. .35
EXECUTIVE OFFICERS OF EASTERN UTILITIES ASSOCIATES . . . . . . 35
PART II
Item 5. MARKET FOR EUA'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . 36
Item 6. SELECTED FINANCIAL DATA. . . . . . .. . . . . . . . . 36
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . 37
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . 37
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES. . . . . . . . . 37
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANTS:
Eastern Utilities Associates. . . . . . . . . . . . . . 37
Blackstone and Eastern Edison . . . . . . . . . . . . . 38
Item 11. EXECUTIVE COMPENSATION . . . . . .. . . . . . . . . . 39
Eastern Utilities Associates. . . . . . . . . . . . . . 39
Blackstone and Eastern Edison . . . . . . . . . . . . . 40
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . 40
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . 40
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K . . . . . . . . . . . . . . . . . . . . . . 41
(a)(1) Financial Statements . . . . . . . . . . . . . . 41
(a)(2) Financial Statement Schedules . . . . . . . . . 41
(a)(3) Exhibits (*denotes filed herewith).. . . . . . . 41
(b) Reports on Form 8-K. . . . . . . . . . . . . . . . 54
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Reports of Independent Accountants. . . . . . . . . . . . . . . 64
Consent of Independent Accountants . . . . . . . . . . . . . . 66
GLOSSARY OF DEFINED TERMS
The following is a glossary of frequently used abbreviations and/or acronyms
found throughout this report:
The EUA System Companies
Blackstone Blackstone Valley Electric Company
Eastern Edison Eastern Edison Company
EUA Eastern Utilities Associates
EUA Cogenex EUA Cogenex Corporation
EUA Day EUA Day Company, a subsidiary of EUA Cogenex
EUA Nova EUA Nova, a division of EUA Cogenex
EUA Energy EUA Energy Investment Corporation
EUA Ocean State EUA Ocean State Corporation
EUA Service EUA Service Corporation
Montaup Montaup Electric Company
Newport Newport Electric Corporation
Registrants EUA, Blackstone and Eastern Edison
Retail Subsidiaries Blackstone, Eastern Edison
and Newport
Non-Affiliated Companies
Aquidneck Aquidneck Power Limited Partnership
Great Bay Power Great Bay Power Corporation (formerly EUA
Power Corporation)
Maine Yankee Maine Yankee Atomic Power Company
OSP Ocean State Power Project Units 1 and 2
Yankee Atomic Yankee Atomic Electric Company
Regulators/Regulations
1935 Act Public Utility Holding Company Act of 1935
CERCLA Federal Comprehensive Environmental
Response, Compensation and Liability
Act of 1980
Chapter 21E Massachusetts Oil and Hazardous Material
Release Prevention and Response Act
Clean Air Act Amendments Clean Air Act Amendments of 1990
DEP Massachusetts Department of Environmental
Protection
DEQE Massachusetts Department of Environmental
Quality Engineering
GLOSSARY OF DEFINED TERMS (Cont'd)
Regulators/Regulations (continued)
DOE Department of Energy
Energy Policy Act Energy Policy Act of 1992
EPA Federal Environmental Protection Agency
FAS106 Statement No. 106 "Employer's Accounting for
Post-Retirement Benefits Other Than
Pensions"
FERC Federal Energy Regulatory Commission
IRS Internal Revenue Service
MDPU Massachusetts Department of Public
Utilities
NESCAUM Northeast States for Coordinated Air Use
Management
NRC Nuclear Regulatory Commission
NWPA Nuclear Waste Policy Act
Price-Anderson Act The Price-Anderson Act, as amended by the
Price-Anderson Amendments of 1988
PURPA Public Utility Regulatory Policies Act
of 1978
RCRA Resource Conservation and Recovery Act of
1976
RIDEM Rhode Island Department of Environmental
Management
RIDPUC Rhode Island Division of Public Utilities
and Carriers
RIPUC Rhode Island Public Utilities Commission
SEC Securities and Exchange Commission
TEC-RI The Energy Counsel of Rhode Island
TSCA Toxic Substances Control Act
Other
AFUDC Allowance for Funds Used During
Construction
BTU British Thermal Unit
C&LM Conservation and Load Management
DSM Demand Side Management
EMF Electric and Magnetic Fields
EWG Exempt Wholesale Generator
IPP Independent Power Producer
KWH Kilowatthour
GLOSSARY OF DEFINED TERMS (Cont'd)
Other (continued)
MBTU Millions of British Thermal Units
MOU Memorandum of Understanding
MW Megawatt
NEPOOL New England Power Pool
PCB Polychlorinated Biphenyls
PRP Potentially Responsible Party
QF Qualifying cogeneration and small power
production facilities pursuant to PURPA
Seabrook Project Seabrook Nuclear Power Project located in
Seabrook, New Hampshire
PART I
Item 1. BUSINESS
System Overview
Eastern Utilities Associates is a Massachusetts voluntary association
organized and existing under a Declaration of Trust dated April 2, 1928, as
amended, and is a registered holding company under the 1935 Act. Blackstone, a
registered retail electric utility organized under the laws of the State of
Rhode Island in 1912 operates in northern Rhode Island. Eastern Edison, a
registered retail electric utility company is a corporation organized under the
laws of the Commonwealth of Massachusetts in 1883, operates in southeastern
Massachusetts. EUA owns directly all of the shares of common stock of
Blackstone, Eastern Edison and Newport, a retail electric utility which
operates in south coastal Rhode Island. These subsidiaries are collectively
referred to as the Retail Subsidiaries. Eastern Edison owns all of the
permanent securities of Montaup, a generation and transmission company, which
supplies electricity to Eastern Edison, Blackstone, Newport and two
unaffiliated utilities for resale. EUA also owns directly all of the shares of
common stock of EUA Cogenex, EUA Energy, EUA Ocean State and EUA Service. EUA
Service provides various accounting, financial, engineering, planning, data
processing and other services to all EUA System companies. EUA Cogenex is an
energy services company. EUA Energy invests in energy-related projects. EUA
Ocean State owns a 29.9% interest in OSP's two gas-fired generating units.
(See Item 2. PROPERTIES -- Power Supply.) The holding company system of EUA,
the Retail Subsidiaries, Montaup, EUA Service, EUA Cogenex, EUA Energy and EUA
Ocean State is referred to as the EUA System. The EUA System is organized into
a business unit structure. The Core Electric Business consists of the Retail
Subsidiaries and Montaup. The Energy Related Business includes EUA Cogenex,
EUA Energy and EUA Ocean State. The Corporate Business is made up of EUA and
EUA Service.
General - Core Electric Business
As of December 31, 1995, the number of regular employees in the core
electric and corporate business units was 1,077. Blackstone had 126 regular
non-union employees. Eastern Edison and Montaup had 344 regular employees.
Labor bargaining unit contracts covering approximately 161 employees of Eastern
Edison in the Fall River area and of Montaup, and 67 employees of Newport
expire in June 1997, March 1998 and September 1996, respectively. Relations
with employees are considered to be satisfactory.
On March 15, 1995, EUA announced a corporate reorganization which, among
other things, consolidated management of Eastern Edison, Blackstone and
Newport. As part of the reorganization, a voluntary retirement incentive,
effective June 1, 1995, was offered to sixty-six professionals of the
EUA System. Forty-nine of those eligible, including nine employees of
Blackstone and twenty-two employees of Eastern Edison and Montaup, accepted the
incentive and retired effective June 1, 1995.
The Core Electric Business supplies retail electric service in 33 cities
and towns in southeastern Massachusetts and Rhode Island. The largest
communities served are the cities of Brockton and Fall River, Massachusetts.
The retail electric service territory covers approximately 595 square miles and
has an estimated population of approximately 731,000. At December 31, 1995,
Core Electric Business served approximately 297,000 retail customers.
Blackstone serves a territory of about 150 square miles in portions of
northern Rhode Island with a population of approximately 206,000. At December
31, 1995, Blackstone furnished retail electric service to approximately 85,000
customers in the cities of Central Falls, Pawtucket and Woonsocket, and four
surrounding towns.
Eastern Edison supplies retail electric service in 22 cities and towns in
southeastern Massachusetts. The largest communities served are the cities of
Brockton and Fall River, Massachusetts. The retail electric service territory
covers approximately 390 square miles and has an estimated population of
approximately 456,000. At December 31, 1995, Eastern Edison served
approximately 180,000 retail customers.
For 1995, 1994 and 1993, the Core Electric Business accounted for
approximately 86%, 87%, and 88%, respectively, of total operating revenues of
the EUA System. The remaining balance of operating revenues during these
periods were attributable to EUA Cogenex.
Montaup supplies the Retail Subsidiaries with nearly 100% of each
company's electric requirements. About 51% of the net generating capacity of
the EUA System comes from a combination of the following sources: (i) wholly
owned EUA System generating plants, primarily Montaup's 153 MW Somerset
facility located in Somerset, Massachusetts; (ii) Montaup's net entitlement of
257 MW from the 584 MW Canal No. 2 unit, which is located in Sandwich,
Massachusetts and is 50% owned by Montaup; and, (iii) entitlements from units
in which Montaup has partial ownership interests (by joint ownership through
tenancy-in-common or by stock ownership) that are 4.5% or less. The remaining
49% of the net generating capacity of the EUA System comes from units in which
Montaup has long-term or short-term power contracts for shares ranging from
5.94% to 41.67% of the unit's capacity, including 28% of the OSP Units 1 and 2
in which EUA Ocean State has a 29.9% partnership interest, or entitlements from
the Hydro-Quebec Project through NEPOOL. (See Item 2. PROPERTIES -- Power
Supply for further details of the EUA System's sources of power supply).
The Retail Subsidiaries and Montaup hold valid franchises, permits and
other rights which are necessary to allow these companies to conduct electric
business within the territories which they serve. Such franchises, permits and
other rights contain no unduly burdensome restrictions or limitations upon
duration.
The EUA System's electric sales are seasonal to some extent due to
electricity usage for heating and lighting in the winter and air conditioning
in the summer. The EUA System is not dependent on a single customer or a few
customers for its electric sales.
There is no competition from other electric utilities within the retail
territories served by the Retail Subsidiaries at this time. Federal law
permits, however, certain federal facilities to by-pass the local utility and
purchase power directly from another utility. It is probable that in the
future retail competition could be imposed by legislative or regulatory action
at the federal or state level. (See "Electric Utility Industry Restructuring"
below).
At the wholesale level, Montaup faces new sources of competition primarily
as a result of PURPA, the Energy Policy Act and other policies being
implemented by the MDPU and considered by the RIPUC relating to the
solicitation of competitive proposals for new generation sources. Non-utility
wholesale generators, generally known as independent power producers or IPPs,
are subject to FERC regulations under the Federal Power Act as well as various
other federal, state, and local regulations. PURPA was intended, among other
things, to promote national energy independence and diversification of energy
supply and to improve the overall efficiency of energy usage. PURPA created a
class of non-utility power generation facilities called QFs. PURPA allows QFs
to sell power generated by the QFs to local utilities at specified rates based
on each utility's avoided cost. In order to further promote competition in
energy supply, the Energy Policy Act established another class of non-utility
generators, generally referred to as EWGs, which are exempt from the 1935 Act
and increased FERC's power to order transmission access, resulting in FERC's
Regional Transmission Group Policy. As a complement to the federal
initiatives, the MDPU and the RIPUC have implemented regulations which require
utilities to integrate least-cost planning with competitive proposals to meet
requirements for new generation. Both states have also approved a Memorandum
of Understanding among Montaup and the Retail Subsidiaries that establishes a
framework which makes possible a coordinated, regional review of the resource
planning and procurement process of the EUA System Companies. (see Public
Utility Regulation below).
Competition at the wholesale level is likely to increase as a result of
the FERC's pending action on its "Mega-NOPR" regarding open access to
transmission and recovery of stranded costs. Two dockets, being considered
jointly, were initiated by the FERC with the express purpose of promoting
competition in the wholesale electric power industry. A final rule is expected
during the first half of 1996, and will affect the EUA System primarily in the
requirement to file and implement non-discriminatory open access transmission
tariffs. Montaup anticipates filing the required tariffs in advance of the
FERC's final rule-making order. Montaup will face increased competition in the
wholesale generating market, primarily based on price, from QFs and EWGs and in
the future could be affected by such competition supplying generation to its
customers. More recently, non-utility power marketers have become active,
engaging in new and creative power transactions. Power marketers are likely to
become more prevalent in the market as transmission access opens up and
opportunities arise, due to price differentials, to move power inter-
regionally.
Across the country, including the states serviced by EUA's Retail
Subsidiaries, there has been an increasing focus on competitive issues.
Regulators in Massachusetts and Rhode Island are currently examining, among
other things, issues related to incentive regulation and potential electric
industry restructuring including retail wheeling (the transmission of power
from one utility for sale by that system to retail customers of a different
system). The timing and impact of these examinations on the financial
condition of the utility industry in general and EUA's utility operations in
particular are uncertain at this time. EUA will continue to monitor and
participate in all regulatory investigations into the many issues surrounding
this move to a competitive marketplace (see "Electric Utility Industry
Restructuring" below).
The EUA System companies are members of NEPOOL, which is open to any
person or organization engaged in the electric utility business such as
investor-owned, municipal, and cooperative utilities as well a non-utilities
and others such as brokers and marketers. The systems making up NEPOOL own or
purchase the output from virtually all the generation in New England.
Since the EUA System operates an integrated transmission system which, in turn,
is connected to the New England 345 KV grid at three locations, NEPOOL treats
the EUA System as one consolidated participant. This is consistent with the
EUA System's planning and resource management perspective. The objectives of
NEPOOL are: (a) to assure that the bulk power supply of New England and any
adjoining areas served by participants conforms to proper standards of
reliability, and (b) to attain maximum practicable economy in the bulk power
supply consistent with all proper standards of reliability and to provide for
equitable sharing of the resulting benefits and costs. These objectives are
accomplished through joint planning, central dispatching, coordinated
construction, operation, and maintenance of electric generation and
transmission facilities, cooperation in environmental matters, and through
effective coordination with other power pools and utilities situated in the
United States and Canada.
The NEPOOL agreement imposes obligations concerning generating capacity
reserve and the right to use major transmission lines, and provides for central
dispatch of the generating capacity of NEPOOL's members with the objective of
achieving reliable and economical use of the region's facilities. Pursuant to
the NEPOOL agreement, interchange sales to NEPOOL are made at a price
approximately equal to the fuel cost for generation without contribution to the
support of fixed charges. The capacity responsibilities of Montaup and the
Retail Subsidiaries under the NEPOOL agreement are based on an allocated share
of a New England capacity requirement which is determined for each period on
the basis of certain regional reliability criteria. Because of its
participation in NEPOOL, the EUA System's operating revenues and costs are
affected to some extent by the operations of other members. A comprehensive
review of the NEPOOL Agreement was initiated in 1994 and continued through 1995
to look at its current structure and determine what will be done as the
electric utility environment becomes increasingly competitive.
Electric Utility Industry Restructuring:
The electric industry is in a period of transition from a traditional rate
regulated environment to a competitive marketplace. While competition in the
wholesale electric market is not new, electric utilities are facing impending
competition in the retail sector.
In 1995, Eastern Edison, Blackstone and Newport participated with
collaborative groups in their respective states consisting of other utilities,
industrial users, environmental groups, governmental agencies and consumer
advocates in submitting similar sets of interdependent principles with their
respective state regulatory commissions addressing electric utility industry
restructuring. These filings were intended to be statements of the consensus
position by the signatories of the principles that should underlie any electric
industry restructuring proposal and include but are not limited to principles
addressing stranded cost recovery, unbundling of services and demand side
management programs. Each set of principles was submitted on the condition
they be approved in full by the respective Commissions.
The RIPUC accepted all but one of the principles submitted by the Rhode
Island Collaborative with minor modifications to certain language in others and
added a new principle which supports negotiation (as opposed to litigation) to
resolve conflicts as restructuring moves forward and directed the Rhode Island
Collaborative to proceed with negotiations on the issues presented in the
principles and to submit a progress report, which was submitted in February
1996. The one principle that was not accepted provided for subsidization of
renewable energy sources. (See Rates, "Rhode Island Proceedings" for further
discussion).
In February 1996 a bill was introduced in the Rhode Island legislature
that, if enacted, would allow customer choice of electricity supplier
commencing January 1, 1998 for large industrial customers and phasing in all
customers by January 1, 2001. The proposed legislation also provides
for recovery of "stranded investments" through a transition charge initially
set at three cents per KWH.
EUA believes that development of the proposed legislation should have been
conducted in a public forum so that all interested stakeholders could have
participated. EUA believes that competition, if done right, can benefit
customers; however, there are substantial issues about the proposed legislation
which EUA is currently reviewing.
The MDPU issued an order enumerating principles, similar to those
submitted by the Massachusetts Collaborative, that describe the key
characteristics of a restructured electric industry and provides for, among
other things, customer choice of electric service providers, services, pricing
options and payment terms, an opportunity for customers to share in the
benefits of increased competition, full and fair competition in the generation
markets and incentive regulation for distribution services where competition
cannot exist. This order sets out principles for the transition from a
regulated to a competitive industry structure and identifies conditions
for the transition process which will require investor-owned utilities to
unbundle rates, provide consumers with accurate price signals and allow
customers choice of generation services. The order also provides for the
principle of recovery of net, non-mitigable stranded costs by investor-owned
utilities resulting from the industry restructuring.
Each Massachusetts investor-owned utility is required to file
restructuring proposals for moving from the current regulated industry
structure to a competitive generation market. The schedule for the filing
requirement is staggered. The initial group of utilities was required to file
their proposals in February 1996. The second group is required to file within
three months of the MDPU's orders on the first group of submissions. Eastern
Edison Company filed its proposal, "Choice and Competition" (see below) with the
first group of proposals and is awaiting MDPU review. (See Rates,
"Massachusetts Proceedings" for further discussion).
In January 1996, EUA unveiled its preliminary proposal for a restructured
electric utility industry called "Choice and Competition" and began discussions
with the Rhode Island and Massachusetts Collaboratives. The plan proposes,
among other things: choice of power supplier by all customers as early as
January 1998; open access transmission services; performance based rates
for electric distribution services; all utility generation competing for power
sales and; a transition charge allowing regional utilities the opportunity to
recover, among other things, the costs of past commitments to nuclear and
independent power. The company believes the plan, which requires participation
by all New England parties, satisfies the principles adopted in both Rhode
Island and Massachusetts, and provides a fair and equitable transition to a
competitive electric utility marketplace for all parties.
Historically, electric rates have been designed to recover a utility's
full costs of providing electric service including recovery of investment in
plant assets. Also, in a regulated environment, electric utilities are subject
to certain accounting rules that are not applicable to other industries.
