"THIS DOCUMENT IS A COPY OF THE FORM 10-KT FILED ON JUNE 30, 2000 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION." SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ( ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended December 31, 1999 OR (X) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from January 1, 2000 to March 31, 2000 Registrant; State of Incorporation or I.R.S. Employer Commission Organization; Address; Identification File Number and Telephone Number Number - ------------ ---------------------- --------------- 1-6564 NEW ENGLAND POWER COMPANY 04-1663070 (A Massachusetts corporation) 25 Research Drive Westborough, Massachusetts 01582 Telephone: 508-389-2000 Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (X) Yes ( ) 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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) Aggregate market value of the voting stock Number of shares of held by nonaffiliates common stock outstanding of the registrant at of the registrant at June 15, 2000 June 15, 2000 ---------------------- ------------------------- New England $1,285,104 3,619,896($20 par value) Power Company Documents Incorporated by Reference Part of Form 10-K into which Description document is incorporated - ---------------------------------- ---------------------------- Portions of New England Power Company Parts I and II Annual Report to Stockholders for the year ended December 31, 1999 as set forth in Parts I and II Portions of New England Power Company Parts I and II Transition Report to Stockholders for the transition period from January 1, 2000 to March 31, 2000 as set forth in Parts I and II. TABLE OF CONTENTS PAGE GLOSSARY OF TERMS.......................................... iii FORWARD LOOKING INFORMATION................................ v PART I ITEM 1. BUSINESS............................................ 1 THE COMPANY................................................. 1 Merger with National Grid ............................. 1 Merger with EUA........................................ 1 Employees.............................................. 2 ELECTRIC UTILITY OPERATIONS................................. 2 Industry Restructuring................................. 2 Accounting Implications............................. 2 Overview of Financial Results....................... 2 Year 2000 Disclosure................................... 2 Transmission and Nuclear Generation Business........... 3 Description of Business............................. 3 Rates............................................... 4 Standard Offer Service.............................. 5 Operating Revenues.................................. 6 Electric Utility Properties............................ 7 Transmission Properties............................. 7 Interconnection with Quebec ........................ 8 Nuclear Generation Properties....................... 8 Nuclear Units..................................... 9 Purchased Power Transfer Agreement................ 17 Regulatory and Environmental Matters................... 18 Regulation.......................................... 18 Environmental Requirements.......................... 18 Construction and Financing............................. 19 EXECUTIVE OFFICERS.......................................... 22 ITEM 2. PROPERTIES.......................................... 23 ITEM 3. LEGAL PROCEEDINGS................................... 23 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................ 25 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS........................ 25 ITEM 6. SELECTED FINANCIAL DATA............................. 26 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 26 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............................................ 26 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......... 26 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................... 26 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............................................. 26 ITEM 11. EXECUTIVE COMPENSATION............................ 29 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................... 40 PART IV ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.... 40 ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K.................. 41 INDEX TO FINANCIAL STATEMENTS............................... 53 GLOSSARY OF TERMS Term Meaning ---- ------- AFDC allowance for funds used during construction Connecticut Yankee Connecticut Yankee Atomic Power Company CTC contract termination charges DOE U.S. Department of Energy EUA Eastern Utilities Associates Electricity Delivery Mass. Electric, Narragansett, Granite Companies State, and Nantucket FERC Federal Energy Regulatory Commission Granite State Granite State Electric Company Interconnection transmission interconnection between participating New England utilities and Hydro-Quebec ISO Independent System Operator kWh kilowatthour Maine Yankee Maine Yankee Atomic Power Company Mass. Electric Massachusetts Electric Company Mass. Hydro New England Hydro-Transmission Electric Company, Inc. MDTE Massachusetts Department of Telecommunications and Energy MW megawatts Nantucket Nantucket Electric Company Narragansett The Narragansett Electric Company National Grid The National Grid Group plc National Grid USA Successor to NEES and a wholly-owned subsidiary of The National Grid Group plc N.E. Hydro Finance New England Hydro Finance Company, Inc. NEEI New England Energy Incorporated NEES New England Electric System (renamed National Grid USA) NEES Energy NEES Energy, Inc. NEET New England Electric Transmission Corporation NEP New England Power Company NEPOOL New England Power Pool N.H. Hydro New England Hydro-Transmission Corporation NRC Nuclear Regulatory Commission PG&E Gen PG&E Generating, formerly USGen New England, Inc. GLOSSARY OF TERMS Term Meaning ---- ------- Seabrook 1 Seabrook Nuclear Generating Station Unit 1 SEC Securities and Exchange Commission Sellers NEP and Narragansett Service Company New England Power Service Company spent nuclear fuel high level radioactive waste stranded costs the amounts by which prudently incurred costs incurred to supply customers electricity under a regulated industry structure exceed market prices under an unregulated industry structure Vermont Yankee Vermont Yankee Nuclear Power Corporation VPSB Vermont Public Service Board Yankee Atomic Yankee Atomic Electric Company Yankee Companies Yankee Atomic, Vermont Yankee, Maine Yankee, and Connecticut Yankee 1935 Act Public Utility Holding Company Act of 1935, as amended FORWARD LOOKING INFORMATION This report and other presentations made by New England Power Company (NEP or the Company) contain forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Throughout this report, forward looking statements can be identified by the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimated", "projected", "believe", "hopes", or similar expressions. Although NEP believes that, in making any such statements, its expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Important factors that could cause actual results to differ materially from those in the forward looking statements include, but are not limited to: (a) the impact of ongoing industry restructuring, as more fully set out in the Industry Restructuring section of the NEP Transition Report for the period January 1, 2000 to March 31, 2000; (b) the impact of general economic changes in New England; (c) federal and state regulatory developments and changes in law which may have a substantial adverse impact on the value of NEP's assets; (d) changes in accounting rules and interpretations which may have an adverse impact on NEP's statements of financial position and reported earnings; (e) timing and adequacy of rate relief; (f) adverse changes in electric load; (g) climatic changes or unexpected changes in weather patterns; and (h) operation and decommissioning costs associated with nuclear generating facilities, as set out under Nuclear Units below, page 9. PART I ITEM 1. BUSINESS THE COMPANY Merger with National Grid On March 22, 2000, the merger of New England Electric System (NEES) and The National Grid Group plc (National Grid) was completed, with NEES (renamed National Grid USA) becoming a wholly owned subsidiary of National Grid. New England Power Company (NEP) will maintain its existing name and will remain a wholly owned subsidiary of National Grid USA. Merger with EUA The merger between the National Grid USA and Eastern Utilities Associates (EUA) parent companies was completed on April 19, 2000, with EUA merging into National Grid USA. The impacts of this transaction will be reflected in subsequent reporting periods. On May 1, 2000, EUA's operating companies merged into those of National Grid USA, and Montaup Electric Company, a wholly-owned subsidiary of EUA, was consolidated into the Company. New England Power Company, a wholly owned subsidiary of National Grid USA (formerly New England Electric System), is a Massachusetts corporation qualified to do business in Massachusetts, New Hampshire, Rhode Island, Connecticut, Maine, and Vermont. NEP is subject, for certain purposes, to the jurisdiction of the regulatory commissions of these six states, the Securities and Exchange Commission, under the Public Utility Holding Company Act of 1935 (the 1935 Act), the Federal Energy Regulatory Commission, and the Nuclear Regulatory Commission. NEP's business is primarily the transmission of electric energy in wholesale quantities to other electric utilities, principally its distribution affiliates Granite State Electric Company, Massachusetts Electric Company, Nantucket Electric Company, and The Narragansett Electric Company. NEP's transmission business will also do business under the name of National Grid Transmission USA. Holders of common stock and 6% Cumulative Preferred Stock have general voting rights. National Grid USA owns 99.57% of the voting stock of NEP and the NEP 6% preferred holders own 0.43%. NEP owns voting stock in the amounts indicated of the following companies: % Voting Securities State of Type of Owned by Name of Company Organization Business NEP --------------- ------------ -------- --------- Connecticut Yankee Atomic Conn. Ownership of 15% Power Company Nuclear Unit (a) Maine Yankee Atomic Maine Ownership of 20% Power Company Nuclear Unit (a) Vermont Yankee Nuclear Vermont Ownership of 20% Power Corporation Nuclear Unit (a) Yankee Atomic Electric Company Mass. Ownership of 30% Nuclear Unit (a) (a) For information on NEP's ownership interest in nuclear generating units, see Nuclear Units, page 9. The facilities of NEP, together with National Grid USA's four electricity delivery companies, Massachusetts Electric Company (Mass. Electric), The Narragansett Electric Company (Narragansett), Granite State Electric Company (Granite State), and Nantucket Electric Company (Nantucket), (together, the Electric Delivery Companies) constitute an electrical transmission and distribution system that is directly interconnected with other utilities in New England and New York State, and indirectly interconnected with utilities in Canada. See ELECTRIC UTILITY OPERATIONS, page 2. EMPLOYEES At March 31, 2000, NEP had 81 employees, of which approximately 16 are members of labor organizations. Collective bargaining agreements with the Brotherhood of Utility Workers of New England, Inc., the International Brotherhood of Electrical Workers, and the Utility Workers Union of America, AFL-CIO expire in May, 2004. ELECTRIC UTILITY OPERATIONS INDUSTRY RESTRUCTURING For a full discussion of Industry Restructuring see the Industry Restructuring section of the 1999 NEP Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000, both incorporated herein by reference. Accounting Implications For a full discussion of Accounting Implications see the Accounting Implications section of the 1999 NEP Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000, incorporated herein by reference. Overview of Financial Results For a full discussion of Overview of Financial Results see the Overview of Financial Results section of the 1999 NEP Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000, incorporated herein by reference. YEAR 2000 DISCLOSURE For a full discussion of Year 2000 disclosure, see the Year 2000 Disclosure section of the 1999 NEP Annual Report, incorporated herein by reference. TRANSMISSION AND NUCLEAR GENERATION BUSINESS Description of Business On September 1, 1998, NEP completed the sale of substantially all of its nonnuclear generating business to PG&E Generating (PG&E Gen) an indirect wholly-owned subsidiary of PG&E Corporation. NEP's primary business is now the transmission of electric energy to other electric utilities, principally its distribution affiliates, the Electricity Delivery Companies. NEP owns a system of transmission lines and substations. NEP continues to own minority interests in two joint owned nuclear generating units as well as minority equity interests in four nuclear generating companies (see Nuclear Units, page 9). Rates The rates of NEP are subject to regulation by the Federal Energy Regulatory Commission ("FERC"). NEP's current unbundled rates consist of contract termination charges, transmission charges, standard offer charges where applicable, and market revenues where applicable. Prior to industry restructuring, NEP was obligated to sell to its customers, and its customers were obligated to purchase from NEP, the requirements of their respective retail service territories, and they could only terminate those mutual obligations upon seven years' notice. Under the Settlement Agreements between NEP and the Electricity Delivery Companies implemented in 1997 and 1998, the contractual relationship was reformed to allow for the early termination of the Electricity Delivery Companies' obligation to purchase wholesale all-requirements service from NEP, in consideration for the payment of contract termination charges ("CTCs"). The CTCs recover costs associated with NEP's former generating investments and related contractual commitments that were not recovered from