SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For fiscal year ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
Registrant; State of
Incorporation or I.R.S. Employer
Commission Organization; Address; Identification
File Number and Telephone Number Number
- ------------ ---------------------- ---------------
1-3446 NEW ENGLAND ELECTRIC SYSTEM 04-1663060
(A Massachusetts voluntary
association)
25 Research Drive
Westborough, Massachusetts 01582
Telephone: 508-389-2000
1-6564 NEW ENGLAND POWER COMPANY 04-1663070
(A Massachusetts corporation)
25 Research Drive
Westborough, Massachusetts 01582
Telephone: 508-389-2000
0-5464 MASSACHUSETTS ELECTRIC COMPANY 04-1988940
(A Massachusetts corporation)
25 Research Drive
Westborough, Massachusetts 01582
Telephone: 508-389-2000
1-7471 THE NARRAGANSETT ELECTRIC COMPANY 05-0187805
(A Rhode Island corporation)
280 Melrose Street
Providence, Rhode Island 02907
Telephone: 401-784-7000
Indicate by check mark whether the registrants (1) have filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrants were required to
file such reports), and (2) have been subject to such filing
requirements for the past 90 days.
(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. (X)
Securities registered pursuant to Section 12(b) of the Act:
Outstanding at Name of each exchange
Registrant Title of each class March 18, 1996 on which registered
- ---------- ------------------- -------------- ---------------------
New England Common Shares 64,803,369 New York Stock Exchange
Electric Boston Stock Exchange
System
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of each class
- ---------- -------------------
New England 6.00% Cumulative Preferred Stock
Power Company Dividend Series Preferred Stock
Massachusetts Cumulative Preferred Stock
Electric Company Preferred Stock - Cumulative
The Narragansett Cumulative Preferred Stock
Electric Company
Aggregate market value
of the voting stock Number of shares of
held by non-affiliates common stock outstanding
of the registrants at of the registrants at
March 18, 1996 March 18, 1996
---------------------- ------------------------
New England $2,405,825,074 64,803,369 ($1 par value)
Electric System
New England $5,907,825 6,449,896 ($20 par value)
Power Company
Massachusetts None 2,398,111 ($25 par value)
Electric Company
The Narragansett None 1,132,487 ($50 par value)
Electric Company
Documents Incorporated by Reference
Part of Form 10-K into which
Description document is incorporated
- ---------------------------------- ----------------------------
Portions of Annual Reports to Part II
Shareholders for the year ended
December 31, 1995 of the following
companies, as set forth in Part II
New England Electric System
New England Power Company
Massachusetts Electric Company
The Narragansett Electric Company
Portions of Proxy Statement of Part III
New England Electric System
filed in connection with its
annual meeting of shareholders to
be held on April 23, 1996, as set
forth in Part III
This combined Form 10-K is separately filed by New England Electric
System, New England Power Company, Massachusetts Electric Company, and The
Narragansett Electric Company. Information contained herein relating to
any individual company is filed by such company on its own behalf. Each
company makes no representation as to information relating to the other
companies.
TABLE OF CONTENTS PAGE
GLOSSARY OF TERMS........................................... iii
PART I
ITEM 1. BUSINESS............................................ 1
THE SYSTEM.................................................. 1
System Organization.................................... 1
Employees.............................................. 3
ELECTRIC UTILITY OPERATIONS................................. 3
General................................................ 3
Results of Operations.................................. 6
Competitive Conditions................................. 7
Rates.................................................. 14
General............................................. 14
NEP Rates........................................... 15
Transmission rates.................................. 16
Mass. Electric Rates................................ 17
Narragansett Rates.................................. 17
Granite State Rates................................. 18
Recovery of Demand Side Management Expenditures..... 19
Generation............................................. 20
Energy Mix.......................................... 20
Electric Utility Properties......................... 20
Map - Electric Utility Properties................... 24
Fuel for Generation................................. 25
Non-Utility Power Producer Information.............. 27
Nuclear Units....................................... 29
Regulatory and Environmental Matters................... 37
Regulation.......................................... 37
Hydroelectric Project Licensing..................... 38
Environmental Requirements.......................... 39
Construction and Financing............................. 44
Research and Development............................... 49
OIL AND GAS OPERATIONS...................................... 50
General................................................ 50
Results of Operations.................................. 51
Oil and Gas Properties................................. 53
Capital Requirements and Financing..................... 54
Map - Major Oil and Gas Properties..................... 55
EXECUTIVE OFFICERS.......................................... 56
ITEM 2. PROPERTIES.......................................... 60
ITEM 3. LEGAL PROCEEDINGS................................... 60
-i-
PAGE
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 61
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED SECURITY HOLDER MATTERS..................... 61
ITEM 6. SELECTED FINANCIAL DATA............................. 62
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 63
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......... 63
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE................. 64
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. 64
ITEM 11. EXECUTIVE COMPENSATION............................. 68
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT......................................... 82
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..... 85
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K................... 86
INDEX TO FINANCIAL STATEMENTS............................... 114
-ii-
GLOSSARY OF TERMS
Term Meaning
---- -------
AFDC allowance for funds used during construction
Algonquin Algonquin Gas Transmission Company
C&LM Conservation and Load Management
Columbia Columbia Gas Transmission Company
Connecticut Yankee Connecticut Yankee Atomic Power Company
DOE U.S. Department of Energy
DOER Massachusetts Division of Energy Resources
DOMAC Distrigas Corporation of Massachusetts
DSM demand-side management
EMF electric and magnetic fields
EPA U.S. Environmental Protection Agency
FERC Federal Energy Regulatory Commission
FAS 121 Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be
Disposed Of
FAS 71 Financial Accounting Standards No. 71,
Accounting for the Effects of Certain Types
of Regulation
Firm Energy agreement between NEPOOL members and Hydro-
Contract Quebec
Granite State Granite State Electric Company
GMP Green Mountain Power Corporation
IBC Intercoastal Bulk Carriers, Inc.
Interconnection transmission interconnection between
participating New England utilities
and Hydro-Quebec
Iroquois Iroquois Gas Transmission System
ISC International Shipping Company
Keystone Keystone Shipping Company
kWh kilowatt hour
Maine Yankee Maine Yankee Atomic Power Company
Mass. Electric Massachusetts Electric Company
Mass. Hydro New England Hydro-Transmission Electric
Company, Inc.
MDPU Massachusetts Department of Public Utilities
MPLP Milford Power Limited Partnership
MRS Monitored Retrievable Storage
Narragansett The Narragansett Electric Company
NEEI New England Energy Incorporated
NEERI New England Electric Resources, Inc.
NEES New England Electric System
NEES Companies the Subsidiaries of NEES
NEES Trans NEES Transmission Services, Inc.
-iii-
GLOSSARY OF TERMS
Term Meaning
---- -------
NEET New England Electric Transmission
Corporation
NEP New England Power Company
NEPOOL New England Power Pool
N.H. Hydro New England Hydro-Transmission Corporation
NHPUC New Hampshire Public Utilities Commission
NOPR notice of proposed rulemaking
NOx nitrogen oxide
NRC Nuclear Regulatory Commission
NU Northeast Utilities
OSP Ocean State Power
OSP II Ocean State Power II
PBOPs postretirement benefits other than pensions
PPCA purchased power cost adjustment
PRP potentially responsible party
Pricing Policy SEC approved pricing policy between NEEI and
NEP
Resources Narragansett Energy Resources Company
Retail Companies Mass. Electric, Narragansett, and Granite
State
RIPUC Rhode Island Public Utilities Commission
Samedan Samedan Oil Corporation
Seabrook 1 Seabrook Nuclear Generating Station Unit 1
SEC Securities and Exchange Commission
SED service extension discount
Service Company New England Power Service Company
SO2 sulphur dioxide
SPCC Spill prevention control and counter-measure
System the subsidiaries of NEES collectively
Tennessee Tennessee Gas Pipeline Company
TransCanada TransCanada PipeLines, Ltd.
Vermont Yankee Vermont Yankee Nuclear Power Corporation
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
-iv-
PART I
Item 1. BUSINESS
THE SYSTEM
SYSTEM ORGANIZATION
New England Electric System (NEES) is a voluntary association created under
Massachusetts law on January 2, 1926, and is a registered holding company under
the Public Utility Holding Company Act of 1935 (the 1935 Act). NEES owns voting
stock in the amounts indicated of the following companies, which together
constitute the System.
% Voting
Securities
State of Type of Owned by
Name of Company Organization Business NEES
--------------- ------------ -------- ---------
Subsidiaries:
Granite State Electric Company N.H. Retail 100
(Granite State) Electric
Massachusetts Electric Company Mass. Retail 100
(Mass. Electric) Electric
The Narragansett Electric Company R.I. Retail 100
(Narragansett) Electric
Narragansett Energy Resources R.I. Wholesale 100
Company (Resources) Electric
Generation
New England Electric Resources, Inc.
(NEERI) Mass. Development 100
Services
New England Electric Transmission N.H. Electric 100
Corporation (NEET) Transmission
New England Energy Incorporated Mass. Oil and Gas 100
(NEEI) Exploration
& Development
New England Hydro-Transmission N.H. Electric 53.97(a)
Corporation (N.H. Hydro) Transmission
New England Hydro-Transmission Mass. Electric 53.97(a)
Electric Company, Inc. Transmission
(Mass. Hydro)
New England Power Company (NEP) Mass. Wholesale 98.85(b)
Electric
Generation &
Transmission
New England Power Service Company Mass. Service 100
(Service Company) Company
(a) The common stock of these subsidiaries is owned by NEES and
certain participants (or their parent companies) in Phase II
of the Hydro-Quebec project. See Interconnection with Quebec,
page 28.
(b) Holders of common stock and 6% Cumulative Preferred Stock of
NEP have general voting rights. The 6% Cumulative Preferred
Stock represents 1.15% of the total voting power.
The facilities of NEES' three retail electric subsidiaries,
Mass. Electric, Narragansett, and Granite State (collectively
referred to as the Retail Companies), and of its principal
wholesale electric subsidiary, NEP, constitute a single integrated
electric utility 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 3.
NEET owns and operates a portion of an international
transmission interconnection between the electric systems of
Hydro-Quebec and New England. Mass. Hydro and N.H. Hydro own and
operate facilities in connection with an expanded second phase of
this interconnection. See Interconnection with Quebec, page 28.
NEEI is engaged in various activities relating to fuel supply
for the System. These activities primarily include participation
(principally through a partnership with a non-affiliated oil
company) in domestic oil and gas exploration, development, and
production (see OIL AND GAS OPERATIONS, page 50) and the sale to
NEP of fuel purchased in the open market.
Resources is a general partner, with a 20% interest, in each
of two partnerships formed in connection with the Ocean State Power
project. See Ocean State Power, page 28.
The Service Company has contracted with NEES and its
subsidiaries to provide, at cost, such administrative, engineering,
construction, legal, and financial services as the companies
request.
NEERI is a wholly-owned, non-utility subsidiary of NEES which
provides consulting and independent project development services
domestically and internationally to non-affiliates and seeks
investment opportunities in power plant modernization,
transmission, and environmental improvement. NEERI also provides
maintenance and construction services under contract to certain
non-affiliated utility customers.
EMPLOYEES
As of December 31, 1995, NEES subsidiaries had approximately
4,830 employees. As of that date, the total number of employees
was approximately 800 at NEP, 1,715 at Mass. Electric, 765 at
Narragansett, 75 at Granite State, and 1,475 at the Service
Company. Of the 4,830 employees, approximately 3,100 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 were signed in May, 1995 and
expire in May, 1999.
ELECTRIC UTILITY OPERATIONS
GENERAL
NEP's business is principally generating, purchasing,
transmitting, and selling electric energy in wholesale quantities.
In 1995, 95% of NEP's revenue from the sale of electricity was
derived from sales for resale to affiliated companies and 5% from
sales for resale to municipal and other utilities. NEP is the
wholesale supplier of the electric energy requirements of the
Retail Companies under contracts that require seven years notice of
termination. Narragansett receives credits against its purchases
of power from NEP for the cost of generation from its Providence
units, which are functionally integrated with NEP's facilities to
achieve maximum economy and reliability. Discussions of NEP's
generating properties, load growth, energy mix, and fuel supplies
include the related properties of Narragansett. For details of
sales of energy and operating revenue for the last five years, see
OPERATING STATISTICS on page 27 of the New England Power Company
1995 Annual Report to Stockholders (the NEP 1995 Annual Report).
(For a discussion of electric utility operations in a more
competitive environment, see COMPETITIVE CONDITIONS, page 7).
The combined service area of the Retail Companies constitutes
the retail service area of the System and covers more than 4,400
square miles with a population of about 3,000,000 (1990 census).
See Map, page 24. The largest cities served are Worcester, Mass.
(population 170,000) and Providence, R.I. (population 161,000).
Mass. Electric and Narragansett are engaged principally in the
distribution and sale of electricity at retail. Mass. Electric
provides approximately 950,000 customers with electric service at
retail in a service area comprising approximately 43% of the area
of The Commonwealth of Massachusetts. The population of the
service area is about 2,160,000 or 36% of the total population of
the Commonwealth (1990 Census). Mass. Electric's territory
consists of 146 cities and towns including rural, suburban, and
urban communities with Worcester, Lowell, and Quincy being the
largest cities served. The economy of the area is diversified.
Principal industries served by Mass. Electric include electrical
and industrial machinery, computer manufacturing and related
products, plastic goods, fabricated metals and paper, and chemical
products. In addition, a broad range of professional, banking,
high-technology, medical, and educational concerns is served.
During 1995, 41% of Mass. Electric's revenue from the sale of
electricity was derived from residential customers, 37% from
commercial customers, 21% from industrial customers, and 1% from
others. In 1995, the 20 largest customers of Mass. Electric
accounted for approximately 7% of its electric revenue. For
details of sales of energy and operating revenue for the last five
years, see OPERATING STATISTICS on page 21 of Mass. Electric's 1995
to Stockholders (the Mass. Electric 1995 Annual Report).
Narragansett provides approximately 328,000 customers with
electric service at retail. Its service territory, which includes
urban, suburban, and rural areas, covers about 839 square miles or
80% of the area of Rhode Island, and encompasses 27 cities and
towns including the cities of Providence, Warwick, Cranston, and
East Providence. The population of the area is about 725,000
(1990 Census) which represents about 72% of the total population of
the state. The economy of the territory is diversified. Principal
industries served by Narragansett produce fabricated metal
products, jewelry, silverware, electrical and industrial machinery,
transportation equipment, textiles, and chemical and allied
products. In addition, a broad range of professional, banking,
medical, and educational institutions is served. During 1995, 42%
of Narragansett's revenue from the sale of electricity was derived
from residential customers, 41% from commercial customers, 15% from
industrial customers, and 2% from others. In 1995, the 20 largest
customers of Narragansett accounted for approximately 9% of its
electric revenue. For details of sales of energy and operating
revenue for the last five years see OPERATING STATISTICS on page 21
of Narragansett's 1995 Annual Report to Stockholders (the
Narragansett 1995 Annual Report).
Granite State provides approximately 36,000 customers in 21 New
Hampshire communities with electric service at retail in the State
of New Hampshire in a service area having a population of about
73,000 (1990 Census), including the city of Lebanon and the towns
of Hanover, Pelham, Salem and surrounding communities. During
1995, 48% of Granite State's revenue from the sale of electricity
was derived from commercial customers, 39% from residential
customers, 12% from industrial customers, and 1% from others. In
1995, the 10 largest customers of Granite State accounted for about
18% of its electric revenue. Granite State is not subject to the
reporting requirements of the Securities Exchange Act of 1934, and
its financial impact on the System is relatively small.
Information on Granite State is provided herein solely for the
purpose of furnishing a more complete description of System
operations.
On March 22, 1995, NEES agreed to acquire Nantucket Electric
Company for $3.5 million. Completion of the acquisition occured on
March 22, 1996.
The electric utility business of NEP and the Retail Companies
is not highly seasonal. For NEP and the Retail Companies,
industrial customers are broadly distributed among standardized
industrial classifications. No single industrial classification
exceeds 3% of operating revenue, and no single customer of the
System contributes more than 1% of operating revenue.
RESULTS OF OPERATIONS
The following is the detail of consolidated sales and revenue
from sales of electricity by the System for the last five years.
Sales of Electricity
(in thousands of kWh)
---------------------
Classification 1995 1994 1993 1992 1991
- -------------- ---- ---- ---- ---- ----
Residential 7,837,527 7,879,747 7,749,514 7,666,992 7,584,426
Commercial 8,378,580 8,266,754 8,064,024 7,851,859 7,757,350
Industrial 4,952,217 4,858,638 4,863,059 4,870,612 4,955,001
Other 142,848 149,724 154,981 164,450 173,639
---------- ---------- ---------- ---------- ----------
Total Sales
to Ultimate
Customers 21,311,172 21,154,863 20,831,578 20,553,913 20,470,416
Sales for
Resale 1,592,577 2,289,091 1,958,499 2,125,463 3,031,660
---------- ---------- ---------- ---------- ----------
Total 22,903,749 23,443,954 22,790,077 22,679,376 23,502,076
---------- ---------- ---------- ---------- ----------
Revenues from Sales of Electricity
(in thousands of dollars)
----------------------------------
Classification 1995 1994 1993 1992 1991
- -------------- ---- ---- ---- ---- ----
Residential $ 841,433 $ 811,585 $ 818,120 $ 775,973 $ 729,313
Commercial 773,138 741,194 742,121 728,645 687,605
Industrial 393,174 381,062 401,533 408,243 398,684
Other 25,836 24,580 24,745 24,776 24,900
---------- ---------- ---------- ---------- ----------
Total Sales
to Ultimate
Customers 2,033,581 1,958,421 1,986,519 1,937,637 1,840,502
Amortization
of Unbilled
Revenues 8,209 38,458 2,700
Sales for
Resale 79,452 88,912 80,554 82,580 102,411
---------- ---------- ---------- ---------- ----------
Total 2,121,242 $2,085,791 $2,069,773 $2,020,217 $1,942,913
---------- ---------- ---------- ---------- ----------
Kilowatt hour (kWh) sales to ultimate customers increased less
than 1 percent in 1995. This increase was primarily due to a
return to more normal weather in the fourth quarter of 1995, along
with a warmer summer in 1995, partially offset by lower sales in
the first quarter of 1995, due to unusually mild weather. In 1994,
kWh sales to ultimate customers increased 1.6 percent over 1993,
reflecting an improved economy.