These accounting rules allow regulated companies, in appropriate circumstances,
to establish regulatory assets and liabilities, which defer the current
financial impact of certain costs that are expected to be recovered in future
rates. EUA believes that its Core Electric operations continue to meet the
criteria established in these accounting standards. Effects of legislation
and/or regulatory initiatives or EUA's own initiatives such as "Choice and
Competition" could ultimately cause EUA's Core Electric companies to no longer
follow these accounting rules. In such an event, a non-cash write-off of
regulatory assets and liabilities could be required at that time.
In addition, if legislative or regulatory changes and/or competition
result in electric rates which do not fully recover the company's costs, a
write-down of plant assets could be required pursuant to Financial Accounting
Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" (FAS121) issued in March 1995, effective
for fiscal year 1996.
General - EUA Cogenex
EUA Cogenex is a wholly owned subsidiary of EUA. EUA Cogenex is an
energy services company that employs energy efficient technology and equipment
intended to reduce the energy consumption and costs of its customers. Such
technology and equipment include building automation systems, lighting
modifications, boiler and chiller replacements and other mechanical measures
such as motors and drives. EUA Cogenex may design, install, own, operate,
maintain, and finance specific energy efficient applications for its customers.
EUA Cogenex is compensated for these services primarily through energy
services agreements in which EUA Cogenex and the customer who occupies or owns
a facility agree upon a prescribed base year and a set of savings calculations.
EUA Cogenex then receives payments based on a portion of the savings that
result from the installation and maintenance of the energy efficient equipment
in the facility. Some of EUA Cogenex revenues under these agreements are
dependent upon the actual achievement of energy savings; therefore EUA Cogenex
assesses the financial and technical risk of each customer and project. In
addition, EUA Cogenex participates in demand side management (DSM) programs
sponsored by electric utilities as a means to decrease both base load and peak
demand on the utilities' systems. In utility DSM programs, EUA Cogenex
contracts with the utility and its commercial and industrial customers in order
to decrease the overall demand on the utility system or to reduce peak demand,
curtailing the need for costly capacity additions. EUA Cogenex is paid by the
utility based on the reduction in the demand on the utility's system and may
also receive a portion of the customers' savings by entering into energy
services agreements of the type described above with those customers. EUA
Cogenex contracts for utility DSM programs through a bidding process or
participates in the utility's "Standard Offer Program". EUA Cogenex
also may, from time to time, acquire existing DSM contracts or energy services
agreements, or the benefits from those contracts from other energy services
companies.
EUA Cogenex's principal markets include institutional, commercial,
industrial and government entities, and through its EUA Citizens Conservation
Services subsidiary, public and private multi-family housing.
In September 1995, EUA announced that EUA Cogenex was discontinuing its
cogeneration operations because overall, the cogeneration portfolio had not
performed up to expectations. EUA Cogenex's total net investment in its
cogeneration portfolio was $29.2 million. The decision to discontinue its
cogeneration operations resulted in a one-time, after-tax charge of
approximately $10.5 million, or 52 cents per share, to 1995 earnings.
EUA Cogenex also operates a lighting services division, EUA Nova, and a
controls division, EUA Day. EUA Nova provides lighting products designed to
achieve an efficiency gain through the integration of various lamp, ballast and
light reflector products. EUA Day, is primarily engaged in the business of
customization, installation and servicing of building temperature control
systems, monitoring and verification systems and process control systems for
the purpose of energy conservation. These systems are primarily designed for
regulating lighting and heating, ventilation and air-conditioning, but can also
simultaneously be used for security surveillance, building entry and exit,
equipment monitoring and air quality monitoring.
EUA Cogenex also provides consulting services to its customers in the form
of training in the proper use and maintenance of the energy equipment. This
service includes instruction in the use of existing equipment as well as newly
installed equipment so that further energy savings can be realized. In
addition, EUA Cogenex monitors installed projects on a 24-hour basis and
dispatches third party contractors to make repairs and/or adjustments.
In 1995, EUA Cogenex acquired certain energy services assets of Citizens
Conservation Corporation with headquarters in Boston, Massachusetts in exchange
for preferred stock of a newly formed subsidiary of EUA Cogenex, EUA Citizens
Conservation Services, which will utilize those assets. EUA Citizens
Conservation provides energy conservation services to the public and private
multi-family housing sector. EUA Cogenex also acquired the Highland Energy
Group, an energy services company in Boulder, Colorado in exchange for common
shares of EUA. Highland provides energy conservation services in Colorado,
Texas, Ohio, North Carolina and certain other mid-western states.
Also in 1995, EUA Cogenex announced joint ventures with affiliates of the
Allegheny Power System and Western Resources, Inc. to provide energy services
in and around the geographic regions served by those companies. In early 1996,
EUA Cogenex announced a proposed joint venture with Monenco-Agra of Canada to
provide similar services in Canada.
There are no seasonal factors that impact normal business operations of
EUA Cogenex.
As a result of its ownership by EUA, a registered holding company under
the 1935 Act, EUA Cogenex is regulated by the SEC in matters related to
financing and asset acquisitions. On February 15, 1995, the SEC issued an
order lifting its previous requirement that EUA Cogenex earn more than
50% of its revenues in the New England/New York area. There are no current
geographic restrictions on EUA Cogenex operations.
At December 31, 1995, EUA Cogenex employed 253 persons in its operations.
EUA Cogenex's competition is comprised primarily of the manufacturers and
distributors of the energy efficiency equipment which it installs, other energy
services companies, engineering consulting firms and from financial
institutions who provide capital to finance energy efficiency projects.
The potential deregulation of the electric utility industry may have an
effect on EUA Cogenex. Electric industry deregulation may present new markets
and opportunities in which EUA Cogenex may participate. However, some electric
utilities have, or announced plans to establish, subsidiaries that will
compete directly with EUA Cogenex. In addition, the move toward electric
industry deregulation has also resulted in a reduction of electric utility
sponsored DSM programs. Termination of any such DSM programs by one or more
electric utilities in which EUA Cogenex participates could result in a
reduction of EUA Cogenex's revenues.
As of December 31, 1995, EUA Cogenex participated in six partnerships. It
is the managing general partner in all of the partnerships and has limited
partnership interest in certain of the partnerships. EUA Cogenex has provided
virtually all of the capital to the partnerships and is generally entitled to a
return of, and on, this capital before any significant partnership distribution
is made to the other general partners. All partnerships and their customers
are subject to the same selection and screening process to establish acceptable
credit quality.
The rates charged by EUA Cogenex to customers through its energy service
agreements are not subject to the jurisdiction of any regulatory agency.
The following table sets forth the amounts of revenues, pre-tax income,
net earnings and identifiable assets attributable to the consolidated
operations of EUA Cogenex:
Year Ended December 31,
1995 1994 1993
(Thousands)
Operating Revenues $ 79,499 $ 74,480 $ 66,912
Pre-tax Income $(13,885)(1) $ 7,266 $ 5,864
Net Earnings $ (7,904)(1) $ 4,171 $ 3,536
Total Assets $199,115 $ 211,310 $ 191,432
(1) Includes pre-tax charge of $18.1 million, $10.5 million after-tax, related
to discontinuance of cogeneration operations.
See Note I - Financial Information by Business Segment, of Consolidated
Financial Statements contained in the EUA's Annual Report to Shareholders for
the year ended December 31, 1995 (Exhibit 13-1.03 filed herewith).
Construction
Construction Program - EUA:
The EUA System's cash construction expenditures for the year ended
December 31, 1995 were approximately $77.9 million.
Planned cash construction expenditures for 1996, 1997 and 1998, as set
forth below, are estimated to total $269.3 million.
EUA SYSTEM CONSTRUCTION PROGRAM
(Dollars in Thousands)
1996 1997 1998 3-Yr. Total
Generation $ 20,443 $ 16,307 $ 9,128 $ 45,878
Transmission 1,240 942 1,016 3,198
Distribution 17,063 17,446 18,045 52,554
General (41) 1,071 1,106 2,136
Total Utility Construction
Requirements 38,705 35,766 29,295 103,766
EUA Cogenex Capital
Requirements 42,885 58,324 64,320 165,529
Total $ 81,590 $ 94,090 $ 93,615 $ 269,295
Construction Program - Blackstone:
Blackstone's cash construction expenditures for the year ended December 31,
1995 were approximately $5.1 million, related primarily to its electric
distribution system.
Planned cash construction expenditures for 1996, 1997 and 1998, as set forth
below, are estimated to total $13.5 million.
BLACKSTONE CONSTRUCTION PROGRAM
(Dollars in Thousands)
1996 1997 1998 3-Yr. Total
Transmission $ 313 $ 368 $ 379 $ 1,060
Distribution 3,968 3,939 4,069 11,976
General 53 183 189 425
Total $ 4,334 $ 4,490 $4,637 $ 13,461
Construction Program - Eastern Edison:
Eastern Edison's cash construction expenditures for the year ended December
31, 1995 were approximately $23.4 million.
Cash construction expenditures of Eastern Edison and Montaup for 1996, 1997
and 1998 as set forth below, are estimated to total $78.8 million.
EASTERN EDISON CONSTRUCTION PROGRAM
(Dollars in Thousands)
1996 1997 1998 3-Yr. Total
Eastern Eastern Eastern Eastern
Edison Montaup Edison Montaup Edison Montaup Edison Montaup Combined
Generation $ $20,432 $ $16,254 $ $ 9,073 $ $45,759 $ 45,759
Transmission 290 366 174 159 180 209 644 734 1,378
Distribution 10,191 10,614 10,999 31,804 31,804
General 40 (580) 213 221 474 (580) (106)
Total $10,521 $20,218 $ 11,001 $16,413 $11,400 $ 9,282 $32,922 $45,913 $ 78,835
Fuel for Generation
The Retail Subsidiaries rely primarily on power purchased from Montaup to
meet their electric energy requirements. Power purchases are arranged on a
system basis, by Montaup, under which power is made available to the EUA System
and allocated to the Retail Subsidiaries in accordance with their peak
requirements.
The rates charged by Montaup for power sold to the Retail Subsidiaries are
those on file from time to time with FERC and are substantially the same as
those charged by Montaup for power sold to its unaffiliated customers. Changes
in the cost to Montaup of power from units in which it has interests are
reflected in the cost of power purchased by the Retail Subsidiaries. The Retail
Subsidiaries recover their cost of fuel and purchased power through the
operation of revenue adjustment clauses which are designed to provide timely
recovery of such costs.
For 1995, the EUA System's sources of energy, by fuel type, were as follows:
28% nuclear, 27% gas, 25% oil, 15% coal and 5% other. During 1995, Montaup had
an average inventory of 63,544 tons of coal for its steam generating unit at
the Somerset Station, the equivalent of 77 days' supply (based on average
daily output at 80% capacity factor for the unit (see Item 2. PROPERTIES --
Power Supply)). The cost of coal averaged about $50.18 per ton in 1995 which
is equivalent to oil at $12.16 per barrel. This was slightly more expensive
than 1994 because 1995's value was measured on a dry weight basis and because
it included a larger amount of compliant coal required for Massachusetts Clean
Air Act testing and compliance. Montaup also maintained an average inventory
of Nos. 2 and 6 oil of 6,690 barrels and 74,713 barrels, respectively. These
fuels are used for start-up and flame stabilization for Montaup's steam
generating unit. The cost of Nos. 2 and 6 oil averaged $21.97 per barrel and
$15.98 per barrel in 1995, respectively. Montaup also maintained an average
inventory of jet oil of 4,639 barrels at an average cost per barrel of $24.24
during 1995 for its two peaking units at the Somerset Station.
Montaup has a one year purchase order effective through December, 1996 with a
coal producer. Barge and rail agreements for coal transportation are also in
place through 1996. The 1995 year-end coal inventory of approximately 102,285
tons is all 0.6% to 0.7% sulfur coal which is compliant with Clean Air Act
requirements.
Canal Electric Company (Canal), on behalf of itself, Montaup and others has
contracts with a supplier for up to 100% of the fuel-oil requirements of Canal
Unit Nos. 1 and 2 for the period ending June 30, 1996 with a unilateral option
of extending it through December 1996. The current contracts permit up to 20%
of fuel oil purchases in the spot market. Fuel prices are based on oil market
posting at the time of delivery. For 1995, the cost of oil per barrel at Canal
averaged $16.16.
Canal and Montaup have entered into agreements with Algonquin Gas
Transmission Company (Algonquin) for Algonquin to provide gas transmission
facilities and services to the Canal facilities. Algonquin has finished the
construction of the pipeline which will connect its existing system with
the pipeline built by Canal and Montaup. Canal and Montaup have successfully
placed a pipeline under the Cape Cod Canal which will bring gas to Canal Unit
No. 2. Boiler modifications which will enable the unit to burn gas will begin
in March, 1996 and are expected to be completed by the beginning of July, 1996.
Gas will be burned at Canal along with No. 6 oil as the prices of each fuel
dictate. In the future it is expected that gas supplies will be available in
an interruptible basis from mid-March until mid-November.
Montaup's costs of fossil and nuclear fuels for the years 1993 through 1995,
together with the weighted average cost of all fuels, are set forth below:
Mills* per KWH
1995 1994 1993
Nuclear . . . . . . . . . 6.3 6.1 7.5
Gas . . . . . . . . 14.3 14.1 15.1
Coal . . . . . . . . . 20.3 20.9 24.1
Oil . . . . . . . . . 30.2 27.1 25.5
All fuels . . . . . . . . . 16.7 14.5 15.5
*One Mill is 1/10 of one cent
The rate schedules of Montaup and the Retail Subsidiaries are designed to
pass on to customers the increases and decreases in fuel costs and the cost of
purchased power, subject to review and approval by appropriate regulatory
authorities (see Rates below).
OSP has two gas supply contracts which expire December 14, 2009 and September
29, 2010, respectively, for its two 250 MW generators. The cost of gas for
1995 averaged $1.11 per MBTU or approximately 9.4 mills per KWH generated.
The owners (or lead participants) of the nuclear units in which Montaup has
an interest have made, or expect to make, various arrangements for the
acquisition of uranium concentrate, the conversion, enrichment, fabrication and
utilization of nuclear fuel and the disposition of that fuel after use. The
owners (or lead participants) of United States nuclear units have entered into
contracts with the DOE for disposal of spent nuclear fuel in accordance with
the NWPA. The NWPA requires (subject to various contingencies) that the
federal government design, license, construct and operate a permanent
repository for high level radioactive wastes and spent nuclear fuel and
establish a prescribed fee for the disposal of such wastes and nuclear fuel.
The NWPA specifies that the DOE provide for the disposal of such waste and
spent nuclear fuel starting in 1998. Objections on environmental and other
grounds have been asserted against proposals for storage as well as disposal
of spent nuclear fuel. The DOE now estimates that a permanent disposal site
for spent fuel will not be ready to accept fuel for storage or disposal until
as late as the year 2010. Montaup owns a 4.01% interest in Millstone Unit 3
and a 2.9% interest in Seabrook Unit 1. Northeast Utilities, the operator
of the units, indicates that Millstone Unit 3 has sufficient on-site storage
facilities which, with rack additions, can accommodate its spent fuel for the
projected life of the unit. At the Seabrook Project, there is on-site storage
capacity which, with rack additions, will be sufficient to at least the year
2011.
The Energy Policy Act requires that a fund be created for the decommissioning
and decontamination of the DOE uranium enrichment facilities. The fund will be
financed in part by special assessments on nuclear power plants in which
Montaup has an interest. These assessments are calculated based on the
utilities' prior use of the government facilities and have been levied by the
DOE, starting in September 1993, and will continue over 15 years. This cost is
passed on to the joint owners or power buyers as an additional fuel charge on a
monthly basis and is currently being recovered by Montaup through rates.
Nuclear Power Issues
General:
Nuclear generating facilities, including those in service in which Montaup
participates, as shown in the table under Item 2. PROPERTIES -- Power Supply,
are subject to extensive regulation by the NRC. The NRC is empowered to
authorize the siting, construction and operation of nuclear reactors
after consideration of public health, safety, environmental and anti-trust
matters.
The NRC has promulgated numerous requirements affecting safety systems, fire
protection, emergency response planning and notification systems, and other
aspects of nuclear plant construction, equipment and operation. These
requirements have caused modifications to be made at some of the nuclear units
in which Montaup has an interest. Montaup has been affected, to the extent of
its proportionate share, by the costs of such modifications.
Nuclear units in the United States have been subject to widespread criticism
and opposition. Some nuclear projects have been cancelled following
substantial construction delays and cost overruns as the result of licensing
problems, unanticipated construction defects and other difficulties. Various
groups have by litigation, legislation and participation in administrative
proceedings sought to prohibit the completion and operation of nuclear units
and the disposal of nuclear waste. In the event of cancellation or shutdown of
any unit, NRC regulations require that it be completely decontaminated of any
residual radioactivity. The cost of such decommissioning, depending on the
circumstances, could substantially exceed the owners' investment at the time of
cancellation.
The continuing public controversy concerning nuclear power could affect the
operating units in which Montaup has an interest. While management cannot
predict the ultimate effect of such controversy, it is possible that it could
result in the premature shutdown of one or more of the units (see "Yankee
Atomic," below).
The Price-Anderson Act provides, among other things, that the liability for
damages resulting from a nuclear incident would not exceed an amount which at
present is about $8.7 billion. Under the Price-Anderson Act, prior to
operation of a nuclear reactor, the licensee is required to insure against this
exposure by purchasing the maximum amount of liability insurance available from
private sources (currently $200 million) and to maintain the insurance
available under a mandatory industry-wide retrospective rating program. Should
an individual licensee's liability for an incident exceed $200 million, the
difference between such liability and the overall maximum liability, currently
about $8.7 billion, will be made up by the retrospective rating program. Under
such a program, each owner of an operating nuclear facility may be assessed a
retrospective premium of up to a limit of $79.3 million (which shall be
adjusted for inflation at least every five years) for each reactor owned in the
event of any one nuclear incident occurring at any reactor in the United
States, with provision for payment of such assessment to be made over time as
necessary to limit the payment in any one year to no more than $10 million per
reactor owned. With respect to operating nuclear facilities of which it is a
part owner or from which it contracts (on terms reflecting such liability) to
purchase power, Montaup would be obligated to pay its proportionate share of
any such assessment.
Joint owners of nuclear projects are also subject to the risk that one of
their number may be unable or unwilling to finance its share of the project's
costs, thus jeopardizing continuation of the project. On February 28, 1991,
EUA Power (now known as Great Bay Power Corporation), a 12.1% owner of the
Seabrook Project and a former subsidiary of EUA, filed for protection under
Chapter 11 of the Federal Bankruptcy Code. It conducted its business as a
Debtor-in-Possession until November 23, 1994, at which time its Plan of
Reorganization became effective and Great Bay Power emerged from Chapter 11.