the divestiture of those investments ("stranded costs"). The recovery of NEP's stranded costs is divided into several categories. Unrecovered costs associated with generating plants (nuclear and nonnuclear) and most regulatory assets will be fully recovered through the CTCs by the end of 2000 and earn a return on equity averaging 9.7%. Stranded investment relating to the Montaup generation facilities and other regulatory assets will be recovered through the CTCs by the end of 2007 and earn a return on equity averaging 8.39%. NEP's obligation related to the above-market cost of purchased power contracts and nuclear decommissioning costs are recovered through the CTCs as such costs are actually incurred. As the CTC's rate declines, NEP, under certain of the Settlement Agreements, earns incentives based on successful mitigation of its stranded costs. These incentives supplement NEP's return on equity. Until such time as NEP divests its operating nuclear interests, NEP will share with customers, through the CTCs, 80% of the revenues and operating costs related to the units, with shareholders retaining the balance. The Electricity Delivery Companies are recovering the CTCs through a transition access charge. NEP has also reached similar agreements with three unaffiliated wholesale customers. (See Item 3 for a description of litigation with one unaffiliated customer.) The transmission charge is a formula rate which recovers NEP's actual costs plus a return on actual capital investment and equals approximately 0.5 cents per kWh (including the transmission element of NEPOOL tariff charges). The standard offer revenues with respect to NEP's continuing obligation to supply standard offer service to Narragansett described below equaled 3.5 cents per kWh in 1999 and equal 3.8 cents in 2000. The rate will escalate in the years thereafter. Revenues from any sales in the marketplace will vary. In 1999, 47% of NEP's total transmission billings was derived directly from affiliated companies, and 53% was from NEPOOL, including payments from NEP's affiliates to NEPOOL and municipal and other utilities. Standard Offer Service Prior to divesting its nonnuclear generation business, NEP was the wholesale supplier of the electric energy requirements of the Electricity Delivery Companies under contracts that required seven years' notice of termination. NEP's contracts with the Electricity Delivery Companies were amended to remove the obligation to sell electrical energy and related products. PG&E Gen, TransCanada Power Marketing, Ltd. and Constellation Power Source, Inc. retain the backstop obligation to supply the electric energy requirements of the Electricity Delivery Companies for retail customers eligible to continue to buy standard offer generation service from their electricity delivery company at regulated prices. NEP remains obligated to provide transition power supply service at fixed rates to new customer load in Rhode Island. NEP meets this obligation by periodically procuring the necessary power supply at market prices. Over time NEP cannot predict whether the resulting revenues will be sufficient to cover the costs of producing such power. In the short term, it appears that due to current high market prices, it is probable that NEP will incur losses this summer. OPERATING REVENUES The following is the detail of kWh sales and deliveries, electric sales and other operating revenue, and operating income for the quarter ended March 31, 2000 and each of the three years ended December 31, 1999. Sales and Deliveries of Electricity (in thousands of kWh) ------------------------------------ Quarter Ended Year Ended December 31 March 31, 2000 1999 1998 1997 -------------- ---- ---- ---- Total Sales and Deliveries 901,723 2,970,433 18,214,193 26,405,204 ======== ========== ========== ========== Operating Revenues (in thousands of dollars) ------------------------------------ Quarter Ended Year Ended December 31 March 31, 2000 1999 1998 1997 -------------- ---- ---- ---- Total Electric 32,048 90,639 631,943 1,616,598 Sales Revenue Other Operating 102,515 505,702 586,397 61,305 Revenue --------- --------- ---------- --------- Total Operating Revenue $134,564 $596,341 $1,218,340 $1,677,903 ========= ========== ========== ========= Operating Income $ 16,319 $78,563 $ 157,362 $ 190,852 ========= ========== ========== ========= Operating revenue for 1999 decreased $622 million compared with 1998 due to the divestiture and reduced CTC charges. ELECTRIC UTILITY PROPERTIES Transmission Properties NEP's integrated system consists of approximately 2,400 circuit miles of transmission lines, and approximately 108 substations. The properties of National Grid USA subsidiaries also include the ownership interests of NEET, Mass. Hydro, and N.H. Hydro in the Hydro-Quebec Interconnection, and an integrated system of transmission lines, substations, and distribution facilities. NEP is a participant in NEPOOL. The NEPOOL Agreement provides for coordination of the operation of the generation and transmission facilities of its members. The NEPOOL Agreement further provides for New England-wide central dispatch of generation by the Independent System Operator (ISO). ISO-New England was activated on July 1, 1997 and has been operating the control area since that time. It operates under contract with NEPOOL and is governed by an independent Board of Directors. NEPOOL's Open Access Transmission Tariff, which covers service across pool transmission facilities is administered by ISO-New England. In May 1999, NEPOOL and ISO-New England commenced implementation of the NEPOOL competitive market system. The market system establishes markets for several tradable energy and reserve products. Implementation of the markets also has resulted in the imposition of certain costs including congestion related costs. By Order issued June 28, 2000, FERC conditionally approved a congestion management system and multi-settlement system (CMS/MSS). The CMS/MSS includes a number of transitional steps towards the establishment of a permanent congestion management system which would include a Financial Congestion Rights scheme, a transmission planning process, and locational marginal pricing. NEPOOL's governance structure consists of five sectors: transmission owners, generators, suppliers, public power, and end users. National Grid USA participates in the transmission owners sector. The Transmission sector accounts for 20 percent of the NEPOOL vote and the National Grid USA Companies account for one- seventh of the Transmission sector vote. Under NEPOOL's revised governance structure, all National Grid USA companies are considered "related persons" and therefore receive only a single vote. Interconnection with Quebec New England Electric Transmission Corporation (NEET) owns and operates a portion of an international transmission interconnection between the electric systems of Hydro-Quebec and New England. New England Hydro-Transmission Electric Company, Inc. (Mass. Hydro) and New England Hydro-Transmission Corporation (N.H. Hydro) own and operate facilities in connection with an expanded second phase of this interconnection. New England Hydro Finance Company, Inc. (N.E. Hydro Finance) provides the debt financing to Mass. Hydro and N.H. Hydro for the capital costs of the interconnection. National Grid USA owns 100% of the voting stock of NEET and 53.97% (60.51% including Montaup's interest) of the voting stock of Mass. Hydro and N.H. Hydro. Mass. Hydro and N.H. Hydro each own 50% of the voting securities of N.E. Hydro Finance. NEET, Mass. Hydro, and N.H. Hydro own and operate, on behalf of NEPOOL participants in the project, a 450 kV direct current transmission line and related terminals to interconnect the New England and Quebec transmission systems (the Interconnection). The transfer capability of the Interconnection is currently rated at 2,000 MW. Operating limits implemented by adjacent Power Pools covering New York, New Jersey, Pennsylvania, and Maryland often restrict the effective transfer capability to levels of 1,200 MW to 1,400 MW. The Interconnection has two phases. NEP's participation in both is approximately 18 percent. NEP and the other participants have entered into support agreements that end in 2020. Under the support agreements, NEP has agreed to guarantee its share of debt financing for the second phase. At March 31, 2000, NEP had guaranteed approximately $20 million of project debt. NEP's rights and obligations under its support agreements were transferred to PG&E Gen upon completion of the sale of NEP's nonnuclear generating business, but NEP remains an obligor in the event of PG&E Gen nonperformance (see the Industry Restructuring section of the 1999 NEP Annual Report and the NEP Transition Report for the period January 1, 2000 to March 31, 2000). Nuclear Generation Properties On September 1, 1998, NEP and its affiliate Narragansett, completed the sale of substantially all of their nonnuclear generating business to PG&E Gen. NEP also plans to seek offers to buy its operating nuclear generating interests. For more information regarding the sale of operating generating units, see Nuclear Units, page __. Nuclear Units General NEP has interests in six nuclear units. Three of the units have been permanently shut down. The remaining three are currently operating. NEP is a stockholder of Yankee Atomic Electric Company ("Yankee Atomic"), Vermont Yankee Nuclear Power Corporation ("Vermont Yankee"), Maine Yankee Atomic Power Company ("Maine Yankee"), and Connecticut Yankee Atomic Power Company ("Connecticut Yankee"). Each of these companies (collectively referred to as the "Yankee Companies") owns a single nuclear generating unit. The stockholders of three of the Yankee Companies (Vermont Yankee, Maine Yankee, and Connecticut Yankee) have agreed, subject to regulatory approval, to provide capital requirements in the same proportion as their ownership percentages of the particular Yankee Company. NEP also has power contracts with each Yankee Company that require NEP to pay an amount equal to its share of total fixed and operating costs (including decommissioning costs) of the plant plus a return on equity. Yankee Atomic, Connecticut Yankee, and Maine Yankee have permanently ceased operations. NEP purchases the output of the Vermont Yankee plant in the same percentage as its stock ownership, less small entitlements taken by municipal utilities. In addition, NEP is a joint owner of the Millstone 3 nuclear generating unit in Connecticut and the Seabrook Nuclear Generating Station Unit 1 ("Seabrook 1") nuclear generating unit in New Hampshire. Millstone 3 and Seabrook 1 are operated by subsidiaries of Northeast Utilities ("NU"). NEP pays its proportionate share of costs and receives its proportionate share of output from Millstone 3 and Seabrook 1. Listed below is certain information on each nuclear plant in which NEP has an ownership interest. Montaup held an ownership interest of 4% in Millstone 3 and an equity investment of 4.5% in Yankee Atomic, 2.5% in Vermont Yankee, 4% in Maine Yankee, and 4.5% in Connecticut Yankee. These interests are included in the information set out below. Under restructuring settlement agreements approved by regulators in Massachusetts, New Hampshire and Rhode Island, NEP has agreed to attempt to divest its interest in the three operating nuclear generating units. Operating Nuclear Units The Company has minority interests in three operating nuclear generating units which the Company is engaged in efforts to divest: Vermont Yankee, Millstone 3, and Seabrook 1. Uncertainties regarding the future of nuclear generating stations, particularly older units, such as Vermont Yankee, have increased in recent years and could adversely affect their service lives, availability, and costs. These uncertainties stem from a combination of factors, including the acceleration of competitive pressures in the power generation industry and increased Nuclear Regulatory Commission (NRC) scrutiny. The Company performs periodic economic viability reviews of operating nuclear units in which it holds ownership interests. Until such time as the Company divests its operating nuclear interests, the Company will share with customers, through the CTC, 80 percent of the revenues and operating costs related to the units, with shareholders retaining the balance. Vermont Yankee The following tables summarize the interests of the Company, and of Montaup (effective with the EUA merger), in the Vermont Yankee Nuclear Power Corporation as of March 31, 2000: The Company's Interest (millions of dollars) ---------------------------------------------- Equity Net Estimated Decommissioning Ownership Equity Plant Decommissioning Fund License Interest (%) Investment Assets Cost (in 1999$) Balance Expiration ------------ ---------- ------ --------------- ------- ---------- 20 $11 $33 $86 $43 2012 Montaup's Interest (millions of dollars) ---------------------------------------------- Equity Net Estimated Decommissioning Ownership Equity Plant Decommissioning Fund License Interest (%) Investment Assets Cost (in 1999$) Balance Expiration ------------ ---------- ------ --------------- ------- ---------- 2.5 $1 $4 $11 $5 2012 In November 1999, the Vermont Yankee Nuclear Power Corporation entered into an agreement with AmerGen Energy Company (AmerGen), a joint venture between PECO Energy and British Energy, to sell the assets of Vermont Yankee. Under the terms of the agreement, after a Vermont Yankee contribution toward the plant's decommissioning trust fund, AmerGen will take over the fund and assume responsibility for the actual cost of decommissioning the plant. The agreement also requires the existing power purchasers (including the Company) to continue to purchase the output of the plant or to buy out of the purchased power obligation. In November 1999, the Company signed an agreement to buy out of its obligation, requiring future payments which will be recovered through the Company's CTC. The Company has recorded an accrued liability and an offsetting regulatory asset of $80 million for its share of future liabilities related to Vermont Yankee, including