COMPETITIVE CONDITIONS
The electric utility business is being subjected to rapidly
increasing competitive pressures, stemming from a combination of
trends, including the presence of surplus generating capacity, a
disparity in electric rates among regions of the country,
improvements in generation efficiency, increasing demand for
customer choice, and new regulations and legislation intended to
foster competition. To date, this competition has been most
prominent in the bulk power market, in which non-utility generators
have significantly increased their market share. Electric
utilities have had exclusive franchises for the retail sale of
electricity in specified service territories. As a result,
competition in the retail market has been limited to (i)
competition with alternative fuel suppliers, primarily for heating
and cooling, (ii) competition with customer-owned generation, and
(iii) direct competition among electric utilities to attract major
new facilities to their service territories. These competitive
pressures have led the subsidiaries of NEES (NEES Companies) and
other utilities to offer, from time to time, special discounts or
service packages to certain large customers.
In states across the country, including Massachusetts, Rhode
Island, and New Hampshire, there have been an increasing number of
proposals to allow retail customers to choose their electricity
supplier, with incumbent utilities required to deliver that
electricity over their transmission and distribution systems (also
known as "retail wheeling"). If electric customers were allowed to
choose their electricity supplier, the Retail Companies' role would
change and they would provide only distribution services. Power
would be provided by power generators and marketers, which could be
either affiliated or non-affiliated companies. In these
competitive circumstances, utilities across the country that
operate generation plants, such as NEP, would face the risk that
market prices may not be sufficient to recover the costs of the
commitments incurred to supply customers under a regulated
industry structure. The amount by which costs exceed market prices
is commonly referred to as "stranded costs".
The NEES Companies derive approximately 70 percent, 23 percent,
and 3 percent of their electric sales revenues from ultimate
customers in Massachusetts, Rhode Island, and New Hampshire,
respectively. Each of the Retail Companies purchases electricity
under wholesale all-requirements contracts with NEES's wholesale
generating subsidiary, NEP and resell it to their customers.
Legislative or utility initiatives, such as Choice: New England,
could ultimately result in changes in the relationship between NEP
and its all-requirements customers.
Choice: New England
In October 1995, the NEES Companies announced a plan to allow
all customers of electric utilities in Massachusetts, Rhode Island,
and New Hampshire to choose their power supplier beginning in 1998.
The plan, Choice: New England, was developed in response to 1995
decisions by the Massachusetts Department of Public Utilities
(MDPU) and the Rhode Island Public Utilities Commission (RIPUC)
that approved a set of principles for industry restructuring.
These principles include allowing utilities the opportunity to
recover stranded costs. Choice: New England was formally filed by
Mass. Electric with the MDPU in February 1996. In March 1995, the
RIPUC ordered all utilities in Rhode Island to file restructuring
plans by April 12, 1996. In response to a RIPUC order,
Narragansett plans to file a similar version of Choice: New England
with the RIPUC in April 1996.
Under Choice: New England, the Retail Companies would no longer
sell electricity to their customers. Instead, customers would
purchase electricity from a supplier of their choice, with the
Retail Companies remaining responsible for providing distribution
services to customers under regulated rates. Transmission services
would be provided by a new affiliate, NEES Transmission Services,
Inc. (NEES Trans), which would be formed by NEES to provide
comparable service across the NEES Companies' transmission system.
NEP has recently filed a proposed tariff rate with the Federal
Energy Regulatory Commission (FERC) whereby its transmission
facilities would be operated by NEES Trans subsidiary pursuant to
a support agreement. See RATES, page 14.
Under Choice: New England, the pricing of generation would be
deregulated. However, customers would have the right to receive
service under a "standard offer" from the incumbent utility or its
affiliate, the pricing of which would be approved in advance by
legislators or regulators. Customers electing the standard offer
would be eligible to choose an alternative power supplier at any
time, but would not be allowed to return to the standard offer.
Under Choice: New England, transmission and distribution rates
would remain regulated.
Under Choice: New England, the Retail Companies' wholesale
contracts with NEP would be terminated. In return, Choice: New
England proposes that the cost of NEP's past generation commitments
be recovered from the Retail Companies through a contract
termination charge. The Retail Companies would, in turn, seek to
recover the payments to NEP through a wires access or transition
charge to retail customers. Those commitments, which are
currently estimated at approximately $4 billion on a present value
basis, primarily consist of (i) generating plant commitments, (ii)
regulatory assets, (iii) purchased power contracts, and (iv) the
operating cost of nuclear plants which cannot be mitigated by
shutting down the plants (otherwise referred to as "nuclear costs
independent of operation"). Sunk costs associated with utility
generating plants, such as past capital investments, and regulatory
assets would be recovered over ten years. The return on equity
related to the unrecovered capital investments and regulatory
assets would be reduced to one percentage point over the rate on
long-term "BBB" rated utility bonds. Purchased power contract
costs and nuclear costs independent of operation would be recovered
as incurred over the life of those obligations, a period expected
to extend beyond ten years. The access charge would be set at
three cents per kWh for the first three years. Thereafter, the
access charge would vary, but is expected to decline. The
provisions of Choice: New England, including the proposed access
charge, are subject to state approval and FERC approval.
In March 1996, Mass. Electric filed a request with the MDPU to
allow the implementation of two pilot programs to test the plan.
The first would allow certain high technology customers in
Massachusetts representing 1 percent of the NEES Companies' retail
sales to have direct access to alternative power suppliers
beginning in July 1996. The second would allow residential and
small business customers in Massachusetts representing 0.5 percent
of the NEES Companies' retail sales to have direct access
beginning September 1, 1996.
Three other utilities and the Massachusetts Division of Energy
Resources (DOER) also filed plans with the MDPU in February 1996.
The DOER's plan calls for direct access for all customers beginning
in 1998 with a pilot program beginning in 1997. The DOER plan,
however, proposes that, in exchange for stranded cost recovery,
utilities divest their generating assets, either through sale or
spinoff. The NEES Companies do not support the DOER mandatory
divestiture proposal. The MDPU is expected to issue regulations on
industry restructuring in September 1996 and to issue orders on the
individual utility plans in 1997.
Rhode Island Legislation
In February 1996, the Speaker and Majority Leader of the House
of Representatives of the Rhode Island Legislature announced the
filing of legislation which would allow electric consumers in Rhode
Island to choose their power supplier. Under the proposed
legislation, large manufacturing customers and new large non-
manufacturing customers would gain access to alternative power
suppliers over a two-year period beginning in 1998. These
customers represent approximately 14 percent of Narragansett's
retail kWh sales. The balance of Rhode Island customers would gain
access over a two- year period beginning in the year 2000, or
earlier if consumers of 50 percent of the electricity in New
England gain similar rights to choose their power supplier. The
NEES Companies have announced their support for the proposed
legislation.
A key provision of the legislation authorizes utilities to
recover the cost of past generation commitments through a
transition access charge on utility distribution wires. The
legislation divides those past commitments in the same manner as
Choice: New England. The legislation proposes a 12-year recovery
period for utility generation commitments and regulatory assets.
The legislation would require Narragansett to transfer its 10
percent share of the Manchester Street Station and its transmission
facilities to separate affiliates at net book value. (For further
discussion on the Manchester Street Station repowering project, see
Construction and Financing, page 44.)
The legislation also establishes performance-based rates for
distribution utilities, such as Narragansett. Under the
legislation, Narragansett would be entitled to increase its
distribution rates by approximately $10 million annually, for the
period 1997 through 1999, less any increases in wholesale base
rates from NEP passed on by Narragansett to customers. For those
three years, Narragansett's return on equity would be subject to a
floor of 6 percent and a ceiling of 11 percent. Earnings over the
ceiling would be shared equally between customers and shareholders
up to an absolute cap on return on equity of 12.5 percent. To the
extent that earnings fall below the floor, Narragansett would be
authorized to surcharge customers for the shortfall. Consideration
by the Rhode Island Legislature of the proposed legislation is
expected to be completed by the summer of 1996.
Previously, in 1995, the Rhode Island Legislature passed
legislation that would have allowed certain industrial customers to
buy power from alternative suppliers, rather than through the local
electric utility. Narragansett urged the Governor of Rhode Island
to veto the legislation because Narragansett believed it would
result in piecemeal deregulation that would not be fair to
customers or shareholders. The Governor vetoed the proposed
legislation, in part because of commitments by Narragansett to
provide a two-year rate discount to manufacturing customers (see
RATES, page 14) and to submit a specific and detailed proposal to
the RIPUC addressing the issues associated with providing large
customers with access to Narragansett's distribution system for the
purpose of choosing an alternative power supplier.
Other Legislative and Regulatory Initiatives
In February 1996, the New Hampshire House of Representatives
passed a bill requiring utilities in that state to file plans by
June 1996 with the New Hampshire Public Utilities Commission
(NHPUC) to provide customers with access to alternative suppliers.
The bill allows the NHPUC significant discretion in determining the
appropriate level of stranded cost recovery. The bill would
authorize the NHPUC to impose a plan on utilities if none is filed
and approved by July 1997. The bill is pending in the state
Senate.
In January 1996, Granite State reached an agreement with the
NHPUC staff to conduct a retail access pilot for 3 percent of
Granite State's customers. If approved by the NHPUC and the FERC,
participating customers in the pilot will pay access charges that
are on average over 90 percent of the charges proposed under
Choice: New England. The agreement was reached in response to 1995
legislation which directed the NHPUC to establish a pilot program
for the state's utilities. The agreement includes more favorable
terms regarding stranded cost recovery than preliminary pilot
guidelines issued by the NHPUC. In February 1996, the NHPUC
indicated that further review of certain assumptions made in the
agreement was necessary. The Commission also expanded the pilot to
include new large commercial and industrial customers. Separately,
in June 1995, the NHPUC issued a decision stating that franchise
territories in New Hampshire are not exclusive as a matter of law.
That decision is under appeal.
In February 1996, the MDPU denied the recovery of stranded
power generation costs in the context of the town of Stow,
Massachusetts, attempting to purchase the distribution assets in
that town owned by the neighboring Hudson Municipal Light
Department. Although the MDPU reaffirmed its general position that
utilities should have a reasonable opportunity to recover net, non-
mitigable, stranded costs, it refused to allow recovery in this
case stating that Hudson had not sufficiently demonstrated that
stranded costs would be incurred and made no effort to mitigate any
such costs. Both parties have appealed the MDPU decision, and the
MDPU has stayed its decision pending appeal.
In August 1995, the MDPU issued an order requiring a customer
of another utility who installed cogenerating equipment to pay 75
percent of that utility's stranded costs attributable to serving
the customer's load. The MDPU indicated the decision did not set
a precedent for stranded cost recovery as part of industry
restructuring. In March 1996, the FERC ruled that it would not
review the MDPU's decision. The customer is expected to appeal the
decision to the courts.
In March 1995, the FERC issued a Notice of Proposed Rulemaking
(NOPR) in which it stated that it is appropriate that legitimate
and verifiable stranded costs be recovered from departing customers
as a result of wholesale competition. The FERC also indicated
that costs stranded as a result of retail competition would be
subject to state commission review if the necessary statutory
authority exists and subject to FERC review if the state commission
does not have such authority. A final decision is expected during
1996. The NOPR also addressed open access transmission and
indicated that those utilities owning transmission facilities would
be required to file a tariff to make available comparable
transmission service. For further discussion, see RATES, page 14.
Risk Factors
The major risk factors affecting recovery of at-risk assets
are: (i) regulatory and legal decisions, (ii) the market price of
power, and (iii) the amount of market share retained by the NEES
Companies. First, there can be no assurance that a final
restructuring plan ordered by regulatory bodies, or the courts, or
through legislation will include an access charge that would fully
recover stranded costs. If laws are enacted or regulatory
decisions are made that do not offer an opportunity to recover
stranded costs, NEES believes it has strong legal arguments to
challenge such laws or decisions. Such a challenge would be based,
in part, on the assertion that subjecting utility generating
assets to competition without compensation for stranded costs,
while requiring utilities to open access to their wires at historic
cost-based rates, would constitute an unconstitutional taking of
property without just compensation. Second, the access charge
proposed under Choice: New England recovers only sunk costs, such
as plant expenditures and contractual commitments. Because of a
regional surplus of electric generation capacity, current wholesale
power prices in the short-term market are based on the short-run
fuel costs of generating units. Such wholesale prices are not
currently providing a significant contribution toward other
marginal costs, such as operation and maintenance expenses. The
NEES Companies expect this situation to continue in a retail
market. Third, revenues will also be affected by the NEES
Companies' ability to retain existing customers and attract new
customers in a competitive environment. As a result of the
pressure on market prices and market share, it is likely that, even
if Choice: New England is implemented, the NEES Companies would
experience losses in revenue for an indeterminate period and
increased revenue volatility.
The major risk factors affecting the Retail Companies relate
to the possibility of adverse regulatory decisions or legislation
which limit the level of revenues the Retail Companies are allowed
to charge for their services. Each of the Retail Companies' all-
requirements purchased power contract with NEP requires either
party to give seven years notice prior to terminating the contract.
Termination of the contract would create stranded costs at NEP that
NEP would seek to recover from the Retail Companies pursuant to the
contract. In that event, the Retail Companies would seek recovery
of such stranded costs from their customers. However, there is no
assurance that the final restructuring plans ordered by state
regulatory bodies or state legislatures will include provisions
that allow the Retail Companies to fully recover any stranded costs
passed on to the Retail Companies by NEP. In such an event, the
Retail Companies could be faced with a significant amount of costs
being billed to them by NEP that the Retail Companies could not
fully recover from retail customers, for which the Retail Companies
would seek a remedy in the courts. In addition, there is no
assurance that any performance incentive system, which regulators
might ultimately adopt with respect to any of the Retail Companies'
distribution activities, would allow the Retail Companies to fully
recover prudently incurred costs and earn a reasonable return on
investment.
Historically, electric utility rates have been based on a
utility's costs. As a result, electric utilities are subject to
certain accounting standards that are not applicable to other
business enterprises in general. Financial Accounting Standards
No. 71, Accounting for the Effects of Certain Types of Regulation
(FAS 71), requires regulated entities, in appropriate
circumstances, to establish regulatory assets and liabilities, and
thereby defer the income statement impact of certain costs that are
expected to be recovered in future rates. The effects of
regulatory, legislative, or utility initiatives could, in the near
future, cause all or a portion of the NEES Companies' operations to
cease meeting the criteria of FAS 71. In that event, the
application of FAS 71 to such operations would be discontinued and
a non-cash write-off of previously established regulatory assets
and liabilities related to such operations would be required. At
December 31, 1995, NEES had consolidated pre-tax regulatory assets
(net of regulatory liabilities) of approximately $600 million, of
which about $500 million is related to its subsidiaries' generation
business (including approximately $200 million related to oil and
gas properties regulated as part of the generation business which
is recoverable in its entirety from NEP), $54 million is related to
Mass. Electric, and $48 million is related to Narragansett. If
competitive or regulatory change should cause a substantial revenue
loss or lead to the permanent shutdown of any generating
facilities, a write-down of plant assets could be required pursuant
to Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of (FAS 121). In addition, FAS 121 requires that all
regulatory assets, which must have a high probability of recovery
to be initially established, must continue to meet that high
probability standard to avoid being written off. FAS 121, which is
effective for NEES and its subsidiaries in January 1996, is not
expected to have a material adverse impact on the financial
condition or results of operations upon adoption, based on the
current regulatory environment in which NEES's subsidiaries
operate. However, the impact in the future may change as
competitive factors and potential restructuring influence the
electric utility industry.
RATES
General
In 1995, 73% of the System's electric utility revenues was
attributable to NEP, whose rates are subject to regulation by the
FERC. The rates of Mass. Electric, Narragansett, and Granite State
are subject to the respective jurisdictions of the state regulatory
commissions in Massachusetts, Rhode Island, and New Hampshire.
The rates of each of the Retail Companies contain a purchased
power cost adjustment clause (PPCA). The PPCA is designed to allow
the Retail Companies to pass on to their customers changes in
purchased power expense resulting from changes allowed by the FERC
in NEP's rates. PPCA changes become effective on the dates
specified in the filing of the adjustments with the state
regulatory commission (not earlier than 30 days after such filing)
unless the state regulatory commission orders otherwise. There
have been, on occasion, regulatory delays in permitting PPCA
increases. Narragansett and Granite State rates have PPCA clauses
that fully reconcile on an annual basis purchased power expenses
incurred by the companies against purchased power related revenues.
Under a case decided by the Rhode Island Supreme Court in 1977
(Narragansett v. Burke), NEP's wholesale rates must be accepted as
allowable expenses for rate-making purposes by state commissions in
retail rate proceedings. In 1986 and 1988 the U.S. Supreme Court
reaffirmed this doctrine in two cases that did not involve NEP.
However, the Narragansett v. Burke doctrine has been indirectly
challenged by a number of state regulatory commissions which have
held that federal preemption of the regulation of wholesale
electric rates does not preclude the state commission from
reviewing the prudence of a utility's decision to purchase power
under a FERC-approved rate, and from disallowing costs if it finds
that the purchase was an imprudent choice among alternative
sources. In a 1985 opinion, the New Hampshire Supreme Court took
this position on the issue of state regulation of wholesale power
purchases. Also, legislation has been filed from time to time in
Congress that would have eroded or repealed the doctrine. If state
commissions were to refuse to allow the Retail Companies to include
the full cost of power purchased from NEP in their rates, System
earnings could be adversely affected.
The rates of NEP and the Retail Companies contain fuel
adjustment clauses that allow the rates to be adjusted to reflect
changes in the cost of fuel. NEP's fuel clause is on a current
basis. Mass. Electric has a fuel clause billing procedure that
provides for billing of fuel costs estimated on a quarterly basis,
while fuel costs billed by Narragansett and Granite State are
estimated on a semi-annual basis. Billings are adjusted in the
subsequent period for any excess or deficiency in fuel cost
recovery.
For a discussion of rates in a more competitive environment,
see COMPETITIVE CONDITIONS, page 7.
NEP Rates
In February 1995, the FERC approved a rate agreement filed by
NEP. Under the agreement, which became effective January 1995,
NEP's base rates are frozen through 1996. Before this rate
agreement, NEP's rate structure contained two surcharges that were
recovering the costs of a coal conversion project and a portion of
NEP's investment in the Seabrook 1 nuclear unit (Seabrook 1).