Decommissioning:
Each of the three operating nuclear generating companies in which Montaup has
an equity ownership interest (see Item 2. PROPERTIES -- Power Supply) has
developed its estimate of the cost of decommissioning its unit and has received
the approval of FERC to include charges for the estimated costs of
decommissioning its unit in the cost of energy which it sells. From time to
time, these companies re-estimate the cost of decommissioning and apply to FERC
for increased rates in response to increased decommissioning costs. Maine
Yankee has filed a decommissioning financing plan under a Maine statute which
requires the establishment of a decommissioning trust fund. That statute also
provides that if the trust has insufficient funds to decommission the plant,
the licensee (Maine Yankee) is responsible for the deficiency and, if the
licensee is unable to provide the entire amount, the "owners" of the licensee
are jointly and severally responsible for the remainder. The definition of
"owner" under the statute includes Montaup and may include companies affiliated
with Montaup. The applicability and effect of this statute cannot be
determined at this time. Montaup would seek to recover through its rates any
payments that might be required (see Yankee Atomic, below).
Montaup is recovering through rates its share of estimated decommissioning
costs for Millstone Unit 3 and Seabrook Unit 1. Montaup's share of the current
estimate of total costs to decommission Millstone Unit 3 is $19.2 million in
1995 dollars, and Seabrook Unit 1 is $12.5 million in 1995 dollars. These
figures are based on studies performed for the lead owners of the plants. In
addition, pursuant to contractual arrangements with other nuclear generating
facilities in which Montaup has an equity ownership interest or life of the
unit entitlement, Montaup pays into decommissioning reserves. Such expenses
are currently recoverable through rates.
Yankee Atomic:
On February 26, 1992, Yankee Atomic announced that it would permanently cease
power operation of Yankee Rowe and began preparing for an orderly
decommissioning of the facility. Montaup has a 4.5% equity ownership in Yankee
Atomic with a book value of approximately $1.1 million at December 31, 1995.
Under the terms of its purchased power contract with the facility, Montaup must
pay its proportionate share of unrecovered costs and expenses incurred after
the plant is retired. In December 1992, Yankee Atomic received FERC
authorization to recover essentially all unrecovered assets and all costs
incurred after the February 26, 1992 shutdown decision until the plant is
decommissioned. Montaup's share of all unrecovered assets and the total
estimated costs to decommission the unit aggregated approximately $10.1 million
at December 31, 1995.
Maine Yankee:
Montaup owns 4% of the Common Stock of Maine Yankee. During the refueling-
and-maintenance shutdown of the Maine Yankee Nuclear Generating plant that
started in early February of 1995, Maine Yankee, the owner of the plant,
detected an increased rate of degradation of the plant's steam generator tubes
in excess of the number expected and started evaluating several courses of
action.
Although testing of all tubes revealed that approximately 40% of the tubes
are free of defects, Maine Yankee decided to sleeve all of the tubes as a
preventative safety measure. Sleeving involves the inserting of a tube of
slightly smaller diameter into the defective tube, the sleeve is welded in
place and acts as a new tube. Sleeving is a proven technology and must meet
rigorous federal standards of safety and licensing. This sleeving project was
completed in December 1995. Montaup's share of the sleeving project costs was
approximately $1.6 million and was recovered through rates.
In late 1995 technical issues were raised by anonymous allegations of
inadequate safety analyses supporting two license amendments to increase the
rated thermal power at which the Maine Yankee Plant could operate. The NRC
initiated a special technical review of those safety analyses in December,
1995. In January 1996 the NRC issued an order limiting the power output of the
Maine Yankee Plant to 90% of its rated maximum pending their review and
approval of safety analyses. The Plant is currently operating at the 90%
level. EUA cannot predict the ultimate outcome of this review.
Recent NRC Actions:
On January 29, 1996, the NRC notified Northeast Utilities, the operator of
Millstone Unit Nos. 1, 2, and 3 that these units would be placed on the NRC
"watch list." The "watch list" includes nuclear units which the NRC believes
warrant additional regulatory scrutiny.
On March 7, 1996, the NRC required Northeast Utilities to provide, within 30
days, specific information pertaining to Millstone Unit No. 3 and the
Connecticut Yankee nuclear unit. The NRC stated that this information must be
provided to determine whether or not the licenses for these units should be
suspended, modified or revoked.
Management cannot predict what, if any, further action the NRC might take.
However, any shut-down of theses units would require Montaup to seek other
sources of energy and increase its cost of power.
Public Utility Regulation
Eastern Edison and Montaup are subject to regulation by the MDPU with respect
to the issuance of securities, the form of accounts, and in the case of Eastern
Edison, rates to be charged, services to be provided and other matters.
Blackstone and Newport are subject to regulation in numerous respects by the
RIPUC and the RIDPUC, including matters pertaining to financing, sales and
transfers of utility properties, accounting, rates and service. In addition,
by reason of its ownership of fractional interests in certain facilities
located in other states, Montaup is subject to limited regulation in those
states.
IPPs, including OSP in which EUA Ocean State has a 29.9% ownership interest,
do not benefit from the PURPA exemptions and are subject to FERC regulation
under the Federal Power Act as well as various other federal, state and local
regulations.
The EUA System is subject to the jurisdiction of the SEC under the 1935 Act
by virtue of which the SEC has certain powers of regulation, including
jurisdiction over the issuance of securities, changes in the terms of
outstanding securities, acquisition or sale of securities or utility assets or
other interests in any business, intercompany loans and other intercompany
transactions, payment of dividends under certain circumstances, and related
matters. Eastern Edison is a holding company under the 1935 Act by reason of
its ownership of securities of Montaup. As a subsidiary of EUA, a registered
holding Company, Eastern Edison is exempted from registering as a holding
company by complying with the applicable rules thereunder.
The Retail Subsidiaries and Montaup are also subject to the jurisdiction of
FERC under Parts II and III of the Federal Power Act. That jurisdiction
includes, among other things, rates for sales for resale, interconnection of
certain facilities, accounts, service, and property records.
The MDPU and RIPUC have approved a Memorandum of Understanding (MOU) with
Eastern Edison, Blackstone, Newport and Montaup. The MOU establishes a
framework for a coordinated, regional review of the resource planning and
procurement process of those companies. It is based on the assumption that
resource planning and procurement by a regional electric company may be
implemented more effectively under a coordinated, consensual review process
involving the EUA retail companies and the state public utility commissions to
which the EUA retail companies are subject. Pursuant to the terms of the MOU,
at least every two years Montaup and Eastern Edison will file with the MDPU and
Blackstone will file with the RIPUC an integrated resource plan concurrently.
The MOU outlines a mechanism and a timetable by which the reviews by the two
commissions will be coordinated and any inconsistencies among the decisions by
the state commissions will be resolved.
In conjunction with its approval of the MOU, the MDPU granted Eastern Edison
and Montaup an exemption from the MDPU's Integrated Resource Management
regulations, but required them to plan, solicit and procure additional
resources according to newly promulgated regional Integrated Regional Planning
procedures consistent with the MOU. The Integrated Resource Management Plan
of Blackstone and Newport meet the criteria of the RIPUC.
Implementation of the MOU is not expected to have a material effect on the
EUA System. The move to restructure the industry to a more competitive model
may, however, impact the role of the states in reviewing utilities' resource
planning and procurement activities. Massachusetts is currently reviewing the
need for its review of load forecasting and resource planning, recognizing that
resource procurement is now a competitive function. As competition becomes
more prevalent in the electric industry, it is anticipated that regulatory
review will decrease accordingly.
See Rates with respect to regulation of rates charged to customers. See
Environmental Regulation. See Fuel for Generation with respect to the disposal
of spent nuclear fuel. See Environmental Regulation of Nuclear Power and see
Nuclear Power Issues with respect to regulation of nuclear facilities by the
NRC. See also General - Core Electric Business, "Electric Utility Industry
Restructuring."
Rates
Rates charged by Montaup (which sells power only for resale) are subject to
the jurisdiction of FERC. The rates for services rendered by the Retail
Subsidiaries for the most part are subject to approval by and are on file with
the MDPU in the case of Eastern Edison and with the RIPUC in the case of
Blackstone and Newport. For the 12 months ended December 31, 1995, 62% of
EUA's consolidated revenues were subject to the jurisdiction of FERC, 13% to
that of the MDPU and 11% to that of the RIPUC. The remaining 14% of
consolidated revenues are not subject to jurisdiction of utility commissions.
For the twelve months ended December 31, 1995, 82.3% of Eastern Edison's
consolidated revenues were subject to the jurisdiction of the FERC and 17.7% to
MDPU. Additionally, rates charged by OSP are subject to the jurisdiction of
FERC. All OSP (Unit 1 and Unit 2) power contracts have been approved by FERC.
However, pursuant to the OSP unit power agreements, rate supplements are
required to be filed annually subject to FERC approval. This process may
result in rate increases or decreases to OSP power purchasers. Recent general
rate increases (reduction) for Montaup and the Retail Subsidiaries are as
follows (thousands of dollars):
Applied For Effective <F1> Return on
Annual Annual Common
Revenue Date Revenue Date Equity %
Federal
- Montaup
M-14 $(10,133) 3/21/94 $(13,992) 8/9/94<F2> 11.10 <F3>
Massachusetts
- Eastern Edison
MDPU - 92-148 14,927<F4>6/15/92 8,100 1/12/93 11.50<F3><F5>
Rhode Island
- Blackstone
RIPUC - 2045
- Phase I 2,724 6/26/92<F6> 353 1/1/93
- Phase II 353 11/1/93<F6> 353 1/1/94
- Phase III 353 11/1/94<F6> 353 1/1/95
- Phase IV 152 10/23/95<F6> 152 1/1/96
- Newport
RIPUC - 2045
- Phase I 1,250 6/26/92<F6> 417 1/1/93
- Phase II 417 11/1/93<F6> 417 1/1/94
- Phase III 417 11/1/94<F6> 417 1/1/95
- Phase IV 179 10/23/95<F7> 179 1/1/96
<FN>
<F1> Per final order or settlement agreement.
<F2> Settlement Agreement with all parties with an annual reduction of
$13,992,000 with billing credits to Middleboro over the period January
1995 through October 1999 totaling $496,000.
<F3> Rate used for AFUDC calculation purposes. Settlement contains no
specific finding on allowed common equity return.
<F4> Reduced from $16,401,000 as originally filed.
<F5> Rates approved for consumption of electricity on and after January 1,
1993.
<F6> RIPUC Docket No. 2045 was a generic docket for all Rhode Island
utilities reviewing FAS106 expenses. The effective amount represents
the revenue requirement for one-third of the tax deductible amount of
the FAS106 expenses (see Rhode Island Proceedings below). As this was
a single issue proceeding, the RIPUC made no revisions to the allowed
return on common equity.
<F7> The revenue requirement represents the total FAS106 incremental tax
deductible amount increased by 14.3% for the next seven years. This
annual revenue requirement will be reduced to the 100% level in the
year after the tenth year of the phase-in.
</FN>
FERC Proceedings:
On December 17, 1992, FERC issued a Statement of Policy regarding the
recovery through rates of the cost of post-retirement benefits other than
pensions (PBOP), as a result of FAS106 issued to address accounting procedures
for these costs. The FERC's policy recognizes allowances for prudently
incurred costs of such benefits of company employees when determined on an
accrual basis that is consistent with the accounting principles set forth in
FAS106. Furthermore, companies must agree to make cash deposits to an
irrevocable external trust fund equal to the annual test period allowance for
the cost of such benefits and they must maximize the use of income tax
deductions for contributions to the trust fund. If tax deductions are not
available for some portion of currently funded amounts, deferred income tax
accounting must be followed for the tax effects of such transactions.
Within three years of their adoption of FAS106, FERC regulated companies
must also file a general rate change and seek inclusion of these costs in their
rates. Companies may defer the jurisdictional portion of the difference
between the costs determined pursuant to accounting principles previously
followed and FAS106 accruals from the time they adopt FAS106 until they file
the general rate case described above. Montaup deferred its incremental FAS106
expenses of approximately $400,000 and $1.4 million for 1994 and 1993,
respectively.
On May 21, 1994 Montaup filed a rate application with the FERC to reduce
annual revenues by $10.1 million. This request was intended to match more
closely Montaup's revenues with its decreasing cost of doing business resulting
from, among other things, a reduced rate base, lower capital costs and
successful cost control efforts. The application also included a request for
recovery of all of Montaup's FAS106 expenses as provided in FERC's generic
order of December 1992, including a five-year amortization of previously
deferred FAS106 costs. Also incorporated in this filing was a request to make
Newport an all requirements customer of Montaup. Settlement agreements have
been made and certified by the Commission with all intervenors with an annual
base rate reduction of approximately $14 million annually, (inclusive of the
filed $10.1 million reduction) effective as of August 1994.
On February 20, 1996, Montaup filed an application with FERC for network
and point-to-point transmission service tariffs. FERC required this tariff
application before granting a concurrent application of Duke/Louis Dreyfus
Energy Services (New England) L.L.C. for permission to charge market based
rates. Montaup has requested that FERC allow the tariffs to become effective
on April 21, 1996.
Massachusetts Proceedings:
In December 1994, the Massachusetts Department of Public Utilities
approved a request made by Eastern Edison to recover through a reconciling
adjustment factor a portion of "lost base revenues." Lost base revenue
represents amounts the company would have collected if it had not offered
demand-side management and conservation and load management programs to its
customers.
On December 31, 1992, the MDPU issued its order in response to a $14.9
million (reduced from the originally filed $16.4 million) rate increase request
of Eastern Edison. The $8.1 million rate relief granted represented 49% of
Eastern Edison's original rate request filed on June 15, 1992 based on a 1991
test year. The new rates filed in compliance with the order became effective
for sales subsequent to January 1, 1993.
In authorizing the increase, the MDPU accepted a settlement proposal
offered jointly by Eastern Edison and the Massachusetts Attorney General, the
sole intervenor. The settlement stipulated the total revenue requirement which
included an amortization of Hurricane Bob costs over a five-year period
without a return on the unamortized amount. The settlement also reflected the
recovery of the full tax deductible amount of post-retirement benefits other
than pensions (FAS106 expenses), without any phasing-in of the increase over
the previous ("pay-as-you-go") level. All FAS106 amounts recovered
were placed in trusts permitted by the IRS to maximize tax deductibility and
provide tax-free benefits to retirees. The depreciation rate and the common
equity component of AFUDC were also specified. The composite rate for the
depreciation calculation was set at 4.13%, up slightly from the 4.07%
previously authorized. Solely for the purpose of calculating AFUDC, the common
equity return component was set at 11.5%.
The MDPU has put all companies on notice that it expects them..."to
consider mergers or acquisitions in order to further optimize least-cost
planning efforts and better fulfill their obligations to serve." Thereafter,
the MDPU instituted an investigation, which was concluded on August 3, 1994,
for the purpose of establishing, among other things, guidelines and standards
for acquisitions and mergers of utilities and evaluating proposals regarding
the recovery of costs associated with such activities. It is not possible to
predict what effects, if any, the MDPU proceeding will have on the EUA System.
On September 20, 1994, the MDPU issued a notice of inquiry and order
seeking comments on incentive regulation. The inquiry was to focus on
incentive regulation, sometimes referred to as performanced-based regulation,
to replace in whole or in part its existing cost-of-service/rate-of-return
regulatory framework. Comments were filed by Eastern Edison and other
interested persons. On February 24, 1995, the MDPU issued an order relating to
implementation of incentive regulation. In the order, the MDPU strongly
encouraged all jurisdictional electric utilities to devise and propose
incentive plans. The objective of incentive regulation is to "provide market-
place benefits to consumers through (1) more efficient utility operations, (2)
stronger utility incentives for better cost control, and (3) enhanced
opportunities for lower rates." While no timetable is specified, the MDPU
stated the largest utilities should commence the incentive plan design process
as soon as possible. EUA can not predict what effect, if any the MDPU's order
will have on the EUA System. (See General - Core Electric Business, "Electric
Utility Industry Restructuring" above).
On February 10, 1995, the MDPU issued a notice of inquiry and order on
electric industry restructuring (MDPU 95-30). The investigation was
established to determine: (1) how a restructuring of the Massachusetts electric
industry would promote competition and economic efficiency while expanding
opportunities that would benefit consumers, (2) whether and how to extend to
customers the option of choosing their own electric suppliers; (3) how such a
restructuring could be implemented; and (4) the appropriate regulatory
mechanisms to apply to a restructured electric industry.
After initial and second round comments were received, the MDPU held
hearings and issued its order on August 16, 1995. The order facilitates
increased competition by requiring investor-owned electric utilities to
unbundle their rates, provide consumers with accurate price signals, and enable
customer choice that allows consumers to purchase generation services
separately from transmission and distribution services. The order provides for
the recovery of net, non-mitigatable stranded costs that will result from the
transition from a regulated to a competitive industry structure.
The order sets forth the MDPU's overall goals for a restructured industry,
the essential characteristics of a restructured industry, as well as principles
to be considered in the transition to a restructured industry. Given the
complexity of the issues, the MDPU supported the multiple requests from
reviewers for a period during which participants can negotiate settlements.
The MDPU stated that consensus and settlements are more likely than litigation
to advance the restructuring process, and directed each company to undertake
negotiations with all interested participants to develop a plan for moving
toward competition in generation and retail customer choice, to decide the
amount and develop a mechanism for stranded cost recovery, and establish
unbundled rates. A collaborative group representing the full spectrum of MDPU
95-30 participants has been meeting in Massachusetts to discuss these issues.
The MDPU noted that while the concepts of competition and customer choice are
fundamental to restructuring, and the basic principles will apply to all
restructuring proposals, specific company corporate structures, service
territories, rate structures and stranded costs may require individual
consideration.
The MDPU established a specific schedule for restructuring proposals.
Massachusetts Electric Company, Boston Edison Company, and Western
Massachusetts Electric Company were required to file their settlements and
proposals by February 16, 1996. The remaining electric utilities are required
to file their settlements and proposals within three months of the issuance of
Department orders related to the restructuring proposals of the former three
companies. Companies are required to file the following information: (1) a
plan for moving from the current regulated industry structure to a competitive
generation market and to increased customer choice; (2) illustrative rates and
supporting information that indicate unbundled charges for generation,
distribution, transmission, and ancillary services; (3) an identifiable charge
reflective of the level of stranded costs to be recovered with all necessary
supporting information; (4) a plan for incentive regulation in the transmission
and distribution systems. Eastern Edison filed its restructuring plan on
February 16, 1996 which was assigned MDPU Docked #96-24. A public hearing was
held on March 6, 1996. EUA can not predict the outcome of this proceeding.