the purchased power contract termination payment obligation, but excluding interest and a return allowance. The proposed sale is contingent upon regulatory approvals by the NRC, the Securities and Exchange Commission (SEC), under the Public Utility Holding Company Act of 1935 (1935 Act), and the Vermont Public Service Board (VPSB), among others. The Vermont Public Service Department has identified several issues that must be resolved to its satisfaction for it to support the VPSB's approval of the sale. Millstone 3 In August 1997, the Company sued Northeast Utilities (NU) in Massachusetts Superior Court for damages, alleging that NU engaged in tortious conduct that caused the shutdown of Millstone 3, which is operated by a subsidiary of NU. The Company's claim for damages included the costs of replacement power during the outage, costs necessary to return Millstone 3 to safe operation, and other additional costs. Most of the Company's incremental replacement power costs have been recovered from customers, either through fuel adjustment clauses or through provisions in the Settlement Agreements. In August 1997, the Company also sent a demand for arbitration to Connecticut Light & Power Company and Western Massachusetts Electric Company, both subsidiaries of NU, seeking damages for breach of obligations under an agreement with the Company and others regarding the operation and ownership of Millstone 3. In July 1998, Millstone 3 returned to full operation after being shut down for more than two years. In November 1999, the Company executed an agreement which settled the litigation and arbitration. Under the settlement agreement, the NU companies paid the Company $23.7 million and paid Montaup $7.8 million. The settlement also includes an agreement by NU to include the Company's and Montaup's share of Millstone 3 in an auction of NU's share of the unit. Upon the closing of the sale, NU will pay the Company and Montaup a combined total of $25 million, regardless of the actual sale price, and reimburse the Company and Montaup for any capital expenditures in excess of pre-budgeted levels incurred after October 1999. The Company and Montaup will also be reimbursed for fuel procurement expenditures which increase net nuclear fuel account balances above current balances. The settlement also requires NU to indemnify the Company and Montaup and assume any residual liabilities resulting from the sale, including any requirements that the sellers continue to purchase output from the unit. In addition, the settlement requires NU to pay the Company and Montaup an additional combined total of $1 million per month for every month beyond April 1, 2001 that the closing does not occur. The auction process is being conducted by the CDPUC and is ongoing. Amounts received pursuant to a sale will, after reimbursement of the Company's transaction costs and net investment in Millstone 3, be credited to customers. Seabrook 1 As part of its restructuring settlement with the State of New Hampshire, Public Service Company of New Hampshire (PSNH), through its affiliate, North Atlantic Energy Corporation (NAEC), has committed to seek New Hampshire Public Utilities Commission (NHPUC) approval of a definitive plan to sell, via public auction, its share of Seabrook 1, with such sale to occur no later than December 31, 2003. NAEC is the majority owner of the plant with a 35.98 percent interest and is also the plant operator. As part of its settlement, PSNH has also agreed to make all reasonable efforts to bundle its interests with those of other owners (including the Company) seeking to sell their interests. This would allow for an auction of a majority interest. The NHPUC granted conditional approval of the settlement on April 19, 2000. The New Hampshire legislature approved the necessary legislation on May 31, 2000. Final resolution by the NHPUC approving the settlement in compliance with the legislation is expected this summer. Nuclear Units Permanently Shut Down Three regional nuclear generating companies in which the Company has a minority interest own nuclear generating units that have been permanently shut down. These three units, including Montaup's portion effective with the EUA merger, are as follows: Future The Company's Estimated Investment Billings to as of 3/31/00 Date the Company Unit % $(millions) Retired $(millions) - ----------------------------------------------------------------- Yankee Atomic 30 4 Feb 1992 4 Connecticut Yankee 15 16 Dec 1996 60 Maine Yankee 20 15 Aug 1997 124 Future Montaup's Estimated Investment Billings as of 3/31/00 Date to Montaup Unit % $(millions) Retired $(millions) - ----------------------------------------------------------------- Yankee Atomic 4.5 1 Feb 1992 1 Connecticut Yankee 4.5 5 Dec 1996 19 Maine Yankee 4.0 3 Aug 1997 26 In the case of each of these units, the Company has recorded a liability and an offsetting regulatory asset reflecting the estimated future billings from the companies. In a 1993 decision, the FERC allowed Yankee Atomic to recover its undepreciated investment in the plant, including a return on that investment, as well as unfunded nuclear decommissioning costs and other costs. Maine Yankee recovers its costs, including a return, in accordance with settlement agreements approved by the FERC in May 1999. Connecticut Yankee filed a similar request with the FERC, to which several parties intervened in opposition arguing that Connecticut Yankee was entitled to recover only those costs directly related to decommissioning, but should not recover any remaining unamortized investment or return on equity. In August 1998, a FERC Administrative Law Judge (ALJ) issued an initial decision which would allow for full recovery of Connecticut Yankee's unrecovered investment, but precluded a return on that investment. Connecticut Yankee, the Company, and other parties filed with the FERC exceptions to the ALJ's decision. Should the FERC uphold the ALJ's initial decision in its current form, the Company's share (including Montaup's) of the loss of the return component would total approximately $16 million to $20 million before taxes for the entire recovery period. In April 2000, a settlement was reached among Connecticut Yankee, the Connecticut Department of Public Utility Control (CDPUC), the Office of Consumer Counsel (OCC), and the Connecticut Municipal Electric Cooperative. The settlement resolves all issues in the case, except the OCC has reserved its right to appeal recovery of any costs other than decommissioning. Billings will be reduced prospectively. There will be no refund of any amounts collected up to the effective date of the settlement. Connecticut Yankee had reserved for potential refunds and will be reversing that reserve. Prospectively, Connecticut Yankee has agreed to reduce annual collections for decommissioning through the use of its pre-1983 spent fuel trust funds and to limit its return on equity to 6 percent. In addition, Connecticut Yankee has pursued litigation against the Department of Energy to assume financial responsibility for storage of spent nuclear fuel and has agreed to pass to ratepayers any recovery after litigation expenses. The settlement is pending before the FERC. A Maine statute provides that if both Maine Yankee and its decommissioning trust fund have insufficient assets to pay for the plant decommissioning, the owners of Maine Yankee are jointly and severally liable for the shortfall. Under the provisions of the Settlement Agreements, the Company recovers all costs, including shutdown costs, that the FERC allows these Yankee companies to bill to the Company. Maine Yankee had hired Stone & Webster, Inc., an engineering, construction, and consulting company, as the principal contractor to decommission the unit. Stone & Webster recently announced plans to file for Chapter 11 bankruptcy protection due to financial difficulties. Stone & Webster also announced that it has negotiated the sale of substantially all of its assets. In May 2000, Maine Yankee terminated its long-term contract with Stone & Webster and negotiated an arrangement with Stone & Webster to continue work until June 2000. On June 2, 2000, Stone & Webster filed for Chapter 11 bankruptcy protection. Maine Yankee is considering its options for decommissioning the unit beyond June 30, 2000. At this time, the Company is unable to determine the potential impact, if any, of this development. Nuclear Decommissioning The Company is liable for its share of decommissioning costs for Millstone 3, Seabrook 1, and all of the Yankees. Decommissioning costs include not only estimated costs to decontaminate the units as required by the NRC, but also costs to dismantle the uncontaminated portion of the units. The Company records decommissioning costs on its books consistent with its rate recovery. The Company is recovering its share of projected decommissioning costs for Millstone 3 and Seabrook 1 and these costs are recorded as depreciation expense. In addition, the Company is paying its portion of projected decommissioning costs for all of the Yankees through purchased power expense. Such costs reflect estimates of total decommissioning costs approved by the FERC. In New Hampshire, legislation was enacted in 1998 which makes owners of Seabrook 1, in which the Company owns a 10 percent interest, proportional guarantors for decommissioning costs in the event that an owner without a franchise service territory fails to fund its share of decommissioning costs. Currently, a single owner of an approximate 15 percent share of Seabrook 1 has no franchise service territory. The impact of this legislation to the Company is not considered material to its financial position or results of operation. The Nuclear Waste Policy Act of 1982 establishes that the federal government (through the DOE) is responsible for the disposal of spent nuclear fuel. The federal government requires the Company to pay a fee based on its share of the net generation from the Millstone 3 and Seabrook 1 nuclear generating units. Prior to 1998, the Company recovered this fee through its fuel clause. Under the Settlement Agreements, substantially all of these costs are recovered through CTCs. Similar costs are billed to the Company by Vermont Yankee and are also recovered from customers through CTCs. In 1997, ruling on a lawsuit brought against the DOE by numerous utilities and state regulatory commissions, the U.S. Court of Appeals for the District of Columbia held that the DOE was obligated to begin disposing of utilities' spent nuclear fuel by January 1998. The DOE failed to meet this deadline and is not expected to have a temporary or permanent repository for spent nuclear fuel before 2010, at the earliest. Many utilities, including Yankee Atomic, Connecticut Yankee, and Maine Yankee, are plaintiffs in on-going litigation related to the DOE's failure to accept spent nuclear fuel. Decommissioning Trust Funds Each nuclear unit in which the Company and Montaup have an ownership interest has established a decommissioning trust fund or escrow fund into which payments are being made to meet the projected costs of decommissioning. The tables below list information on the operating nuclear plants in which the Company and Montaup are joint owners. The Company's share of (millions of dollars) -------------------------------------------- Decommissioning The Company's Net Estimated Fund OwnershipPlant AssetsDecommissioning Balances* License Unit Interest (%)(at 3/31/00) Cost (in 1999 $) (at 3/31/00) Expiration - ---------------------------------------------------------------------------------------- Millstone 3 12 12** 76 23 2025 Seabrook 1 10 14** 56 13 2026 Montaup's share of (millions of dollars) -------------------------------------------- Decommissioning The Company's Net Estimated Fund OwnershipPlant AssetsDecommissioning Balances* License Unit Interest (%)(at 3/31/00) Cost (in 1999 $) (at 3/31/00) Expiration - ---------------------------------------------------------------------------------------- Millstone 3 4 4** 25 8 2025 <FN> *Certain additional amounts are anticipated to be available through tax deductions. **Represents post-December 1995 spending including nuclear fuel. For further information, refer to Note C. </FN> There is no assurance that decommissioning costs actually incurred will not substantially exceed the estimated amounts. For example, decommissioning cost estimates assume the availability of permanent repositories for both low-level and high-level nuclear waste; those repositories do not currently exist. The temporary low-level repository located in Barnwell, South Carolina will gradually become unavailable to units other than Connecticut Yankee and Millstone 3. If any of the operating units were shut down prior to the end of their operating licenses, which the Company believes is likely, the funds collected for decommissioning to that point would be insufficient. Under the Settlement Agreements, the Company will recover decommissioning costs through CTCs. Nuclear Fuel Supply The utilities responsible for the fuel supply for these operating nuclear units are not experiencing any difficulties in obtaining commitments for the supply of each element of the nuclear fuel cycle. Purchased Power Transfer Agreement As part of the sale of NEP's nonnuclear generating business to PG&E Gen on September 1, 1998, NEP signed a purchased power transfer agreement through which PG&E Gen purchased NEP's entitlement to approximately 1,100 MW of power procured under long-term contracts. For more information, see the Industry Restructuring section of the 1999 NEP Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. REGULATORY AND ENVIRONMENTAL MATTERS Regulation Numerous activities of NEP are subject to regulation by various federal agencies. Under the 1935 Act, many transactions of NEP are subject to the jurisdiction of the SEC. With the intensifying competitive pressures within the electric utility industry, there has been increasing debate about modifying or repealing the 1935 Act. Under the Federal Power Act, NEP is subject to the jurisdiction of the FERC with respect to rates and accounting. In addition, the NRC has broad jurisdiction over nuclear units and federal environmental agencies have broad jurisdiction over environmental matters. For more information, see Industry Restructuring section of the 1999 NEP Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000; Rates, page 4; Nuclear Units, page 9; and Environmental Requirements, page 18. Environmental Requirements Existing Operations NEP is subject to federal, state, and local environmental regulation of, among other things, wetlands and flood plains; air and water quality; storage, transportation, and disposal of hazardous wastes and substances; underground storage tanks; and land-use. Upon completion of the sale of substantially all of NEES' nonnuclear generating business to PG&E Gen, PG&E Gen assumed responsibility for environmental conditions at the Sellers' nonnuclear generating stations (see the Industry Restructuring section of the 1999 NEP Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000.) Siting and Construction Activities for New Transmission Facilities All New England states require, in certain circumstances, regulatory approval for site selection or construction of major transmission facilities. Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island also have programs of coastal zone management that might restrict construction of electrical facilities in, or potentially affecting, coastal areas. The New England states have environmental laws which require project proponents to prepare reports of the environmental impact of certain proposed actions for review by various agencies. Environmental Protection Facilities Expenditures Due to the divestiture of its nonnuclear generating business, NEP estimates that capital expenditures for environmental protection facilities in 2000 and 2001 will not be material. Hazardous Substances The electric utility industry typically utilizes and/or generates in its operations a range of potentially hazardous products and by-products. For more information regarding sites for which NEP has been named as potentially responsible parties, other sites, a settlement agreement covering rate recovery of certain remediation costs, and reserves, see Note D of the Notes to the Financial Statements of both the NEP 1999 Annual Report, and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. Nuclear The NRC, along with other federal and state agencies, has extensive regulations pertaining to environmental aspects of nuclear reactors. Safety aspects of nuclear reactors, including design controls and inspection programs to mitigate any possibility of nuclear accidents and to reduce any damages therefrom, are also subject to NRC regulation. See Nuclear Units, page 9. CONSTRUCTION AND FINANCING NEP's estimated construction expenditures (including nuclear fuel) are shown below for the fiscal years ended March 2001 through 2003. NEP conducts a continuing review of its construction and financing programs. These programs and the estimates shown below are subject to revision based upon changes in assumptions as to load growth, rates of inflation, receipt of adequate and timely rate relief, the availability and timing of regulatory approvals, new environmental and legal or regulatory requirements, total costs of major projects, technological changes, and the availability and costs of external sources of capital. Estimated Construction Expenditures for the years ended March ----------------------------------- 2001 2002 2003 Total ---- ---- ---- ----- ($ in Millions - excluding AFDC) Nuclear Generation (1) 10 10 10 30 Transmission 45 45 40 130 ---- ---- ---- ---- Total NEP 55 55 50 160 ---- ---- ---- ---- <FN> (1) Includes nuclear fuel. </FN> Financing All of NEP's construction expenditures during the fiscal years ended March 2001 through March 2003 are expected to be financed by internally generated funds. NEP's general practice has been to finance construction expenditures in excess of internally generated funds initially by issuing unsecured short-term debt. This short-term debt is subsequently reduced through sales of long-term debt securities and through capital contributions from its parent. The ability of NEP to issue short-term debt is limited by the need to obtain regulatory approval from the SEC under the 1935 Act and from the New Hampshire Public Utilities Commission. The following table summarizes the short-term debt amounts for which regulatory approval has been granted at March 31, 2000, and the amount of outstanding short-term debt and lines of credit and standby bond facilities at such date. ($ millions) Lines of Credit/ Regulatory Standby Bond Limit Outstanding Facilities ---------- ----------- ---------------- NEP 375 39(a) 460 (a) NEP plans to seek the necessary regulatory approvals in 2000 which would allow the $39 million of variable rate debt to remain outstanding through 2015. This would result in classifying the debt as long-term rather than short-term. NEP and certain affiliates, with regulatory approval, operate a money pool to more effectively utilize cash resources and to reduce outside short-term borrowings. Short-term borrowing needs are met first by available funds of the money pool participants. Borrowing companies pay interest at a rate designed to approximate the cost of outside short-term borrowings. Companies which invest in the pool share the interest earned on a basis proportionate to their average monthly investment in the money pool. Funds may be withdrawn from or repaid to the pool at any time without prior notice. At March 31, 2000, NEP had no moneypool borrowings outstanding. EXECUTIVE OFFICERS The Treasurer is elected by the stockholders to hold office until the next annual meeting of stockholders and until the successor is duly chosen and qualified. The other executive officers are elected by the Board of Directors to hold office subject to the pleasure of the directors and until the first meeting of directors after the next annual meeting of stockholders and until their successors are duly chosen and qualified. Certain officers of NEP are, or at various times in the past have been, officers and/or directors of the affiliated companies with which NEP has entered into contracts and had other business relations. The list below is as of June 1, 2000. Peter G. Flynn - Age: 46 - Elected President in 1999 - Vice President and Director of Rates for the Service Company from 1996 to 1999 - Assistant General Counsel for the Service Company during 1996 - Senior Counsel for the Service Company from 1992 to 1996. Michael E. Jesanis - Age: 43 - Vice President since 1998 - National Grid USA (formerly NEES) Senior Vice President and Chief Financial Officer since 1998 - NEES Vice President from 1997 to 1998 - NEES Treasurer from 1992 to 1998 - Elected Vice President of Narragansett in 1998 - Treasurer of Mass. Electric and NEP from 1992 to 1998. Cheryl A. LaFleur - Age: 45 - Vice President since 1995. National Grid USA (formerly NEES) Senior Vice President since 1998 - NEES Vice President from 1995 to 1998 - Secretary and General Counsel since 1995 - Vice President of Mass. Electric from 1993 to 1995. Marc F. Mahoney - Age: 46- Elected Vice President in 2000 - Vice President, Field Operations for EUA from 1997 to 2000 - Director, Transmission and Distribution for EUA from 1995 to 1997. John F. Malley - Age: 51 - Vice President since 1992. James S. Robinson - Age: 46 - Vice President since 1998 - Director of Nuclear Investments from 1997 to 1998 - Manager, Wholesale Business Administration from 1993 to 1997. Masheed H. Rosenqvist - Age: 45 - Vice President since 1998 - Manager, Transmission Tariffs and Contracts for NEP or Service Company since 1997 - Consulting Engineer for the Service Company from 1995 to 1997. Terry L. Schwennesen - Age: 44 - Elected Vice President in 2000 - Associate General Counsel of Mass. Electric 1999 to 2000 - Director of Rates for Service Company from 1998 to 1999 - Manager of Rates during 1998 - Manager of Wholesale Rates until 1998. John G. Cochrane - Age: 42 - National Grid USA (formerly NEES) Vice President since 1999 - National Grid USA (formerly NEES) Treasurer since 1998 - Treasurer of Mass. Electric, NEP, and the Service Company since 1998 - Vice President of the Service Company and Treasurer of Narragansett since 1993. Kwong O. Nuey - Age: 51 - Elected Controller in 2000 - Vice President and Director, Retail Information Services for Mass. Electric from 1993 to 2000. ITEM 2. PROPERTIES See ITEM 1. Business - Transmission Properties, Page 7 and Nuclear Generation Properties, page 8. ITEM 3. LEGAL PROCEEDINGS See Item 1. BUSINESS - Nuclear Units, page 9. In August 1997, NEP sued Northeast Utilities (NU) in Massachusetts Superior Court for damages resulting from the tortious conduct of NU that caused the shutdown of Millstone 3. NEP's claim for damages included the costs of replacement power during the outage, costs necessary to return Millstone 3 to safe operation, and other additional costs. Most of NEP's incremental replacement power costs have been recovered from customers, either through fuel adjustment clauses or through provisions in the Settlement Agreements. In August 1997, NEP also sent a demand for arbitration to Connecticut Light & Power Company and Western Massachusetts Electric Company, both subsidiaries of NU (subsidiaries), seeking damages resulting from their breach of obligations under an agreement with NEP and others regarding the operation and ownership of Millstone 3. In November 1999, NEP, NU, and the subsidiaries executed an agreement which settled the litigation and the arbitration described above. Under the settlement, NU paid NEP approximately $24 million. In addition, NU also agreed to include NEP's Millstone 3 interest when NU sells its Millstone 3 interest at auction. Amounts received pursuant to a sale will, after reimbursement of NEP's transaction costs and net investment in Millstone 3, be credited to customers. From 1983 until 1998, NEP was the wholesale power supplier for the Town of Norwood, Massachusetts (Norwood). In April 1998, Norwood began taking power from another supplier. Pursuant to a tariff amendment approved by the FERC in May 1998, NEP has been assessing Norwood a CTC. Through December 1999, the charges assessed Norwood amount to approximately $15 million, all of which remain unpaid. NEP is pursuing a collection action in Massachusetts Superior Court. Separately, Norwood filed suit in Federal District Court (District Court) in April 1997 alleging that NEP's divestiture violated the terms of the 1983 power contract and contravened antitrust laws. The District Court dismissed the lawsuit. On appeal, the First Circuit Court of Appeals (First Circuit) also consolidated appeals Norwood made from FERC's orders approving the divestiture, the wholesale rate settlement between NEP and its distribution affiliates, and the CTC tariff amendment. On February 2, 2000, the First Circuit dismissed Norwood's appeal from the FERC orders and dismissed its appeal from all but one of Norwood's District Court claims, which relates to the creation of generation market power. On February 28, 2000, and March 3, 2000, respectively, the First Circuit denied Norwood's petition for further review of its District Court claims decision and its decision on the FERC orders. On May 30, 2000, Norwood petitioned the US Supreme Court for review of the First Circuit decisions. Norwood has also appealed a 1999 FERC decision that rejected Norwood's challenge to the calculation of the CTC based on the term of the 1983 power contract. On June 12, 2000, Norwood moved to amend its complaint to reassert a claim for rescission with respect to NEP's divestiture. NEP has filed a motion to dismiss. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On February 25, 2000, a Special Meeting of Shareholders was held. By unanimous vote of the 3,749,896 shares present out of 3,765,568 total shares having general voting rights: 1. The Company's Articles of Organization and By-Laws were amended to delete provisions relating to Dividend Series Preferred Stock and Preferred Stock-Cumulative. 2. The Company's capital stock was decreased by 2,262,500 shares of Dividend Series Preferred Stock and 6,879,440 shares of Preferred Stock-Cumulative. 3. The Company's By-laws were amended to add provisions for a Nuclear Committee which has delegated authority over most matters regarding the Company's ownership in nuclear generating units. 4. The Company's By-laws were amended to require that all officers and directors of the Company be US citizens so long as the Company is a licensee of an operating nuclear generating unit. 5. The number of directors was increased from four to seven. 6. The following were elected as directors: Cynthia A. Arcate L. Joseph Callan Philip R. Sharp 7. To approve the merger of Montaup Electric Company into the Company. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS The information required by this item is not applicable as the common stock of NEP is held solely by National Grid USA. Information pertaining to payment of dividends and restrictions on payment of dividends is incorporated herein by reference to the NEP 1999 Annual Report and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is incorporated herein by reference to Selected Financial Information, Note K of both the NEP 1999 Annual Report and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. 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 the Financial Review section of the NEP 1999 Annual Report and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is incorporated herein by reference to the Risk Management section of the NEP 1999 Annual Report and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated herein by reference to the financial statements and Notes to Financial Statements in the NEP 1999 Annual Report and the NEP Transition Report for the period January 1, 2000 to March 31, 2000. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The names of the directors of NEP, their ages, and a brief account of their business experience during the past five years appear below. Information required by this item for Executive Officers is provided under the caption EXECUTIVE OFFICERS in Part I of this report. Directors are elected to hold office until the next annual meeting of stockholders or special meeting held in lieu thereof and until their respective successors are chosen and qualified. The list below is as of June 1, 2000 L. Joseph Callan - Age: 52 - Elected Director in 2000 - Consultant since 1998 - Several positions at the NRC, including Regional Administrator and Executive Director of Operations, from 1979 to 1998. Peter G. Flynn* - Elected Director in 1999. Michael E. Jesanis* - Elected Director in 2000 - Directorships of National Grid USA Companies: EUA Bioten, Inc., EUA Energy Investment Corporation, EUA Ocean State Corporation, Granite State Electric Company, Massachusetts Electric Company, Nantucket Electric Company, National Grid USA, National Grid USA Service Company, Inc., NEES Communications, Inc., New England Electric Transmission Corporation, New England Energy Incorporated, New England Hydro Finance Company, Inc., New England Hydro-Transmission Corporation, New England Hydro-Transmission Electric Company, Inc. and New England Power Company. Cheryl A. LaFleur* - Director since 1995. Directorships of National Grid USA companies: AllEnergy Fuels Corp., EUA Bioten, Inc., EUA Cogenex Corporation, EUA Cogenex West Corporation, EUA Energy Investment Corporation, EUA Ocean State Corporation, Granite State Electric Company, Granite State Energy, Inc., Massachusetts Electric Company, Nantucket Electric Company, National Grid Transmission Services Corporation, National Grid USA, National Grid USA Service Company, Inc., NEES Communications, Inc., NEES Energy, Inc., NEES Telecommunications Corp., New England Electric Transmission Corporation, New England Energy Incorporated, New England Hydro Finance Company, Inc., New England Hydro-Transmission Corporation, New England Hydro- Transmission Electric Company, Inc., New England Power Company, NEWHC, Inc., New England Wholesale Electric Company, Northeast Energy Management, Inc., and Wayfinder Group, Inc. Robert G. Powderly - Age: 53 - Elected Director in 2000 - Executive Vice President of EUA until 2000 - Directorships of National Grid USA Companies: EUA Bioten, Inc., EUA Cogenex Corporation, EUA Energy Investment Corporation, EUA Ocean State Corporation, National Grid USA, National Grid USA Service Company, Inc. Terry L. Schwewnnesen* - Elected Director in 2000. Richard P. Sergel* - Director since 1998. Director of National Grid Group, plc. Directorships of National Grid USA companies: EUA Bioten, Inc., EUA Cogenex Corporation, EUA Energy Investment Corporation, EUA Ocean State Corporation, Granite State Electric Company, Granite State Energy, Inc., Massachusetts Electric Company, Nantucket Electric Company, The Narragansett Electric Company, National Grid Transmission Services Corporation, National Grid USA, National Grid USA Service Company, Inc., NEES Communications, Inc., NEES Energy, Inc., NEES Telecommunications Corp., New England Energy Incorporated, New England Electric Transmission Corporation, New England Hydro Finance Company, Inc., New England Hydro- Transmission Corporation, New England Hydro-Transmission Electric Company, Inc., New England Power Company, NEWHC, Inc., and Wayfinder Group, Inc. Philip R. Sharp - Age: 57 - Elected Director in 2000 - Lecturer, Harvard University John F. Kennedy School of Government since 1995 - US Congressman from 1975 to 1995. Other directorship: Cinergy Corporation. *Please refer to the material supplied under the caption EXECUTIVE OFFICERS in Part I of this report for other information regarding these directors. Section 16(a) Beneficial Ownership Reporting Compliance ------------------------------------------------------- Section 16(a) of the Securities Exchange Act of 1934 requires NEP's officers and directors, and persons who own more than 10 percent of a registered class of NEP's equity securities, to file reports on Forms 3, 4, and 5 of share ownership and changes in share ownership with the SEC and the New York Stock Exchange and to furnish NEP with copies of all Section 16(a) forms they file. Based solely on NEP's, review of the copies of such forms received by it, or written representations from certain reporting persons that such forms were not required for those persons, NEP believes that, during the first calendar quarter of 2000, all filing requirements applicable to its officers, directors, and 10 percent beneficial owners were complied with, with the exception that due to Company error a Form 3 for each of Messrs. Callan and Sharp was filed late. ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION The following table gives information with respect to all compensation (whether paid directly by NEP or billed to it as hourly charges) for services in all capacities for NEP for the first calendar quarter of 2000 and years 1997 through 1999 to or for the benefit of the Chief Executive Officer and the four other most highly compensated executive officers. NEP SUMMARY COMPENSATION TABLE Long-Term Annual Compensation (b) Compensation -------------------------- ------------------- Other Restricted Securities Name and Annual & Deferred Under All Other Principal Compensa- Share Lying LTIP Compensa- Position Year Salary Bonus tion Awards Options Payouts tion (a) ($)(c) ($)(c) ($)(d) ($) ($) ($)(f) - ---------- ---- ------- ------ --------- ---------- --------- ------- ------- Peter G. 2000(g) 40,997 107,889 2,050 0 36,473 118,615 90 Flynn 1999 154,707 74,812 3,616 30,220 46,464 359 President 1998 57,838 29,383 1,151 12,176 6,864 75 (Elected 1/99) Alfred D. 2000(g) 11,110 35,204 653 0 0 59,146 99 Houston 1999 40,385 20,766 1,054 11,576 20,235 219 Chairman 1998 49,236 32,804 1,137 18,677 17,545 288 (Retired 3/31/00) Cheryl A. 2000(g) 9,794 26,656 654 0 10,892 54,198 32 LaFleur 1999 36,268 17,321 1,278 7,871 19,015 82 Vice 1998 32,922 18,509 1,258 8,562 6,143 69 President 1997 85,555 93,340 3,311 1,832 0 149 Masheed H. 2000(g) 32,745 63,412 1,637 0 16,023 54,855 103 Rosenqvist 1999 124,740 45,569 2,538 17,671 0 412 Vice 1998 113,697 44,654 2,285 17,618 0 366 President James S. 2000(g) 31,811 62,966 1,625 0 14,458 53,878 42 Robinson 1999 115,920 42,415 2,693 16,405 22,018 167 Vice 1998 108,205 39,143 2,510 17,734 13,641 149 President (a) Certain officers of NEP are also officers of affiliate companies. (b) Includes deferred compensation in category and year earned. (c) The bonus figure represents: cash bonuses under an incentive compensation plan, the all-employee goals program, the variable match of the incentive thrift plan, including related deferred compensation plan matches, special cash bonuses, and unrestricted shares under the incentive share plan. In 1997, the bonus amounts were all cash or contributions to the incentive thrift plan, including related deferred compensation plan matches. See descriptions under Plan Summaries. (d) Includes amounts reimbursed by NEP for the payment of taxes on certain noncash benefits and NEP contributions to the incentive thrift plan that are not bonus contributions including related deferred compensation plan match. See description under Plan Summaries. (e) The incentive share awards for the named executives who were also NEES executives (1997 - 1999) and the other named executives (in 1998 only) were in the form of restricted shares (with a five-year restriction) or deferred share equivalents, deferred for receipt for at least five years, at the executive's option. As cash dividends were declared, the number of deferred share equivalents increased as if the dividends were reinvested in shares. The shares awarded for the other named executives in 1997 were not restricted and the value of the awards is included in the bonus column. As of December 31, 1999, the following executive officers held the amount of restricted and deferred shares with the value indicated: Mr. Flynn 3,691 shares, $191,009 value; Mr. Houston 19,545 shares, $1,011,454 value; Ms. LaFleur 8,306 shares, $429,836 value; Ms. Rosenqvist 376 shares, $19,458 value; and Mr. Robinson 131 shares, $6,779 value. The value was calculated by multiplying the closing market price on December 31, 1999 by the number of shares. These shares were cashed out as a result of the merger with National Grid. (f) Includes NEP contributions to life insurance. See description under Plan Summaries. The life insurance contribution is calculated based on the value of term life insurance for the named individuals. The premium costs for most of these policies have been or will be recovered by NEP. (g) Information is for the first calendar quarter of 2000 only. Directors' Compensation Members of the NEP Board who are employees of National Grid USA companies receive no fees for service on the Board. Non- employee directors receive an annual retainer of $20,000 plus a meeting fee of $1,000 for each Board or committee meeting attended. Retirement Plans The following table shows estimated annual benefits payable to executive officers under the qualified pension plan and the supplemental retirement plan, assuming retirement at age 65 in 2000. PENSION TABLE Five-Year Average 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years Compensa- of of of of of of tion Service Service Service Service Service Service - --------- -------- -------- -------- -------- -------- -------- $100,000 18,926 29,276 39,626 49,976 60,326 70,676 $150,000 29,276 42,414 57,439 72,464 87,489 102,514 $200,000 39,626 57,439 75,251 94,951 114,651 134,351 $250,000 49,976 72,464 94,951 116,814 141,064 165,314 $300,000 60,326 87,489 114,651 141,064 167,477 184,123 $350,000 70,676 102,514 134,351 165,314 196,277 215,865 $400,000 81,026 117,539 154,051 189,564 225,077 241,590 $450,000 91,376 132,564 173,751 213,814 253,877 279,315 $500,000 101,726 147,589 193,451 238,064 282,677 311,040 For purposes of the retirement plans, Mr. Flynn, Mr. Houston, Ms. LaFleur, Ms. Rosenqvist, and Mr. Robinson currently have 18, 21, 14, 18, and 12 credited years of service, respectively. Benefits under the pension plans are computed using formulae based on percentages of highest average compensation computed over five consecutive years. The compensation covered by the pension plan includes salary, bonus, and incentive share awards. Long-Term Performance Share awards are not included. The benefits listed in the pension table are not subject to deduction for Social Security and are shown without any joint and survivor benefits. If the participant elected at age 65 a 100 percent joint and survivor benefit with a spouse of the same age, the benefit shown would be reduced by approximately 16 percent. The pension plan table above does not include annuity payments to be received in lieu of life insurance for Mr. Houston. The payments are described below under Plan Summaries. NEP contributes the full cost of post-retirement health benefits for senior executives. PAYMENTS UPON A CHANGE OF CONTROL AND TERMINATION OF EMPLOYMENT National Grid USA is a party to agreements with each of Mr. Houston, Ms. LaFleur, and Mr. Flynn (each, an Executive and each agreement, a Severance Agreement), which Severance Agreements were entered into in 1995 with Mr. Houston and on March 1, 1998 with the other Executives and which remain in effect for the three year period following (1) a Change in Control of NEES (as defined in the Severance Agreements) or (2) a Major Transaction (as defined in the Severance Agreements). In accordance with the terms of the Severance Agreements, if the applicable Executive's employment is terminated within three years following the event described in clause (1) or (2), as applicable, National Grid USA will pay to the Executive the severance payments and will provide to the Executive the severance benefits described below, unless the Executive's employment is terminated (x) by National Grid USA for Cause, (y) by the Executive without Good Reason or (z) by reason of the Executive's death, Disability or Retirement (each term, as defined in the Severance Agreements). The shareholder approval of the merger agreement with The National Grid Group plc (May 1999) constituted a Major Transaction and the merger with The National Grid Group plc on March 22, 2000 constituted a Change in Control. Accordingly, in the event an Executive's employment is terminated within three years following the Major Transaction or Change in Control, such Executive will be entitled to receive, in lieu of any other payments due to the Executive: (1) lump sum cash payment equal to three times (two times, in certain cases) the sum of (a) the higher of (i) such Executive's annual base compensation in effect at the time of termination and (ii) such Executive's annual base compensation in effect immediately prior to the Change in Control or Major Transaction and (b) the higher of (i) the average of the annual bonuses awarded to such Executive under the New England Electric Companies' Senior Incentive Compensation Plan, New England Electric Companies' Incentive Compensation Plan I, II and III and the Incentive Share Plan (collectively, the Incentive Plans) for the three performance years ended prior to the date of termination and (ii) the average of the annual bonuses awarded to such Executive pursuant to the Incentive Plans for the three performance years ended prior to the Change in Control or Major Transaction; (2) a cash lump sum payment equal to the excess of (a) the actuarial equivalent of the retirement pension which the Executive would have accrued under the terms of each pension plan of National Grid USA (determined as if the Executive (i) were fully vested thereunder and had accumulated 36 additional months (24 additional months, in certain cases) of service credit thereunder and (ii) had been credited under each such pension plan of National Grid USA during such 36 month period with compensation at the higher of (A) the Executive's compensation during the 12 months prior to the date of termination and (B) the Executive's compensation during the 12 months ending on the date of the Change in Control or Major Transaction) over (b) the actuarial equivalent of the retirement pension which the Executive had actually