These two surcharges fully recovered their related costs by
mid-1995. However, under the rate agreement, the revenues continue
to be collected as part of base rates. The agreement also provides
for (i) full recovery of costs associated with the Manchester
Street Station repowering project, which began commercial operation
during the second half of 1995, (ii) the recovery of approximately
$50 million of deferred costs associated with terminated purchased
power contracts and postretirement benefits other than pensions
(PBOPs) over seven years, (iii) full recovery of currently incurred
PBOP costs, (iv) the recovery over three years of $27 million of
costs related to the dismantling of a retired generating station in
Rhode Island and the replacement of a turbine rotor at one of NEP's
generating units, and (v) increased recovery of depreciation
expense by approximately $8 million annually to recognize costs
that will be incurred upon the eventual dismantling of its Brayton
Point and Salem Harbor generating plants. Under the agreement,
approximately $15 million of the $38 million in Seabrook 1 costs
scheduled for recovery in 1995 pursuant to a 1988 settlement
agreement were deferred for recovery in 1996.
Finally, the agreement provided that NEP would reimburse its
wholesale customers for discounts provided by those wholesale
customers to their retail customers under service extension
discount (SED) programs. Under these programs, retail customers
are entitled to such discounts only if they have signed an
agreement not to purchase power from another supplier or generate
any additional power themselves for a three to five year period.
Reimbursements in 1995 totaled $12 million.
The FERC's approval of this rate agreement applies to all of
NEP's customers except the Milford Power Limited Partnership
(MPLP). MPLP, owner of a gas-fired power plant in Milford,
Massachusetts, has protested this rate agreement based on issues
related to the Manchester Street Station repowering project. See
LEGAL PROCEEDINGS , page 60.
Transmission Rates
In response to the FERC NOPR discussed above, NEP and NEES
Trans, a proposed new subsidiary of NEES, filed transmission
tariffs in March 1996 at the FERC that will become applicable for
all wholesale transmission transactions, including those of the
Retail Companies. Under the proposed tariffs and accompanying
support agreements, NEES Trans will provide all wholesale
transmission services involving the NEES Companies' facilities
under comparable, nondiscriminatory transmission rates. The
existing NEES Companies would turn operational control of their
transmission facilities over to NEES Trans in exchange for support
payments from NEES Trans for these facilities. The existing NEES
Companies may, at a later date, transfer their transmission assets
to NEES Trans. The net book values of NEP's and Narragansett's
transmission systems are approximately $340 million and $80
million, respectively. NEP is requesting that its filing become
effective by June 1, 1996 or upon approval by the Securities and
Exchange Commission (SEC), for the establishment of this new
company. If approved as filed, the implementation of the tariffs
would not have a significant impact on NEP's revenues.
Mass. Electric Rates
Rate schedules applicable to electric services rendered by
Mass. Electric are on file with the MDPU.
The MDPU approved a $31 million increase to base rates for
Mass. Electric, effective October 1, 1995.
In 1993, the MDPU approved a rate agreement filed by Mass.
Electric, the Massachusetts Attorney General, and two groups of
large commercial and industrial customers. Under the agreement,
effective December 1, 1993, Mass. Electric implemented an 11-month
general rate decrease of $26 million (annual basis). This rate
reduction continued in effect through October 31, 1994, at which
time rates increased to the previously approved levels. The
agreement also provided for the recognition of electricity
delivered but not yet billed (unbilled revenues) for accounting
purposes. Unbilled revenues at September 30, 1993 of approximately
$35 million were amortized to income over 13 months ending December
1994. The agreement further provided for rate discounts for large
commercial and industrial customers who signed agreements to give
a five year notice to Mass. Electric before they purchase power
from another supplier or generate any additional power themselves.
In addition, commencing in 1995 the cost of these discounts is
being passed on to NEP as a result of a NEP rate settlement that
was approved by the FERC in early 1995.
The 1993 agreement also resolved all rate recovery issues
associated with environmental remediation costs of Massachusetts
manufactured gas waste sites formerly owned by Mass. Electric and
its affiliates, as well as certain other environmental cleanup
costs. See Hazardous Substances, page 40.
Narragansett Rates
Rate schedules applicable to electric services rendered by
Narragansett are on file with the RIPUC and the Rhode Island
Division of Public Utilities and Carriers.
The RIPUC approved a settlement agreement that provides for a
$15 million increase to base rates for Narragansett effective
December 1, 1995. The RIPUC also approved $3 million of new
discounts for manufacturing customers, the costs of which are not
being recovered from other customers.
In February 1995, the FERC approved a rate agreement, effective
in January 1995, for NEP. This rate agreement, among other things,
increased the credits Narragansett receives from NEP for the costs
of owning and operating its generation and transmission facilities
by $14 million on an annual basis. Narragansett supplies all of
the output of its generating facilities to NEP. The increase in
the credits reflects Narragansett's 10 percent investment in the
Manchester Street Station, which entered commercial operation in
the second half of 1995, and the transmission facilities associated
with the station, which were placed in service in September 1994.
An additional increase in these credits of approximately $2 million
took effect in January 1996.
In 1994, the RIPUC approved a rate agreement between
Narragansett and the Rhode Island Division of Public Utilities and
Carriers that provided for Narragansett to recognize, for
accounting purposes, $14 million of unbilled revenues over a 21
month period which ended in December 1995. The agreement further
provided for rate discounts for large commercial and industrial
customers who signed agreements to give a five-year notice to
Narragansett before they purchase power from another supplier or
generate any additional power themselves. In addition, commencing
in 1995 the cost of these discounts is being passed on to NEP as a
result of the NEP rate settlement referred to above.
Effective March 1993, the RIPUC approved a new PPCA mechanism
for the recovery of all of Narragansett's purchased power costs,
excluding fuel charges which continue to be recovered through a
separate adjustment mechanism. Under the new mechanism any over or
under-collections of purchased power expense will ultimately be
passed on to customers including the effects of peak-demand billing
fluctuations. Narragansett accrues the effects of this new
mechanism on its books on a current basis.
Effective January 1993, the RIPUC approved a $1.5 million
increase in rates for Narragansett, representing the first step of
a three-year phase-in of Narragansett's recovery of costs
associated with PBOPs. The second and third $1.5 million increases
took effect in January 1994 and 1995, respectively.
A 1986 Rhode Island Supreme Court decision held that the
RIPUC's rate-making power includes the authority to order refunds
of amounts earned in excess of an allowed return. As a result, the
RIPUC monitors Narragansett's earnings on a regular basis.
Granite State Rates
In July 1995, Granite State filed a $2.6 million rate increase
request with the NHPUC. On October 31, 1995, Granite State
received approval to collect an interim increase of $0.9 million,
effective November 1, 1995, subject to refund or surcharge pending
the final outcome of the full case. The NHPUC staff is
recommending a rate decrease of approximately $0.3 million. A
final decision is expected in 1996.
Commencing in 1995, Granite State began offering discounts to
large commercial and industrial customers who give Granite State a
five year notice before they purchase power from another supplier
or generate additional power themselves. Granite State is
reimbursed for these discounts by NEP.
Effective July 1, 1993, the NHPUC approved a $0.7 million
increase in rates for Granite State to recover costs associated
with PBOPs.
Effective March 1993, the NHPUC authorized a $2.0 million rate
increase for Granite State, with a retroactive adjustment to
September 15, 1992 to reflect the difference between the authorized
amount and the $1.4 million Granite State had been collecting on an
interim basis since September 15, 1992.
Recovery of Demand-Side Management Expenditures
The three Retail Companies offer conservation and load
management programs, usually referred to in the industry as Demand-
Side Management (DSM) programs, which are designed to help
customers use electricity efficiently, as a part of meeting the
NEES Companies' future resource needs and customers' needs for
energy services.
The Retail Companies regularly file their DSM programs with
their respective regulatory agencies and have received approval to
recover DSM program expenditures in rates on a current basis.
Mass. Electric's expenditures were $53 million, $59 million, $47
million in 1995, 1994, and 1993, respectively. Narragansett's
expenditures were $9 million, $10 million, and $12 million in 1995,
1994, and 1993, respectively. Since 1990, the Retail Companies
have been allowed to earn incentives based on the results of their
DSM programs. The Retail Companies must be able to demonstrate the
electricity savings produced by their DSM programs to their
respective state regulatory agencies before incentives are
recorded. Mass Electric recorded $5.1 million, $7.1 million, and
$6.7 million of before-tax incentives in 1995, 1994, and 1993,
respectively. Narragansett recorded $0.5 million, $0.6 million,
and $0.5 million of before-tax incentives in 1995, 1994, and 1993,
respectively. The Retail Companies have received regulatory orders
that will give them the opportunity to continue to earn incentives
based on 1996 DSM program results.
GENERATION
Energy Mix
The following table displays the contributions of various fuel
sources and other generation to total net generation of electricity
by NEP during the past three years, as well as an estimate for
1996:
% of Net Generation
------------------------------
Estimated Actual
--------- -------------------
1996 1995 1994 1993
---- ---- ---- ----
Coal 34 38 37 38
Nuclear 19 14 19 18
Gas (1) 27 22 16 16
Oil 2 10 10 11
Hydroelectric 6 5 6 6
Hydro-Quebec 6 5 6 5
Renewable Non-Utility
Generation (2) 6 6 6 6
--- --- --- ---
100 100 100 100
(1) Gas includes both utility and non-utility generation.
(2) Waste to energy and hydro.
Electric Utility Properties
The electric utility properties of the System companies consist
of NEP's and Narragansett's fossil-fuel base load and intermediate
load steam and combined cycle generating units, conventional and
pumped storage hydroelectric stations, internal combustion peaking
units, portions of fossil fuel and nuclear generating units, 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. See
MAP - ELECTRIC UTILITY PROPERTIES, page 24.
NEP's integrated system consists of 2,284 circuit miles of
transmission lines, 117 substations with an aggregate capacity of
13,718,538 kVA, and 7 pole or conduit miles of distribution lines.
The properties of Mass. Electric and Narragansett include
substations and distribution and transmission lines, which are
interconnected with transmission and other facilities of NEP. At
December 31, 1995, Mass. Electric owned 256 substations, which had
an aggregate capacity of 2,794,364 kVA, 142,636 line transformers
with the capacity of 7,315,338 kVA, and 15,726 pole or conduit
miles of distribution lines. Mass. Electric also owns 83 circuit
miles of transmission lines. At December 31, 1995, Narragansett
owned 237 substations, which had an aggregate capacity of 2,803,118
kVA, 48,828 line transformers with the capacity of 2,090,935 kVA,
and 4,297 pole or conduit miles of distribution lines.
Narragansett, in addition, owns 325 circuit miles of transmission
lines.
Substantially all of the properties and franchises of Mass.
Electric, Narragansett, and NEP are subject to the liens of
indentures under which mortgage bonds have been issued. For
details of the mortgage liens on these properties see the long-term
debt note in Notes to Financial Statements in each of these
companies' respective 1995 annual reports. The properties of NEET
are subject to a mortgage under its financing arrangements.
The net capability at December 31, 1995, and the net generation for the
twelve months ended December 31, 1995, from all sources were as follows:
Year(s)
Placed Energy Net Net
Source Location In-Service Source Capability Generation
------ -------- ---------- ------ ---------- -------------
Fossil Fuel Units (MW) (000's of MWh)
Brayton Point
Station
Units 1,2 & 3 Somerset, 1963-1969 Coal-Oil-Gas(a) 1,130 7,137
Unit 4 Mass. 1974 Oil-Gas 446 1,220
Salem Harbor
Station
Units 1,2 & 3 Salem, 1952-1958 Coal-Oil(a) 314 1,893
Unit 4 Mass. 1972 Oil 400 661
Manchester St. Prov., 1941-1949, Gas-Oil 513 640
Station(b) R.I. 1995
Other System Me., 1963-1978 Oil 101 59
Units(c) Mass.
Hydroelectric Units(d)
Conventional Mass.,N.H.
& Vt. 1909-1987 Water 577 1,258
Pumped Storage
Bear Swamp Rowe, Mass. 1974 Water 589 (196)
Nuclear Units(e)
Yankees Conn., Me., 1968-1972 Nuclear 341 1,279
and Vt.
Millstone 3 Waterford, 1986 Nuclear 140 978
Conn.
Seabrook 1 Seabrook, 1990 Nuclear 115 835
N.H.
Other(f) - - - 1,038 7,729
----- ------
Total 5,704 23,493
===== ======
(a) These units currently burn coal, but are also capable of
burning oil. In addition Brayton Point Units 1, 2, and 3 are
capable of limited co-firing of natural gas.
(b) For a discussion of the Manchester Street Station repowering
project, see Construction and Financing on page 44.
(c) Includes (i) an interest in a jointly owned oil-fired unit in
Yarmouth, Maine, and (ii) diesel units at various locations.
(d) See Hydroelectric Project Licensing, page 38.
(e) See Nuclear Units, page 29.
(f) Capability includes contracted purchases (1,402) less contract
sales (364 MW). Net generation includes the effects of the
above contracted purchases and economy interchanges through the
New England Power Exchange (including a 2 MW capacity credit
associated with purchases from Hydro-Quebec and purchases from
non-utility generation). For further information see Non-
Utility Power Producer Information, page 27.
NEP and Narragansett are members of the New England Power Pool
(NEPOOL). Mass. Electric and Granite State participate in NEPOOL
through NEP. The NEPOOL Agreement provides for coordination of the
planning and operation of the generation and transmission
facilities of its members. The NEPOOL Agreement incorporates
generating capacity reserve obligations, provisions regarding the
use of major transmission lines, and provisions for payment for
facilities usage. The NEPOOL Agreement further provides for New
England-wide central dispatch of generation through the New England
Power Exchange. Through NEPOOL, operating and capital economies
are achieved and reserves are established on a region-wide rather
than an individual company basis.
The 1995 NEPOOL peak demand of 20,499 MW occurred on July 27,
1995. This was slightly below the all time NEPOOL peak demand of
20,519 MW set on July 21, 1994.
The 1995 summer peak for the System of 4,381 MW occurred at
the same day as the NEPOOL peak demand. The previous all-time peak
load of 4,385 MW occurred on July 21, 1994. The 1995-1996 winter
peak of 4,069 MW occurred on December 14, 1995.
MAP
(Displays electric utility properties of NEES subsidiaries)
Fuel for Generation
NEP burned the following amounts of coal, residual oil, and gas
during the past three years:
1995 1994 1993
---- ---- ----
Coal (in millions of tons) 3.4 3.3 3.2
Oil (in millions of barrels) 1.7 3.4 5.0
Natural Gas (in billions of cubic feet) 16.2 4.0 0.7
Coal Procurement Program
Depending on coal-fired generating unit availability and the
degree to which the units are dispatched, NEP's 1996 coal
requirements should range between 3.5 and 3.8 million tons. NEP
obtains its domestic coal under contracts of varying lengths and on
a spot basis from domestic coal producers in Kentucky, West
Virginia, and Virginia, and from mines in Colombia and Venezuela.
Two different rail systems (CSX and Norfolk Southern) transport
coal from domestic sources to loading ports on the east coast.
NEP's coal is transported from east coast ports by ocean-going
collier to Brayton Point and Salem Harbor. NEP has a term charter
with the Energy Enterprise, a self-unloading collier, which carries
most of NEP's U.S. coal and a portion of foreign coal. See LEGAL
PROCEEDINGS, page 60. NEP also charters other coal-carrying
vessels for the balance of foreign coal, and presently has
contracts of affreightment with Canada Steamship Lines,
International and Malbulk Shipping Inc.. As protection against
interruptions in coal deliveries, NEP maintains average coal
inventories at its generating stations of 35 to 55 days.
To meet environmental requirements, NEP uses coal with a
relatively low sulphur content. NEP's average price for coal
burned, including transportation costs, calculated on a 26 million
Btu per ton basis, was $43.53 per ton in 1993, $42.90 in 1994, and
$42.25 in 1995. Based on a 42 gallon barrel of oil producing 6.3
million Btu's, these coal prices were equivalent to approximately
$10.57 per barrel of oil in 1993, $10.41 in 1994, and $10.25 in
1995.
Oil Procurement Program
Depending on unit availability, dispatch, and the relationship
of oil and gas prices, the System's 1996 oil requirements are
expected to be approximately 1.5 to 2.0 million barrels. The
System obtains its oil requirements through contracts with oil
suppliers and purchases on the spot market. Current contracts
provide for minimum purchases of 0.4 million barrels at market
related prices. The System currently has a total storage capacity
for approximately 1.5 million barrels of residual and diesel fuel
oil. The System's average cost of oil burned, calculated on a 6.3
million Btu per barrel basis, was $13.30 in 1993, $13.17 in 1994,
and $14.46 in 1995.
Natural Gas
NEP uses natural gas at Manchester Street (see Construction and
Financing, page 44) and, when gas is priced less than residual fuel
oil, at Brayton Point Unit 4. Brayton Point Units 1, 2, and 3 also
have limited capability to co-fire natural gas with coal. In 1995,
approximately 56 billion cubic feet of gas were purchased at an
average cost (excluding pipeline demand charges) of $1.70/MMBTU, 16
billion cubic feet of which were consumed at Brayton Point and
Manchester Street Station. This price was equivalent to
approximately 10.77 per barrel of oil. The remaining gas was sold
to third parties or delivered to an independent power producer
project from which NEP purchases power.
NEP's principal service agreements for firm transportation are
with the following pipeline companies:
(1) 60 million cubic feet per day on TransCanada PipeLines,
Ltd (TransCanada) from western Canada supply sources to
an interconnection with Iroquois Gas Transmission System
(Iroquois). NEP has released 25 million cubic feet per
day of this pipeline capacity on a limited, recallable
basis.
(2) 60 million cubic feet per day on Iroquois to an
interconnection with Tennessee Gas Pipeline Company
(Tennessee).
(3) 60 million cubic feet per day on Tennessee to an
interconnection with Algonquin Gas Transmission Company
(Algonquin).
(4) 60 million cubic feet per day on ANR Pipeline Company
from mid-continent supply sources to an interconnection
with Columbia Gas Transmission (Columbia). NEP has
released 15 million cubic feet per day of this pipeline
capacity on a limited, recallable basis.
(5) 60 million cubic feet per day on Columbia to an
interconnection with Algonquin. NEP has released 15
million cubic feet per day of this pipeline capacity on
a limited, recallable basis.
(6) 95 million cubic feet per day on Algonquin to NEP's
facilities.
(7) 120 million cubic feet per day on an Algonquin lateral
for deliveries to Brayton Point Station.
NEP has contracts with two Canadian natural gas suppliers for
a total of 35 million cubic feet per day . NEP has not signed any
long-term supply arrangements with mid-continent producers. In
addition, NEP has a 7.5 million cubic feet per day supply contract
with Distrigas Corporation of Massachusetts (DOMAC). Service
commenced December 1, 1995.