Rhode Island Proceedings:
On April 7, 1992, the RIPUC initiated generic Docket No. 2045 pertaining
to the FAS106 issue for all Rhode Island utility companies. On June 26, 1992,
Newport and Blackstone filed proposed rate increases to reflect the impact of
FAS106 of approximately $1.3 million and $2.7 million, respectively. An order
was issued on December 11, 1992 granting recovery of a tax deductible amount of
FAS106 phased into rates over a three-year period with the initial one-third to
be recovered no earlier than the first fiscal year beginning after December 15,
1992, and the deferrals of the first two years recovered in rates over the
seven-year period following the three-year phase-in. On December 21, 1992,
Newport and Blackstone filed compliance rates representing phase one of the
three-year phase-in. The Phase I revenue requirement, representing one third
of the incremental FAS106 tax deductible amount for Blackstone and Newport was
calculated to be $353,000 and $417,000, respectively. Phase II compliance was
filed November 1, 1993. The revenue requirement, representing two thirds of
the incremental FAS106 tax deductible expense for Blackstone and Newport was
calculated to be $706,000 and $834,000, respectively. Phase III compliance was
filed November 1, 1994. The revenue requirement, representing the full phase-
in of the incremental FAS106 tax deductible expense for Blackstone and Newport
were calculated to be $1,059,000 and $1,251,000, respectively. The RIPUC also
ordered that all amounts recovered be placed in trusts permitted by the IRS
which will maximize tax deductibility. In 1995, total FAS106 expenses for
Blackstone and Newport, net of capitalized amounts were approximately $1.3
million and $0.8 million, respectively.
Also, on January 14, 1994, the RIPUC issued a written order establishing
Docket No. 2167 for a Comprehensive Review of Newport's rate design. A
prehearing conference was held on February 8, 1994 at which time a schedule for
pre-filing testimony was established.
On May 20, 1994, Newport filed its Cost of Service Study (COSS) analysis
of the rates of return by customer class and an alternative rate design
proposal. The RIDPUC filed its recommendations with regard to cost allocation
and rate design on June 23, 1994. The United States Navy, Newport s largest
customer, filed its recommendations on June 24, 1994. On July 29, 1994 the
Company filed a Stipulation and Settlement Agreement (SSA) which had been
executed by the RIDPUC and TEC-RI. The parties signing the SSA agreed on
certain rate class revenue changes. While the settling parties did not agree
with the COSS techniques utilized by Newport, they agreed to accept the SSA
rather than litigating with respect to what might be deemed appropriate study
allocators and techniques. The rate class revenue changes generally reduce,
although they do not eliminate, inequities in the class rate of return.
Newport agreed to perform a new COSS to be submitted no later than July 1,
1996. At an open meeting on October 28, 1994, the RIPUC found that the SSA is
reasonable and in the best interests of the ratepayers. Rates established in
compliance with the RIPUC's October 28, 1994 finding, were effective January 1,
1995.
In December 1994, the United States Navy, filed a petition for a writ of
certiorari with the Rhode Island Supreme Court to review the RIPUC's decision.
Discussions between the Navy and Newport electric and several other interested
parties have been held in an attempt to reach a settlement. It is too early to
tell if a settlement is likely. A second motion to stay was filed by the Navy
on December 21, 1995. It is not possible to predict what effect, if any, the
Court's decision will have on the EUA system.
On June 27, 1994 TEC-RI petitioned the RIDPUC to investigate the propriety
of "the current bundled electric rates," and what might be required to
transition "... from a fully regulated to a more competitive retail electric
industry". A Division hearing officer was appointed on July 24, 1994 and
Docket No. D-94-9 was established. Blackstone and Newport were parties to the
proceeding.
Initial and reply comments were submitted to a comprehensive list of
issues. Many of the comments addressed a broad restructuring of the electric
utility industry. When the parties met on January 9, 1995, they decided that
TEC-RI's proposal for a "cooperative collaborative process," including the
Division as a party, rather than a litigated proceeding before the Division
hearing officer, was appropriate. Hence, the Rhode Island Collaborative
(Collaborative) was formed.
On May 12, 1995, the Collaborative submitted a Report and Set of
Interdependent Principles to the RIPUC. The 17 Interdependent Principles
represented the Collaborative's underpinnings for any restructuring proposal.
The Collaborative requested that the RIPUC establish a docket and conduct a
hearing to explore the settlement principles with a view to issuing an order
indicating whether the principles "provide a suitable basis for further
detailed negotiation by the parties, or in what respects they require
modification" and setting a deadline for the submission of a more detailed
proposal for restructuring.
The RIPUC responded to the Collaborative's request by creating Docket No.
2320, taking administrative notice of Docket No. D-94-9, and declaring that all
parties to the Division docket would be treated as intervenors in this docket.
The RIPUC conducted a technical conference on July 6, 1995 and a Public hearing
on July 11, 1995. On July 19, 1995 three of the principles were modified to
address concerns expressed by the RIPUC at the technical conference. On July
25, 1995, the Collaborative provided additional information on the principle
concerning Renewables, and requested that the RIPUC approve the principles in
full.
On August 16, 1995, the RIPUC accepted the principles as modified,
deleting the principle concerning Renewables and adding a principle concerning
negotiation. The Collaborative was directed to proceed with negotiations to
quantify specific issues involving competition and open access as well
as the other issues presented in the principles. A Collaborative Progress
Report was filed in February, 1996. Blackstone and Newport have been active
participants in the ongoing collaborative meetings. It is not possible to
predict the outcome of this proceeding at this time.
Environmental Regulation
General:
The Retail Subsidiaries and Montaup and other companies owning generating
units from which power is obtained are subject, like other electric utilities,
to environmental and land use regulations at the federal, state and local
levels. The EPA, and certain state and local authorities, have jurisdiction
over releases of pollutants, contaminants and hazardous substances into the
environment and have broad authority in connection therewith, including the
ability to require installation of pollution control devices and remedial
actions. In 1994, an environmental audit program designed to ensure compliance
with environmental laws and regulations and to identify and reduce liability
was instituted for Montaup and the Retail Subsidiaries.
Federal, Massachusetts and Rhode Island legislation requires consideration
of reports evaluating environmental impact of large projects as a prerequisite
to the granting of various permits and licenses with a view of limiting such
impact. Federal, Massachusetts and Rhode Island air quality regulations also
require that plans (including procedures for operation and maintenance) for
construction or modification of fossil fuel generating facilities receive prior
approval from the DEP or RIDEM. In addition, in Massachusetts, certain
electric generation and transmission facilities will be permitted to be built
only if they are consistent with a long-range forecast filed by the utility
concerned and approved by the Massachusetts Energy Facilities Siting Board. In
Rhode Island, siting, construction and modification of major electric
generating and transmission facilities must be approved by the Rhode Island
Energy Facility Siting Board and the Rhode Island Coastal Resource Management
Council.
Generating facilities in which Montaup and Newport have an interest, and
are required to pay a share of the costs, are also subject, like other electric
utilities, to regulation with regard to zoning, land use, and similar controls
by various state and local authorities.
The EPA and state and local authorities may, after appropriate
proceedings, require modification of generating facilities for which
construction permits or operating licenses have already been issued, or impose
new conditions on such permits or licenses, and may require that the operation
of a generating unit cease or that its level of operation be temporarily or
permanently reduced. Such action may result in increases in capital costs and
operating costs which may be substantial, in delays or cancellation of
construction of planned facilities, or in modification or termination of
operations of existing facilities.
Other activities of the EUA System from time to time are subject to the
jurisdiction of various other local, state and federal regulatory agencies. It
is not possible to predict with certainty what effects the above described
statutes and regulations will have on the EUA System.
The EPA has issued regulations relating to the generation, transportation,
storage and disposal of certain wastes under RCRA; in Massachusetts, the
requirements are implemented and enforced by the DEP, whereas in Rhode Island,
RIDEM implements and enforces its own regulations under a state statute
comparable to RCRA as well as pursuant to EPA authorization.
There is an extensive body of federal and state statutes governing
environmental matters, including CERCLA, as amended by the Superfund Amendments
and Reauthorization Act of 1986; in Massachusetts, Chapter 21E, and, in Rhode
Island, the "Industrial Property Site Remediation and Reuse Act" (Brownfield's
Legislation) which permit, among other things, federal and state authorities to
initiate legal action providing for liability, compensation, cleanup, and
emergency response to the release or threatened release of hazardous substances
into the environment and for the cleanup of inactive hazardous waste disposal
sites which constitute substantial hazards. Under CERCLA, Chapter 21E, and the
Rhode Island Brownfield's Legislation, joint and several liability for cleanup
costs may be imposed on, among others, the owners or operators of a facility
where hazardous substances were disposed, the party who generated the
substances, or any party who arranged for the disposition or transport of the
substances. Due to the nature of the business of EUA's utility subsidiaries,
certain materials are generated that may be classified as hazardous under
CERCLA, Chapter 21E and Brownfield's Legislation. As a rule, the subsidiaries
employ licensed contractors to dispose of such materials. See Item 3. LEGAL
PROCEEDINGS -- Environmental Proceedings.
The EPA, pursuant to TSCA, regulates the use, storage, and disposal of
PCBs and other dielectric fluids. Because the EUA System had owned and used
some electrical transformers containing PCBs, it is subject to EPA regulation
under TSCA. These PCB transformers have been either declassified or disposed
of in accordance with TSCA requirements. EUA currently uses mineral oil
transformers which may contain traces of PCB and which may be subject to
regulations pursuant to TSCA.
Electric and Magnetic Fields:
A number of scientific studies in the past several years have examined the
possibility of health effects from EMF that are found wherever there is
electricity. While some of the studies have indicated some association between
exposure to EMF and health effects, many others have indicated no direct
association. The research to date has not conclusively established a direct
causal relationship between EMF exposure and human health. Additional studies,
which are intended to provide a better understanding of EMF, are continuing.
Some states have enacted regulations to limit the strength of EMF at the
edge of transmission line rights-of-way. Rhode Island has enacted a statute
which authorizes and directs the Rhode Island Energy Facility Siting Board to
establish rules and/or regulations governing construction of high voltage
transmission lines of 69 KV or more. There is a bill pending in the
Massachusetts legislature that would authorize the MDPU to examine the
potential health effects of EMF. Management cannot predict the impact if any,
which legislation(s) or other developments concerning EMF may have on the EUA
System.
Water Regulation:
The objective of the Federal Water Pollution Control Act is to restore and
maintain the chemical, physical, and biological integrity of the nation's
navigable waters. The elimination of pollutant discharges (including heat)
into navigable waters is one goal aimed at achieving this objective. Another
step mandated by the Federal Water Pollution Control Act was the creation of a
rigorous permit program. All water discharge permits for plants in
Massachusetts, including those for the Somerset and Canal plants, are issued
jointly by the EPA and DEP. These same agencies also regulate certain
industrial stormwater discharges.
Standards have been established to control the dredging and filling of
wetlands under the Federal Water Pollution Control Act, the Massachusetts
Wetland Protection Act, and the Rhode Island Wetland Act. The EPA, the Army
Corps of Engineers, RIDEM, the Rhode Island Coastal Resources Management
Council and the DEP are pursuing a non-degradation (no loss) policy for
wetlands.
Under the Massachusetts Water Management Act, the DEP is responsible for
promulgating regulations relating to water usage and conservation.
Most of the generating units from which Montaup obtains power operate
under permits which limit their effluent discharges into water and which
require monitoring and, in some instances, biological studies and toxicity
testing of the impact of the discharges. Such permits are issued for a period
of not more than five years, at the expiration of which renewal must be sought.
The permit for the Somerset plant was renewed on September 30, 1994 and expires
on September 30, 1998.
The Oil Pollution Act of 1990 was passed after several major oil spills
occurred in waters of the United States. The primary intent of this
legislation is to mandate strong contingency plans to prevent releases of oil
and to require that sufficient resources are in place and ready to respond to
any release. EPA, United States Coast Guard, RIDEM, and DEP have a number of
other rules in place, such as EPA's Spill Prevention, Countermeasures and
Control Plan regulations, which are designed to minimize the release of oil and
other substances into navigable waters and the environment.
Air Regulation:
All fossil fuel plants from which Montaup obtains power operate under
permits which limit their emissions into the air and require monitoring of the
emissions. Air quality requirements adopted by state authorities in
Massachusetts pursuant to the Clean Air Act impose limitations with respect to
pollutants such as sulfur dioxide, oxides of nitrogen and particulate matter.
Montaup's Somerset Station is permitted to burn coal which results in sulfur
dioxide emissions not in excess of 1.2 pounds per million BTU heat release
potential (approximately 0.75% sulfur content coal). The Canal Station Unit 2
is permitted to burn fuel oil which results in sulfur dioxide emissions not in
excess of 1.2 pounds per million BTU heat release potential (approximately 1%
sulfur content fuel oil).
The EPA has established clean air standards for certain pollutants,
including standards limiting emissions from coal-fired and oil-fired
generators. Congress passed amendments to the Clean Air Act in 1990 which
created additional regulatory programs and generally updated and strengthened
air pollution control laws. These amendments will expand the regulatory role
of the EPA regarding emissions from electric generating facilities. Title IV
of the Clean Air Act Amendments addresses acid deposition abatement and
establishes a two-phase utility power plant pollution control program to reduce
emissions of sulfur dioxide and oxides of nitrogen. The first phase began in
1995 and affected approximately 261 large units in 21 eastern and midwestern
states. Phase II, which begins in the year 2000, tightens the emission limits
imposed on these larger plants and also sets restrictions on smaller, cleaner
plants fired by coal, oil and gas. Montaup's Somerset Station is classified as
a Phase II facility with a compliance deadline by the end of 1999. The control
program establishes a national cap of 8.90 million tons per year for sulfur
dioxide emissions. Beginning in the year 2000, the EPA will issue 8.90
million sulfur dioxide allowances to utilities annually. The sulfur allowance
program will not affect Montaup's Somerset Station until January 1, 2000.
Massachusetts DEP regulations establish a statewide cap on sulfur dioxide
emissions and require Montaup's facilities to meet an average emission rate of
1.2 pounds of sulfur dioxide per million BTU of fuel input by the end of 1994.
Under federal standards, Montaup would not be required to meet this sulfur
dioxide emission level until the year 2000 as a result of Title IV of the Clean
Air Act. However, Massachusetts DEP regulations require compliance five years
earlier. As required by state regulations, Montaup submitted and received
approval of a plan detailing how it would meet the 1995 sulfur dioxide
standard. Montaup is achieving compliance by substituting lower sulfur content
fuels.
Other provisions of the Clean Air Act Amendments will likely impact
Montaup. Title I of the Act sets a strategy for states to move toward
attaining national air quality standards, with the emphasis on meeting the
ozone standard. Ozone relates directly to the nation's smog problem. Oxides
of nitrogen are one of the precursors of ozone formation. Title I requires
additional controls on industrial sources of oxides of nitrogen including
utility power plants. The Act creates the Northeast Ozone Transport
Region, covering the area from Virginia to Maine, including Massachusetts and
Rhode Island. Areas within the transport region will become subject to
enhanced controls on oxides of nitrogen emissions.
In April 1992, NESCAUM, an environmental advisory group for eight
Northeast states including Massachusetts and Rhode Island issued
recommendations for nitrogen oxide controls for existing utility boilers
required to meet the ozone non-attainment requirements of the Clean Air Act
Amendments. The NESCAUM recommendations are more restrictive than EPA's
requirements. The DEP has amended its regulations to require that Reasonably
Available Control Technology (RACT) be implemented at all stationary sources
potentially emitting 50 tons per year or more of oxides of nitrogen. Rhode
Island has also issued similar regulations requiring that RACT be implemented
at all stationary sources potentially emitting 50 tons or more per year of
nitrogen oxides. Montaup has initiated compliance through, among other things,
selective, noncatalytic reduction processes.
Title V of the Clean Air Act Amendments provides EPA with broad new
permitting authority, with the goal of having states begin to issue federally
enforceable operating permits by 1995 which will outline limits and conditions
necessary to comply with all applicable air requirements. The Clear Air Act
Amendments' permitting program will be phased in over a couple of years.
Montaup submitted its initial Operating Permit Application under this program
on May 5, 1995. On September 20, 1995, DEP issued Montaup an Administrative
Completeness Determination and Application Shield for its Operating Permit
Application. Although individual sources will be required to pay fees to the
various states which will administer the program, the impact of these
requirements is not expected to have a material financial impact on the EUA
System.
Environmental Regulation of Nuclear Power
The NRC has promulgated a variety of standards to protect the public from
radiological pollution caused by the normal operation of nuclear generating
facilities. For example, the NRC requires licensed facilities to develop plans
to respond to unexpected developments.
In some environmental areas the NRC and the EPA have overlapping
jurisdiction. Thus, NRC regulations are subject to all conditions imposed by
the EPA and a variety of federal environmental statutes, including obtaining
permits for the discharge of pollutants (including heat) into the nation's
navigable waters. In addition, the EPA has established standards, and is in
the process of reviewing existing standards, for certain toxic air pollutants,
including radionuclides, under the Clean Air Act Amendments which apply to NRC-
licensed facilities. The effective date for the new radionuclide standards has
been stayed as to nuclear generating units. The EPA has also promulgated
environmental radiation protection standards for nuclear power plants. These
standards regulate the doses of radiation received by the general public.
The NWPA provides for development by the federal government of facilities
for the disposal or permanent storage of civilian nuclear waste. For further
details about NWPA, see Fuel for Generation above. The NRC has also
promulgated regulations regarding the disposal of nuclear waste materials
designed to protect the public from radiological dangers.
Environmental regulation of nuclear facilities in which the EUA System has
an interest or from which they purchase power may result in significant
increases in capital and operating costs, in delays or cancellation of
construction of planned improvements, or in modification or termination of
existing facilities.
Item 2. PROPERTIES
Power Supply
Montaup supplies the EUA System with nearly 100% of its electric
requirements. Newport became an all-requirements customer of Montaup on May
21, 1994. At the same time, Montaup assumed all of Newport's power contracts
and began leasing all of Newport's generation facilities and a portion of
Newport's transmission facilities. In 1995, the EUA System's wholly owned
generating units referred to in the following table consisted of Montaup's jet-
fueled peaking units (Somerset Jet 1 and Jet 2) and Somerset 6 which was
converted from oil to coal burning in 1983, Blackstone's Pawtucket Hydro, which
was repowered in 1985 and Newport's diesel peaking units (Jepson in Jamestown
and Eldred in Portsmouth) which supply the EUA System with 8 MW and 8.25 MW,
respectively. With the exception of Somerset's Jet 1 and Jet 2, Montaup has
not significantly increased its wholly owned generating units since 1959. The
EUA System has found it more economically beneficial to join with other
utilities in the joint ownership of large generating units and in long-term
purchase contracts, and to supplement these sources with short-term purchases
as required. EUA believes that spreading the EUA System's sources of
electricity among a number of plants should improve the reliability of its
power supply and limit the financial exposure relating to construction and
potentially prolonged outages of a generating unit. Current forecasts indicate
that the combination of company owned generation, current long-term
purchased power contracts, expected short-term power opportunities, and the
System's C&LM programs, should meet EUA System capacity requirements through
the year 2000.
