SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: November 25, 1997
MASSACHUSETTS ELECTRIC COMPANY
(exact name of registrant as specified in charter)
Massachusetts 0-5464 04-1988940
(state or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
(508) 389-2000
(Registrant's telephone number, including area code)
Item 5. Other Events
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Industry Restructuring
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On November 25, 1997, legislation was signed into law by the
Governor of Massachusetts which would provide Massachusetts
utility customers with the ability to choose their electric
supplier on March 1, 1998. The legislation provides a mechanism
for the recovery by electric utilities of stranded costs
resulting from industry restructuring. The legislation further
requires electric companies to provide customers who do not
choose a competitive supplier with a transition rate (or standard
offer) which results in a 10 percent rate reduction, with the
discount increasing to 15 percent on or before September 1, 1999.
In October 1996, Massachusetts Electric Company (the
Company), a subsidiary of New England Electric System (NEES), and
its affiliate, New England Power Company (NEP), reached a
settlement agreement with various governmental agencies and other
interested parties, regarding recovery of stranded costs,
divestiture of the NEES companies generating business and other
issues. The Massachusetts settlement agreement was approved by
the Massachusetts Department of Public Utilities (MDPU) earlier
this year. As a result of the Massachusetts settlement and an
August 5, 1997 agreement to sell the NEES companies nonnuclear
generating business to USGen New England, Inc. (USGen), the
Company is expected to be able to meet the legislation's rate
reduction targets. The legislation permits the MDPU to implement
previously approved plans that substantially comply with the
legislation. The NEES companies believe that their Massachusetts
settlement is substantially consistent with the provisions of the
legislation, and will be filing for such a finding by the MDPU.
On November 25, 1997, the Federal Energy Regulatory Commission
(FERC) approved the Massachusetts settlement but required the
NEES companies to amend the settlement within 30 days to clarify
that the settlement does not affect the rights of non-settling
parties.
This Form 8-K contains statements that may be considered
forward looking statements as defined under the securities laws
regarding recovery of stranded assets, meeting rate reduction
targets, and regulatory matters. Actual results may differ
materially. While the NEES companies believe that the
Massachusetts legislation and the sale agreement with USGen and
other developments constitute substantial progress in resolving
the uncertainty regarding the impact from industry restructuring,
significant risks remain. These include, but are not limited to:
(i) the potential that ultimately the Massachusetts settlement
will not be implemented in the manner anticipated by the Company
and (ii) the possibility of federal legislation that would
increase the risks above those contained in the settlement and
statute. The major risk factors affecting the Company relate to
the possibility of adverse regulatory or judicial decisions or
legislation which limit the level of revenues the Company is
allowed to charge for its services or affect the costs the
Company incurs.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this Current Report on
Form 8-K to be signed on its behalf by the undersigned thereunto
duly authorized.
MASSACHUSETTS ELECTRIC COMPANY
s/Michael E. Jesanis
By _________________________
Michael E. Jesanis
Treasurer
Date: December 1, 1997