Service under the pipeline agreements listed above and the
DOMAC supply contract require minimum fixed payments. NEP's
minimum fixed payments under all pipeline and supply agreements
(including those listed above) are currently estimated to be
approximately $60 million to $65 million per year from 1996 to
2000. Remaining fixed payments from 2001 through 2014 total
approximately $625 million. The amount of the fixed payments is
subject to FERC regulation and will depend on FERC actions
affecting the rates on each of the pipelines.
In connection with managing its fuel supply, NEP uses a portion
of this pipeline capacity to sell natural gas. Proceeds from the
sale of natural gas and pipeline capacity of $71 million, $55
million, and $21 million in 1995, 1994, and 1993, respectively,
have been passed on to customers through NEP's fuel clause.
Natural gas sales are expected to decrease as a result of the
Manchester Street Station entering commercial operation in the
second half of 1995.
Nuclear Fuel Supply
As noted below, NEP participates with other New England
utilities in the ownership of several nuclear units. See Nuclear
Units, page 29. The utilities responsible for supply for these
units are not experiencing any difficulty in obtaining commitments
for the supply of each element of the nuclear fuel cycle.
Non-Utility Power Producer Information
The System companies purchase a portion of the electricity
generated by, or provide back-up or standard service to, 136 small
power producers, cogenerators, or independent power producers (a
total of 5,178,209 MWh of purchases in 1995). As of December 31,
1995, these non-utility generation sources include 26 low-head
hydroelectric plants, 49 wind or solar generators, seven waste to
energy facilities, 51 cogenerators, and three independent power
producers. The total capacity of these sources is as follows:
In Service Future Projects
(12/31/95) Under Contract
Source (MW) (MW)
------ ---------- ---------------
Hydro 37 -
Wind - 20
Waste to Energy 173 16
Cogeneration 304 -
Independent Power Producers 380 -
---- --
Total 894 36
The in-service amount includes 743 MW of long-term capacity,
16 MW of short-term capacity, and 135 MW treated as load reductions
and includes the Ocean State Power contracts discussed below.
Ocean State Power
Ocean State Power (OSP) and Ocean State Power II (OSP II) are
general partnerships that own and operate a two unit gas-fired
combined cycle electric power plant in Burrillville, R.I. The
first unit began commercial operation on December 31, 1990 and the
second unit went into service on October 1, 1991. The two units
have a combined winter net electrical capability of approximately
562 MW. Each unit's capacity and energy output is sold under
20-year unit power agreements to a group of New England utilities,
including NEP, which has contracts for 48.5% of the output of each
unit. NEP is required to make certain minimum fixed payments to
cover capital and fixed operating costs of these units in amounts
estimated to be $75 million per year.
Resources is a general partner with a 20% interest in both OSP
and OSP II and had an equity investment of approximately $36
million at December 31, 1995.
Interconnection with Quebec
NEET, Mass. Hydro, and New Hampshire 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 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 a lower level. NEPOOL members
purchase from and sell energy to Hydro-Quebec pursuant to several
agreements. The principal agreement calls for NEPOOL members to
purchase 7 billion kWh of energy each year for ten years (the Firm
Energy Contract). Purchases under the Firm Energy Contract totaled
over 5.2 billion kWh in 1995. Net energy deliveries from Hydro-
Quebec over the Interconnection totaled more than 8 billion kWh in
1995. These additional deliveries reflect the use of the
Interconnection by participants to conduct independent transactions
with Hydro-Quebec on a regular basis.
NEP is a participant in both the Phase I and Phase II projects
of the Interconnection. NEP's participation percentage in both
projects is approximately 18%. NEP and the other participants have
entered into support agreements that end in 2020, to pay monthly
their proportionate share of the total cost of constructing,
owning, and operating the transmission facilities. NEP accounts
for these support agreements as capital leases and accordingly
recorded approximately $73 million in utility plant at December 31,
1995. Under the support agreements, NEP has agreed, in conjunction
with any Phase II project debt financing, to guarantee its share of
project debt. At December 31, 1995, NEP had guaranteed
approximately $30 million of project debt. In the event any
Interconnection facilities are abandoned for any reason, each
participant is contractually committed to pay its pro-rata share of
the net investment in the abandoned facilities.
Nuclear Units
General
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. In addition, NEP is a joint
owner of the Millstone 3 nuclear generating unit in Connecticut and
the 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 each unit's output. NEP's
interest and investment in each of the Yankee Companies,
Millstone 3, and Seabrook 1 and the net capability of each plant
are as follows:
Equity
Net Investment
Capability (12/31/95)
Interest (MW) (in millions)
-------- ---------- -------------
Yankee Atomic 30.0% * $ 7
Vermont Yankee 20.0% 96 10
Maine Yankee 20.0% 158 15
Connecticut Yankee 15.0% 87 15
---- ----
Subtotal 341 $47
Net Investment
in Plant**
(12/31/95)
(in millions)
-------------
Millstone 3 12.2% 140 $386
Seabrook 1 9.9% 115 62
---- ----
Subtotal 255 $448
----
Total 595
====
*Operations permanently ceased
**Excludes nuclear fuel
NEP has a 30% ownership interest in Yankee Atomic which owns
a 185 megawatt nuclear generating station in Rowe, Massachusetts.
In 1992, the Yankee Atomic board of directors decided to
permanently cease power operation of the facility and to proceed
with decommissioning.
NEP has recorded an estimate of its total future payment
obligations for post-operating costs to Yankee Atomic as a
liability and an offsetting regulatory asset of $68 million each at
December 31, 1995, reflecting its expected future rate recovery of
such costs.
NEP purchases the output of the other Yankee nuclear electric
generating plants in the same percentages as its stock ownership of
the Yankee Companies, less small entitlements taken by municipal
utilities for Maine Yankee and Vermont Yankee. NEP 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.
The stockholders of three 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.
There is widespread concern about the safety of nuclear
generating plants. The Nuclear Regulatory Commission (NRC)
regularly reviews the adequacy of its comprehensive requirements
for nuclear plants. Many local, state, and national public
officials have expressed their opposition to nuclear power in
general and to the continued operation of nuclear power plants.
From time to time, various organizations and individuals file
petitions raising safety concerns at particular nuclear units. It
is possible that this controversy will result in cost increases and
modifications to, or premature shutdown of, the operating nuclear
units in which NEP has an interest.
Maine Yankee is currently operating at 90% power (790 MW) while
the NRC conducts an investigation of allegations made by an
anonymous individual. The allegations contend that Yankee Atomic,
acting as agent for Maine Yankee, knowingly performed inadequate
analyses of the plant's cooling system and that Maine Yankee
misrepresented the analyses to the NRC in order to attain two
license amendments to increase the rated thermal power at which
Maine Yankee may operate. Maine Yankee and Yankee Atomic are also
conducting an internal investigation into the matter. Maine Yankee
is performing a new cooling system analysis in order to address the
NRC's concerns with the existing analyses and intends to submit the
new analysis to the NRC by mid-1996. The schedule for NRC review
of, and action upon, the filing is unknown. The NRC also has on-
going investigations into allegations about safety violations made
by a whistle blower employee at Vermont Yankee.
In January 1996, the NRC added the three units at Millstone
Station to its Category 2 problem plant list. This designation
indicates that "weaknesses have been identified that warrant
increased NRC attention until the licensee demonstrates a period of
improved performance." Although there are significant variations
in the performance of the three units, a number of problems over
the last five years, combined with a failure to sustain improved
performance across all three units and to resolve employee
concerns, resulted in the entire station being placed on the
problem plant list. In addition, the NRC has ordered Millstone
1 and 2 to remain shutdown pending safety verification. NEP has no
ownership interest in either Millstone 1 or 2. In March 1996,
the NRC issued a letter requiring Millstone 3 and Connecticut
Yankee to demonstrate to the NRC within 30 days a plan and schedule
to ensure that the future operation of those units will be
conducted in accordance with their operating licenses and safety
provisions or face license suspension. The letter was issued based
upon internal documentation provided to the NRC which stated that
Millstone 3 and Connecticut Yankee may have some of the same
underlying problems as Millstone 1 and 2. It is unknown what
effect the increased NRC scrutiny will have on the operations and
cost of Millstone 3 and Connecticut Yankee. Other non-affiliated
facilities which have been on the problem plant list have incurred
substantial additional capital and operating expenditures before
the NRC designation was changed.
On three occasions (most recently in 1987), referenda appeared
on the ballot in Maine that, if passed, would have required the
prompt shutdown of Maine Yankee. All the referenda were defeated.
There is no assurance that similar measures will not appear on
future ballots.
Aging Units
The remaining Yankee plants may experience age-related
deterioration of essential plant equipment or facilities. To the
extent that costly repair, replacement, or maintenance becomes
necessary due to such deterioration, the overall economics of the
unit would have to be re-evaluated and early shut-down of such
units could occur, as was the case with the Yankee Atomic plant.
Maine Yankee was shut down from January 1995 to January 1996
for refueling and repairs to the plant's steam generators.
Analyses of the plant's steam generator tubes during the 1995
refueling revealed that approximately 60% of the tubes had
sustained some level of circumferential cracking. Maine Yankee
repaired the tubes by inserting reinforcing "sleeves" into all
17,100 tubes in its three steam generators. The sleeving repair
was completed at a cost of $26.8 million ($4.8 million NEP share),
significantly under the original $40 million ($7.2 million NEP
share) budget. Maine Yankee has been operating at 90% capacity
since January 1996, and plans to operate at 100% capacity upon
resolution of the NRC investigation referred to above.
Decommissioning
Each of the Yankee Companies includes charges for all or a
portion of decommissioning costs in its cost of energy. These
charges vary depending upon rate treatment, the method of
decommissioning assumed, economic assumptions, site and unit
specific variables, and other factors. Any increase in these
charges is subject to FERC approval.
Each of the operating nuclear units has established
decommissioning trust funds or escrow funds into which payments are
being made to meet the projected cost of decommissioning and
dismantling its plant. If any of the units were shut down prior to
the end of its operating license, the funds collected for
decommissioning to that point would be insufficient. Estimates of
NEP's pro-rata share (based on ownership) of decommissioning costs,
NEP's share of the actual book values of decommissioning fund
balances set aside for each unit at December 31, 1995, and the
expiration date of the operating license of each plant are as
follows:
NEP's share of
($ in millions)
-----------------------------
Estimated
Decommissioning Fund License
Costs Balances (1) Expiration
Unit (in 1995 $) (12/31/95) Date
---- --------------- ------------ ----------
Yankee Atomic (2) $86 $33 --
Connecticut Yankee $58 $27 2007
Maine Yankee $71 $28 2008
Vermont Yankee $71 $27 2012
Millstone 3 $58 $14 2025
Seabrook 1 $43 $ 6 2026
(1) Certain additional amounts are anticipated to be
available through tax deductions.
(2) The estimated cost of decommissioning and the Fund Balance
for Yankee Atomic reflect the decommissioning work completed
through 1995.
NEP is currently collecting through rates amounts for
decommissioning based upon cost estimates and funding methodologies
authorized by FERC. Such estimates are determined periodically for
each plant and may not reflect the current projected cost of
decommissioning.
There is no assurance that decommissioning costs actually
incurred by the Yankee Companies, Millstone 3, or Seabrook 1 will
not substantially exceed these amounts. For example, current
decommissioning cost estimates assume the availability of permanent
repositories for both low-level and high-level nuclear waste which
do not currently exist. NRC rules require that reasonable
assurance be provided that adequate funds will be available for the
decommissioning of commercial nuclear power plants. The rule
establishes minimum funding levels that licensees must satisfy.
Each of the units in which NEP has an interest has filed a report
with the NRC providing assurance that funds will be available to
decommission the facility.
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. The definition of owner under
the statute covers NEP and may cover companies affiliated with it.
NEP and the Retail Companies cannot determine, at this time, the
constitutionality, applicability, or effect of this statute. If
NEP or the Retail Companies were required to make payments under
this statute, they would assess their legal remedies at that time.
In any event, NEP and the Retail Companies would attempt to recover
through rates any payments required. If any claim in excess of
NEP's ownership share were enforced against a NEES company, that
company would seek reimbursement from any other Maine Yankee
stockholder which failed to pay its share of such costs.
High-Level Waste Disposal
The Nuclear Waste Policy Act of 1982 provides a framework and
timetable for selection of sites for repositories of high-level
radioactive waste (spent nuclear fuel) from United States nuclear
plants. The U.S. Department of Energy (DOE) has entered into
contracts with the Yankee Companies, the Millstone 3 joint owners,
and the Seabrook 1 joint owners for acceptance of title to, and
transportation and storage of, this waste. Under these contracts,
each operating unit will pay fees to the DOE to cover the
development and creation of waste repositories. Fees for fuel
burned since April 1983 have been collected by the DOE on an
ongoing basis at the rate of one tenth of a cent per kWh of net
generation. Fees for generation up through April 1983 were
determined by the DOE as follows: $13.2 million for Yankee Atomic,
$48.7 million for Connecticut Yankee, $50.4 million for Maine
Yankee, and $39.3 million for Vermont Yankee. Neither Millstone 3
nor Seabrook 1 has been assessed any fees for fuel burned through
April 1983, because they did not enter commercial operation until
1986 and 1990, respectively.
The Yankee Companies had several options to pay these fees.
Yankee Atomic paid its fee to the DOE for the period through April
1983. The other three Yankee Companies elected to defer payment
until a future date, thereby incurring interest expense. However,
payment to the DOE must occur prior to the first delivery of spent
fuel. Connecticut, Maine, and Vermont Yankee have segregated a
portion of their respective DOE obligations in external accounts.
The remainder of the funds have been used to support general
capital requirements. All expect to separately fund in full in
external accounts their DOE obligation (including accrued interest)
prior to payment to the DOE. To the extent that any of the three
Yankee Companies is unable to fully meet its DOE obligation at the
prescribed time, NEP might be required to provide additional funds.
Prior to such time that the DOE takes delivery of a plant's
spent nuclear fuel, it is stored on site in spent fuel pools.
Connecticut Yankee, Maine Yankee, Millstone 3, and Seabrook are in
the process of reconfiguring their spent fuel pools to allow for
additional storage capability. Upon successful completion of the
reconfiguring, Connecticut Yankee, Maine Yankee, and Millstone 3
will have sufficient spent fuel pool capacity to support plant
operation through the expiration of their respective current NRC
license. Seabrook 1's licensed storage capacity will allow a full
core discharge until 2011. Vermont Yankee is able to maintain a
full core discharge capability until 2001. Yankee Atomic has
adequate on-site storage capacity for all its spent fuel.
Federal legislation enacted in 1987 directed the DOE to proceed
with the studies necessary to develop and operate a permanent
high-level waste disposal site at Yucca Mountain, Nevada. There is
local opposition to development of this site. Although originally
scheduled to open in 1998, the DOE currently estimates that the
permanent disposal site is not expected to open before 2015.
Nuclear waste legislation mandating DOE acceptance of spent fuel at
an interim storage site in Nevada by January 1, 1998 was introduced
in Congress in 1995. To date, the legislation has not been brought
before the House or the Senate for vote. In January 1996, oral
arguments were heard in a lawsuit filed in the U.S. Court of
Appeals for the District of Columbia Circuit by 25 utilities, 22
public utilities commissions, and 17 states. The lawsuit petitions
the court to declare the 1998 contract date a binding legal
obligation and to order DOE to report back to the court with a plan
for meeting that obligation. The Court is expected to issue a
decision by May 1996.
The legislation enacted in 1987 also provides for the
development of a Monitored Retrievable Storage (MRS) facility and
abandons plans to identify and select a second, permanent disposal
site. An MRS facility would provide temporary storage for
high-level waste prior to eventual permanent disposal. Pending a
vote on the legislation mentioned above, it is not known when an
MRS facility would begin accepting deliveries. Additional delays
due to political and technical problems are likely.
Federal authorities have deferred indefinitely the commercial
reprocessing of spent nuclear fuel.
Low-Level Waste Disposal
In 1986, the Low-Level Radioactive Waste Policy Amendments Act
was enacted by Congress. This statute allowed the states in which
the three existing low-level waste disposal sites were located to
deny access to non-regional waste generators after 1992. Under the
statute, individual states are responsible for finding local sites
for disposal or forming regional disposal compacts by defined
milestone dates.
None of the states in which NEP holds an interest in a nuclear
facility has met the statutory milestones toward developing
disposal sites. Currently, two low-level waste disposal sites in
the U.S. are accepting non-regional waste, Chem-Nuclear Systems,
Inc.'s site in Barnwell, South Carolina and Envirocare of Utah,
Inc's site in Clive, Utah. The Barnwell facility reopened its
services to most non-regional generators, on July 1, 1995 and is
authorized to remain open until July 1, 2005. In March 1996, the
South Carolina Supreme Court will hear oral arguments on a
challenge to the constitutionality of the legislation re-opening
the Barnwell facility to non-regional generators. Envirocare began
accepting Class A low-level waste in 1995. Class A waste is the
least contaminated of the three categories defining low-level
waste. The Barnwell facility accepts all three categories of
waste. Connecticut Yankee, Maine Yankee, Millstone 3, Seabrook,
and Yankee Atomic are currently shipping low-level waste to these
sites.
The states of Maine and Vermont have established a compact with
Texas for the disposal of low-level waste in Hudspeth County,
Texas. The compact agreement has been approved in all three states
and is now before the U.S. Congress. If Congress approves, the
site is expected to begin accepting waste during 1997 or 1998.
While Maine Yankee has been shipping its low-level waste off-site,
Vermont Yankee has elected to store low-level waste on-site until
that time. The compact releases Maine and Vermont from having to
site an in-state disposal facility. Connecticut, Massachusetts,
and New Hampshire are still required to pursue local or regional
low-level waste disposal facilities. However, Massachusetts is
expected to suspend its search for a local disposal facility in
1996.
Nuclear Insurance
The Price-Anderson Act limits the amount of liability claims
that would have to be paid in the event of a single incident at a
nuclear plant to $8.9 billion (based upon 110 licensed reactors).
The maximum amount of commercially available insurance coverage to
pay such claims is only $200 million. The remaining $8.7 billion
would be provided by an assessment of up to $79.3 million per
incident levied on each of the nuclear units in the United States,
subject to a maximum assessment of $10 million per incident per
nuclear unit in any year. The maximum assessment, which was most
recently adjusted in 1993, is adjusted for inflation at least every
five years. NEP's current interest in the Yankee Companies
(excluding Yankee Atomic), Millstone 3, and Seabrook 1 would
subject NEP to a $58.0 million maximum assessment per incident.
NEP's payment of any such assessment would be limited to a maximum
of $7.3 million per incident per year. As a result of the
permanent cessation of power operation of the Yankee Atomic plant,
Yankee Atomic has received from the NRC a partial exemption from
obligations under the Price-Anderson Act. However, Yankee Atomic
must continue to maintain $100 million of commercially available
nuclear insurance coverage.