Montaup recovered approximately $12.8 million through rates in 1995 for
its C&LM programs. C&LM is designed to (i) decrease existing energy demand and
(ii) offset future load growth through conservation incentives, thereby
minimizing future need for large capital investment in generating facilities.
The all-time peak EUA System demand was approximately 931 MW experienced
on July 27, 1995.
EUA SYSTEM CAPABILITY
GENERATING UNITS IN SERVICE AS OF DECEMBER 31, 1995
GROSS WINTER MAX GROSS NET
IN SYSTEM CLAIMED SYSTEM UNIT SYSTEM
SERVICE SHARE CAPABILITY SHARE SALES SHARE
DATE UNIT NAME FUEL TYPE OWNER/OPERATOR % MW MW MW MW
100% OWNERSHIP:
1959 SOMERSET 6 COAL MONTAUP ELECTRIC CO. 100.00 110.00 110.00 0.00 110.00
1970 SOMERSET J1 JET OIL MONTAUP ELECTRIC CO. 100.00 22.00 22.00 0.00 22.00
1971 SOMERSET J2 JET OIL MONTAUP ELECTRIC CO. 100.00 21.20 21.20 0.00 21.20
1985 PAWTUCKET HYDRO HYDRO BLACKSTONE VALLEY ELEC. 100.00 1.24 1.24 0.00 1.24
1961 JEPSON DIESEL NEWPORT ELECTRIC CORP. 100.00 8.00 8.00 0.00 8.00
1978 ELDRED DIESEL NEWPORT ELECTRIC CORP. 100.00 8.25 8.25 0.00 8.25
SUBTOTAL: 171 0.00 171
JOINT OWNERSHIP:
1976 CANAL 2 NO. 6 OIL CANAL ELECTRIC COMPANY 50.00 584.00 292.00 35.00 257.00
1978 WYMAN 4 (YAR 4) NO. 6 OIL CENTRAL MAINE POWER CO. 2.63 <F1> 619.25 16.28 0.00 16.28
1986 MILLSTONE 3 NUCLEAR NORTHEAST UTILITIES 4.01 1145.70 45.93 0.00 45.93
1990 SEABROOK NUCLEAR NORTH ATLANTIC ENERGY CORP 2.90 1158.00 33.58 0.00 33.58
SUBTOTAL: 387.79 35.00 352.79
EQUITY OWNERSHIP:
1968 CONN. YANKEE NUCLEAR CONN. YANKEE ATOMIC POWER 4.50 583.20 26.24 0.00 26.24
1972 MAINE YANKEE NUCLEAR MAINE YANKEE ATOMIC POWER 3.59 880.00 31.61 0.00 31.61
1972 VERMONT YANKEE NUCLEAR VT. YANKEE NUCLEAR POWER 2.25 531.00 11.95 0.00 11.95
SUBTOTAL: 69.80 0.00 69.80
PURCHASED POWER:
1968 CANAL 1 NO. 6 OIL CANAL ELECTRIC COMPANY 25.00 557.00 139.25 0.00 139.25
1972 PILGRIM 1 NUCLEAR BOSTON EDISON COMPANY 11.00 <F2> 668.97 73.59 0.00 73.59
1977 POTTER 2 GAS/OIL BRAINTREE ELEC. LIGHT DEPT 41.67 <F2> 96.00 40.00 0.00 40.00
1975 CLEARY 9 GAS/OIL TAUNTON MUNIC. LIGHTING 13.64 <F2> 110.00 15.00 0.00 15.00
1984 MCNEIL WOOD VERMONT ELECTRIC POWER 15.24 <F2><F3> 53.00 8.08 0.00 8.08
1972 BERLIN A&B JET OIL GREEN MOUNTAIN POWER 26.27 57.10 15.00 0.00 15.00
1974 BEAR SWAMP GT1 HYDRO NEW ENGLAND POWER 5.94 286.38 17.50 0.00 17.50
1974 BEAR SWAMP GT2 HYDRO NEW ENGLAND POWER 5.94 286.38 17.50 0.00 17.50
1990 OSP 1 GAS OCEAN STATE POWER 28.00 <F4> 287.00 80.36 0.00 80.36
1991 OSP 2 GAS OCEAN STATE POWER 28.00 <F4> 281.00 78.68 0.00 78.68
1991 NEA GAS NORTHEAST ENERGY ASSOC. 8.62 333.43 28.74 0.00 28.74
SUBTOTAL: 513.70 0.00 513.70
1991 HYDRO QUEBEC I&II HYDRO HQ / NEPOOL 4.06 <F5> 1215.00 49.31 0.00 49.31
SUBTOTAL: 49.31 0.00 49.31
TOTAL GROSS SYSTEM CAPABILITY (MW) ------------------------------ 1,191.29
LESS: UNIT CONTRACT SALES (MW) --------------------- 35.00
TOTAL NET SYSTEM CAPABILITY (MW) ------------------------------------- 1,156.29
<FN>
<F1> REPRESENTS MONTAUP JOINT OWNERSHIP SHARE OF 1.9618% AND NEWPORT JOINT OWNERSHIP SHARE OF .6666%.
<F2> "LIFE OF UNIT" PURCHASE CONTRACT.
<F3> NEWPORT PURCHASED POWER ASSIGNED TO MONTAUP.
<F4> FOR EACH UNIT, MONTAUP IS A POWER PURCHASER WITH 22% ENTITLEMENT AND A 6% ENTITLEMENT
ASSIGNED FROM NEWPORT. (EUA OCEAN STATE HOLDS A 29.9% EQUITY INTEREST IN OCEAN STATE POWER
PARTNERSHIP.)
<F5> ENTITLEMENT % IS WEIGHTED AVERAGE OF PHASE I & II SHARES (40% PHASE I (4.01987%); 60% PHASE II (4.0842%)).
</FN>
Montaup's participation in generating units of which it is not the sole
owner takes various forms including stock (equity) ownership, joint ownership
and purchase contracts. In most cases (other than short-term purchased power
contracts) the purchaser is required to pay its share (i.e., the same
percentage as the percentage of its entitlement to the output) of all of the
costs of the generating unit (whether or not the unit is operating) including
fixed costs, operating costs, costs of additional construction or modification,
costs associated with condemnation, shutdown, retirement, or decommissioning of
the unit, and certain transmission charges. Under its contracts with Maine
Yankee, Connecticut Yankee Atomic Power Company, Vermont Yankee Nuclear Power
Corporation and Yankee Atomic and, under its agreements relating to Phase II of
the interconnection with Hydro-Quebec, Montaup may be called upon to provide
additional capital and/or other types of direct or indirect financial support.
(See Item 1. BUSINESS -- Nuclear Power Issues "Yankee Atomic" and "Maine
Yankee.")
Other Property
The EUA System owns approximately 4,600 miles of transmission and
distribution lines and approximately 85 substations located in the cities and
towns served.
Blackstone owns approximately 1,000 miles of transmission and distribution
lines and approximately 23 substations located in the cities and towns served.
Blackstone also owns 100% of a 1.2-MW hydroelectric generating plant located in
Pawtucket, Rhode Island. See Note E of Notes to Financial Statements in
Blackstone's 1995 Annual Report (Exhibit 13-1.01 filed herewith) regarding
encumbrances.
Eastern Edison and Montaup own approximately 3,200 miles of transmission
and distribution lines and approximately 48 substations located in the cities
and towns served. See Note F of Notes to Consolidated Financial Statements in
Eastern Edison's 1995 Annual Report (Exhibit 13-1.08 filed herewith) regarding
encumbrances.
In addition to the above, the Retail Subsidiaries, Montaup, and EUA
Service also own several buildings which house distribution, maintenance or
general office personnel. See Note E of Notes to Consolidated Financial
Statements contained in EUA's Annual Report to Shareholders for the year ended
December 31, 1995, (Exhibit 13-1.03 filed herewith) regarding encumbrances.
Item 3. LEGAL PROCEEDINGS
Rate Proceeding
See descriptions of proceedings under Item 1, BUSINESS -- Rates.
Environmental Proceedings
1. In March 1985, Blackstone was notified by the DEQE, which is now the
DEP, that it had been identified, along with other parties, as a potentially
responsible party under Massachusetts law for a condition of soil and ground
water contamination in Lowell, Massachusetts. The site in question was
occupied by a scrap metal reclamation facility which received transformers and
other electrical equipment from utility companies and others from the early
1960s until 1984. Among the contaminants apparently released at the site were
PCBs. The potentially responsible parties (PRPs), including Blackstone,
performed site studies and proposed a remedial action plan, which was approved
by the DEQE several years ago. Since that time, the PRPs have negotiated over
access, taxes and similar issues with the site owner and other parties. The
remedial option selected but not yet completed is a process of solidification;
however, a risk assessment that may now be required could lead the PRPs to
choose capping as the remedial option. The cost of implementing either remedy
could vary from $250,000 for capping to $600,000 for solidification.
Blackstone is alleged to be the fifth ranked generator out of approximately
twenty potentially responsible parties. However, Blackstone's estimated 2%
share allocation is considerably less than the shares of the four largest
contributors at the site. As a result, Blackstone expects to be offered a de
minimis party buyout settlement from the major members of the site PRPs in the
near future.
2. On July 14, 1987, the Commonwealth of Massachusetts (the Commonwealth)
on behalf of the DEP filed a cost recovery action pursuant to CERCLA and Mass.
Gen. Laws Chapter 21E against Blackstone in the United States District Court
for the District of Massachusetts (District Court). The Complaint seeks $2.2
million in costs incurred by DEP in the cleanup of an alleged coal gasification
waste site at Mendon Road in Attleboro, Massachusetts. In October 1987,
without admitting liability, Blackstone entered into an administrative Consent
Order with DEP regarding the Mendon Road site and another alleged coal
gasification site discovered by the DEP approximately 1/4 mile away known as
the Lawn/Knoll site in Attleboro. Blackstone agreed to perform preliminary
assessments at both sites in order to determine what remediation, if any, was
necessary at the site. In 1988, Blackstone submitted Phase II testing results
for the Lawn/Knoll site to the DEP for review and approval, but Blackstone has
not received a response or DEP authorization to proceed with further studies or
remedial action. On May 26, 1993, the DEP requested Blackstone to submit
additional Phase I testing for the Mendon Road site which was completed and
sent to the DEP on December 20, 1993. Meanwhile, Blackstone has contested
the DEP's cost recovery action, arguing, inter alia, that the waste removed
from the Mendon Road site, ferric ferrocyanide (FFC), was not "hazardous"
within the meaning of CERCLA or Mass. Gen. Laws Chapter 21E and the DEP's
cleanup actions were inconsistent with the National Contingency Plan (NCP).
On November 25, 1991, the District Court held that the waste was "hazardous"
within the meaning of both statutes and on December 20, 1992, the District
Court held Blackstone and a co-defendant, the Courtois Sand & Gravel Co.
(Courtois) liable for an undetermined amount of cleanup costs. The District
Court remanded the case to the DEP to supplement the administrative record with
Blackstone's oral and written comments concerning the cleanup. On March 19,
1993, Blackstone made an oral presentation to the DEP and on April 19, 1993,
Blackstone submitted written comments. On December 13, 1994, the District
Court issued a judgment against Blackstone finding Blackstone liable to the
Commonwealth for the full amount of response costs incurred by the Commonwealth
in the cleanup of the Mendon Road site. The judgment also found Blackstone
liable for interest and litigation expenses calculated to the date of
judgment. The total liability at December 31, 1994 was approximately $5.9
million, including approximately $3.6 million in interest which has accumulated
since 1985.
On January 20, 1995, Blackstone entered into an escrow agreement with the
Commonwealth whereby Blackstone deposited $5.9 million with an escrow agent who
transferred the funds into an interest bearing money market account. The
distribution of the proceeds of the escrow account will be determined upon the
final resolution of the judgment. No additional interest expense will accrue
on the judgment amount.
Blackstone filed a Notice of Appeal of the District Court's judgment and
filed its brief with the United States Court of Appeals for the First Circuit
(Circuit Court) on February 24, 1995. On October 6, 1995, the Circuit Court
vacated the District Court's $5.9 million judgement. Rather than remand the
case to the District Court for a trial on the issue of whether FFC is a
hazardous substance, the Circuit Court exercised its primary jurisdictional
powers to send the matter to the EPA for an administrative determination on the
issue. If the EPA determines that FFC is not a hazardous substance, given the
present posture of the case, Blackstone may not be liable to reimburse the
Commonwealth for the Mendon Road cleanup costs.
On January 28, 1994, Blackstone filed a Complaint in the District Court
seeking, among other relief, contribution and reimbursement from Stone &
Webster Inc., of New York City and several of its affiliated companies (Stone &
Webster), and Valley Gas Company of Cumberland, Rhode Island (Valley) for any
damages incurred by Blackstone regarding the Mendon Road site. Blackstone's
Complaint also seeks a declaratory judgment that Stone & Webster and Valley
owned and/or operated a coal gasification plant on Tidewater Street in
Pawtucket (the Tidewater Plant) where the coal gasification waste allegedly
was generated, and that they individually or collectively arranged for the
disposal of such waste. The District Court has denied motions to dismiss the
complaint filed by Stone & Webster and Valley in 1994. This proceeding was
stayed in December 1995 pending final EPA determination as to whether FFC is a
hazardous substance.
Blackstone has notified certain liability insurers and has filed claims
with respect to the Mendon Road site. Blackstone reached final settlement with
one such insurer for coverage of legal costs related to this proceeding and in
January 1996 received payment of approximately $1.2 million. Blackstone is
actively pursuing coverage from other carriers.
3. On October 28, 1986, RIDEM notified Blackstone that there may have been
a release of hazardous material at the Tidewater Plant site in Pawtucket, Rhode
Island. The site was placed on EPA's CERCLA list in 1987. The site includes
the Tidewater Plant owned by Valley Gas Company (approximately 10 acres), the
No. 1 Station owned by Blackstone (approximately 10 acres), and land formerly
owned by Blackstone that was sold in 1968 to the City of Pawtucket
(approximately 10 acres). RIDEM told Blackstone that the site contained
cyanide-contaminated wastes and petroleum-contaminated soils due to tanks
formerly located at the site. In December, 1990, after obtaining approval
from RIDEM, Blackstone removed approximately 1,000 tons of soil from the site.
On September 3, 1991, RIDEM initiated a site investigation which constitutes
the second step in a site screening and assessment process established by the
EPA to determine whether the site should be listed as a Superfund site. On
February 3, 1993, RIDEM notified Blackstone that it required further assessment
and evaluation of site conditions to determine if the site qualifies for review
pursuant to the Hazardous Ranking System. The EPA is planning to review the
site to determine whether a further investigation and a hazard ranking
should be performed. As previously discussed in item 2 above, on January 28,
1994, Blackstone filed a complaint (previously mentioned in paragraph 2) in the
District Court seeking, inter alia, a declaratory judgment that Stone & Webster
and Valley are responsible for owning and/or operating the Tidewater
Plant and disposing and/or arranging for the disposal of coal gasification
wastes at the Tidewater Plant site. On September 12, 1995, RIDEM notified
Blackstone and Valley of their responsibility regarding the release of
hazardous substances at the Tidewater Plant site. RIDEM ordered Blackstone
and Valley to conduct an environmental study of the Tidewater Plant site and
adjoining lots. Blackstone and Valley have entered into an agreement to share
the expenses of conducting the study and/or retaining an environmental energy
firm to conduct a Phase II site study.
4. Montaup and EUA Service received a Notice of Responsibility on July 27,
1987, from the DEP for suspected hazardous material at a site owned by Montaup
on Hortonville Road in Swansea, Massachusetts. EUA Service has contracted for
and received an environmental site assessment for the property identifying the
previous property owner as the party likely responsible for the deposit of
suspected hazardous waste materials on the site. This assessment has been
submitted to the DEP, identifying the previous property owner. Under the new
Massachusetts Contingency Plan regulations, Montaup must take the initiative to
complete investigative and remedial actions by August 1997. A site
investigation was initiated in September 1995 as the first step in this
process.
5. During March-April 1990, Eastern Edison conducted a limited
environmental investigation (Phase I study) of a portion of its Dupont
Substation in Brockton, Massachusetts. During the investigation, Eastern
Edison notified the DEP that it had encountered oils and PCBs. On May 3, 1990,
the DEP notified Eastern Edison of its liability for releases of oil and/or
hazardous materials at the site, and requested a copy of the Phase I study.
Following its review of the Phase I study on January 23, 1991, the DEP issued a
Notice of Responsibility to Eastern Edison requiring a Phase II - Comprehensive
Site Investigation. A scope of work for the Phase II study was submitted on
April 12, 1991. In August 1994 a transition statement issued by DEP
reclassifying the site from a Tier IA site to a Tier IB site was signed by
Eastern Edison and submitted to DEP. That reclassification enables the site to
be investigated and cleaned up under the guidance of a licensed site
professional without DEP approval for each action taken. Cleanup activities
were nearly completed at the site in 1995. The removal of storage tanks and
excavation of PCB "hot spots" was accomplished. Backfilling and paving to cap
areas of residual soil contamination are expected to commence in the spring of
1996. The total estimated cost of the cleanup including amounts already
incurred, is anticipated to be approximately $550,000.
Blackstone, Eastern Edison, Montaup and EUA Service are unable to predict
the outcome of any of the foregoing environmental matters or to estimate the
potential costs which may ultimately result. It is the policy of these
companies in such cases to provide notice to liability insurers and to make
claims. However, it is not possible at this time to predict whether liability,
if any, will be assumed by, or can be enforced against, the insurance carrier
in these matters. Under CERCLA, each responsible party can be held "jointly
and severally" liable for clean-up costs. EUA or a subsidiary could thus be
held fully liable for environmental damages for which they were only partially
responsible. However, EUA might then be entitled to recover costs from other
PRPs.
As of December 31, 1995, the EUA System has incurred costs of
approximately $4.6 million (excluding the Mendon Road judgment) in connection
with the foregoing environmental matters, substantially all of which relate to
Blackstone. EUA estimates that additional expenditures (excluding the Mendon
Road judgment) may be incurred through 1997 of up to $3.0 million of which
approximately $2.5 and $0.5 million relate to Blackstone and Eastern Edison,
respectively.