accrued pursuant to the provisions of National Grid USA's pension plans as of the date of his or her termination of employment; (3) the continuation of employee welfare benefits for three years (two years, in certain cases) following the date of termination, reduced to the extent the Executive receives such benefits from a subsequent employer; (4) if the Executive would have otherwise been entitled to post-retirement health care or life insurance had he continued to be employed for three additional years (two additional years, in certain cases), such post-retirement health care and life insurance commencing on the later of (a) the date that such coverage would have first become available to the Executive and (b) the date that the benefits described in clause (3) above terminate and (5) the reimbursement of legal fees and expenses, if any, incurred by the Executive in disputing any issue relating to the termination of his employment. Notwithstanding the above, payments to be made and benefits to be provided to the Executives will be reduced to the extent necessary to avoid imposition of the excise tax (the Excise Tax) pursuant to Section 4999 of the Code; in certain cases, however, such payments and benefits will be reduced only if such reduction would yield a greater result to the Executive than actual payment by the Executive of the Excise Tax. Mr. Houston's employment was terminated in accordance with the merger agreement. Therefore, Mr. Houston is receiving the benefits listed in the preceding paragraph. Also pursuant to the merger agreement with National Grid, National Grid and National Grid USA entered into a consulting contract with Mr. Houston. The consulting contract is for a term of two years and provides for payments to Mr. Houston of $200,000 per year. Upon a change in control a participant in the deferred compensation plan has the option of receiving a full distribution of the participant's cash and share accounts and the actuarial value of future benefits from the insurance related benefits under a prior plan, all less 10 percent. NEES's bonus plans, including the incentive compensation plans, the Incentive Thrift Plan, and the Goals Program, provided for payments equal to the average of the bonuses for the three prior years in the event of a Change of Control. These payments would be made in lieu of the regular bonuses for the year in which the Change in Control occurs. These payments were triggered upon the merger with National Grid and are reflected in the Summary Compensation Table in the bonus column for 2000. The Long-Term Performance Share Award Plan provided for a cash payment equal to the value of the performance shares in the participants' account times the average target achievement percentage for the Incentive Thrift Plan for the three prior years. This payment was triggered upon the merger with National Grid and is reflected in the Summary Compensation Table in the LTIP Payouts column for 2000. The Retirees Health and Life Insurance Plan has provisions preventing changes in benefits adverse to the participants for three years following a Change in Control. PLAN SUMMARIES A brief description of the various plans through which compensation and benefits have been provided to the named executive officers is presented below to better enable shareholders to understand the information presented in the tables shown earlier. The amounts of compensation and benefits provided to the named executive officers under the plans described below (and charged to NEP) are presented in the Summary Compensation Table. Goals Program The Goals Program establishes goals annually. For 1999, these included goals related to core operating income, costs for customers for electricity delivery, safety, absenteeism, transmission and distribution reliability, environmental and OSHA compliance, and customer satisfaction. Some goals apply to all employees, while others apply to particular functional groups. Depending upon the number of goals met, and provided the minimum earnings goal is met, employees may earn a cash bonus of 1 percent to 4-1/2 percent of their compensation. Incentive Thrift Plan The incentive thrift plan (a 401(k) program) provides for a match of 40 percent of up to the first 5 percent of base compensation contributed to the incentive thrift plan (shown under Other Annual Compensation in the Summary Compensation Table) and, based on an incentive formula tied to core operating income, may fully match the first 5 percent of base compensation contributed (the additional amount, if any, is shown under Bonus in the Summary Compensation Table). Under Federal law, contributions to these plans are limited. In 1999, the salary reduction amount was limited to $10,000. Deferred Compensation Plan The Deferred Compensation Plan offered executives the opportunity to defer base pay and bonuses. The plan offered the option of investing at the prime rate or in NEES common shares. Under Federal law, the Incentive Thrift Plan, described above, was required to limit participant base compensation to $160,000 in calculating the NEES match. Under the Deferred Compensation Plan, NEES made a contribution to an executive's share account equivalent to the resultant reduction in his or her match under the Incentive Thrift Plan. Life Insurance National Grid USA has established for certain senior executives life insurance plans funded by individual policies. The combined death benefit under these insurance plans is three times the participant's annual salary. These plans are structured so that, over time, National Grid USA should recover the cost of the insurance premiums. Mr. Houston's plan differed and under the terms of the plan he has elected to receive an annuity income equal to 22.5 percent of 1998 annual salary plus 40 percent of final annual salary. The life insurance is reduced over 15 years to an amount equal to his final annual salary. Incentive Compensation Plan Under the bonus plan for certain senior employees, bonuses are tied to achievement of core business operating income and strategic objectives. Annual income targets and strategic objectives are established for each year. Bonuses are also dependent upon the achievement of individual goals. An individual's award of shares under the incentive share plan has been a fixed percentage of her or his cash bonus for that year. If no cash award was made, no shares would be distributed. Financial Counseling NEP pays for personal financial counseling for certain executives. As required by the IRS, a portion of the amount paid is reported as taxable income for the executive. Financial counseling is also offered to other employees through seminars conducted at various locations each year. Stock Option Plan For description, please see the Option Grants During Transition Period table. LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR ----------------------------------------------------- The Long-Term Performance Share Award Plan provided awards based on various measures of NEES performance over a three-year period. Each award factor functioned independently. The performance targets for each cycle were set by the Compensation Committee of the NEES Board. Performance was rated on rolling three-year periods, with a new cycle beginning each year. An individual's potential award under the plan was a fixed percentage (ranging from 15 percent to 50 percent) of base pay. At the end of the three-year cycle, the participant received NEES shares based upon the performance against the various factors. The only measure of performance for the cycle commencing January 1, 1999 was the successful completion of the merger with National Grid. The following table shows the awards, for those executive officers named in the Summary Compensation Table, under the Long- Term Performance Share Award Plan for the performance cycle commencing January 1, 1999. Due to the change of control provisions in the plan, triggered by the merger with National Grid on March 22, 2000, the listed participants received awards in the amounts indicated in the table. The amount awarded was based upon the average of incentive compensation target achievement for the prior three years and not upon the measure specified above. NEP --- ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE-BASED PLANS ------------------------------------------------ Number of Actual Change Common Shares Performance in Control Name Allotted Period Award (a) --------- ----------- ------------ Peter G. Flynn 856 3 years 744 Alfred D. Houston 5187 3 years 4512 Cheryl A. LaFleur 2534 3 years 2204 Masheed H. Rosenqvist 388 3 years 338 James S. Robinson 361 3 years 314 (a) The awards in this column were made as a result of the change in control on March 22, 2000. The listed participants received awards in the amounts indicated in the table. The amount awarded was based upon the average of incentive compensation target achievement for the prior three years and not upon the measure specified above. OPTION GRANTS DURING TRANSITION PERIOD -------------------------------------- Potential Realizable Value At Assumed Annual Rates Of Stock Individual Grants Price Appreciation For Option Term ---------------------------------------------------------------------------- Percent Of Number Of Options Securities Granted Underlying To Exercise Option Employees Of Base Expi- Granted In Fiscal Price ration Name (#) Year ($/Sh) Date 5%($) 10% ($) (a) (b) (c) (d) (e) (f) (g) - ------------------------------------------------------------------------------------------------ Peter G. Flynn 36,473 40% 8.97 3/31/2010 205,749 521,408 Alfred D. Houston 0 0% 8.97 3/31/2010 0 0 Cheryl A. LaFleur 10,892 12% 8.97 3/31/2010 61,441 155,705 Masheed H. Rosenqvist 16,023 18% 8.97 3/31/2010 90,389 229,063 James S. Robinson 14,458 16% 8.97 3/31/2010 81,560 206,690 On March 31, 2000, National Grid granted stock options to certain executives, including officers named in the Summary Compensation Table. The exercise price is $8.97 (the mid market price on the day before the grant of the options) per share of National Grid stock. The options are not vested for 3 years and lapse after 10 years. The number of stock options granted was a multiple of base pay ranging from 1 to 3 times base pay. None of the options may be exercised if National Grid earnings per share growth does not exceed inflation on a rolling three year basis (EPS Exceeds Inflation) by 5.99%. Fifty percent of the options may be exercised if EPS Exceeds Inflation by 6 to 8.99% and 100% may be exercised if EPS Exceeds Inflation by 9% or more. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT National Grid USA owns 99.57 percent of the voting securities of NEP. The following table lists the holdings of National Grid American Depositary Receipts (ADRs) as of June 1, 2000 by the directors, the executive officers named in the Summary Compensation Table, and all directors and executive officers of the Company, as a group. All of the ADRs are held through the Incentive Thrift Plan described above. Name ADRs Beneficially Owned L. Joseph Callan 0 Peter G. Flynn 2,715 Alfred D. Houston 47 Michael E. Jesanis 81 Cheryl A. LaFleur 76 Robert G. Powderly 21 James S. Robinson 245 Masheed H. Rosenqvist 40 Terry L. Schwennesen 37 Richard P. Sergel 74 Philip R. Sharp 0 All directors and executive officers, as a group (15 persons) 3,460 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Reference is made to ITEM 11. EXECUTIVE COMPENSATION. PART IV ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K List of Exhibits Unless otherwise indicated, the exhibits listed below are incorporated by reference to the appropriate exhibit numbers and the Commission file numbers indicated in parentheses. (3) (a) Articles of Organization as amended through June 25, 1987 (Exhibit 3(a) to 1988 Form 10-K, File No. 0-1229). Articles of Amendment dated January 27, 1998 (Exhibit B.18.a to National Grid USA 1999 Form U-5-S, File No. 30-33); Articles of Amendment dated February 25, 2000 (filed herewith). (b) By-laws of the Company as amended April 19, 2000 (Filed herewith). (10) Material Contracts (a) Boston Edison Company et al. and the Company: Amended REMVEC Agreement dated August 12, 1977 (Exhibit 5-4(d), File No. 2-61881). (i) Boston Edison Company et al. and the Company: REMVEC II Agreement dated on or about July 1, 1997 (Exhibit 10(a)(I) to NEES' 1997 Form 10- K, File No. 1-3446). (ii) Boston Edison Company et al. and the Company: Security Analysis Services Agreement dated on or about July 1, 1997 (Exhibit 10(a)(ii) to NEES' 1997 Form 10-K, File No. 1- 3446). (b) The Connecticut Light and Power Company et al. and the Company: Sharing Agreement for Joint Ownership, Construction and Operation of Millstone Unit No. 3 dated as of September 1, 1973, and Amendment dated as of August 1, 1974 (Exhibit 10-5, File No. 2-52820); Amendments dated as of December 15, 1975 and April 1, 1986 (Exhibit 10(b) to NEES' 1990 Form 10-K File No. 1-3446). Transmission Support Agreement dated August 9, 1974; Instrument of Transfer to the Company with respect to the 1979 Connecticut Nuclear Unit, and Assumption of Obligations, dated December 17, 1975 (Exhibit 10-6(b), File No. 2-57831). (c) Connecticut Yankee Atomic Power Company et al. and the Company: Stockholders Agreement dated July 1, 1964 (Exhibit 13-9-A, File No. 2-2006); Power Purchase Contract dated July 1, 1964 (Exhibit 13-9-B, File No. 2-23006); Additional Power Contract dated as of April 30, 1984 and 1996; Amendatory Agreement dated as of December 4, 1996 (Exhibit 10(c) to 1996 Form 10-K, File No. 1-3446); Supplementary Power Contract dated as of April 1, 1987 (Exhibit 10(c) to 1987 Form 10-K, File No. 0-1229); Capital Funds Agreement dated September 1, 1964 (Exhibit 13-9-C, File No. 2-23006); Transmission Agreement dated October 1, 1964 (Exhibit 13-9-D, File No. 2-23006); Agreement revising Transmission Agreement dated July 1, 1979 (Exhibit to NEES' 1979 Form 10-K, File No. 1-3446); Amendment revising Transmission Agreement dated as of January 19, 1994 (Exhibit 10(c) to NEES' 1995 Form 10-K, File No. 1-3446); Five Year Capital Contribution Agreement dated November 1, 