Each of the nuclear units in which NEP has an ownership
interest also carries nuclear insurance to cover the costs of
property damage, decontamination or premature decommissioning and
workers' claims resulting from a nuclear incident. These policies
may require additional premium assessments if losses relating to
nuclear incidents at units covered by this insurance occurring in
a prior six year period exceed the accumulated funds available.
NEP's maximum potential exposure for these assessments, directly,
or indirectly through purchased power payments to the Yankees, is
approximately $17 million per year.
Other Items
Federal legislation requires emergency response plans, approved
by federal authorities, for nuclear generating units. The Yankee
Companies, Seabrook 1, and Millstone 3 are not currently
experiencing difficulty in maintaining approval of their emergency
response plans.
REGULATORY AND ENVIRONMENTAL MATTERS
Regulation
Numerous activities of NEES and its subsidiaries are subject
to regulation by various federal agencies. Under the 1935 Act,
many transactions of NEES and its subsidiaries 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. The
System supports its repeal. (See COMPETITIVE CONDITIONS, page 7).
Under the Federal Power Act, certain electric subsidiaries of NEES
are subject to the jurisdiction of the FERC with respect to rates,
accounting, and hydroelectric facilities. In addition, the NRC has
broad jurisdiction over nuclear units and federal environmental
agencies have broad jurisdiction over environmental matters. The
electric utility subsidiaries of NEES are also subject to the
jurisdiction of regulatory bodies of the states and municipalities
in which they operate.
For more information, see: RATES, page 14, Nuclear Units, page
29, Fuel for Generation, page 25, Environmental Requirements, page
39, and OIL AND GAS OPERATIONS, page 50.
Hydroelectric Project Licensing
NEP is the largest operator of conventional hydroelectric
facilities in New England. Most of NEP's hydroelectric projects
are licensed by the FERC. These licenses expire periodically and
the projects must be relicensed at that time. NEP's present
licenses expire over a period from 2001 to 2020, excluding the
Deerfield River Project discussed below. Upon expiration of a FERC
license for a hydro project, the project may be taken over by the
United States or licensed to the existing, or a new licensee. If
the project were taken over, the existing licensee would receive an
amount equal to the lesser of (i) fair value of the project or
(ii) original cost less depreciation and amounts held in
amortization reserves, plus in either case severance damages. The
net book value of NEP's hydroelectric projects was $241 million as
of December 31, 1995.
In the event that a new license is not issued when the existing
license expires, FERC must issue annual licenses to the existing
licensee which will allow the project to continue operation until
a new license is issued. A new license for a project may
incorporate operational restrictions and requirements for
additional non-power facilities (e.g., fish passage or recreational
facilities) that could affect operation of the project, and may
also require additional capital investment. For example, NEP has
previously received new licenses for projects on the Connecticut
River that involved construction of an extensive system of fish
ladders.
The license for the 84 MW Deerfield River Project expired at
the end of 1993. NEP filed an application for a new license in
1991, which is still under review. NEP has signed, with 15
governmental agencies and advocacy groups, an Offer of Settlement
which embodies operational, environmental and recreational
conditions acceptable to the parties. NEP has received water
quality certifications from the Commonwealth of Massachusetts and
the State of Vermont needed to complete the FERC relicensing
processing. In Vermont the certificate has been appealed by two
advocacy groups who did not participate in the Offer of Settlement
process. FERC has issued NEP an annual license to continue
operation of the project under the terms and conditions of the
expired license until a new license is issued or other disposition
of the project takes place.
The next NEP project to require a new license will be the 368
MW Fifteen Mile Falls Project on the Connecticut River in New
Hampshire and Vermont. This license expires in 2001. The formal
process of preparing an application for a new license will begin in
1996.
In 1994, the FERC adopted a policy statement in which it
asserted that it has authority over the decommissioning of licensed
hydroelectric projects being abandoned or denied a new license.
However, the FERC has recognized in the process leading to the
policy statement, that mandated project removal would occur in only
rare circumstances. The FERC also declined to require any generic
funding mechanism to cover decommissioning costs. If a project is
decommissioned, the licensee may incur substantial costs.
Environmental Requirements
Existing Operations
The NEES subsidiaries are 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. It is likely that the stringency of
environmental regulation affecting the System and its operations
will increase in the future.
Siting and Construction Activities for New Facilities
All New England states require, in certain circumstances,
regulatory approval for site selection or construction of electric
generating and major transmission facilities. Connecticut, Maine,
Massachusetts, New Hampshire, and Rhode Island also have programs
of coastal zone management that might restrict construction of
power plants and other electrical facilities in, or potentially
affecting, coastal areas. All agencies of the federal government
must prepare a detailed statement of the environmental impact of
all major federal actions significantly affecting the quality of
the environment. 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. The System is not currently constructing
generating plants or major transmission facilities.
Environmental Expenditures
Total System capital expenditures for environmental protection
facilities have been substantial. System capital expenditures for
such facilities amounted to approximately $23 million in 1993, $51
in 1994, and $39 million in 1995, including expenditures by NEP of
$14 million, $44 million, and $32 million, respectively, for those
years. The System estimates that capital expenditures for
environmental protection facilities in 1996 and 1997 will not be
material to the System.
Hazardous Substances
The Federal Comprehensive Environmental Response, Compensation
and Liability Act, more commonly known as the "Superfund" law,
imposes strict, joint and several liability, regardless of fault,
for remediation of property contaminated with hazardous substances.
A number of states, including Massachusetts, have enacted similar
laws.
The electric utility industry typically utilizes and/or
generates a range of potentially hazardous products and by-products
in its operations. NEES subsidiaries currently have an
environmental audit program in place intended to enhance compliance
with existing federal, state, and local requirements regarding the
handling of potentially hazardous products and by-products.
NEES and/or its subsidiaries have been named as potentially
responsible parties (PRPs) by either the U.S. Environmental
Protection Agency (EPA) or the Massachusetts Department of
Environmental Protection for 22 sites at which hazardous waste is
alleged to have been disposed. Private parties have also contacted
or initiated legal proceedings against NEES and certain
subsidiaries regarding hazardous waste cleanup. The most prevalent
types of hazardous waste sites with which NEES and its subsidiaries
have been associated with are manufactured gas locations. (Until
the early 1970s, NEES was a combined electric and gas holding
company system.) NEES is aware of approximately 40 such locations
(including eight of the 22 locations for which NEES Companies are
PRPs) mostly located in Massachusetts. NEES and its subsidiaries
are currently aware of other sites, and may in the future become
aware of additional sites, that they may be held responsible for
remediating.
NEES has been notified by the EPA that it is one of several
PRPs for cleanup of the Pine Street Canal Superfund site in
Burlington, Vermont, where coal tar and other materials were
deposited. Between 1931 and 1951, NEES and its predecessor owned
all of the common stock of Green Mountain Power Corporation (GMP).
Prior to, during, and after that time, gas was manufactured at the
Pine Street Canal site by GMP. In 1989, NEES was one of 14 parties
required to pay the EPA's past response costs related to this site.
NEES remains a PRP for ongoing and future response costs. In
November 1992, the EPA proposed a cleanup plan estimated by the EPA
to cost $50 million. In June 1993, the EPA withdrew this cleanup
plan in response to public concern about the plan and its cost.
The cost of any cleanup plan and NEES's share of such cost are
uncertain at this time. NEES signed a settlement agreement in
March 1996 establishing NEES's apportioned share of these costs.
NEES believes it has adequate reserves for this site.
In 1993, the MDPU approved a Mass. Electric rate agreement
that allows for remediation costs of former manufactured gas sites
and certain other hazardous waste sites located in Massachusetts to
be met from a non-rate- recoverable interest-bearing fund of $30
million established on Mass. Electric's books in 1993. Rate-
recoverable contributions of $3 million, adjusted for inflation,
are added to the fund annually in accordance with the agreement.
Any shortfalls in the fund would be paid by Mass. Electric and be
recovered through rates over seven years.
Predicting the potential costs to investigate and remediate
hazardous waste sites continues to be difficult. There are also
significant uncertainties as to the portion, if any, of the
investigation and remediation costs of any particular hazardous
waste site that may ultimately be borne by NEES or its
subsidiaries. A preliminary review by a consultant hired by the
NEES Companies of the potential cost of investigating and, if
necessary, remediating Rhode Island manufactured gas sites resulted
in costs per site ranging from less than $1 million to $11 million.
An informal survey of other utilities conducted on behalf of NEES
and its subsidiaries indicated costs in a similar range. Where
appropriate, the NEES Companies intend to seek recovery from their
insurers and from other PRPs, but it is uncertain whether, and to
what extent, such efforts would be successful. At December 31,
1995, NEES had total reserves for environmental response costs of
$50 million and a related regulatory asset of $19 million. NEES
believes that hazardous waste liabilities for all sites of which it
is aware, and which are not covered by a rate agreement, are not be
material to its financial position.
Electric and Magnetic Fields (EMF)
Concerns have been raised about whether EMF, which occur near
transmission and distribution lines as well as near household
wiring and appliances, cause or contribute to adverse health
effects. Numerous studies on the effects of these fields, some of
them sponsored by electric utilities (including NEES Companies),
have been conducted and are continuing. Some of the studies have
suggested associations between certain EMF and health effects,
including various types of cancer, while other studies have not
substantiated such associations. It is impossible to predict the
ultimate impact on NEES subsidiaries and the electric utility
industry if further investigations were to demonstrate that the
present electricity delivery system is contributing to increased
risk of cancer or other health problems.
Many utilities, including the NEES Companies, have been
contacted by customers regarding the potential relationship between
EMF and adverse health effects. To date, no court in the United
States has ruled that EMF from electrical facilities cause adverse
health effects and no utility has been found liable for personal
injuries alleged to have been caused by EMF. In any event, the
NEES Companies believe that they currently have adequate insurance
coverage for personal injury claims.
Several state courts have recognized a cause of action for
damage to property values in transmission line condemnation cases
based on the fear that power lines cause cancer. It is difficult
to predict what the impact on the NEES Companies would be if this
cause of action is recognized in the states in which NEES Companies
operate and in contexts other than condemnation cases.
Air
Approximately 45 percent of NEP's electricity is produced at
eight older thermal generating units in Massachusetts. Six are
principally fueled by coal, one by oil, and one by oil and gas.
The federal Clean Air Act requires significant reduction in utility
sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions that
result from burning fossil fuels by the year 2000 to reduce acid
rain and ground-level ozone (smog).
NEP reduced SO2 emissions under Phase 1 of the federal acid
rain program and SO2 and NOx emissions under Massachusetts
regulations, all of which took effect in 1995. The SO2 and NOx
reductions that were made to meet 1995 requirements have resulted
in one-time operation and maintenance costs of $21 million and
capital costs of $110 million through December 31, 1995.
Additional capital expenditures in 1996 are expected to be less
than $3 million. Depending on fuel prices, NEP also expects to
incur not more than $5 million annually in increased costs to
purchase cleaner fuels to meet SO2 emission reduction requirements.
All eight of NEP's thermal units will be subject to Phase 2 of
the federal and state acid rain regulations that become effective
in 2000. NEP believes that the SO2 controls already installed for
the 1995 requirements will satisfy the Phase 2 acid rain
regulations.
In connection with the federal ozone emission requirements,
state environmental agencies in ozone non-attainment areas are
developing a second phase of NOx reduction regulations that would
have to be fully implemented by NEP no later than 1999. While the
exact costs are not known, NEP estimates that the cost of
implementing these regulations would not jeopardize continued
operation of NEP's units.
The generation of electricity from fossil fuel also emits trace
amounts of certain hazardous air pollutants and fine particulates.
An EPA study of utility hazardous air pollutant emissions is
expected to be completed in 1996. The study's conclusions could
lead to new emission standards requiring costly controls or fuel
restrictions on NEP plants. At this time, NEES and its
subsidiaries cannot estimate the impact the findings of this
research might have on NEP's operations.
Under the System's own 1993 corporate resource plan, also known
as NEESPLAN 4, the System has a goal to reduce CO2, SOx, and NOx
emissions by 2000 to 20%, 60%, and 60%, respectively, below 1990
levels. Consistent with the CO2 goal, in 1995, the NEES Companies
and the DOE executed an accord in which the Companies committed to
reduce greenhouse gas emissions (e.g. CO2) 20% below 1990 levels by
2000. The accord was executed pursuant to the Climate Challenge
Program, a joint voluntary effort of the DOE and the electric
utility industry. Climate Challenge is a component of President
Clinton's Climate Change Action Plan.
Water
The federal Clean Water Act prohibits the discharge of any
pollutant (including heat), except in compliance with a discharge
permit issued by the states or the EPA for a term of no more than
five years. NEP and Narragansett have received required permits
for all their steam-generating plants. NEET has received its
required surface water discharge permits for all of its current
operations.
NEES facilities store substantial amounts of oil and are
required to have spill prevention control and counter-measure
(SPCC) plans. Currently, major System facilities such as Brayton
Point and Salem Harbor have up-to-date SPCC plans. A comprehensive
study of smaller facilities has been completed to determine the
appropriate plans for these facilities and a five-year
implementation plan is underway.
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 29.
CONSTRUCTION AND FINANCING
In 1995, NEES subsidiaries' completed the approximately 500 MW
repowering of Manchester Street Station in Providence, R.I.
Narragansett and NEP operated three steam electric generating
units of approximately 45 MW each which went into service at
Manchester Street Station in the 1940s. During 1992, NEP acquired
a 90% interest in the site and the Station in anticipation of the
repowering project. As part of the repowering project, three new
combustion turbines and heat recovery steam generators were added
to the Station, replacing the existing boilers. The existing steam
turbines were replaced with new and more efficient turbines of
slightly larger capacity. The fuel for generation, which was
primarily residual oil, was be replaced with natural gas, using
distillate oil as an emergency backup. See Fuel for Generation,
page 25.
Repowering more than tripled the power generation capacity of
Manchester Street Station and has substantially increased the
plant's thermal efficiency. It is expected that the plant's
capacity factor will also increase. Certain air emissions are
projected to decrease relative to historical levels because of the
change in fuels and the increase in efficiency.
Substantial additions to Narragansett's high voltage
transmission network were necessary in order to accommodate the
output of the plant. Two 7-mile 115 kV underground transmission
cables (located primarily in public ways) are in service, which
connect the repowered station to existing 115 kV lines at a new
substation. Total cost for the generating station will be
approximately $450 million, including allowance for funds used
during construction (AFDC). In addition, related transmission
improvements were placed in service in September 1994 at a cost of
approximately $60 million.
Estimated construction expenditures (including nuclear fuel)
for the System's electric utility companies are shown below for
1996 through 1998.
The System 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
System 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, and the availability and costs of
external sources of capital.
The anticipated capital requirements for oil and gas operations are not
included in the table below. See OIL AND GAS OPERATIONS page 50.
Estimated Construction Expenditures
-----------------------------------
1996 1997 1998 Total
---- ---- ---- -----
(In Millions - excluding AFDC)
NEP
- ---
Generation (1) 50 35 40 125
Transmission 35 25 30 90
---- ---- ---- ----
Total NEP 85 60 70 215
---- ---- ---- ----
Mass. Electric
- --------------
Distribution 105 95 100 300
Narragansett
- ------------
Transmission 20 15 15 50
Distribution 30 30 30 90
---- ---- ---- ----
Total Narragansett 50 45 45 140
---- ---- ---- ----
Granite State
- -------------
Distribution 5 5 5 15
---- ---- ---- ----
Combined Total
- --------------
Generation (1) 50 35 40 125
Transmission 55 40 45 140
Distribution 140 130 135 405
---- ---- ---- ----
Grand Total 245 205 220 670
---- ---- ---- ------
(1) Includes Nuclear Fuel
Financing
All of NEP's construction expenditures during the period from
1996 to 1998 will be financed by internally generated funds. The
proportion of the Retail Companies' construction expenditures
estimated to be financed by internally generated funds during the
period from 1996 to 1998 is:
Mass. Electric 85%
Narragansett 90%
Granite State 75%
The general practice of the operating subsidiaries of NEES 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 by such
subsidiaries of long-term debt securities and preferred stock, and
through capital contributions from NEES to the subsidiaries. NEES,
in turn, generally has financed capital contributions to the
operating subsidiaries through retained earnings and the sale of
additional NEES shares. Since April 1991, NEES has been meeting
all of the requirements of its dividend reinvestment and common
share purchase plan and employee share plans through open market
purchases. Under these plans, NEES may revert to the issuance of
new common shares at any time.
The ability of NEP and the Retail Companies to issue short-term
debt is limited by regulatory restrictions, by provisions contained
in their charters, and by certain debt and other instruments.
Under the charters or by-laws of NEP, Mass. Electric, and
Narragansett, short-term debt is limited to 10% of capitalization.
The preferred stockholders authorized these limitations to be
increased to 20% of capitalization until 1998 for NEP and
Narragansett, and until 1999 for Mass. Electric, at which time the
limits will revert to 10% of capitalization. The following table
summarizes the short-term debt limits at December 31, 1995, and the
amount of outstanding short-term debt and lines of credit and
standby bond facilities at such date.
($ millions)
Lines of Credit/
Standby Bond
Limit Outstanding Facilities
----- ----------- ----------------
NEP 339 125 510
Mass. Electric 150 55 90
Narragansett 94 23 41
Granite State 10 4 7
NEES and certain subsidiaries, 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 December 31, 1995, NEP, Mass.
Electric, and Narragansett each had money pool borrowings of
approximately $1 million and Granite State had money pool
borrowings of approximately $4 million.
In order to issue additional long-term debt and preferred
stock, NEP and the Retail Companies must comply with earnings
coverage requirements contained in their respective mortgages, note
agreements, and preference provisions. The most restrictive of
these provisions in each instance generally requires (1) for the
issuance of additional mortgage bonds by NEP, Mass. Electric, and
Narragansett, for purposes other than the refunding of certain
outstanding mortgage bonds, a minimum earnings coverage (before
income tax) of twice the pro forma annual interest charges on
mortgage bonds, and (2) for the issuance of additional preferred
stock by NEP, Mass. Electric, and Narragansett, minimum gross
income coverage (after income tax) of one and one-half times pro
forma annual interest charges and preferred stock dividends, in
each case for a period of twelve consecutive calendar months within
the fifteen calendar months immediately preceding the proposed new
issue.