As a general matter, the EUA System will seek to recover costs relating to
environmental proceedings in their rates. Blackstone is recovering in rates
certain of its incurred costs over a five-year period. Montaup is currently
recovering certain of its incurred costs in its rates. Estimated amounts after
1997 are not now determinable since site studies which are the basis of these
estimates have not been completed. As a result of the recoverability in
current rates and the uncertainty regarding both its estimated liability, as
well as potential contributions from insurance carriers and other responsible
parties, EUA does not believe that the ultimate impact of the environmental
costs will be material to the financial position of the EUA System or to any
individual subsidiary and thus, no loss provision is required at this time.
EUA WestCoast L.P.
EUA Cogenex, through its EUA WestCoast (WestCoast) L.P., had under
development a cogeneration facility of approximately 1.5 MW. The cogeneration
facility experienced numerous start-up delays and cost overruns. The host of
the facility has taken the position that the energy services agreement between
WestCoast and itself is terminated due to, among other things, failure to
complete the project. WestCoast disagrees with the host's right to terminate,
but has decided not to contest the host's purported termination.
In June 1993, WestCoast filed a lawsuit against the contractors
responsible for the design and construction of the facility, as well as the
surety which issued a performance bond guaranteeing construction. Certain
defendants in that action have filed cross-complaints against WestCoast and EUA
Cogenex, seeking, among other things, approximately $300,000 for payments
withheld by WestCoast due to the contractor's deficient performance,
contribution and indemnity. A contractor has also filed a cross-complaint
against the host. Additionally, the host has filed a cross-complaint against
Cogenex and the other parties in the litigation, seeking approximately $7
million in damages arising principally from lost economic advantage. EUA
WestCoast filed its own cross complaint against the host affirmatively
seeking damages. EUA WestCoast has secured defense from insurance carriers for
the claims made by the host.
EUA Cogenex intends to vigorously prosecute its claims against the
contractors, surety and host, and defend itself against any cross-complaints.
EUA Cogenex cannot predict the ultimate resolution of this matter. As a result
of EUA Cogenex's decision to discontinue cogeneration operations effective as
of July 1, 1995, EUA Cogenex has recorded a reserve for its total investment in
this project which is included in the one-time after-tax charge to earnings of
approximately $10.5 million.
Other Proceedings
In December 1992, Montaup commenced a declaratory judgment action in which
it sought to have the Massachusetts Superior Court determine its rights under
the Power Purchase Agreement between it and Aquidneck Power Limited
Partnership. In April 1995 Montaup filed a motion for summary judgement and in
June 1995 the court granted Montaup's motion. In July, Aquidneck filed for
appeal of the court's decision.
Montaup, EUA and EUA Service intend to vigorously contest the appeal and
continue to believe that Aquidneck's claims have no basis in law.
On June 30, 1987, the MDPU commenced a proceeding for the purpose of
investigating Eastern Edison's power planning process after rejecting a
proposed Purchased Capacity Adjustment Clause. One of the purposes of this
proceeding is to investigate the prudency of Eastern Edison's all-requirements
contract with Montaup. No procedural dates have been set nor has any other
activity occurred in this docket. EUA cannot predict the outcome of this
matter at this time.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
EXECUTIVE OFFICERS OF EASTERN UTILITIES ASSOCIATES
The names, ages and positions of all of the executive officers of EUA as
of March 18, 1996, are listed below along with their business experience during
the past five years. Officers are elected annually by the Trustees at the
meeting of Trustees next following the annual meeting of shareholders. The
1996 Annual Meeting of Shareholders is scheduled to be held on May 20, 1996.
There are no family relationships among these officers, nor any arrangement or
understanding between any officer and any other person pursuant to which the
officer was selected. The executive officers also serve as officers/or
directors of various subsidiary companies.
Name, Age and Position Business Experience During Past 5 Years
Richard M. Burns, 58 Comptroller since 1976, Assistant Secretary since
Comptroller 1978, and Assistant Treasurer since April 1986.
Chief Accounting Officer of EUA.
John D. Carney, 51 Executive Vice President since April 1995;
Executive Vice President President of Eastern Edison Company since January
1990; President of Blackstone since April 1995.
Responsible for the day-to-day activities of
The EUA System's retail electric operations.
Clifford J. Hebert, Jr., 48 Treasurer since April 1986. Secretary since May,
Treasurer and 1995. Responsible for financial, treasury and
Secretary corporate affairs of the EUA System.
Donald G. Pardus, 55 Chairman since July 1990; Chief Executive
Chairman of the Board, Officer since April 1989. Responsible for
Chief Executive Officer the overall management of the EUA System.
and Trustee
Robert G. Powderly, 48 Executive Vice President since April 1992;
Executive Vice President President of Newport Electric Corporation from
March 1990 to April 1992. Responsible for
purchasing, customer information services,
information systems, human resources, marketing
and rate activities of the EUA System.
John R. Stevens, 55 President since July 1990; Chief Operating
President, Chief Operating Officer since January 1990; Senior Executive Vice
Officer and Trustee President from January 1990 to July, 1990.
Responsible for retail operations and new
ventures of the EUA System.
Except as described below, there have been no events under any bankruptcy
act, no criminal proceedings and no judgments or injunctions material to the
evaluation of the ability and integrity of any director or executive officer
during the past five years.
On February 28, 1991, EUA Power (now Great Bay Power), filed a voluntary
petition with the United States Bankruptcy Court for the District of New
Hampshire for protection under Chapter 11 of the Federal Bankruptcy Code. EUA
Power, a wholly owned subsidiary of EUA prior to February 5, 1993, the date it
redeemed all of its equity securities held by EUA, was organized solely for the
purpose of acquiring an interest in the Seabrook Project and selling in the
wholesale market its share of electricity generated by the project. EUA has no
ownership interest in Great Bay Power.
Messrs. Burns, Hebert, Pardus and Stevens, were officers or directors of EUA
Power since its formation in 1986, resigned their positions effective December
30, 1992, with the exception of Mr. Stevens who resigned as the sole officer
and director of Great Bay Power on November 22, 1994.
PART II
Item 5. MARKET FOR EUA'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth under the caption "QUARTERLY FINANCIAL AND COMMON
SHARE INFORMATION" included in EUA's Annual Report to Shareholders for the year
ended December 31, 1995 (Exhibit 13-1.03 filed herewith) is incorporated herein
by reference.
The information required by this item for Blackstone and Eastern Edison is
incorporated by reference to information contained under the like captioned
sections of Blackstone's and Eastern Edison's 1995 Annual Reports (Exhibit 13-
1.01 and 13-1.08, respectively, filed herewith).
As of February 1, 1996 there were 12,161 EUA common shareholders of record.
The closing price of EUA's Common Shares as reported by the Wall Street
Journal on March 18, 1996 was $21.125.
Item 6. SELECTED FINANCIAL DATA
The information set forth under the caption "SELECTED CONSOLIDATED FINANCIAL
DATA" included in EUA's Annual Report to Shareholders for the year ended
December 31, 1995, (Exhibit 13-1.03 filed herewith) and the information set
forth under the caption "SELECTED FINANCIAL DATA" included in the Annual
Reports for the year ended December 31, 1995 for Blackstone and Eastern Edison
(Exhibits 13-1.01 and 13-1.08, respectively, filed herewith) are incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference to
pages 9 through 20 in the 1995 EUA Annual Report to Shareholders, pages 3
through 8 in the 1995 Blackstone Annual Report and pages 3 through 9 in the
1995 Eastern Edison Annual Report (Exhibits 13-1.03, 13-1.01 and 13-1.08 for
EUA, Blackstone and Eastern Edison , respectively, filed herewith).
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to
pages 22 through 37 in the 1995 EUA Annual Report to Shareholders, page 2 and
pages 10 through 27 in the 1995 Blackstone Annual Report and, page 2 and pages
12 through 31 in the 1995 Eastern Edison Annual Report (Exhibits 13-1.03, 13-
1.01 and 13-1.08 for EUA, Blackstone and Eastern Edison, respectively, filed
herewith).
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
EASTERN UTILITIES ASSOCIATES
The information concerning trustees and executive officers set forth under
the caption "ELECTION OF TRUSTEES AND OWNERSHIP OF COMMON SHARES" in EUA's
definitive Proxy Statement to be mailed to shareholders in connection with the
shareholders' annual meeting to be held on May 20, 1996, and filed with the SEC
is incorporated herein by reference. See also "EXECUTIVE OFFICERS OF EASTERN
UTILITIES ASSOCIATES" following Item 4 herein.
BLACKSTONE AND EASTERN EDISON
The names, ages and positions of all of the directors and executive officers of
Blackstone and Eastern Edison as of March 18, 1996 are listed below with their
business experience during the past five years. The directors of Blackstone
and the directors, Treasurer and Clerk of Eastern Edison are each elected
to serve until the next annual stockholders' meeting. All other officers are
elected to serve until the next meeting of directors following the annual
stockholders' meeting. There is no family relationship between any of the
directors or officers of Blackstone and Eastern Edison. Messrs. Pardus and
Stevens are Trustees of EUA. Certain officers of Blackstone and Eastern
Edison are, or at various times in the past have been, officers and/or
directors of the System Companies with which Blackstone and Eastern Edison have
entered into contracts and had other business relations.
Name, Age and Position Business Experience During Past 5 Years
Richard M. Burns, 58* Vice President, Assistant Treasurer and Assistant
Vice President Clerk/Assistant Secretary of Blackstone and
Eastern Edison since April 1986.
John D. Carney, 51* President and Director of Blackstone since April
Director and President 1995; President and Director of Eastern Edison
since January 1990.
David H. Gulvin, 61 Senior Vice President of Blackstone and Eastern
Senior Vice President Edison since April 1995; President of Blackstone
from November 1989 to April 1995; Director of
Blackstone since November 1989. Director of
Eastern Edison since July 1995. Responsible for
corporate communications, consumer services,
marketing and rate activities.
Barbara A. Hassan, 46 Vice President of Blackstone since April 1995;
Vice President Vice President of Eastern Edison since January
1990. Responsible for the operation and
maintenance of the transmission and distribution
facilities.
Clifford J. Hebert, Jr., 48* Treasurer since April 1986 and Secretary/Clerk
Treasurer and since April 1995 of both Blackstone
Secretary/Clerk and Eastern Edison.
Michael J. Hirsh, 41 Vice President of Blackstone since July 1991;
Vice President Vice President of Eastern Edison since April
1995; Prior to that he was either a Director or
Manager of the Engineering or Resource Planning
Departments of EUA Service for more than five
years. Responsible for all engineering and
technical services.
Kevin A. Kirby, 45 Vice President of Blackstone and Eastern Edison
Vice President since April, 1995; prior to that he was a
Director of the Integrated Resource Management
department of EUA Service for five years;
responsible for the resource planning, power
supply and contract administration activities of
the EUA System.
Donald G. Pardus, 55* Chairman of the Board since July 1989 and
Director and Director since 1979 of both Blackstone and
Chairman of the Board Eastern Edison.
Robert G. Powderly, 48* Executive Vice President and Director since March
Director and Executive 1992 of both Blackstone and Eastern Edison.
Vice President
John R. Stevens, 55* Vice Chairman of the Board since July 1989 and
Director and Vice Director since July 1987 of both Blackstone and
Chairman of the Board Eastern Edison.
* Please refer to the material supplied under the caption "EXECUTIVE OFFICERS
OF EASTERN UTILITIES ASSOCIATES" following Item 4 herein for other information
regarding this officer.
Item 11. EXECUTIVE COMPENSATION
Eastern Utilities Associates
The information concerning executive compensation set forth under the caption
"COMPENSATION AND OTHER TRANSACTIONS" in EUA's definitive Proxy Statement to be
mailed to shareholders in connection with the shareholders' annual meeting to
be held on May 20, 1996 and filed with the SEC is incorporated herein by
reference with the exception of the Report of the Compensation and Nominating
Committee on Compensation of Executive Officers and accompanying Corporate
Performance Graph that appears therein and which are specifically not
incorporated herein by reference.
Blackstone and Eastern Edison
The Chief Executive Officer and the four other most highly compensated
executive officers of Blackstone and Eastern Edison hold the same or similar
positions with EUA and are not paid directly by either Blackstone or Eastern
Edison. The information required by this item is incorporated herein
by reference to the material under the caption "COMPENSATION AND OTHER
TRANSACTIONS" in the definitive Proxy Statement of EUA, dated March 27, 1996,
with the exception of the Report of the Compensation and Nominating Committee
on Compensation of Executive Officers and accompanying Corporate Performance
Graph that appears therein and which are specifically not incorporated herein
by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners of Blackstone and
Eastern Edison.
Amount (number of
Name and Address of shares) and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
Common Stock Eastern Utilities
Associates 2,891,357 of Eastern Edison* 100%
One Liberty Square 184,062 of Blackstone* 100%
Boston, Massachusetts
_______________
*All shares, which are the only voting securities of Eastern Edison and
Blackstone, are registered in the name of the beneficial owner.
(b) Security ownership of certain beneficial owners of EUA and management of
EUA, Blackstone and Eastern Edison.
The statements concerning security ownership of certain beneficial owners
and management set forth under the caption "ELECTION OF TRUSTEES AND OWNERSHIP
OF COMMON SHARES" in EUA's definitive Proxy Statement to be mailed to
shareholders in connection with the shareholders' annual meeting to be held on
May 20, 1996 and filed with the SEC are incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The response to this portion of Item 14 is set forth under Item 8.
(a)(2) Financial Statement Schedules
The following additional consolidated financial statement schedules filed
herewith for EUA and Blackstone should be considered in conjunction with the
financial statements in the EUA's Annual Report to Shareholders and
Blackstone's Annual Report for the year ended December 31, 1995 (Exhibit 13-
1.03 and 13-1.01, respectively, filed herewith):
1. Financial Statement Schedules:
EUA
Schedule II - Valuation and Qualifying Accounts for the three years
ended December 31, 1995.
Blackstone
Schedule II - Valuation and Qualifying Accounts for the three years
ended December 31, 1995.
(a)(3) Exhibits (*denotes filed herewith).
Articles of Incorporation and By-Laws:
-EUA-
3-1.03 - Declaration of Trust of EUA, dated April 2, 1928, as amended
(Exhibit A-3, File No. 70-3188; Exhibit 1 to EUA's 8-K Reports for
April in each of the years 1957, 1962, 1966, 1968, 1972, and 1973,
File No. 1-5366; Exhibit A-1 (a), Amendment No. 2 to Form U-1,
File No. 70-5997; Exhibit 4-3, Registration No. 2-72589; Exhibit
1 to Certificate of Notification, File No. 70-6713; Exhibit 1 to
Certificate of Notification, File No. 70-7084; Exhibit 3-2, Form
10-K of EUA or 1987, File No. 1-5366).
- Eastern Edison -
3-1.08 - Form of Restated and Amended Articles of Organization (filed as
Exhibit B-1 to Form U5S of EUA for 1993).
Instruments Defining the Rights of Shareholders, Including Indentures:
- Eastern Edison -
4-1.08 - Indenture of First Mortgage and Deed of Trust dated as of
September 1, 1948 of Eastern Edison (Exhibit 4-1, Registration No.
2-77468), and twenty-six supplements thereto (Exhibit A, File No.
70-3015; Exhibit A-3, File No. 70-3371; Exhibit C to Certificate
of Notification, File No. 70-3371; Exhibit D to Certificate of
Notification, File No. 3619; Exhibit D to Certificate of
Notification, File No. 70-3798; Exhibit F to Certificate of
Notification, File No. 70-4164; Exhibit D to Certificate of
Notification, File No. 70-4748; Exhibit C to Certificate of
Notification, File No. 70-5195; Exhibit F to Certificate of
Notification, File No. 70-5379; Exhibit C to Certificate of
Notification, File No. 70-5719; Exhibit 5-24 Registration No. 2-
65785; Exhibit F to Certificate of Notification, File No. 70-6463;
Exhibit C to Certificate of Notification, File No. 70-6608;
Exhibit C to Certificate of Notification, File No. 70-6737;
Exhibit F to Certificate of Notification, File No. 70-6851;
Exhibit 4-31, Form 10-K of EUA for 1984, File No. 1-5366; Exhibit
F to Certificate of Notification, File No. 70-7254; Exhibit C
to Certificate of Notification, File No. 70-7373; Exhibit C to
Certificate of Notification, File No. 70-7373; Exhibit C to
Certificate of Notification, File No. 70-7373; Exhibit F to
Certificate of Notification, File No. 20-7511; Exhibit 4-34,
Form 10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit 4-
24, Form 10-K of Eastern Edison for 1992, File No. 0-8480; Exhibit
4-35, Form 10-K of Eastern Edison for 1990, File No. 0-8480;
Exhibit 4-36, Form 10-K of Eastern Edison for 1990, File No. 0-
8480; Exhibit C-33 to Form U5S of EUA for 1993; Exhibit C-34
to Form U5S of EUA for 1993; Exhibit 4-29.08, Form 10-K of Eastern
Edison for 1994, File No. 0-8480).
- Montaup -
4-1.05 - Form of 8% Debenture Bonds due 2000 of Montaup (Exhibit 4-10,
Registration No. 2-41488).
4-2.05 - Form of 8-1/4% Debenture Bonds due 2003 of Montaup (Exhibit B-3,
Form U5S of EUA for year 1973).
4-3.05 - Form of 14% Debenture Bonds due 2005 of Montaup (Exhibit 4-11,
Registration No. 2-55990).
4-4.05 - Form of 10% Debenture Bonds due 2008 of Montaup (Exhibit 5-3,
Registration No. 2-65785).
4-5.05 - Form of 16-1/2% Debenture Bonds due 2010 of Montaup (Exhibit 4-11,
Form 10-K of EUA for 1980, File No. 1-5366).
4-6.05 - Form of 12-3/8% Debenture Bonds due 2013 of Montaup (Exhibit 4-13,
Form 10-K of EUA for 1983, File No. 1-5366).
4-7.05 - Form of 10-1/8% Debentures due 2008 of Montaup (Exhibit 4, Form
10-Q of Eastern Edison for quarter ended September 30, 1983, File
No. 0-8480).
4-8.05 - Form of 9% Debenture Bonds due 2020 of Montaup (Exhibit 4-10, Form
10-K of Eastern Edison for 1990, File No. 0-8480).
4-9.05 - Form of 9 3/8% Debenture Bonds due 2020 of Montaup (Exhibit 4-11,
Form 10-K of Eastern Edison for 1990, File No. 0-8480).
- Blackstone -
4-1.01 - First Mortgage Indenture and Deed of Trust dated as of December 1,
1980 of Blackstone (Exhibit A, Form 8-K of EUA dated January 14,
1981, File No. 1-5366) and two supplements thereto (Exhibit 4-33,
Form 10-K of EUA for 1989, File No. 1-5366; Exhibit 4-3, Form 10-K
of BVE for 1990, File No. 0-2602).