1980 (Exhibit 10(e) to NEES' 1980 Form 10-K, File No. 1-3446). (d) Maine Yankee Atomic Power Company et al. and the Company: Capital Funds Agreement dated May 20, 1968 and Power Purchase Contract dated May 20, 1968 (Exhibit 4-5, File No. 2-29145); Amendments dated as of January 1, 1984, March 1, 1984 (Exhibit 10(d) to NEES' 1983 Form 10-K, File No. 1-3446); October 1, 1984, and August 1, 1985 (Exhibit 10(d) to NEES' 1985 Form 10-K, File No. 1-3446); Stockholders Agreement dated May 20, 1968 (Exhibit 10-20; File No. 2-34267); Additional Power Contract dated as of February 1, 1984 (Exhibit 10(d) to NEES' 1985 Form 10-K, File No. 1-3446); 1997 Amendatory Agreement dated as of August 6, 1997 (Exhibit 10(d) to NEES' 1997 Form 10-K, File No. 1-3446). (e) Mass. Electric and the Company: Primary Service for Resale dated February 15, 1974 (Exhibit 5-17(a), File No. 2-52969); Amendment of Service Agreement dated June 22, 1983 (Exhibit 10(b) to Mass. Electric's 1986 Form 10-K, File No. 0-5464); Amendment of Service Agreement effective November 1, 1993 (Exhibit 10(e) to 1993 Form 10-K, File No. 0-1229); Memorandum of Understanding effective May 22, 1994 (Exhibit 10(e) to 1994 Form 10-K, File No. 0-1229); Amendment of Service Agreement effective July 1, 1996 and, Amendment to Service Agreement dated as of February 1, 1997 (Exhibit 10(e) to 1997 Form 10-K, File No. 1-3446); Supplement to Amendment to Service Agreement dated as of March 1, 1998; (Exhibit 10(e) to 1998 Form 10-K, File No. 1-3446); Supplement to Service Agreement effective December 31, 1999 (Exhibit 10(e)to 1999 Form 10-K, File No. 1- 6564). (f) The Narragansett Electric Company and the Company: Primary Service for Resale dated February 15, 1974 (Exhibit 4-1(b), File No. 2-51292); Amendment of Service Agreement dated July 26, 1990 (Exhibit 4(f) to New England Power Company's 1990 Form 10-K, File No. 0-1229). Amendment of Service Agreement dated July 24, 1991 (Exhibit 10(f) to 1991 Form 10-K, File No. 0-1229); Amendment of Service Agreement effective November 1, 1993 (Exhibit 10(f) to 1993 Form 10-K, File No. 0-1229); Memorandum of Understanding effective May 22, 1994 (Exhibit 10(e) to 1994 Form 10-K, File No. 0-1229); Amendment of Service Agreement effective January 1, 1995 (Exhibit 10(f) to 1995 Form 10-K, File No. 0-1229); Amendment of Service Agreement effective October 30, 1995 and, Amendment to Service Agreement dated as of February 1, 1997 (Exhibit 10(f) to 1997 Form 10-K, File No. 1-3446); Supplement to Amendment to Service Agreement dated as of December 31, 1998 (Exhibit 10(f) to 1998 Form 10-K, File No. 1-3446); Supplement to Service Agreement effective December 31, 1999 (Exhibit 10(f) to 1999 Form 10-K, File No. 1-6564). (g) New England Electric Transmission Corporation et al. and the Company: Phase I Terminal Facility Support Agreement dated as of December 1, 1981 (Exhibit 10(g) to NEES' 1981 Form 10-K, File No. 1-3446); Amendments dated as of June 1, 1982 and November 1, 1982 (Exhibit 10(f) to NEES' 1982 Form 10-K, File No. 1-3446); Agreement with respect to Use of the Quebec Interconnection dated as of December 1, 1981 (Exhibit 10(g) to NEES' 1981 Form 10-K, File No. 1-3446); Amendments dated as of May 1, 1982 and November 1, 1982 (Exhibit 10(f) to NEES' 1982 Form 10-K, File No. 1-3446); Amendment dated as of January 1, 1986 (Exhibit 10(f) to NEES' 1986 Form 10-K, File No. 1-3446); Agreement for Reinforcement and Improvement of the Company's Transmission System dated as of April 1, 1983 (Exhibit 10(f) to NEES' 1983 Form 10-K, File No. 1-3446); Lease dated as of May 16, 1983 (Exhibit 10(f) to NEES' 1983 Form 10-K, File No. 1-3446); Upper Development-Lower Development Transmission Line Support Agreement dated as of May 16, 1983 (Exhibit 10(f) to NEES' 1983 Form 10-K, File No. 1-3446). (h) Vermont Electric Transmission Company, Inc. et al. and the Company: Phase I Vermont Transmission Line Support Agreement dated as of December 1, 1981; Amendments dated as of June 1, 1982 and November 1, 1982 (Exhibit 10(g) to NEES' 1982 Form 10-K, File No. 1-3446); Amendment dated as of January 1, 1986 (Exhibit 10(h) to NEES' 1986 Form 10-K, File No. 1-3446). (i) New England Power Pool Agreement: (Exhibit 4(e), File No. 2-43025); Amendments dated July 1, 1972, March 1, 1973 (Exhibit 10-15, File No. 2-48543); Amendment dated March 15, 1974 (Exhibit 10-5, File No. 2-52775); Amendment dated June 1, 1975 (Exhibit 10-14, File No. 2-57831); Amendment dated September 1, 1975 (Exhibit 10-13, File No. 2-59182); Amendments dated December 31, 1976, January 31, 1977, July 1, 1977, and August 1, 1977 (Exhibit 10-16, File No. 2-61881); Amendments dated August 15, 1978, January 3, 1980, and February 1980 (Exhibit 10-3, File No. 2-68283); Amendment dated September 1, 1981 (Exhibit 10(h) to NEES' 1981 Form 10-K, File No. 1-3446); Amendment dated December 1, 1981 (Exhibit 10(h) to NEES' 1982 Form 10-K, File No. 1-3446); Amendments dated June 1, 1982, June 15, 1983, and October 1, 1983 (Exhibit 10(i) to NEES' 1983 Form 10-K, File 1-3446); Amendments dated August 1, 1985, August 15, 1985, September 1, 1985, and January 1, 1986 (Exhibit 10(i) to NEES' 1985 Form 10-K, File No. 1-3446); Amendment dated September 1, 1986 (Exhibit 10(i) to NEES' 1986 Form 10-K, File No. 1-3446); Amendment dated April 30, 1987 (Exhibit 10(i) to NEES' 1987 Form 10-K, File No. 1-3446); Amendments dated March 1, 1988 and May 1, 1988 (Exhibit 10(i) to NEES' 1988 Form 10-K, File No. 1-3446); Amendment dated March 15, 1989 (Exhibit 10(i) to 1989 NEES Form 10-K, File No. 1-3446); Amendment dated October 1, 1990 (Exhibit 10(i) to 1990 NEES Form 10-K, File No. 1-3446); Amendment dated October 1, 1990 Exhibit 10(i) to 1990 NEES Form 10-K, File No. 1-3446); Amendment dated as of September 15, 1992 (Exhibit 10(i) to 1992 NEES Form 10-K, File No. 1-3446); Amendments dated as of June 1, 1993, July 1, 1995, and September 1, 1995 (Exhibit 10(i) to 1995 NEES Form 10-K, File No. 1-3446); Amendment dated as of December 1, 1996 (Exhibit 10(i) to 1996 NEES Form 10-K, File No. 1-3446). Amendment dated as of September 1, 1997 and Amendment dated as of November 15, 1997 (Exhibit 10(i) to 1997 NEES Form 10-K, File No. 1-3446); Second Restated New England Power Pool Agreement as amended through the Fifty-first Agreement amending the New England Power Pool Agreement issued on December 30, 1999 (Exhibit 10(i) to 1999 Form 10-K, File No. 1-6564). (j) New England Power Service Company and the Company: Specimen of Service Contract (Exhibit 10(l) to 1994 Form 10-K, File No. 0- 1229). (k) Massachusetts Electric Company, et al. and the Company: Form of Mutual Assistance Agreement (Exhibit 10(n) to 1996 Form 10-K, File No. 0-1229). (l) Massachusetts Electric Company, et al. and the Company: Restructuring Settlement Agreement approved by the Massachusetts Department of Public Utilities (Exhibit 10(o) to 1996 Form 10-K, File No. 0-1229). (m) Public Service Company of New Hampshire et al. and the Company: Agreement for Joint Ownership, Construction and Operation of New Hampshire Nuclear Units dated as of May 1, 1973; Amendments dated May 24, 1974, June 21, 1974, September 25, 1974 and October 25, 1974 (Exhibit 10-18(b), File No. 2-52820); Amendment dated January 31, 1975 (Exhibit 10-16(b), File No. 2-57831); Amendments dated April 18, 1979, April 25, 1979, June 8, 1979, October 11, 1979, December 15, 1979, June 16, 1980, and December 31, 1980 (Exhibit 10(i) to NEES' 1980 Form 10-K, File No. 1-3446); Amendments dated June 1, 1982, April 27, 1984, and June 15, 1984 (Exhibit 10(j) to NEES' 1984 Form 10-K, File No. 1-3446); Amendments dated March 8, 1985, March 14, 1986, May 1, 1986, and September 19, 1986 (Exhibit 10(j) to NEES' 1986 Form 10-K, File No. 1-3446); Amendment dated November 12, 1987 (Exhibit 10(j) to NEES' 1987 Form 10-K, File No. 1-3446); Amendment dated January 13, 1989 (Exhibit 10(j) to NEES' 1990 Form 10-K, File No. 1-3446); Seventh Amendment as of November 1, 1990 (Exhibit 10(m) to NEES' 1991 Form 10-K, File No. 1-3446). Transmission Support Agreement dated as of May 1, 1973 (Exhibit 10-23, File No. 2-49184); Instrument of Transfer to the Company with respect to the New Hampshire Nuclear Units and Assumptions of Obligations dated December 17, 1975 and Agreement Among Participants in New Hampshire Nuclear Units, certain Massachusetts Municipal Systems and Massachusetts Municipal Wholesale Electric Company dated May 28, 1976 (Exhibit 16(c), File No. 2-57831); Seventh Amendment To and Restated Agreement for Seabrook Project Disbursing Agent dated as of November 1, 1990 (Exhibit 10(m) to NEES' 1991 Form 10-K, File No. 1-3446); Amendments dated as of June 29, 1992 (Exhibit 10(j) to NEES' 1992 Form 10-K, File No. 1- 3446). Settlement Agreement dated as of July 19, 1990 between Northeast Utilities Service Company and the Company (Exhibit 10(m) to NEES' 1991 Form 10-K, File No. 1-3446). Seabrook Project Managing Agent Operating Agreement dated as of June 29, 1992, Amendment to Seabrook Project Managing Agent Operating Agreement dated as of June 29, 1992 (Exhibit 10(j) to NEES' 1992 Form 10-K, File No. 1- 3446). (n) Vermont Yankee Nuclear Power Corporation et al. and the Company: Capital Funds Agreement dated February 1, 1968, Amendment dated March 12, 1968 and Power Purchase Contract dated February 1, 1968 (Exhibit 4-6, File No. 2-29145); Amendments dated as of June 1, 1972, April 15, 1983 (Exhibit 10(k) to NEES' 1983 Form 10-K, File No. 0-1229) and April 24, 1985 (Exhibit 10(n) to NEES' 1985 Form 10-K, File No. 1-3446); Amendment dated as of June 1, 1985 (Exhibit 10(n) to 1988 Form 10-K, File No. 0-1229); Amendments dated May 6, 1988 (Exhibit 10(n) to 1988 Form 10-K, File No.0-1229); Amendment dated as of June 15, 1989 (Exhibit 10(k) to 1989 NEES Form 10-K, File No. 1-3446); Additional Power Contract dated as of February 1, 1984 (Exhibit 10(k) to NEES' 1983 Form 10-K, File No. 1-3446); Guarantee Agreement dated as of November 5, 1981 (Exhibit 10(j) to NEES' 1981 Form 10-K, File No. 1-3446); 1999 Amendatory Agreement dated as of November 17, 1999 and 1999 Restated Amendatory Agreement dated as of November 17, 1999 (Exhibit 10(n) to 1999 Form 10-K, File No. 1-6564). (o) Yankee Atomic Electric Company et al. and the Company: Amended and Restated Power Contract dated April 1, 1985 (Exhibit 10(l) to NEES' 1985 Form 10-K, File No. 1-3446); Amendment dated May 6, 1988 (Exhibit 10(l) to NEES' 1988 Form 10-K, File No. 1-3446); Amendments dated as of June 26, 1989 and July 1, 1989 (Exhibit 10(l) to 1989 NEES Form 10-K, File No. 1-3446); Amendment dated as of February 1, 1992 (Exhibit 10(l) to 1992 NEES Form 10-K, File No. 1-3446). *(p) New England Electric Companies' Deferred Compensation Plan as amended through February 28, 1998 (Exhibit 10(l) to NEES' 1998 Form 10-K, File No. 1-3446); Amendments effective as of March 1, 1999 and September 1, 1999 (Exhibit 10(p) to 1999 Form 10-K, File No. 1-6564). *(q) New England Electric System Companies Retirement Supplement Plan as amended through June 1, 1996 (Exhibit 10(n) to NEES' 1996 Form 10-K, File No. 1-3446); Amendment dated as of March 1, 1999 (Exhibit 10(q) to 1999 Form 10-K, File No. 1-6564). *(r) New England Electric Companies' Executive Supplemental Retirement Plan I as amended through December 11, 1998 (Exhibit 10(n) to NEES' 1998 Form 10-K, File No. 1-3446); Amendment dated as of March 1, 1999 (Exhibit 10(r) to 1999 Form 10-K, File No. 1-6564). *(s) New England Electric Companies Executive Retirees Health and Life Insurance Plan as Amended and Restated January 1, 1996 (Exhibit 10(o) to NEES' 1998 Form 10-K, File No. 1-3446). *(t) New England Electric Companies' Incentive Compensation Plan I as amended through January 1, 1998 (Exhibit 10(p) to NEES' 1998 Form 10-K, File No. 1-3446). *(u) New England Electric Companies' Incentive Compensation Plan II as amended through January 1, 1998 (Exhibit 10(q) to NEES' 1998 Form 10-K, File No. 1-3446). *(v) New England Electric Companies' Incentive Compensation Plan III as amended through January 1, 1998 (Exhibit 10(r) to NEES' 1998 Form 10-K, File No. 1-3446). *(w) New England Electric Companies' Senior Incentive Compensation Plan as amended through January 1, 1998 (Exhibit 10(s) to NEES' 1998 Form 10-K, File No. 1-3446). *(x) Forms of Life Insurance Program (Exhibit 10(s) to NEES' 1986 Form 10-K, File No. 1-3446); and Form of Life Insurance (Collateral Assignment) (Exhibit 10(t) to NEES' 1991 Form 10-K, File No. 1-3446). *(y) New England Electric Companies' Incentive Share Plan as amended through February 24, 1997 (Exhibit 10(w) to NEES' 1996 Form 10- K, File No. 1-3446); Amendment dated as of March 1, 1999 Exhibit 10(y) to 1999 Form 10-K, File No. 1-6564). *(z) Forms of Severance Protection Agreement (Exhibit 10(z) to NEES' 1996 Form 10-K, File No. 1-3446). Forms of Severance Protection Agreements (Exhibit 10(y) to NEES' 1998 Form 10-K, File No. 1-3446). *(aa) New England Electric Companies' Long-Term Performance Share Award Plan amended through August 25, 1998 (Exhibit 10(w) to NEES' 1998 Form 10-K, File No. 1-3446); Amendment dated as of March 1, 1999 (Exhibit 10(aa) to 1999 Form 10- K, File No. 1-6564). (bb) New England Hydro-Transmission Electric Company, Inc. et al. and the Company: Phase II Massachusetts Transmission Facilities Support Agreement dated as of June 1, 1985 (Exhibit 10(t) to NEES' 1986 Form 10-K, File No. 1-3446); Amendment dated as of May 1, 1986 (Exhibit 10(t) to NEES' 1986 Form 10-K, File No. 1-3446); Amendments dated as of February 1, 1987, June 1, 1987, September 1, 1987, and October 1, 1987 (Exhibit 10(u) to NEES' 1987 Form 10-K, File No. 1-3446); Amendment dated as of August 1, 1988 (Exhibit 10(u) to NEES' 1988 Form 10-K, File No. 1-3446); Amendment dated January 1, 1989 (Exhibit 10(u) to NEES' 1990 Form 10-K, File No. 1-3446). (cc) New England Hydro-Transmission Corporation et al. and the Company: Phase II New Hampshire Transmission Facilities Support Agreement dated as of June 1, 1985 (Exhibit 10(u) to NEES' 1986 Form 10-K, File No. 1-3446); Amendment dated as of May 1, 1986 (Exhibit 10(u) to NEES' 1986 Form 10-K, File No. 1-3446); Amendments dated as of February 1, 1987, June 1, 