The respective long-term debt and preferred stock coverages of
NEP and the Retail Companies under their respective mortgage
indentures, note agreements, and preference provisions, are stated
in the following table for the past three years:
Coverage
-----------------------
1995 1994 1993
---- ---- ----
NEP
- ---
General and Refunding Mortgage Bonds 4.05 4.13 4.66
Preferred Stock 2.45 2.60 2.76
Mass. Electric
- --------------
First Mortgage Bonds 2.82 3.65 3.15
Preferred Stock 1.71 2.02 2.02
Narragansett
- ------------
First Mortgage Bonds 3.10 2.16 2.47
Preferred Stock 2.01 1.61 1.78
Granite State
- -------------
Notes (1) 2.38 2.26 2.41
(1) As defined under the most restrictive note agreement.
RESEARCH AND DEVELOPMENT
Expenditures for the System's research and development
activities totaled $9.5 million, $8.3 million, and $7.5 million in
1993, 1994, and 1995, respectively. Total expenditures are
expected to be about $8.6 million in 1996.
About 37% of these expenditures support the Electric Power
Research Institute, which conducts research and development
activities on behalf of its sponsors and provides the System with
access to a wide range of relevant research results at minimum
cost.
The System also directly funds research projects of a more
site-specific concern to the System and its customers. These
projects include:
- creating options to allow the use of
economically-priced fossil fuels without adversely
affecting plant performance, and to insure safe,
reliable and environmentally sound production of
electric energy at the lowest cost;
- developing and assessing new information and methods
to understand and reduce the environmental impacts
of System operations including investigation of
offset methods for counterbalancing greenhouse gas
emissions away from the source;
- developing, assessing and demonstrating new
generation technologies and fuels that will ensure
economic, efficient and environmentally sound
production of electric energy in the future; an
example of this is the planned demonstration project
linking advanced fuel cell technology to a biomass
fuel at the Massachusetts Water Resources Authority
Deer Island facility;
- creating options to maintain electric service
quality and reliability for customers at the lowest
cost; and
- developing conservation, load control, and rate
design measures that will help customers use
electric energy more efficiently.
OIL AND GAS OPERATIONS
GENERAL
Since 1974, NEEI has engaged in oil and gas exploration and
development, primarily through a partnership with Samedan Oil
Corporation (Samedan), a subsidiary of Noble Affiliates, Inc.
NEEI's oil and gas activities are regulated by the SEC under the
1935 Act.
Under the terms of the Samedan-NEEI partnership agreement,
Samedan is the managing partner and oversees all partnership
operations including the sale of production. Effective January 1,
1987, NEEI decided not to acquire new oil and gas prospects due to
prevailing and expected oil and natural gas market conditions.
This decision did not affect NEEI's interests and commitments in
oil and gas properties owned as of December 31, 1986 by the
Samedan-NEEI partnership. Samedan continues to explore, develop,
and manage these properties on behalf of the partnership. Thus,
the results of NEEI's operations are substantially affected by the
performance of Samedan. Samedan may elect to terminate the
partnership at the end of any calendar year upon one year's prior
notice.
NEEI is required to obtain SEC approval for further investment
in these oil and gas properties. On December 20, 1994, the SEC
issued an order authorizing NEEI to invest up to $30 million in its
partnership with Samedan for the years 1995-1998. NEEI is winding
down its oil and gas program. The level of expenditures for
exploration and development of existing properties has declined as
a result of the decision not to acquire new oil and gas prospects
after December 31, 1986.
NEEI's activities are primarily rate-regulated and consist of
all prospects entered into prior to 1984. Losses from this
rate-regulated program are being passed on to NEP and ultimately to
retail customers, under an intercompany pricing policy (Pricing
Policy) approved by the SEC. Due to declines in oil and gas
prices, NEEI has incurred operating losses since 1986 and expects
to generate substantial additional losses in the future. NEP's
ability to pass such losses on to its customers was favorably
resolved in NEP's 1988 FERC rate settlement. This settlement
covered all costs incurred by or resulting from commitments made by
NEEI through March 1, 1988. Other subsequent costs incurred by
NEEI are subject to normal regulatory review. NEEI follows the
full cost method of accounting for its oil and gas operations,
under which capitalized costs (including interest paid to banks)
relating to wells and leases determined to be either commercial or
non-commercial are amortized using the unit of production method.
Due to the Pricing Policy, NEEI's rate-regulated program has
not been subject to certain SEC accounting rules, applicable to
non-rate-regulated companies, which limit the costs of oil and gas
property that can be capitalized. The Pricing Policy has allowed
NEEI to capitalize all costs incurred in connection with fuel
exploration activities of its rate regulated program, including
interest paid to banks of which $10 million was capitalized in 1995
and 1994, and $9 million in 1993, respectively. In the absence of
the Pricing Policy, the SEC's full cost "ceiling test" rule
requires non-rate regulated companies to write-down capitalized
costs to a level which approximates the present value of their
proved oil and gas reserves. Based on NEEI's 1995 average oil and
gas selling prices at December 31, 1995, if this test were applied,
it would have resulted in a write-down of approximately $112
million after-tax.
RESULTS OF OPERATIONS
Revenues from natural gas sales were lower in 1995 versus 1994
due to decreased production levels and a decrease in natural gas
prices. NEEI expects 1996 natural gas revenues to be lower than
1995 revenues due to lower production. NEEI's 1995 oil and gas
exploration and development expenditures were $7 million.
NEEI's estimated proved reserves decreased from 12.4 million
barrels of oil and gas equivalent at December 31, 1994, to
10.8 million barrels of oil and gas equivalent at December 31,
1995. Production, primarily from offshore Gulf properties,
decreased reserves by 3.0 million equivalent barrels. Additions
and revisions primarily on offshore Gulf properties increased
reserves by 1.4 million equivalent barrels.
Prices received by NEEI for its natural gas from its major
producing properties varied considerably during 1995, from
approximately $0.85/MCF to $1.66/MCF, due principally to seasonal
fluctuations and regional variations in gas prices. NEEI's overall
average gas price in 1995 was $1.48/MCF.
The results of NEEI's oil and gas program will continue to be
affected by developments in the world oil market and the domestic
market for natural gas, including actions by the federal government
and by foreign governments, which may affect the price of oil and
gas, and the terms of contracts under which gas is sold.
The following table summarizes NEEI's crude oil and condensate
production in barrels, natural gas production in MCF, and the
average sales price per barrel of oil and per MCF of natural gas
produced by NEEI during the years ended December 1995, 1994, and
1993, and the average production (lifting) cost per dollar of gross
revenues.
Years Ended December 31,
----------------------------------
1995 1994 1993
---- ---- ----
Crude oil and condensate
production (barrels) 339,228 362,645 477,545
Natural gas production 16,246,149 18,011,275 19,696,944
(MCF)
Average sales price per
barrel of oil and $16.97 $15.19 $17.76
condensate
Average sales price per
MCF of natural gas $1.48 $1.94 $1.96
Average production cost
(including severance taxes)
per dollar of gross revenue $0.17 $0.12 $0.14
OIL AND GAS PROPERTIES
During 1995, principal producing properties, representing
approximately 65% of NEEI's 1995 revenues, were (i) a 50% working
interest in Brazos Blocks A-52, A-65, and A-37, located in federal
waters offshore Texas, (ii) a 25% working interest in Main Pass
Blocks 93, 94, 102, and 90, located in Federal waters offshore
Louisiana, (iii) a 15% working interest in High Island Blocks 21,
22, 34, 50, and 51, located in Federal waters offshore Texas, (iv)
a 12.5% working interest in Main Pass Blocks 107 and 108, located
in Federal waters offshore Louisiana, and (v) a 7.5% working
interest in High Island Blocks 365 and 376, located in Federal
waters offshore Texas. Other major producing properties during
1995 included a 15% working interest in Eugene Island 28 located in
Federal waters offshore Louisiana, a 15% working interest in Brazos
Blocks 399, 400, 412, 413, and 435, located in Federal waters
offshore Texas, a 13.3% working interest in Matagorda Island Block
587, located in Federal waters offshore Texas, a 3.2% working
interest in the Sand Dunes Units, Derrick Draw Field, Converse
County, Wyoming, and a 9.7% interest in Eugene Island 24, located
in Federal waters offshore Louisiana.
As used in the tables below, (i) a productive well is an
exploratory or a development well that is not a dry well, (ii) a
dry well is an exploratory or development well found to be
incapable of producing either oil or gas in commercial quantities,
(iii) "gross" refers to the total acres or wells in which NEEI has
a working interest, and (iv) "net," as applied to acres or wells,
refers to gross acres or wells multiplied by the percentage working
interest owned by NEEI.
The following table shows the approximate undeveloped acreage
held by NEEI as of December 31, 1995. Undeveloped acreage is
acreage on which wells have not been drilled or completed to a
point that would permit the production of commercial quantities of
oil and gas, regardless of whether such acreage contains proved
reserves.
Location Gross Acres Net Acres
-------- ----------- ---------
Offshore-Gulf of Mexico 4,495 1,249
Other 44,679 8,191
------- ------
Total 49,174 9,440
During the years ended December 31, 1995, 1994, and 1993 NEEI
participated in the completion of the following net exploratory and
development wells:
Net Exploratory Wells Net Development Wells
--------------------- ---------------------
Year Ended Productive* Dry Productive* Dry
---------- ---------- --- ---------- ---
December 31, 1995 0 0 1 0
December 31, 1994 0 0 1 0
December 31, 1993 0 2 0 0
*Includes depleted wells
The following table summarizes the total gross and net
productive wells and the approximate total gross and net developed
acres, both as of December 31, 1995:
Oil Gas Developed Acres
--- --- ------------------
Gross Net Gross Net Gross Net
----- --- ----- --- ------- ------
137 16 542 64 292,568 55,148
At December 31, 1995 NEEI was drilling or completing two gross
wells, which represents less than one net well.
CAPITAL REQUIREMENTS AND FINANCING
Estimated expenditures in 1996 for NEEI's exploration and
development program are approximately $15 million, of which
capitalized interest costs are approximately $10 million.
Internal funds are expected to provide 100% of NEEI's capital
requirements for 1996. In April 1995, NEEI refinanced its
outstanding borrowings through a credit agreement which currently
provides for borrowings of up to $225 million. Borrowings under
this credit agreement are principally secured by a pledge of NEEI's
rights with respect to NEP under the Pricing Policy covering the
rate-regulated program. The amount available for borrowing under
the revolving credit agreement decreases annually, beginning April
13, 1996 and expiring April 13, 2002.
NEEI MAP
Major Oil and Gas Properties
EXECUTIVE OFFICERS
NEES
- ----
All executive officers are elected to continue in office
subject to Article 19 of the Agreement and Declaration of Trust
until the first meeting of the Board of Directors following the
next annual meeting of shareholders, or the special meeting of
shareholders held in lieu of such annual meeting, and until their
successors are chosen and qualified. The executive officers also
serve as officers and/or directors of various subsidiary companies.
John W. Rowe - Age: 50 - President and Chief Executive Officer
since 1989 - Elected Chairman of NEP in 1993 - President of NEP
from 1991 to 1993 - Chairman of NEP from 1989 to 1991.
Alfred D. Houston - Age: 55 - Executive Vice President since
1994 - Senior Vice President-Finance from 1987 to 1994 - Vice
President of NEP from 1987 to 1994 - Vice President of
Narragansett since 1976 - Treasurer of Narragansett since 1977.
Richard P. Sergel - Age: 46 - Elected Senior Vice President in
1996 - Vice President from 1992 to 1995 - Treasurer from 1990
to 1991 - Chairman of Mass. Electric and Narragansett since
1993 - Treasurer of NEP and Mass. Electric from 1990 to 1991
- Vice President of the Service Company from 1988 to 1993.
Jeffrey D. Tranen - Age: 49 - Elected Senior Vice President in
1996 - Vice President from 1991 to 1995 - President of NEP
since 1993 - Vice President of NEP from 1984 to 1993 -
President of Mass. Hydro, N.H. Hydro, and NEET since 1991.
Cheryl A. LaFleur - Age: 41 - Elected Vice President,
Secretary, and General Counsel in 1995 - Vice President of
Mass. Electric from 1993 to 1995 - Vice President of the
Service Company from 1992 to 1993 - Senior Counsel for the
Service Company from 1989 to 1991 - Elected Vice President of
NEP in 1995.
Michael E. Jesanis - Age: 39 - Treasurer since 1992 - Director
of Corporate Finance from 1990 to 1991.
NEP
- ---
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 System companies with which NEP
has entered into contracts and had other business relations.
John W. Rowe* - Chairman since 1993 - President from 1991 to
1993 - Chairman from 1989 to 1991.
Jeffrey D. Tranen* - President since 1993 - Vice President from
1984 to 1993.
Andrew H. Aitken - Age: 51 - Elected Vice President in 1995 -
Director of Environmental and Safety for the Service Company
since 1993 - Director, Environmental Affairs for the Service
Company from 1981 to 1993.
Lawrence E. Bailey - Age: 52 - Vice President since 1989 -
Plant Manager of Brayton Point Station from 1987 to 1991.
Jeffrey A. Donahue - Age: 37 - Vice President since 1993 -
various engineering positions with the Service Company since
1983 - Director of Construction since 1992 - Chief Electrical
Engineer since 1991.
Cheryl A. LaFleur* - Elected Vice President effective December
31, 1995.
John F. Malley - Age: 47 - Vice President since 1992 - Manager
of Generation Planning for the Service Company from 1986 to
1991.
Arnold H. Turner - Age: 55 - Vice President since 1989 -
Director of Transmission Marketing since 1993.
Jeffrey W. VanSant - Age: 42 - Vice President since 1993 -
Manager of Oil and Gas Exploration and Development for the
Service Company from 1985 to 1993 - Manager of Oil and Gas
Procurement from 1992 to 1993 - Manager of Natural Gas Supply
from 1989 to 1992.
Michael E. Jesanis* - Treasurer since 1992.
Howard W. McDowell - Age: 52 - Controller since 1987 -
Controller of Mass. Electric and Narragansett since 1987 -
Treasurer of Granite State since 1984.
*Please refer to the material supplied under the caption
EXECUTIVE OFFICERS - NEES for other information regarding this
officer.
Mass. Electric
- --------------
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 the directors after the next annual meeting of
stockholders. Certain officers of Mass. Electric are, or at
various times in the past have been, officers and directors of
System companies with which Mass. Electric has entered into
contracts and had other business relations.
Richard P. Sergel - Chairman since 1993 - Reference is made to
the material supplied under the caption EXECUTIVE OFFICERS -
NEES for other information regarding Mr. Sergel.
John H. Dickson - Age: 53 - President since 1990.
John C. Amoroso - Age: 57 - Vice President since 1993 -
District Manager, Southeast District from 1992 to 1993 -
Manager, Southeast District from 1985 to 1992.
Eric P. Cody - Age: 45 - Elected Vice President in 1995 - Vice
President and Director, Information Services for the Service
Company from 1991 to 1995.
Peter H. Gibson - Age: 50 - Vice President since 1995 -
Director of Business Marketing since 1995 - Director of
Business Marketing for the Service Company from 1993 to 1994
-Director of Conservation and Load Management (C&LM) and
Commercial and Industrial Services for the Service Company from
1992 to 1993 - Manager of C&LM for the Service Company from
1987 to 1991.
Charles H. Moser - Age: 55 - Vice President since 1993 - Chief
Protection and Planning Engineer for the Service Company from
1984 to 1993.
Lydia M. Pastuszek - Age: 42 - Vice President since 1993 - Vice
President of NEP from 1990 to 1993 - President of Granite State
since 1990.
Anthony C. Pini - Age: 43 - Vice President since 1993 -
Assistant Controller for the Service Company from 1985 to 1993.
Thomas E. Rogers - Age: 45 - Elected Vice President in 1995 -
Project Director for the Service Company from 1991 to 1995.
Christopher E. Root - Age: 36 - Elected Vice President in 1995
- Director, Retail Distribution Services for the Service
Company from 1993 to 1995 - Chief of Division Engineering for
the Service Company from 1992 to 1993 - Manager, Distribution
Engineering for Narragansett from 1990 to 1992.
Nancy H. Sala - Age: 44 - Vice President since 1992 - Central
District Manager since 1992 - Assistant to the President of
Mass. Electric from 1990 to 1992.
Dennis E. Snay - Age: 54 - Vice President and Merrimack Valley
District Manager since 1990.
Michael E. Jesanis - Treasurer since 1992 - Reference is made
to the material supplied under the caption EXECUTIVE OFFICERS
- NEES for other information regarding Mr. Jesanis.
Howard W. McDowell - Controller since 1987 and Assistant
Treasurer since 1977 - Reference is made to the material
supplied under the caption EXECUTIVE OFFICERS - NEP for other
information regarding Mr. McDowell.
Narragansett
- ------------
Officers are elected by the board of directors or appointed,
as appropriate, to serve until the meeting of directors following
the annual meeting of stockholders, and until their successors are
chosen and qualified. Officers other than the President,
Treasurer, and Secretary, serve also at the pleasure of the
directors. Certain officers of Narragansett are, or at various
times in the past have been, officers and directors of System
companies with which Narragansett has entered into contracts and
had other business relations.
Richard P. Sergel - Chairman since 1993 - Reference is made to
the material supplied under the caption EXECUTIVE OFFICERS -
NEES for other information regarding Mr. Sergel.
Robert L. McCabe - Age: 54 - President since 1986.
William Watkins, Jr. - Age 63 - Executive Vice President since
1992 - Vice President of the Service Company from 1981 to 1992.
Francis X. Beirne - Age: 52 - Vice President since 1993 -
Manager, Southern District from 1988 to 1993.
Richard W. Frost - Age: 56 - Vice President since 1993 -
District Manager - Southern District from 1990 to 1993.
Alfred D. Houston - Vice President since 1976 - Treasurer since
1977 - Reference is made to the material supplied under the
caption EXECUTIVE OFFICERS - NEES for other information
regarding Mr. Houston.
Richard Nadeau - Age: 60 - Vice President since 1994 - Director
of Customer Service since 1993 - Assistant to the President
from 1990 to 1993.
Marcy L. Reed - Age: 32 - Elected Vice President in 1995 -
Assistant Controller for the Service Company from 1993 to 1995
- Manager, Internal Audit for the Service Company from 1991 to
1993.
Michael F. Ryan - Age: 44 - Vice President since 1994 - Rhode
Island Director for U.S. Senator John H. Chafee from 1986 to
1994.
Howard W. McDowell - Controller since 1987 - Reference is made
to the material supplied under the caption EXECUTIVE OFFICERS
- NEP for other information regarding Mr. McDowell.
Item 2. PROPERTIES
See Item 1. Business - ELECTRIC UTILITY PROPERTIES, page 20
and OIL AND GAS PROPERTIES, page 53.