4-4.01 - Loan Agreement between Rhode Island Industrial Facilities
Corporation and Blackstone dated as of December 1, 1984 (Exhibit
10-72, Form 10-K of EUA for 1984, File No. 1-5366).
- EUA Service -
4-1.07 - Note Purchase Agreement dated as of January 13, 1988 of Service
(Exhibit 4-38, Form 10-K of EUA for 1987, File No. 1-5366).
- EUA Cogenex -
4-1.10 - Note Agreement dated as of June 28, 1990 of EUA Cogenex with the
Prudential Insurance Company of America (Exhibit 4-46, Form 10-K
of EUA for 1990, File No. 1-5366).
4-2.10 - Note Agreement dated as of October 29, 1991 between EUA Cogenex
and Prudential Insurance Company of America (Exhibit 4-55, Form
10-K of EUA for 1991, File No. 1-5366).
4-3.10 - Note Purchase Agreement dated as of September 29, 1992 of EUA
Cogenex and the Prudential Life Insurance Company of America
(Exhibit 4-44, Form 10-K of EUA for 1992, File No. 1-5366).
4-4.10 - Indenture dated September 1, 1993 between EUA Cogenex and the Bank
of New York as Trustee (Exhibit 4-4.10, Form 10-K of EUA for 1993,
File No. 1-5366).
- Newport -
4-1.14 - Indenture of First Mortgage dated as of June 1, 1954 of Newport,
as supplemented on August 1, 1959, April 1, 1962, October 1, 1964,
April 1, 1967, September 1, 1969, September 1, 1970, June 1, 1978,
October 1, 1978, May 1, 1986, December 1, 1987 and November 1,
1989 (Exhibit 4-49, Form 10-K of EUA for 1990, File No. 1-5366).
4-2.14 - United States Government Small Business Administration Loan to
Newport entitled, "Base Closing Economic Injury Loan", signed May
30, 1975 and amended on October 6, 1983 (Exhibit 4-50, Form 10-K
of EUA for 1990, File No. 1-5366).
4-3.14 - Indenture of Second Mortgage dated as of September 1, 1982 of
Newport, as supplemented on December 1, 1988 (Exhibit 4-51, Form
10-K of EUA for 1990, File No. 1-5366).
4-4.14 - Loan Agreement between the Rhode Island Port Authority and
Economic Development Corporation and Newport Electric Corporation
dated as of January 6, 1994 (Exhibit 4-4.14, Form 10-K of EUA for
1993, File No. 1-5366).
4-5.14 - Trust Indenture between the Rhode Island Authority and Economic
Development Corporation and Newport Electric Corporation dated as
of January 1, 1994 (Exhibit 4-5.14, Form 10-K of EUA for 1993,
File No. 1-5366).
4-6.14 - Letter of Credit and Reimbursement Agreement dated January 6, 1994
(Exhibit 4-6.14, Form 10-K of EUA for 1993, File No. 1-5366).
- EUA Ocean State -
4-1.12 - Note Purchase Agreement dated as of January 16, 1992 between EUA
Ocean State Corporation and John Hancock Mutual Life Insurance
Company (Exhibit 4-56, Form 10-K of EUA for 1991, File No. 1-
5366).
Material Contracts:
- EUA -
10-1.03 - Employees' Retirement Plan of Eastern Utilities Associates and its
Subsidiary Companies Trust Agreement as amended and restated,
effective July 1, 1981 (Exhibit 10-1, Registration No. 2-80205).
10-2.03 - Eastern Utilities Associates Employees' Savings Plan Trust
Agreement (Exhibit 10-3, Form 10-K of EUA for 1992, File No. 1-
5366).
10-3.03 - Eastern Utilities Associates Employees' Savings Plan as amended
and restated effective January 1, 1989 (Exhibit 10-4, Form 10-K of
EUA for 1992, File No. 1-5366).
10-4.03 - Stock Purchase Agreement dated as of December 10, 1986, among
Eastern Utilities Associates, Citizens Corporation and Citizens
Energy Corporation (Exhibit 10-104, Form 10-K of EUA for 1986,
File No. 1-5366).
10-5.03 - Precedent Agreement dated as of November 29, 1989 between EUA and
NECO Enterprises, Inc. (Exhibit B-4, Form U-1, File No. 70-7677).
10-6.03 - Amendment to and Restatement of Stock Purchase Agreement dated as
of February 1, 1990 between EUA, NECO Enterprises, Inc., Newport
Electric Corporation and a special-purpose subsidiary of EUA for
the acquisition by EUA of the stock of Newport Electric
Corporation (Exhibit B-3, Form U-1, File No. 70-7677).
10-7.03 - Letter of Assurance in connection with the Credit Agreement
between Vermont Electric Transmission Company, Inc. and Bank of
America National Trust and Savings Association dated July 19, 1983
(Exhibit 10-111, Form 10-K of EUA for 1990, File No. 1-5366).
10-8.03 - Amended and Restated Equity Maintenance Agreement dated as of
September 29, 1992 among EUA and The Prudential Insurance Company
of America and Pruco Life Insurance Company (Exhibit 10-9, EUA 10-
K for 1992, File No. 1-5366).
10-9.03 - Guaranty, dated June 28, 1990 made by EUA in favor of The
Prudential Life Insurance Company of America (Exhibit 10-10, EUA
10-K for 1992, File No. 1-5366).
10-10.03 - Guaranty, dated January 16, 1992 made by EUA in favor of John
Hancock Mutual Life Insurance Company (Exhibit 4-125, Form 10-K of
EUA for 1991, File No. 1-5366).
10-11.03 - Form of Service Contract between EUA Service Corporation and each
of the other companies (including EUA) in the EUA System (Exhibit
13-1.03, Registration No. 2-55990).
10-12.03 - Form of EUA Restricted Stock Plan effective July 17, 1989 (Exhibit
10-13, EUA Form 10-K for 1992, File No. 1-5366).
10-13.03 - Eastern Utilities Associates Employees' Share Ownership Plan Trust
Agreement (Exhibit 5, Form 10-K of EUA for 1977, File No. 1-5366).
10-14.03* - Employees' Retirement Plan of Eastern Utilities Associates and Its
Affiliated Companies as amended and restated effective January 1,
1989.
10-15.03* - Eastern Utilities Associates Employees' Savings Plan as amended
and restated effective January 1, 1989 (including amendments
through January 1, 1992).
10-16.03* - First Amendment to the Employees' Retirement Plan of Eastern
Utilities Associates and Its Affiliated Companies dated December
21, 1994.
10-17.03* - First Amendment to Eastern Utilities Associates Employees' Savings
Plan and Its Affiliated Companies dated December 21, 1994.
- Eastern Edison -
10-1.08 - Trust Agreement dated as of July 1, 1993 between Massachusetts
Industrial Finance Agency and Shawmut Bank, N.A. (filed as Exhibit
10-1.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480).
10-2.08 - Loan Agreement dated as of July 1, 1993 between Massachusetts
Industrial Finance Agency and Eastern Edison (filed as Exhibit 10-
2.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480).
10-3.08 - Power Purchase Agreement entered into as of September 20, 1993 by
and between Meridian Middleboro Limited Partnership and Eastern
Edison Company (filed as Exhibit 10-3.08 to Eastern Edison's Form
10-K for 1993, File No. 0-8480).
10-4.08 - Inducement Letter dated July 14, 1993 from Eastern Edison to the
Massachusetts Industrial Finance Agency and Goldman, Sachs &
Company and Citicorp Securities Markets, Inc. (filed as Exhibit
10-4.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480).
- Montaup -
10-1.05 - Montaup Contract, as amended (Exhibit 4-B, Registration No. 2-
14119; Exhibit 13-A1, Registration No. 2-14718; Exhibit 4-B-2,
Registration No. 2-26509; Exhibit 4-B-3, Registration No. 2-
33061; Exhibits 13-3 and 13-4, Registration No. 2-48966; Exhibit
B-2, Form U5S of EUA for year 1974 and Exhibit 5-40, Registration
No. 2-62862).
10-2.05 - Power Contract (composite copy) between Connecticut Yankee Atomic
Power Company and Montaup dated July 1, 1964 as amended and
supplemented March 1, 1978, August 22, 1980, and October 15, 1982
(Exhibit B-1, File No. 70-4245; Exhibit 20, Form 10-K of EUA for
1977, file No. 1-5366; Exhibit 10-52, Form 10-K for EUA for 1981,
File No. 1-5366; Exhibit 10-67, Form 10-K for EUA for 1983, file
No. 1-5366).
10-3.05 - Capital Funds Agreement (composite copy) between Connecticut
Yankee Atomic Power Company and Montaup dated September 1, 1964
(Exhibit B-2, File No. 70-4245).
10-4.05 - Stockholder Agreement (composite copy) among Connecticut Yankee
Atomic Power Company's Sponsors, including Montaup, dated July 1,
1964 (Exhibit B-4, File No. 70-4245).
10-5.05 - Contract for sale of power to Montaup by Canal Electric Company
dated December 1, 1965 (Exhibit 2D, File No. 0-688).
10-6.05 - Capital Funds Agreement (composite copy) between Vermont Yankee
Nuclear Power Corporation and Montaup dated as of February 1,
1968, and Amendment thereto dated as at March 12, 1968 (Exhibit B-
2, File No. 70-4611; Exhibit B-3, File No. 70-4611).
10-7.05 - Form of Power Contract between Vermont Yankee Nuclear Power
Corporation and Montaup dated as of February 1, 1968, as amended
June 1, 1972, April 15, 1983, April 24, 1985, June 1, 1985, May 6,
1988 (2), June 15, 1989 and December 1, 1989 (Exhibit B-4, File
No. 70-4591; Exhibit 13-21, Registration No. 2-46612; Exhibit 10-
63, Form 10-K of EUA for 1983, File No. 1-5366; Exhibit 10-74,
Form 10-K of EUA for 1985, File No. 1-5366; Exhibit 10-78, Form
10-K of EUA for 1986, File No. 1-5366; Exhibits 10-97 and 10-98,
Form 10-K of EUA for 1988, File No. 1-5366; Exhibit 10-95, Form
10-K of EUA for 1989, File No. 1-5366; Exhibit 10-80, Form 10-K of
Eastern Edison for 1990, File No. 0-8480).
10-8.05 - Sponsor Agreement (composite copy) among Vermont Yankee Nuclear
Power Corporation's Sponsors, including Montaup, dated as of
August 1, 1968 (Exhibit 4-0, Registration No. 2-33061).
10-9.05 - Capital Funds Agreement (composite copy) between Maine Yankee and
Montaup dated May 20, 1968 and as amended August 1, 1985 (Exhibit
B-2, File No. 70-4658; Exhibit 10-78, Form 10-K of EUA for 1985,
File No. 1-5366).
10-10.05 - Power Contract (composite copy) between Maine Yankee Atomic and
Montaup dated May 20, 1968, as amended December 19, 1983 and
January 1, 1984 (Exhibit B-3, File No. 70-4658; Exhibit 10-64,
Form 10-K of EUA for 1983, File No. 1-5366; Exhibit 10-66, Form
10-K of EUA for 1984, File No. 1-5366).
10-11.05 - Stockholder Agreement (composite copy) among Maine Yankee
Sponsors, including Montaup, dated May 20, 1968 (Exhibit B-4, File
70-4658).
10-12.05 - Agreement (composite copy) among Vermont Yankee Nuclear Power
Corporation's Sponsors, including Montaup, dated as of April 30,
1969 (Exhibit B-7, File No. 70-4435).
10-13.05 - Form of Agreement among Maine Yankee Atomic Power Company's
Sponsors dated as of May 20, 1969 (Exhibit B-5, File No. 70-4658).
10-14.05 - Form of New England Power Pool Agreement dated as of September 1,
1971, as amended as of July 1, 1972, March 1, 1973, April 2, 1973,
March 15, 1974, June 1, 1975, September 1, 1975, December 31,
1976, January 18, 1977, July 1, 1977, August 1, 1977, August 15,
1978, January 31, 1980, February 1, 1980, September 1, 1981,
December 1, 1981, June 1, 1982, June 15, 1983, October 1, 1983,
August 1, 1985, August 15, 1985, January 1, 1986, September 1,
1986, March 1, 1988, May 1, 1988, March 15, 1989 and October 1,
1990, (Exhibit 13-45, Registration No. 2-41488; Exhibit 13-38,
Registration No. 2-46612; Exhibits 13-39 and 13-40, Registration
No. 2-48966; Exhibit B-3, Form U5S of EUA for year 1974; Exhibit
13-35(a), Registration No. 2-54449; Exhibit 13-35, Registration
No. 2-55990, Exhibits 5-69 and 5-70, Registration Exhibit 13-
35(a), Registration No. 2-54449; Exhibit 13-35, Registration No.
2-55990, Exhibits 5-69 and 5-70, Registration No. 2-58625;
Exhibit 6, Form 10-K of EUA for 1977, File No. 1-5366; Exhibit 1,
Form 10-K of EUA for 1979, File No. 1-5366; Exhibit No. 10-67,
Registration No. 2-80205; Exhibit 10-65, Form 10-K of EUA for
1983, File No. 1-5366; Exhibit 10-66, Form 10-K of EUA for 1983,
File No. 1-5366; Exhibits 10-75, 10-76, and 10-77, Form 10-K of
EUA for 1985, File No. 1-5366; Exhibit 10-79, Form 10-K of
EUA for 1986, File No. 1-5366; Exhibits 10-99 and 10-100, Form
10-K of EUA for 1988, File No. 1-5366; Exhibit 10-96, Form 10-K of
EUA for 1989, File No. 1-5366; Exhibit 10-81, Form 10-K of
Eastern Edison for 1990, File No. 0-8480).
10-15.05 - Unit Participation Agreement between Maine Electric Power Company,
Inc. and New Brunswick Electric Power Commission dated November
15, 1971 (Exhibit 13-43.1, Registration No. 2-44377).
10-16.05 - Assignment Agreement dated March 20, 1972 between Maine Electric
Power Company, Inc. and New Brunswick Electric Power Commission
(Exhibit 13-43.3, Registration No. 2-44377).
10-17.05 - Agreement between Montaup and Boston Edison Company dated August
1, 1972 and as amended January 1, 1985 for purchase of power from
Pilgrim No. 1 nuclear unit at Plymouth, Massachusetts (Exhibit 13-
41, Registration No. 2-46612; Exhibit 10-67, Form 10-K of EUA for
1984, File No. 1-5366).
10-18.05 - Agreement dated as of May 1, 1973 for Joint Ownership,
Construction and Operation of New Hampshire Nuclear Units among
Public Service Company of New Hampshire and other utilities
including Montaup, as amended as of May 24, 1974, June 21, 1974,
September 25, 1974, October 25, 1974, January 31, 1975, as
supplemented by Letter Agreement dated April 27, 1978 and amended
as of April 18, 1979 (two amendments), April 25, 1979, June 8,
1979, October 11, 1979, December 15, 1979, June 16, 1980, December
31, 1980, June 1, 1982, April 27, 1984, June 15, 1984, March 8,
1985, March 14, 1986, May 1, 1986, September 19, 1986, November
1987, January 13, 1989 and November 1, 1990. (Exhibit 13-57,
Registration No. 2-48966; Exhibit B-6, Form U5S of EUA for year
1974; Exhibit 5-130, Registration No. 2-62862; Exhibit 5-70,
Registration No. 2-65785; Exhibit 2, Form 10-K of EUA for 1979,
File No. 1-5366; Exhibit 5-34, Registration No. 2-69052; Exhibit
20-1, Form 10-K of EUA for 1980, File No. 1-5366; Exhibit 10-69,
Registration No. 2-80205; Exhibit 2, Form 10-Q of EUA for the
Quarter Ended March 31, 1984, File No. 1-5366; Exhibit 3, Form
10-Q of EUA for the Quarter Ended June 30, 1984, File No. 1-5366;
Exhibit 10-70, Form 10-K of EUA for 1985, File No. 1-5366;
Exhibits 10-80 and 10-81, Form 10-K of EUA for 1986, File No.
1-5366; Exhibits 10-95 and 10-96, Form 10-K of EUA for 1987, File
No. 1-5366; Exhibit 10-101, Form 10-K of EUA for 1988, File No.
1-5366; Exhibit 10-82, Form 10-K of Eastern Edison for 1990, File
No. 0-8480).
10-19.05 - Sharing Agreement dated as of September 1, 1973 among The
Connecticut Light and Power Company and other utilities, including
Montaup, concerning participation in a nuclear generating unit
located in Connecticut (Millstone Unit No. 3), as amended and
supplemented by Amendatory Agreement dated May 11, 1984 as amended
as of April 1, 1986 (Exhibit B-17, Form U5S of EUA for year 1973;
Exhibit B-8, as amended as of April 11, 1986, Form U5S of EUA for
year 1974; Exhibit B-30, Form U5S of EUA for year 1976; Exhibit
10-68, Form 10-K of EUA for 1984, File No. 1-5366; Exhibit 10-82,
Form 10-K of EUA for 1986, File No. 1-5366).
10-20.05 - Agreement for Joint Ownership, Construction and Operation of
William F. Wyman Unit No. 4 dated November 1, 1974 as amended June
30, 1975, August 16, 1976 and December 31, 1978 among Central
Maine Power Company and other utilities including Montaup (Exhibit
B-9, Form U5S of EUA for year 1974; Exhibit 13-58, Registration
No. 2-55990; Exhibit 5-95, Registration No. 2-58625; Exhibit 5-40,
Registration No. 2-69052).
10-21.05 - Agreement for Joint Ownership dated as of October 27, 1970 between
Canal Electric Company and Montaup (Exhibit 13-71, Registration
No. 2-55990).
10-22.05 - Agreement for use of Common Facilities by Canal Units I and II and
for Allocation of Related Costs dated as of October 27, 1970
between Canal Electric Company and Montaup (Exhibit 13-72,
Registration No. 2-55990).
10-23.05 - Guarantee Agreement (composite copy) dated as of November 13, 1981
between The Connecticut Bank and Trust Company, as Trustee, and
Montaup relating to debentures of Connecticut Yankee Atomic Power
Company (Exhibit 10-61, Form 10-K of EUA for 1981, File No.
1-5366).
10-24.05 - Guarantee Agreement dated as of November 5, 1981 between Bankers
Trust Company, as Trustee of the Vernon Energy Trust, and Montaup
relating to a nuclear fuel sales agreement and related
transactions entered into by Vermont Yankee Nuclear Power
Corporation (Exhibit 10-63, Form 10-K of EUA for 1981, File No.
1-5366).