1987, September 1, 1987, and October 1, 1987 (Exhibit 10(v) to NEES' 1987 Form 10-K, File No. 1-3446). Amendment dated as of August 1, 1988 (Exhibit 10(v) to NEES' 1988 Form 10-K, File No. 1-3446); Amendments dated January 1, 1989 and January 1, 1990 (Exhibit 10 (v) to NEES' 1990 Form 10-K, File No. 1-3446). (dd) Vermont Electric Power Company et al. and the Company: Phase II New England Power AC Facilities Support Agreement dated as of June 1, 1985 (Exhibit 10(v) to NEES' 1986 Form 10-K, File No. 1-3446); Amendment dated as of May 1, 1986 (Exhibit 10(v) to NEES' 1986 Form 10-K, File No. 1-3446). Amendments dated as of February 1, 1987, June 1, 1987, and September 1, 1987 (Exhibit 10(w) to NEES' 1987 Form 10-K, File No. 1-3446); Amendment dated as of August 1, 1988 (Exhibit 10(w) to NEES' 1988 Form 10-K, File No. 1-3446). (ee) USGen New England Contracts (i) Asset Purchase Agreement among the Company, The Narragansett Electric Company and, USGen New England, Inc. dated as of August 5, 1997 (Exhibit 2 to NEES' Form 10-Q for period ended September 30, 1997, File No. 1-3446); Amendment No. 1 dated as of September 25, 1997, Amendment No. 2 dated as of October 29, 1997, Amendment No. 3 dated as of August 5, 1997, Amendment No. 4 dated as of September 1, 1998 (Exhibit 10(ee)(i) to 1999 Form 10-K, File No. 1- 6564). (ii) Wholesale Sales Agreement between the Company and USGen New England, Inc. dated as of August 5, 1997 (Exhibit 10(gg)(ii) to 1997 Form 10-K, File No. 1- 6564); Amendment No. 1 dated as of September 25, 1997, Amendment No. 2 dated as of September 1, 1998 (Exhibit 10(ee)(ii) to 1999 Form 10-K, File No. 1- 6564). (iii) PPA Transfer Agreement between the Company and USGen New England, Inc. dated as of August 5, 1997 (Exhibit 10(gg)(iii) to 1997 Form 10-K, File No. 1-6564). (iv) Form of PSA Performance Support Agreement between the Company, USGen New England, Inc., and each of the following; North Attleboro Electric Department, Groton Electric Light Department, Middleton Municipal Electric Department, Hingham Municipal Lighting Plant, Town of Holden Municipal Light Department, Unitil Power Corp. (Salem Harbor), Unitil Power Corp. (Ocean State), Bangor Hydro- Electric Company, Montaup Electric Company, Central Vermont Public Service Corporation, Braintree Electric Light Department, Littleton Electric Light Department, Massachusetts Government Land Bank, Reading (MA) Municipal Light Department, Shrewsbury Electric Light Plant, Taunton Municipal Light Plant, and Vermont Electric Company, dated as of August 5, 1997 (Exhibit 10(gg)(iv) to 1997 Form 10-K, File No. 1-6564). (v) Quebec Interconnection Transfer Agreement between the Company, The Narragansett Electric Company, and USGen New England, Inc. dated as of September 1, 1998 (Exhibit 10(ee)(v) to 1999 Form 10-K, File No. 1- 6564). * Compensation related plan, contract, or arrangement. (13) The Transition Report to Stockholders for the transition period from January 1, 2000 to March 31, 2000 (filed herewith). (21) Subsidiary list (filed herewith). (24) Power of Attorney (filed herewith). (27) Financial Data Schedule (filed herewith). Reports on Form 8-K NEP filed no reports on Form 8-K during the transition period. NEW ENGLAND POWER COMPANY SIGNATURES Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company. NEW ENGLAND POWER COMPANY s/Peter G. Flynn Peter G. Flynn President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company. (Signature and Title) Principal Executive Officer s/Peter G. Flynn Peter G. Flynn President Principal Financial Officer s/John G. Cochrane John G. Cochrane Treasurer Principal Accounting Officer s/Kwong O. Nuey Kwong O. Nuey Controller Directors (a majority) L. Joseph Callan Peter G. Flynn Michael E. Jesanis Cheryl A. LaFleur s/John G. Cochrane Robert G. Powderly All by: Terry L. Schwennesen John G. Cochrane Richard P. Sergel Attorney-in-fact Philip R. Sharp Date (as to all signatures on this page) June 29, 2000 NEW ENGLAND POWER COMPANY INDEX TO FINANCIAL STATEMENTS References (Page) ---------------------- Transition Report to Stockholders for the period Form January 1, 2000 10-K To March 1, 2000 ---- ------------ Report of Independent Accountants........................... 4 Statements of Income, Three Months Ended March 31, 2000 and 1999, and Year Ended December 31, 1999, 1998 and 1997............... 15 Statements of Retained Earnings, Three Months Ended March 31, 2000 and 1999, and Year Ended December 31, 1999, 1998 and 1997... 15 Balance Sheets, March 31, 2000, December 31, 1999 and 1998........ 16 Statements of Cash Flows, Three Months Ended March 31, 2000 and 1999, and Year Ended December 31, 1999, 1998 and 1997........ 17 Notes to Financial Statements............................... 18-42 * Incorporated by Reference. NEP EXHIBIT INDEX ------------- Exhibit No. Description Page - ----------- ----------- ---- (3)(a) Articles of Organization as Incorporated amended through June 27, 1998 by Reference Articles of Amendment dated Filed February 25, 2000 herewith (3)(b) By-laws of the Company as Filed amended April 19, 2000 herewith (10)(a) Boston Edison Company et al. Incorporated and the Company: Amended by Reference REMVEC Agreement dated August 12, 1977 (10)(a)(i) Boston Edison Company et al. Incorporated and the Company: REMVEC II by Reference Agreement dated on or about July 1, 1997 (10)(a)(ii) Boston Edison Company et al. Incorporated and the Company: Security by Reference Analysis Services Agreement dated on or about July 1, 1997 (10)(b) The Connecticut Light and Power Incorporated Company et al. and the Company: by Reference Sharing Agreement for Joint Ownership, Construction and Operation of Millstone Unit No. 3 dated as of September 1, 1973, and Amendments thereto; Transmission Support Agreement dated August 9, 1974; Instrument of Transfer to the Company with respect to the 1979 Connecticut Nuclear Unit, and Assumption of Obligations, dated December 17, 1975 (10)(c) Connecticut Yankee Atomic Power Incorporated Company et al. and the Company: by Reference Stockholders Agreement dated July 1, 1964; Power Purchase Contract dated July 1, 1964; Additional Power Contract dated as of April 30, 1984 and 1996; Amendatory Agreement dated as of December 4, 1996; Supplementary Power Contract dated as of April 1, 1987; Capital Funds Agreement dated September 1, 1964; Transmission Agreement dated October 1, 1964; Agreement revising Transmission Agreement dated July 1, 1979; Amendment revising Transmission Agreement dated as of January 19, 1994; Five Year Capital Contribution Agreement dated November 1, 1980 (10)(d) Maine Yankee Atomic Power Incorporated Company et al. and the Company: by Reference Capital Funds Agreement dated May 20, 1968 and Power Purchase Contract dated May 20, 1968; and Amendments thereto; Stockholders Agreement dated May 20, 1968; Additional Power Contract dated as of February 1, 1984; 1997 Amendatory Agreement dated as of August 6, 1997 (10)(e) Mass. Electric and the Company: Incorporated Primary Service for Resale dated by Reference February 15, 1974; and Amendments thereto; Memorandum of Understanding effective May 22, 1994; Amendment of Service Agreement effective July 1, 1996; Amendment to Service Agreement dated as of February 1, 1997; Supplement to Amendment to Service Agreement dated as of March 1, 1998 Supplement to Service Incorporated Agreement dated as of by Reference December 31, 1999 (10)(f) The Narragansett Electric Incorporated Company and the Company: by Reference Primary Service for Resale dated February 15, 1974 and Amendments thereto; Memorandum of Understanding effective May 22, 1994 and Amendment thereto; Amendment of Service Agreement effective October 30, 1995; Amendment to Service Agreement dated as of February 1, 1997; Supplement to Amendment to Service Agreement dated as of December 31, 1998 Supplement to Service Incorporated Agreement dated as of by Reference December 31, 1999 (10)(g) New England Electric Incorporated Transmission Corporation et al. by Reference and the Company: Phase I Terminal Facility Support Agreement dated as of December 1, 1981; Amendments dated as of June 1, 1982 and November 1, 1982; Agreement with respect to Use of the Quebec Interconnection dated as of December 1, 1981; Amendments dated as of May 1, 1982 and November 1, 1982; Amendment dated as of January 1, 1986; Agreement for Reinforcement and Improvement of the Company's Transmission System dated as of April 1, 1983; Lease dated as of May 16, 1983; Upper Development-Lower Development Transmission Line Support Agreement dated as of May 16, 1983 (10)(h) Vermont Electric Transmission Incorporated Company, Inc. et al. and the by Reference Company: Phase I Vermont Transmission Line Support Agreement dated as of December 1, 1981 and Amendments thereto (10)(i) New England Power Pool Incorporated Agreement and Amendments by Reference thereto (10)(j) New England Power Service Incorporated Company and the Company: by Reference Specimen of Service Contract (10)(k) Massachusetts Electric Incorporated Company, et al. and the by Reference Company: Form of Mutual Assistance Agreement (10)(l) Massachusetts Electric Incorporated Company, et al. and the by Reference Company: Restructuring Settlement Agreement approved by the Massachusetts Department of Public Utilities (10)(m) Public Service Company of New Incorporated Hampshire et al. and the by Reference Company: Agreement for Joint Ownership, Construction and Operation of New Hampshire Nuclear Units dated as of May 1, 1973 and Amendments thereto; Seventh Amendment as of November 1, 1990; Transmission Support Agreement dated as of May 1, 1973; Instrument of Transfer to the Company with respect to the New Hampshire Nuclear Units and Assumptions of Obligations dated December 17, 1975 and Agreement Among Participants in New Hampshire Nuclear Units, certain Massachusetts Municipal Systems and Massachusetts Municipal Wholesale Electric Company dated May 28, 1976; Seventh Amendment To and Restated Agreement for Seabrook Project Disbursing Agent dated as of November 1, 1990; Amendments dated as of June 29, 1992; Settlement Agreement dated as of July 19, 1990 between Northeast Utilities Service Company and the Company; Seabrook Project Managing Agent Operating Agreement dated as of June 29, 1992; and Amendment thereto (10)(n) Vermont Yankee Nuclear Power Incorporated Corporation et al. and the by Reference Company: Capital Funds Agreement dated February 1, 1968, Amendment dated March 12, 1968 and Power Purchase Contract dated February 1, 1968 and Amendments thereto; Additional Power Contract dated as of February 1, 1984; Guarantee Agreement dated as of November 5, 1981 1999 Amendatory Agreements Incorporated by Reference (10)(o) Yankee Atomic Electric Company Incorporated et al. and the Company: by Reference Amended and Restated Power Contract dated April 1, 1985 and Amendments thereto (10)(p) New England Electric Companies' Incorporated Deferred Compensation Plan as by Reference amended through February 28, 1998 and amendments thereto (10)(q) New England Electric System Incorporated Companies Retirement Supplement by Reference Plan as amended through June 1, 1996 and an Amendment thereto (10)(r) New England Electric Companies' Incorporated Executive Supplemental Retirement by Reference Plan I as amended through December 11, 1998 and an Amendment thereto (10)(s) New England Electric Companies' Incorporated Executive Retirees Health and Life by Reference Insurance Plan as Amended and Restated January 1, 1996 (10)(t) New England Electric Companies' Incorporated Incentive Compensation Plan I as by Reference amended through January 1, 1998 (10)(u) New England Electric Companies' Incorporated Incentive Compensation Plan II as by Reference amended through January 1, 1998 (10)(v) New England Electric Companies' Incorporated Incentive Compensation Plan III as by Reference amended through January 1, 1998 (10)(w) New England Electric Companies' Incorporated Senior Incentive Compensation by Reference Plan as amended through January 1, 1998 (10)(x) Forms of Life Insurance Program Incorporated and Form of Life Insurance by Reference (Collateral Assignment) (10)(y) New England Electric Companies' Incorporated Incentive Share Plan as amended by Reference through February 24, 1997 and an Amendment thereto (10)(z) Forms of Severance Protection Incorporated Agreements by Reference (10)(aa) New England Electric Companies' Incorporated Long-Term Performance Share by Reference Award Plan amended through August 25, 1998 and Amendments thereto (10)(bb) New England Hydro-Transmission Incorporated Electric Company, Inc. et al. by Reference and the Company: Phase II Massachusetts Transmission Facilities Support Agreement dated as of June 1, 1985 and Amendments thereto (10)(cc) New England Hydro-Transmission Incorporated Corporation et al. and the by Reference Company: Phase II New Hampshire Transmission Facilities Support Agreement dated as of June 1, 1985 and Amendments thereto (10)(dd) Vermont Electric Power Company Incorporated et al. and the Company: Phase by Reference II New England Power AC Facilities Support Agreement dated as of June 1, 1985 and Amendments thereto (10)(ee)(i) Asset Purchase Agreement between Incorporated USGen New England and the Company by Reference and The Narragansett Electric Company dated as of August 5, 1997 (10)(ee)(ii) Wholesale Sales Agreement between Incorporated the Company and USGen New England, by Reference Inc. dated as of August 5, 1997 (10)(ee)(iii) PPA Transfer Agreement between Incorporated the Company and USGen New England, by Reference Inc. dated as of August 5, 1997 (10)(ee)(iv) Form of PSA Performance Support Incorporated Agreement between the Company, by Reference USGen New England, Inc., and various Wholesale Customers dated as of August 5, 1997 (10)(ee)(v) Quebec Interconnection Transfer Incorporated Agreement between the Company, by Reference The Narragansett Electric Company, and USGen New England, Inc., dated as of September 1, 1998 (13) 1999 Annual Report to Incorporated Stockholders by Reference (21) Subsidiary list Filed herewith (24) Power of Attorney Filed herewith (27) Financial Data Schedule Filed herewith