Item 3. LEGAL PROCEEDINGS
In October 1994, NEP was sued by MPLP, a venture of Enron
Corporation and Jones Capital that owns a 149 megawatt gas-fired
power plant in Milford, Massachusetts. NEP purchases 56 percent of
the power output of the facility under a long-term contract with
MPLP. The suit alleges that NEP has engaged in a scheme to cause
MPLP and its power plant to fail and has prevented MPLP from
finding a long-term buyer for the remainder of the facility's
output. The complaint includes allegations that NEP has violated
the Federal Racketeer Influenced and Corrupt Organizations Act,
engaged in unfair or deceptive acts in trade or commerce, and
breached contracts. MPLP also asserts that NEP deliberately misled
regulatory bodies concerning the Manchester Street Station
repowering project. MPLP seeks compensatory damages in an
unspecified amount, as well as treble damages. NEP believes that
the allegations of wrongdoing are without merit. NEP has filed
counterclaims and crossclaims against MPLP, Enron Corporation, and
Jones Capital, seeking monetary damages and termination of the
purchased power contract.
MPLP also intervened in NEP's current rate filing before the
FERC, making similar allegations to those asserted in MPLP's
lawsuit. Hearings on this claim concluded in October 1995. An
Administrative Law Judge initial decision is expected by mid-1996.
In August 1995, an arbitration panel upheld NEP's right to
terminate its charter of a ship, the SS. Energy Independence, to
purchase the ship from its owner, Intercoastal Bulk Carriers, Inc.
("IBC"), and sell the ship to a nominee of International Shipping
Company ("ISC"). That same month, the Massachusetts Superior Court
dismissed a lawsuit filed against NEP by Keystone Shipping Company
("Keystone"), an affiliate of IBC, challenging NEP's right to do
so. In September 1995, the ship was transferred to ISC's nominee
and sent to dry dock for routine maintenance and inspection, which
revealed that further work was needed to make the ship seaworthy.
Under NEP's charter with IBC, these costs, which are estimated to
be in excess of $10 million, are IBC's responsibility. NEP
therefore initiated arbitration against both IBC and Keystone
before the same panel. Hearings are tentatively scheduled to
commence in June 1996. Keystone has filed an action in federal
district court seeking to stay the arbitration as to Keystone.
See Item 1. COMPETITIVE CONDITIONS, page 7; RATES, page 14;
Coal Procurement Program, page 25; Nuclear Units, page 29;
Hydroelectric Project Licensing, page 38; Environmental
Requirements, page 39; OIL AND GAS OPERATIONS, page 50.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the last quarter of 1995.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SECURITY HOLDER MATTERS
NEES information in response to the disclosure requirements
specified by this Item 5. appears under the captions in the NEES
Annual Report indicated below:
Required Information Annual Report Caption
-------------------- ---------------------
(a) Market Information Shareholder Information
(b) Holders Shareholder Information
(c) Dividends Financial Highlights
The information referred to above is incorporated by reference
in this Item 5.
NEP, Mass. Electric, and Narragansett - The information
required by this item is not applicable as the common stock of all
these companies is held solely by NEES. Information pertaining to
payment of dividends and restrictions on payment of dividends is
incorporated herein by reference to each company's 1995 Annual
Report.
Item 6. SELECTED FINANCIAL DATA
NEES
----
The information required by this item is incorporated herein
by reference to page 23 of the NEES 1995 Annual Report.
NEP
---
The information required by this item is incorporated herein
by reference to page 28 of the NEP 1995 Annual Report.
Mass. Electric
--------------
The information required by this item is incorporated herein
by reference to page 22 of the Mass. Electric 1995 Annual Report.
Narragansett
------------
The information required by this item is incorporated herein
by reference to page 22 of the Narragansett 1995 Annual Report.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
NEES
----
The information required by this item is incorporated herein
by reference to pages 14 through 22 of the NEES 1995 Annual Report.
NEP
---
The information required by this item is incorporated herein
by reference to pages 2 through 9 of the NEP 1995 Annual Report.
Mass. Electric
--------------
The information required by this item is incorporated herein
by reference to pages 2 through 7 of the Mass. Electric 1995 Annual
Report.
Narragansett
------------
The information required by this item is incorporated herein
by reference to pages 2 through 7 of the Narragansett 1995 Annual
Report.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NEES
----
The information required by this item is incorporated herein
by reference to pages 23 through 42 of the NEES 1995 Annual Report.
NEP
---
The information required by this item is incorporated herein
by reference to pages 1, 10 through 26, and 28 of the NEP 1995
Annual Report.
Mass. Electric
--------------
The information required by this item is incorporated herein
by reference to pages 1, 8 through 20, and 22 of the Mass. Electric
1995 Annual Report.
Narragansett
------------
The information required by this item is incorporated herein
by reference to pages 1, 8 through 20, and 22 of the Narragansett
1995 Annual Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NEES, NEP, Mass. Electric, and Narragansett - None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NEES
----
The information required by this item is incorporated herein
by reference to the material under the caption ELECTION OF
DIRECTORS in the definitive proxy statement of NEES, dated
March 11, 1996, for the 1996 Annual Meeting of Shareholders,
provided that the information under the headings "Compensation
Committee Report on Executive Compensation" and "Corporate
Performance" are not so incorporated. Reference is also made to
the information under the caption EXECUTIVE OFFICERS - NEES in Part
I of this report.
NEP
---
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 - NEP 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.
Joan T. Bok - Director since 1979 - Age: 66 - Chairman of the
Board of NEES - Chairman or Vice Chairman of the Company from
1988 to 1994 - Chairman of NEES from 1984 to 1994 (Chairman,
President, and Chief Executive Officer from July 26, 1988 until
February 13, 1989). Directorships of NEES System companies:
New England Electric System, Massachusetts Electric Company,
The Narragansett Electric Company, Narragansett Energy
Resources Company, New England Electric Resources, 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 Service Company. Other directorships: Avery Dennison
Corporation, John Hancock Mutual Life Insurance Company, and
Monsanto Company.
Alfred D. Houston* - Director since 1984. Directorships of
NEES System companies: Narragansett Energy Resources Company,
New England Electric Resources, 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 Service Company.
Cheryl A. LaFleur* - Elected Director effective December 31,
1995. Directorships of NEES System companies: Narragansett
Energy Resources Company, New England Electric Resources, 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
Service Company.
John W. Rowe* - Director since 1989. Directorships of NEES
System companies and affiliates: New England Electric System,
Massachusetts Electric Company, The Narragansett Electric
Company, Narragansett Energy Resources Company, New England
Electric Resources, 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., New England Power Service Company, and Maine Yankee
Atomic Power Company. Other directorships: Bank of Boston
Corporation and UNUM Corporation.
Jeffrey D. Tranen* - Director since 1991. Directorships of
NEES System affiliates: Narragansett Energy Resources Company,
New England Electric Resources, 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 Service Company.
*Please refer to the material supplied under the caption
EXECUTIVE OFFICERS - NEES and EXECUTIVE OFFICERS - NEP in Part
I of this report for other information regarding this director.
Mass. Electric
--------------
The names of the directors of Mass. Electric, 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
- - Mass. Electric 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.
Urville J. Beaumont - Director since 1984 - Age: 64 -
Treasurer and Director, law firm of Beaumont & Campbell, P.A.
Joan T. Bok* - Director since 1979.
Sally L. Collins - Director since 1976 - Age: 60 - Director of
Workplace Health Services since 1993 - Health Services
Administrator at Kollmorgen Corporation EOD from 1989 to 1993.
John H. Dickson - Director since 1990 - Reference is made to
material supplied under the caption EXECUTIVE OFFICERS - Mass.
Electric for other information regarding Mr. Dickson. Other
directorship: Worcester Business Development Corporation.
Kalyan K. Ghosh - Director since 1995 - Age: 58 - President of
Worcester State College since 1992 - CEO and Acting President,
Worcester State College from 1990 to 1992.
Charles B. Housen - Director since 1979 - Age: 63 - Chairman,
President, and Director of Erving Industries, Inc., Erving,
Mass.
Patricia McGovern - Director since 1994 - Age: 54 - Director
of law firm of Goulston & Storrs, P.C. since 1995 - Counsel to
Goulston & Storrs, P.C. from 1993 to 1995 - Massachusetts State
Senator and Chair of the Senate Ways and Means Committee from
1985 to 1992.
John F. Reilly - Director since 1988 - Age: 63 - President and
CEO of Fred C. Church, Inc., Lowell, Mass. - Other
directorships: Colonial Gas Company, Family Bank, and New
England Insurance Co., Ltd.
John W. Rowe* - Director since 1989.
Richard P. Sergel* - Director since 1993.
Roslyn M. Watson - Director since 1992 - Age: 46 - President
of Watson Ventures (commercial real estate development and
management) Boston, Mass. since 1993 - Vice President of the
Gunwyn Company (commercial real estate development) Cambridge,
Mass. from 1986 - 1993 - Other directorships: The Dreyfus
Laurel Funds and American Express Centurion Bank.
*Please refer to the material supplied under the caption
EXECUTIVE OFFICERS - NEES in Part I of this report and/or the
material supplied under the caption DIRECTORS AND OFFICERS OF
THE REGISTRANT - NEP in this Item for other information
regarding this director.
Narragansett
------------
The names of the directors of Narragansett, 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
- - Narragansett 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.
Joan T. Bok* - Director since 1979.
Stephen A. Cardi - Director since 1979 - Age: 54 - Treasurer
of Cardi Corporation (construction), Warwick, R.I.
Frances H. Gammell - Director since 1992 - Age: 46 - Director,
Senior Vice President, Treasurer, and Secretary of Original
Bradford Soap Works, Inc.
Joseph J. Kirby - Director since 1988 - Age: 64 - President of
Washington Trust Bancorp, Inc., Westerly, R.I. and President
and Director of the Washington Trust Company.
Robert L. McCabe - President and Director of Narragansett since
1986 - Other directorship: Citizens Savings Bank - Please refer
to the material supplied under the caption EXECUTIVE OFFICERS
- Narragansett in Part I of this report for other information
regarding Mr. McCabe.
John W. Rowe* - Director since 1989.
Richard P. Sergel* - Chairman and Director since 1993.
William E. Trueheart - Director since 1989 - Age: 53 -
President of Bryant College, Smithfield, Rhode Island - Other
directorships: Fleet National Bank.
John A. Wilson, Jr. - Director since 1971 - Age: 66 -
Consultant to and former President of Wanskuck Co., Providence,
R.I., - Consultant to Hinckley, Allen, Snyder & Comen
(attorneys), Providence, R.I.
*Please refer to the material supplied under the caption
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - NEP in
this Item for other information regarding this director.
Section 16(a) of the Securities Exchange Act of 1934 requires
the System's officers and directors, and persons who own more than
10% of a registered class of the System'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 the System with copies of all Section 16(a) forms they
file.
Based solely on NEP's, Mass. Electric's, and Narragansett's
review of the copies of such forms received by them, or written
representations from certain reporting persons that such forms were
not required for those persons, NEP, Mass. Electric, and
Narragansett believe that, during 1995, all filing requirements
applicable to its officers, directors, and 10% beneficial owners
were complied with.
Item 11. EXECUTIVE COMPENSATION
NEES
----
The information required by this item is incorporated herein
by reference to the material under the captions BOARD STRUCTURE AND
COMPENSATION, EXECUTIVE COMPENSATION, PAYMENTS UPON A CHANGE IN
CONTROL, PLAN SUMMARIES, and RETIREMENT PLANS in the definitive
proxy statement of NEES, dated March 11, 1996, for the 1996 Annual
Meeting of Shareholders, provided that the information under the
headings "Compensation Committee Report on Executive Compensation"
and "Corporate Performance" are not so incorporated.
NEP, MASS. ELECTRIC, AND NARRAGANSETT
-------------------------------------
EXECUTIVE COMPENSATION
The following tables give information with respect to all
compensation (whether paid directly by NEP, Mass. Electric, or
Narragansett or billed to it as hourly charges) for services in all
capacities for NEP, Mass. Electric, or Narragansett for the years
1993 through 1995 to or for the benefit of the Chief Executive
Officer and the four other most highly compensated executive
officers for each company.
NEP
SUMMARY COMPENSATION TABLE
Long-Term
Compensa-
Annual Compensation (b) tion
-------------------------- ---------
Other
Name and Annual Restricted All Other
Principal Compensa- Share Compensa-
Position Year Salary Bonus tion Awards tion
(a) ($) ($)(c) ($)(d) ($)(e) ($)(f)
- ---------- ---- ------- ------ --------- ---------- ---------
John W. 1995 157,070 124,818 2,795 - 1,387(g)
Rowe 1994 211,598 119,716 4,018 67,966 1,911
Chairman 1993 181,269 112,095 2,318 54,256 2,386
Jeffrey D. 1995 188,884 135,224 4,972 - 3,377(h)
Tranen 1994 187,356 98,357 5,049 45,804 3,466
President 1993 159,936 112,105 2,974 32,753 3,563
John W. 1995 184,689 116,137 5,221 - 119,315(i)
Newsham* 1994 134,518 79,087 4,149 28,413 3,165
Executive 1993 112,460 78,093 2,020 19,319 2,776
Vice
President
Frederic E. 1995 152,685 101,068 4,011 - 2,976(j)
Greenman* 1994 140,070 89,090 3,622 34,126 2,707
Vice 1993 123,648 75,058 2,131 22,811 3,110
President
Lawrence E. 1995 144,720 92,328 116 - 3,598(k)
Bailey 1994 140,471 66,510 116 27,484 3,952
Vice 1993 135,123 61,283 101 21,286 3,790
President
*Retired as of December 31, 1995.
(a) Certain officers of NEP are also officers of NEES and various
other System companies.
(b) Includes deferred compensation in category and year earned.
(c) The bonus figure represents cash bonuses under an incentive
compensation plan, the value of unrestricted shares under the
incentive share plan, special bonuses, the goals program
award, and the variable portion of the incentive thrift plan
match by NEP. See description under Plan Summaries.
(d) Includes amounts reimbursed by NEP for the payment of taxes.
(e) For the 1993 awards, shares were awarded that become
unrestricted after five years. Those shares receive the same
dividends as the other common shares of NEES. The awards made
for 1994 were, at the executives' option, in the form of
restricted shares (with a five year restriction) or deferred
share equivalents, which have been deferred for receipt for at
least five years. As cash dividends are declared, the number
of deferred share equivalents will be increased as if the
dividends were reinvested in shares. See also Payments Upon
a Change in Control, below. The shares awarded for 1995 were
unrestricted and the value of the awards is included in the
bonus column. As of December 31, 1995, the following
executive officers held the amount of restricted shares with
the value indicated: Mr. Rowe 20,370 shares, $807,161 value;
Mr. Tranen 4,582 shares, $181,561 value; Mr. Newsham 4,117
shares, $163,136 value; Mr. Greenman 5,961 shares, $236,204
value; and Mr. Bailey 2,807 shares, $111,227 value. The value
was calculated by multiplying the closing market price on
December 29, 1995 by the number of shares.
(f) Includes NEP contributions to life insurance and the incentive
thrift plan that are not bonus contributions. 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) For Mr. Rowe, the amount and type of compensation in 1995 is
as follows: $876 for contributions to the thrift plan and
$511 for life insurance.
(h) For Mr. Tranen, the amount and type of compensation in 1995 is
as follows: $2,831 for contributions to the thrift plan and
$545 for life insurance.
(i) For Mr. Newsham, the amount and type of compensation in 1995
is as follows: $2,870 for contributions to the thrift plan,
$1,609 for life insurance, and $119,315 one-time supplemental
cash payment upon retirement.
(j) For Mr. Greenman, the amount and type of compensation in 1995
is as follows: $2,027 for contributions to the thrift plan
and $949 for life insurance.
(k) For Mr. Bailey, the amount and type of compensation in 1995 is
as follows: 2,894 for contributions to the thrift plan and
$704 for life insurance.
MASS. ELECTRIC
SUMMARY COMPENSATION TABLE
Long-Term
Compensa-
Annual Compensation (b) tion
-------------------------- ---------
Other
Name and Annual Restricted All Other
Principal Compensa- Share Compensa-
Position Year Salary Bonus tion Awards tion
(a) ($) ($)(c) ($)(d) ($)(e) ($)(f)
- ---------- ---- ------- ------ --------- ---------- ---------
Richard P. 1995 123,480 93,047 3,256 - 2,285(g)
Sergel 1994 113,021 63,550 3,307 29,731 2,228
Chairman 1993 93,628 71,187 1,657 20,713 2,036
John H. 1995 169,692 139,179 4,585 - 3,601(h)
Dickson 1994 161,604 82,956 5,105 34,617 3,536
President 1993 156,900 116,399 3,005 28,103 3,623
David L. 1995 108,808 66,752 90 - 2,407(i)
Holt (m) 1994 95,122 55,347 102 22,973 2,552
Executive 1993 60,782 39,166 51 11,476 1,352
Vice
President
Cheryl A. 1995 118,687 101,680 109 - 2,570(j)
LaFleur (m) 1994 75,940 47,648 77 17,223 1,763
Vice 1993 71,488 47,372 67 12,399 1,575
President
Nancy H. 1995 115,524 59,932 116 - 2,498(k)
Sala 1994 107,621 39,318 116 16,129 2,493
Vice 1993 102,860 43,386 103 13,370 2,378
President
Anthony C. 1995 111,300 59,993 116 - 2,403(l)
Pini 1994 105,884 43,465 116 17,688 2,454
Vice 1993 71,457 27,761 81 7,996 1,653
President
(a) Certain officers of Mass. Electric are also officers of NEES
and various other System companies.
(b) Includes deferred compensation in category and year earned.
(c) The bonus figure represents cash bonuses under an incentive
compensation plan, the value of unrestricted shares under the
incentive share plan, special bonuses, the goals program
award, and the variable portion of the incentive thrift plan
match by Mass. Electric. See description under Plan
Summaries.
(d) Includes amounts reimbursed by Mass. Electric for the payment
of taxes.
(e) For the 1993 awards, shares were awarded that become
unrestricted after five years. Those shares receive the same
dividends as the other common shares of NEES. The awards made
for 1994 were, at the executives' option, in the form of
restricted shares (with a five year restriction) or deferred
share equivalents, which have been deferred for receipt for at
least five years. As cash dividends are declared, the number
of deferred share equivalents will be increased as if the
dividends were reinvested in shares. See also Payments Upon
a Change in Control, below. The shares awarded for 1995 were
unrestricted and the value of the awards is included in the
bonus column. As of December 31, 1995, the following
executive officers held the amount of restricted shares with
the value indicated: Mr. Sergel 4,355 shares, $172,567 value;
Mr. Dickson 4,036 shares, $159,926 value; Mr. Holt 2,953
shares, $117,012 value; Ms. LaFleur 2,166 shares, $85,827
value; Ms. Sala 1,227 shares, $48,619 value; and Mr. Pini
1,966 shares, $77,902 value. The value was calculated by
multiplying the closing market price on December 29, 1995 by
the number of shares.