10-25.05 - Agreement for Seabrook Project Disbursing Agent, dated as of May
23, 1984, as amended March 8, 1985, May 20, 1985, June 18, 1985,
January 1, 1986, November, 1987, August 1, 1989, and restated as
of November 1, 1990, among the participants in the Seabrook
nuclear generating project, including Montaup and Yankee Atomic
Electric Company (Exhibit 2, Form 10-Q of EUA for the Quarter
Ended June 30, 1984, File No. 1-5366; Exhibit 10-69, Form 10-K of
EUA for 1985, File No. 1-5366; Exhibits 10-86, 10-87 and 10-88,
Form 10-K of EUA for 1986, File No. 1-5366; Exhibit 10-97, Form
10-K of EUA for 1987, File No. 1-5366; Exhibit 10-105, Form 10-K
of EUA for 1989, File No. 1-5366; Exhibit 10-84, Form 10-K of
Eastern Edison for 1990, File No. 0-8480).
10-26.05 - Guarantee Agreement dated as of August 1, 1985 among The
Connecticut Bank and Trust Company, Connecticut Yankee Atomic
Power Company and Montaup Electric Company relating to Revolving
Credit Loans of Connecticut Yankee (Exhibit 10-85, Form 10-K of
EUA for 1985, File No. 1-5366).
10-27.05 - Equity Funding Agreement for New England Hydro-Transmission
Corporation dated as of June 1, 1985, between New England Hydro-
Transmission Corporation and several New England electric
utilities, including Montaup as amended as of May 1, 1986 and
September 1, 1987 (Exhibits 10-96 and 10-97, Form 10-K of
EUA for 1986, File No. 1-5366; Exhibit 10-116, Form 10-K of EUA
for 1987, File No. 1-5366).
10-28.05 - Equity Funding Agreement for New England Hydro-Transmission
Electric Company, Inc. dated as of June 1, 1985, between New
England Hydro-Transmission Electric Company, Inc. and several New
England electric utilities, including Montaup as amended as of May
1, 1986 and September 1, 1987 (Exhibits 10-98 and 10-99, Form 10-K
of EUA for 1986, File No. 1-5366; Exhibit 10-117, Form 10-K of EUA
for 1987, File No. 1-5366).
10-29.05 - Unit Power Agreement for the Sale of Unit Capacity and Energy from
Ocean State Power Project to Montaup Electric Company dated as of
May 14, 1986 as amended as of August 27, 1986, September 27, 1988,
October 21, 1988, July 21, 1989, February 7, 1990 and December 21,
1990 (Exhibits 10-101 and 10-102, Form 10-K of EUA for 1986, File
No. 1-5366; Exhibits 10-106 and 10-107, Form 10-K of EUA for 1988,
File No. 1-5366; Exhibit 10-106, Form 10-K of EUA for 1989, File
No. 1-5366; Exhibits 10-86 and 10-87, Form 10-K of Eastern Edison
for 1990, File No. 0-8480).
10-30.05 - Power Purchase Agreement dated as of October 17, 1986, between
Northeast Energy Associates and Montaup as amended as of June 28,
1989 (Exhibit 10-103, Form 10-K of EUA for 1986, File No. 1-5366;
Exhibit 10-103, Form 10-K of EUA for 1989, File No. 1-5366).
10-31.05 - Settlement Agreement dated as of January 13, 1989 among Montaup,
EUA Power, certain past and present owners of the Seabrook Project
and Yankee Atomic Electric Company (Exhibit 10-110, Form 10-K of
EUA for 1988, File No. 1-5366).
10-32.05 - Unit Power Agreement for the Sale of Second Unit Capacity and
Energy from Ocean State Power Project to Montaup Electric Company
dated as of September 28, 1988 as amended by an amendment dated
July 21, 1989, and February 7, 1990 and a Supplemental Agreement
dated July 21, 1989 (Exhibit 10-104, Form 10-K of EUA for 1989,
File No. 1-5366; Exhibit No. 10-88, Form 10-K of Eastern Edison
for 1990, File No. 0-8480).
10-33.05 - Purchase Power Contract between Newport and Montaup dated July 23,
1963, as revised on March 23, 1983 (Exhibit 10-108, Form 10-K of
EUA for 1990, File No. 1-5366).
10-34.05 - Purchase Power Contract between Newport and Montaup for Contract
Demand Service effective May 1, 1983, as amended on July 1, 1983,
December 28, 1983 and November 1, 1984 (Exhibit 10-89, Form 10-K
of Eastern Edison for 1990, File No. 0-8480 and Exhibit 10-109,
Form 10-K of EUA for 1990, File No. 1-5366).
10-35.05 - Power Contract (composite copy) between Yankee Atomic Electric
Company and Montaup dated June 30, 1959 as revised April 1, 1975,
as further amended October 1, 1980, April 1, 1985, May 6, 1988,
June 26, 1989, July 1, 1989 and February 1, 1992 (Exhibit 10-6,
Registration No. 2-72655; Exhibit 10-73, Form 10-K of EUA for
1985, File No. 1.5366; Exhibit 10-96, Form 10-K of EUA for 1988,
File No. 1-5366; Exhibits 10-93 and 10-94, Form 10-K of EUA for
1989, File No. 1-5366; Exhibit 10-46 Form 10-K of Eastern Edison
for 1992, File No. 0-8480).
10-36.05 - Memorandum of understanding by and between Canal Electric Company
and Montaup Electric Company dated September 23, 1993 (Exhibit 10-
39.05, Eastern Edison 10-K for 1993, File No. 0-8480).
10-37.05 - Ancillary Agreement by and between Algonquin Gas Transmission
Company, Canal Electric Company and Montaup Electric Company dated
October 8, 1993. (Exhibit 10-40.05 of Eastern Edison 10-K for
1993, File No. 0-8480).
*10-38.05 - Twenty-eighth Amendment to 10-14.05 dated September 15, 1992.
*10-39.05 - Twenty-ninth Amendment to 10-14.05 dated May 1, 1993.
*10-40.05 - Thirty-second Amendment to 10-14.05 dated September 1, 1995.
- Blackstone -
10-1.01 - Trust Indenture between Rhode Island Industrial Facilities
Corporation and the Rhode Island Hospital Trust Company dated as
of December 1, 1984 (Exhibit 10-73, Form 10-K of EUA for 1984,
File No. 1-5366).
10-2.01 - Remarketing Agreement between Rhode Island Hospital Trust Company,
Citibank and Blackstone dated as of December 19, 1984 (Exhibit 10-
74, Form 10-K of EUA for 1984, File No. 1-5366).
10-3.01 - Letter of Credit and Reimbursement Agreement between Blackstone
Valley Electric Company and The Bank of New York dated as of
January 21, 1993 (Exhibit 10-10, Form 10-K of Blackstone for 1992,
File No. 0-2602).
10-4.01 - Interconnection Agreement by and between Blackstone and Ocean
State Power dated November 1, 1988, as amended and restated
effective August 16, 1989 by and among Blackstone, Ocean State
Power I and Ocean State Power II (Exhibit 10-100, Form 10-K of EUA
for 1989, File No. 1-5366).
10-5.01 - Power Purchase Agreement between Blackstone and Blackstone Hydro,
Inc. dated as of January 8, 1989 and assignment to Montaup
(Exhibits 10-101 and 10-102, Form 10-K of EUA for 1989, File No.
1-5366).
- Newport -
10-1.14 - Phase I Vermont Transmission Line Support Agreement dated as of
December 1, 1981 and as amended as of June 1, 1982, November 1,
1982 and January 1, 1986 between Vermont Electric Transmission
Company, Inc. and several New England utilities, including Montaup
(Exhibit 10-65, Form 10-K of EUA for 1981, File No. 1-5366;
Exhibit 10-72, Registration No. 2-80205; Exhibit 10-64, Form 10-K
of EUA for 1982, File No. 1-5366; Exhibit 10-84. Form 10-K of EUA
for 1986, File No. 1-5366).
10-2.14 - Letter amendment dated August 4, 1983 reallocating the
participating shares originally assigned to the Chicopee Municipal
Lighting Plant and the Taunton Municipal Lighting Plant under the
Phase I Vermont Transmission Line Support Agreement between
Vermont Electric Transmission Company, Inc. and several New
England electric utilities, including Newport, dated December 1,
1981, as amended on June 1, 1982 and November 1, 1982 (Exhibit 10-
110, Form 10-K of EUA for 1990, File No. 1-5366).
10-3.14 - Phase I Terminal Facility Support Agreement dated December 1, 1981
and as amended as of June 1, 1982, November 1, 1982 and January
1, 1986 between New England Electric Transmission Corporation and
several New England utilities, including Montaup (Exhibit 10-68,
Form 10-K of EUA for 1981, File No. 1-5366; Exhibit 10-74,
Registration No. 1-5366; Exhibit 10-68. Form 10-K of EUA for
1986, File No. 1-5366).
10-4.14 - Letter amendment dated July 29, 1983 reallocating the
participating shares originally assigned to the Chicopee Municipal
Lighting Plant and the Taunton Municipal Lighting Plant under the
Phase I Terminal Facility Support Agreement between New England
Transmission Corporation and several New England electric
utilities, including Newport, dated December 1, 1981, as amended
on June 1, 1982 and November 1, 1982 (Exhibit 10-112, Form 10-K of
EUA for 1990, File No. 1-5366).
10-5.14 - Purchase Power Contract between Newport and City of Burlington
Electric Department (life of the unit contract) for purchase of
15.24% of net capability of station output from Joseph C. McNeil
Electric Generating Station located in Burlington, Vermont dated
December 19, 1984 (Exhibit 10-115, Form 10-K of EUA for 1990, File
No. 1-5366).
10-6.14 - Firm Energy Contract between Hydro-Quebec and several New England
electric utilities, including Newport, dated as of October 14,
1985 (Exhibit 10-116, Form 10-K of EUA for 1990, File No. 1-5366).
10-7.14 - Unit Power Agreement for the Sale of Unit Capacity and Energy from
Ocean State Power Project to Newport Electric Corporation dated
May 14, 1986, as amended on August 20, 1986, July 12, 1988,
September 23, 1988, October 21, 1988, July 21, 1989, February 7,
1990 and December 21, 1990 (Exhibit 10-117, Form 10-K for 1990,
File No. 1-5366).
10-8.14 - Unit Power Agreement for the Sale of Second Unit Capacity and
Energy from Ocean State Power Project to Newport Electric
Corporation dated July 12, 1988 as amended and supplemented
September 23, 1988, July 21, 1989 and February 7, 1990 (Exhibit
10-118, Form 10-K for 1990, File No. 1-5366).
10-9.14 - Agreement for Joint Ownership, Construction and Operation of
William F. Wyman Unit No. 4 dated November 1, 1974 as amended June
30, 1975, August 16, 1976 and December 31, 1978 among Central
Maine Power Company and other utilities including Newport (Exhibit
B-9, Form U5S of EUA for year 1974; Exhibit 13-58, Registration
No. 2-55990; Exhibit 5-95, Registration No. 2-58625; Exhibit 5-40,
Registration No. 2-69052).
- EUA Ocean State -
10-1.12 - Ocean State Power Amended and Restated General Partnership
Agreement among EUA Ocean State, Ocean State Power Company, TCPL
Power Ltd., Narragansett Energy Resources Company and NECO Power,
Inc. (collectively, the "OSP Partners") dated as of December 2,
1988, as amended March 27, 1989, December 31, 1990, November 12,
1992 and February 23, 1993 (Exhibit 10-107, Form 10-K of EUA for
1989; File No. 1-5366, Exhibits 10-3.12, 10-4.12 and 10-5.12, Form
10-K of EUA for 1994, File No. 1-5366).
10-2.12 - Ocean State Power II Amended and Restated General Partnership
Agreement among EUA Ocean State, JMC Ocean State Corporation,
Makowski Power, Inc., TCPL Power Ltd., Narragansett Energy
Resources Company and Newport Electric Power Corporation
(collectively, the "OSP II Partners") dated as of September 29,
1989 (Exhibit 10-110, Form 10-K of EUA for 1989, File No. 1-5366).
Annual Reports to Shareholders:
*13-1.03 - Annual Report to Shareholders of EUA for 1995, portions of which
are incorporated by reference in this Annual Report on Form 10-K.
Only the portions expressly so incorporated under PART II, Items
5, 6, 7 and 8 are to be deemed filed herewith.
*13-1.01 - Annual Report to Shareholders of Blackstone for 1995, portions of
which are incorporated by reference in this Annual Report on Form
10-K. Only the portions expressly so incorporated under PART II,
Items 5, 6, 7 and 8 are to be deemed filed herewith.
*13-1.08 - Annual Report to Shareholders of Eastern Edison for 1995, portions
of which are incorporated by reference in this Annual Report on
Form 10-K. Only the portions expressly so incorporated under PART
II, Items 5, 6, 7 and 8 are to be deemed filed herewith.
Subsidiaries of EUA:
21-1.03 - Direct subsidiaries of Eastern Utilities Associates and the state
of organization of each are: Blackstone Valley Electric Company
(Rhode Island), Eastern Edison Company (Massachusetts), EUA
Cogenex Corporation (Massachusetts), EUA Service Corporation
(Massachusetts), EUA Ocean State Corporation (Rhode Island), EUA
Energy Investment Corporation (Massachusetts) and Newport Electric
Corporation (Rhode Island). Montaup Electric Company
(Massachusetts) is a subsidiary of Eastern Edison Company. Each
of the above subsidiaries does business under its indicated
corporate name.
Consent of Experts and Counsel:
*23-1.03 - Consent of Independent Accountants.
(b) Reports on Form 8-K.
None.
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.
Signature Title Date
EASTERN UTILITIES ASSOCIATES
By /s/Richard M. Burns Comptroller March 18, 1996
Richard M. Burns (Principal Accounting 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.
/s/Donald G. Pardus Chairman and Chief Executive Officer
Donald G. Pardus (Principal Executive Officer) and Trustee
/s/John R. Stevens President and Chief Operating Officer
John R. Stevens (Principal Financial Officer) and Trustee
/s/Richard M. Burns Comptroller
Richard M. Burns (Principal Accounting Officer)
/s/Russell A. Boss Trustee
Russell A. Boss
/s/Paul J. Choquette, Jr. Trustee
Paul J. Choquette, Jr.
March 18, 1996
/s/Peter S. Damon Trustee
Peter S. Damon
/s/Peter B. Freeman Trustee
Peter B. Freeman
/s/Larry A. Leibenow Trustee
Larry A. Liebenow
Trustee
Jacek Makowski
/s/Wesley W. Marple, Jr. Trustee
Wesley W. Marple, Jr.
/s/Margaret M. Stapleton Trustee
Margaret M. Stapleton
/s/W. Nicholas Thorndike Trustee
W. Nicholas Thorndike
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.
Signature Title Date
BLACKSTONE VALLEY ELECTRIC COMPANY
By/s/Richard M. Burns Vice President March 18, 1996
Richard M. Burns (Principal Accounting 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.
/s/Donald G. Pardus Chairman of the Board and
Donald G. Pardus Director (Principal Executive Officer)
/s/John R. Stevens Vice Chairman and Director
John R. Stevens (Principal Financial Officer)
/s/Richard M. Burns Vice President
Richard M. Burns (Principal Accounting Officer)
/s/John D. Carney President and Director
John D. Carney
/s/David H. Gulvin Senior Vice President
David H. Gulvin and Director March 18, 1996
/s/Robert G. Powderly Executive Vice President and
Robert G. Powderly Director
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.
Signature Title
Date
EASTERN EDISON COMPANY
March 18, 1996
By /s/Richard M. Burns Vice President
Richard M. Burns (Principal Accounting 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.
/s/Donald G. Pardus Chairman of the Board and Director (Principal
Donald G. Pardus Executive Officer)
/s/John R. Stevens Vice Chairman and Director
John R. Stevens (Principal Financial Officer)
/s/Richard M. Burns Vice President March 18, 1996
Richard M. Burns (Principal Accounting Officer)
/s/John D. Carney President and Director
John D. Carney
/s/David H. Gulvin Senior Vice President
David H. Gulvin and Director
/s/Robert G. Powderly Executive Vice President and
Robert G. Powderly Director
EASTERN UTILITIES ASSOCIATES AND
SUBSIDIARY COMPANIES
Item 14(a)(2). Financial Statement Schedules
Schedule II
Eastern Utilities Associates and Subsidiary Companies
Valuation and Qualifying Accounts
(In Thousands)
Column A Column B Column C Column D Column E
Additions
(1) (2)
Balance at Charged to Charged Balance at
Beginning Costs and to Other Deductions- End of
Description of Period Expenses Accounts Describe Period
For the Year Ended December 31, 1995:
Allowance for Doubtful Accounts $629 $1,217 $287 <F1> $1,443 <F2> $690
For the Year Ended December 31, 1994:
Allowance for Doubtful Accounts $613 $1,141 $277 <F1> $1,402 <F2> $629
For the Year Ended December 31, 1993:
Allowance for Doubtful Accounts $603 $1,029 $255 <F1> $1,274 <F2> $613
<FN>
<F1> Recoveries of accounts previously written off.
<F2> Principally Accounts Receivable written off.
</FN>
Schedule II
Blackstone Valley Electric Company
Valuation and Qualifying Accounts
(In Thousands)
Column A Column B Column C Column D Column E
Additions
(1) (2)
Balance at Charged to Charged Balance at
Beginning Costs and to Other Deduction End of
Description of Period Expenses Accounts Describe Period
For the Year Ended December 31, 1995:
Allowance for Doubtful Accounts $125 $585 $217 <F1> $800 <F2> $127
For the Year Ended December 31, 1994:
Allowance for Doubtful Accounts $158 $710 $213 <F1> $956 <F2> $125
For the Year Ended December 31, 1993:
Allowance for Doubtful Accounts $315 $650 $205 <F1> $1,012 <F2> $158
<FN>
<F1> Recoveries of accounts previously written off.
<F2> Principally Accounts Receivable written off.
Report of Independent Accountants
To the Trustees and Shareholders of
Eastern Utilities Associates:
Our report on the consolidated financial statements of Eastern Utilities
Associates and subsidiaries has been incorporated by reference in this Form
10-K from page 36 of the 1995 Annual Report to Shareholders of Eastern
Utilities Associates. In connection with our audits of such consolidated
financial statements, we have also audited the related consolidated financial
statement schedule listed in Item 14 (a)(2) of this Form 10-K.
In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information required to
be included therein.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 5, 1996
Report of Independent Accountants
To the Directors and Shareholder of
Blackstone Valley Electric Company:
Our report on the financial statements of Blackstone Valley Electric Company
has been incorporated by reference in this Form 10-K from page 27 of the 1995
Annual Report of Blackstone Valley Electric Company. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in Item 14 (a)(2) of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 5, 1996
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