(f) Includes Mass. Electric contributions to life insurance and
the incentive thrift plan that are not bonus contributions.
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 Mass.
Electric.
(g) For Mr. Sergel, the type and amount of compensation in 1995 is
as follows: $2,002 for contributions to the thrift plan and
$283 for life insurance.
(h) For Mr. Dickson, the type and amount of compensation in 1995
is as follows: $3,000 for contributions to the thrift plan
and $601 for life insurance.
(i) For Mr. Holt, the type and amount of compensation in 1995 is
as follows: 1,778 for contributions to the thrift plan and
$629 for life insurance.
(j) For Ms. LaFleur, the type and amount of compensation in 1995
is as follows: $2,373 for contributions to the thrift plan and
$197 for life insurance.
(k) For Ms. Sala, the type and amount of compensation in 1995 is
as follows: $2,310 for contributions to the thrift plan and
$188 for life insurance.
(l) For Mr. Pini, the type and amount of compensation in 1995 is
as follows: $2,225 for contributions to the thrift plan and
$177 for life insurance.
(m) Mr. Holt resigned as of December 20, 1995 to take a position
at an affiliate company, Ms. LaFleur resigned as of December
31, 1995 to take a position at an affiliate company.
NARRAGANSETT
SUMMARY COMPENSATION TABLE
Long-Term
Compensa-
Annual Compensation (b) tion
-------------------------- ---------
Other
Name and Annual Restricted All Other
Principal Compensa- Share Compensa-
Position Year Salary Bonus tion Awards tion
(a) ($) ($)(c) ($)(d) ($)(e) ($)(f)
- ---------- ---- ------- ------ --------- ---------- ---------
Robert L. 1995 152,407 111,785 4,206 - 4,851(g)
McCabe 1994 140,785 68,784 4,457 28,576 4,256
President 1993 139,632 98,654 2,408 22,617 3,771
William 1995 128,172 77,967 119 - 4,054(h)
Watkins, 1994 124,428 62,799 115 26,136 6,186
Jr. 1993 118,501 39,403 101 13,370 5,847
Executive
Vice
President
Richard W. 1995 103,272 48,972 119 - 2,787(i)
Frost 1994 99,300 34,269 115 13,629 2,706
Vice 1993 96,408 28,667 103 11,211 2,628
President
Francis X. 1995 95,964 46,832 119 - 2,331(j)
Beirne 1994 91,392 11,264 115 3,267 2,473
Vice 1993 87,300 10,579 249 2,311 1,859
President
Richard 1995 95,838 15,500 119 - 2,902(k)
Nadeau 1994 91,572 11,272 115 3,267 3,037
Vice
President
(a) Certain officers of Narragansett are also officers of NEES and
various other System companies.
(b) Includes deferred compensation in category and year earned.
(c) The bonus figure represents cash bonuses under an incentive
compensation plan, the value of unrestricted shares under the
incentive share plan, special bonuses, the goals program
award, and the variable portion of the incentive thrift plan
match by Narragansett. See description under Plan Summaries.
(d) Includes amounts reimbursed by Narragansett for the payment of
taxes.
(e) For the 1993 awards, shares were awarded that become
unrestricted after five years. Those shares receive the same
dividends as the other common shares of NEES. The awards made
for 1994 were, at the executives' option, in the form of
restricted shares (with a five year restriction) or deferred
share equivalents, which have been deferred for receipt for at
least five years. As cash dividends are declared, the number
of deferred share equivalents will be increased as if the
dividends were reinvested in shares. See also Payments Upon
a Change in Control, below. The shares awarded for 1995 were
unrestricted and the value of the awards is included in the
bonus column. As of December 31, 1995, the following
executive officers held the amount of restricted shares with
the value indicated: Mr. McCabe 3,799 shares, $150,535 value;
Mr. Watkins 2,140 shares, $84,797 value; Mr. Frost 1,672
shares, $66,253 value, Mr. Beirne 375 shares, $14,859 value;
and Mr. Nadeau 335 shares, $13,275 value. The value was
calculated by multiplying the closing market price on December
29, 1995 by the number of shares.
(f) Includes Narragansett contributions to life insurance and the
incentive thrift plan that are not bonus contributions. 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
Narragansett.
(g) For Mr. McCabe, the type and amount of compensation in 1995 is
as follows: $2,720 for contributions to the thrift plan and
$2,130 for life insurance.
(h) For Mr. Watkins, the type and amount of compensation in 1995
is as follows: $2,563 for contributions to the thrift plan
and $1,491 for life insurance.
(i) For Mr. Frost, the type and amount of compensation in 1995 is
as follows: $2,065 for contributions to the thrift plan and
$722 for life insurance.
(j) For Mr. Beirne, the type and amount of compensation in 1995 is
as follows: $1,919 for contributions to the thrift plan and
$412 for life insurance.
(k) For Mr. Nadeau, the type and amount of compensation in 1995 is
as follows: $1,916 for contributions to the thrift plan and
$986 for life insurance.
Directors' Compensation
Members of the Mass. Electric and Narragansett Boards of
Directors, except Dickson, McCabe, Rowe, and Sergel receive a
quarterly retainer of $1,250, a meeting fee of $600 plus expenses,
and 50 NEES common shares each year. Since all members of the NEP
Board are employees of NEES System companies, no fees are paid for
service on the Board except as noted below for Mrs. Bok.
Mrs. Bok retired as an employee of the System on January 1,
1994 (remaining as Chairman of the Board of NEES and a director for
NEES subsidiaries). Mrs. Bok has agreed to waive the normal fees
and annual retainers otherwise payable for services by
non-employees on NEES subsidiary boards and receives in lieu
thereof a single annual stipend of $60,000. Mrs. Bok also serves
as a consultant to NEES. Under the terms of her contract, she
receives an annual retainer of $100,000.
Mass. Electric and Narragansett permit directors to defer all
or a portion of their retainers and meeting fees. Special accounts
are maintained on Mass. Electric's and Narragansett's books showing
the amounts deferred and the interest accrued thereon.
Other
NEP, Mass. Electric, and Narragansett do not have any share
option plans.
The NEES Compensation Committee administers certain of the
incentive compensation plans, and the Management Committee
administers the others (including the incentive share plan).
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
1996.
PENSION TABLE
Five-Year
Average 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
Compensa- of of of of of of
tion Service Service Service Service Service Service
- --------- -------- -------- -------- -------- -------- --------
$100,000 27,700 36,300 44,600 52,900 57,900 60,900
$150,000 42,700 56,000 68,800 81,700 89,700 94,200
$200,000 57,700 75,700 93,100 110,500 121,400 127,400
$250,000 72,800 95,400 117,300 139,300 153,100 160,600
$300,000 87,800 115,100 141,600 168,100 184,800 193,800
$350,000 102,800 134,800 165,800 196,900 216,600 227,100
$400,000 117,800 154,500 190,100 225,700 248,300 260,300
$500,000 147,900 193,900 238,600 283,300 311,700 326,700
For purposes of the retirement plans, Messrs. Rowe, Tranen,
Newsham, Greenman, and Bailey currently have 18, 26, 45, 30, and 27
credited years of service, respectively. Mr. Sergel, Mr. Dickson,
Mr. Holt, Ms. LaFleur, Ms. Sala, and Mr. Pini currently have 17,
22, 24, 10, 26, and 17 credited years of service, respectively.
Messrs. McCabe, Watkins, Frost, Beirne, and Nadeau currently have
27, 23, 33, 24, and 40 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. The
benefits listed in the pension table are not subject to deduction
for Social Security and are shown without any joint and survivor
benefits.
The Pension Table above does not include annuity payments to
be received in lieu of life insurance for Messrs. Rowe, Houston,
and Greenman. The policies are described below under Plan
Summaries.
Mr. Newsham will also receive a supplemental pension payment
of $5,000 per year.
Under the Retirement Supplement Plan, participants receive an
annual adjustment to their pension benefits. The amount of the
adjustment is equal to the rate of interest on AAA bonds for the
prior year less two percent (but in no case more than the increase
in the cost of living).
The System contributes the full amount toward post-retirement
health benefits for senior executives.
PAYMENTS UPON A CHANGE OF CONTROL
NEES has approved agreements with certain of its executives,
including Ms. LaFleur, and Messrs. Greenman, Newsham, Rowe, Sergel,
and Tranen, which provide severance benefits in the event of
certain terminations of employment following a Change in Control of
NEES (as defined below). If, following a Change in Control, the
executive's employment is terminated other than for cause (as
defined) or if the executive terminates employment for good reason
(as defined), NEES will pay to the executive a lump sum cash
payment equal to three times (two times for some executives) the
sum of the executive's most recent annual base compensation and the
average of his or her bonus amounts for the prior three years. If
Mr. Rowe receives payments under his severance agreement that would
subject him to any federal excise tax due under section 280G of the
Internal Revenue Code, he will receive a cash "gross-up" payment so
he would be in the same net after-tax position he would have been
in had such excise tax not been applied. In addition, NEES will
provide disability and health benefits to the executive for two to
three years, provide such post-retirement health and welfare
benefits as the executive would have earned within such two to
three years, and grant two or three additional years of pension
credit. Mr. Rowe would become eligible for benefits under the
Retirement Supplement Plan described above prior to the five-year
vesting term.
Change in Control, including potential change of control,
occurs (1) when any person becomes the beneficial owner of 20% of
the voting securities of NEES, (2) when the prior members of the
Board of NEES no longer constitute a 2/3 majority of the Board, or
(3) NEES enters into an agreement that could result in a Change in
Control.
The terms of the agreements are for three years with automatic
annual extensions, unless terminated by NEES.
The System's bonus plans, including the incentive compensation
plans, the Incentive Thrift Plan I, and the Goals Program, provide
for payments equal to the average of the bonuses for the three
prior years in the event of a Change of Control. This payment
would be made in lieu of the regular bonuses for the year in which
the Change in Control occurs. The new Long-Term Performance Share
Award Plan provides 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 I for
the three prior years. The System's Retirees Health and Life
Insurance Plan I has provisions preventing changes in benefits
adverse to the participants for three years following a Change in
Control. The Incentive Share Plan and the related Incentive Share
Deferral Agreements provide that, upon the occurrence of a change
in control (defined more narrowly than in other plans),
restrictions on all shares and account balances would cease.
NEP, MASS. ELECTRIC, AND NARRAGANSETT PLAN SUMMARIES
A brief description of the various plans through which
compensation and benefits are 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, Mass. Electric, or Narragansett) are presented in the Summary
Compensation Tables.
Goals Program
The goals program covers all employees who have completed one
year of service with any NEES subsidiary. Goals are established
annually. For 1995, these goals related to earnings per share,
customer costs, safety, absenteeism, demand-side management,
generating station availability, transmission 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% to 4-1/2% of their compensation.
Incentive Thrift Plan
The incentive thrift plan (a 401(k) program) provides for a
match of 40% of up to the first 5% of base compensation contributed
to the System's incentive thrift plan (shown under All Other
Compensation in the Summary Compensation Tables) and, based on an
incentive formula tied to earnings per share, may fully match the
first 5% of base compensation contributed (the additional amount,
if any, is shown under Bonus in the Summary Compensation Tables).
Under Federal law, contributions to these plans are limited. In
1995, the salary reduction amount was limited to $9,240.
Incentive Compensation Plan
The System bonus plan for certain senior employees provides
that in order for cash bonuses to be awarded, NEES must achieve a
return on equity that places NEES in the top 50% of the electric
utilities listed in the Duff & Phelps Utility Group or in the top
50% of the New England/New York regional utilities. Bonuses are
also dependent upon the achievement of individual goals. In order
to provide a long-term component to the incentive compensation
plan, participants may also be awarded NEES common shares. An
individual's award of shares under the incentive share plan is a
fixed percentage of her or his cash bonus for that year. If no
cash award is made, no shares are distributed.
Long-Term Performance Share Award Plan
This plan was established in 1996. There will be no payments
under the plan until the Spring of 1999. Awards under the plan are
based upon various measures of NEES performance over a three-year
period. Each award factor or measurement functions independently.
The factors include financial and operating performance.
Performance is rated on rolling three-year periods, with a new
cycle beginning each year. An individual's potential award under
the plan is a fixed percentage (ranging from 15% to 50%) of base
pay. At the end of the three-year cycle, the participant receives
NEES shares based upon the performance against the various factors.
Deferred Compensation Plan
Those executives whose contributions to the Incentive Thrift
Plan were limited by Federal law may make further contributions to
the Deferred Compensation Plan and the System will match them under
the Deferred Compensation Plan on the same terms as if the full
amount had been contributed to the Incentive Thrift Plan. However,
these amounts under the Deferred Compensation Plan may only be
invested at the then applicable prime rate or in NEES shares.
Life Insurance
NEES 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.
After termination of employment, participants in one of the
insurance plans may elect, commencing at age 55 or later, to
receive an annuity income equal to 40% of annual salary. In that
event, the life insurance is reduced over fifteen years to an
amount equal to the participant's final annual salary. Due to
changes in the tax law, this plan was closed to new participants,
and an alternative was established with only a life insurance
benefit. The individuals listed in the NEP summary compensation
table and Ms. LaFleur and Messrs. Dickson, McCabe, and Sergel are
in one or the other of these plans. These plans are structured so
that, over time, the System should recover the cost of the
insurance premiums.
Financial Counseling
NEP, Mass. Electric, and Narragansett pay for personal
financial counseling for senior 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 a limited number of seminars conducted at various
locations each year.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
NEES
----
The information required by this item is incorporated herein
by reference to the material under the caption TOTAL COMMON EQUITY
BASED HOLDINGS in the definitive proxy statement of NEES, dated
March 11, 1996, for the 1996 Annual Meeting of Shareholders,
provided that the information under the headings "Compensation
Committee Report on Executive Compensation" and "Corporate
Performance" are not so incorporated.
NEP, Mass. Electric, and Narragansett
-------------------------------------
NEES owns 100% of the voting securities of Mass. Electric and
Narragansett. NEES owns 98.85% of the voting securities of NEP.
SECURITY OWNERSHIP
The following tables list the holdings of NEES common shares
as of March 1, 1996 by NEP, Mass. Electric, and Narragansett
directors, the executive officers named in the Summary Compensation
Tables, and all directors and executive officers, as a group.
NEP
---
Shares Deferred
Beneficially Share
Name Owned (a) Equivalents (b)
---- ------------ --------------
Lawrence E. Bailey 4,978 2,980
Joan T. Bok 22,157
Frederic E. Greenman 11,154 1,729
Alfred D. Houston 12,260 3,410
Cheryl A. LaFleur 2,111 1,430
John W. Newsham 11,951 1,247
John W. Rowe 21,799 9,042
Jeffrey D. Tranen 7,451 2,610
All directors and
executive officers,
as a group ( 15 persons) 124,585 (c) 29,443
Mass. Electric
--------------
Shares Deferred
Beneficially Share
Name Owned (a) Equivalents (b)
---- ------------ -------------
Urville J. Beaumont 226 (d)
Joan T. Bok 22,157
Sally L. Collins 227
John H. Dickson 8,970 1,948
Kalyan K. Ghosh 0
David L. Holt 5,596 1,464
Charles B. Housen 165
Cheryl A. LaFleur 2,111 1,430
Patricia McGovern 105
Anthony C. Pini 6,757 572
John F. Reilly 227
John W. Rowe 21,799 9,042
Nancy H. Sala 6,779 (e) 946
Richard P. Sergel 7,728 2,534
Roslyn M. Watson 327
All directors and
executive officers,
as a group (25 persons) 129,752 (c) 24,937
Narragansett
------------
Shares Deferred
Beneficially Share
Name Owned (a) Equivalents (b)
---- ------------ -------------
Francis X. Beirne 3,992 105
Joan T. Bok 22,157
Stephen A. Cardi 227
Richard W. Frost 5,691 441
Frances H. Gammell 227
Joseph J. Kirby 227
Robert L. McCabe 8,705 1,851
Richard Nadeau 3,483
John W. Rowe 21,799 9,042
Richard P. Sergel 7,728 2,534
William E. Trueheart 227
William Watkins, Jr. 5,162 1,409
John A. Wilson, Jr. 608
All directors and
executive officers,
as a group (17 persons) 99,414 (c) 20,150
(a) Number of shares beneficially owned includes: (i) shares
directly owned by certain relatives with whom directors or
officers share voting or investment power; (ii) shares held of
record individually by a director or officer or jointly with
others or held in the name of a bank, broker, or nominee for
such individual's account; (iii) shares in which certain
directors or officers maintain exclusive or shared investment
or voting power whether or not the securities are held for
their benefit; and (iv) with respect to the executive officers,
allocated shares in the Incentive Thrift Plan described above.
(b) Deferred share equivalents are held under the Deferred
Compensation Plan or pursuant to individual deferral
agreements. Under the Plan or deferral agreements, executives
may elect to defer cash compensation and share awards. There
are various deferral periods available under the plans. At the
end of the deferral period, the compensation may be paid out
in NEES common shares, cash, or a combination thereof. The
rights of the executives to payment are those of general,
unsecured creditors. While deferred, the shares do not have
voting rights or other rights associated with ownership. As
cash dividends are declared, the number of deferred share
equivalents will be increased as if the dividends were
reinvested in NEES common shares.
(c) Amount is less than 1% of the total number of shares of NEES
outstanding.
(d) Mr. Beaumont disclaims a beneficial ownership interest in 200
of these shares held under an irrevocable trust.
(e) Ms. Sala disclaims a beneficial ownership interest in 247
shares held under the Uniform Gift to Minors Act.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The construction company of Mr. Stephen A. Cardi, a director
of Narragansett, was paid approximately $77,000 in 1995 pursuant to
a contract to provide gravel to Narragansett.
Mr. John A. Wilson, Jr., a director of Narragansett, is a
consultant to Hinckley, Allen, Snyder & Comen (Attorneys).
Hinckley, Allen, Snyder & Comen was retained by Narragansett and
its affiliates in 1995.
Ms. Patricia McGovern, a director of Mass. Electric, was paid
a retainer of $15,000 by Mass. Electric for serving as a member of
a Massachusetts policy advisory committee regarding external
relations in Massachusetts.
Reference is made to Item 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT and 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.
NEES
----
(3) Agreement and Declaration of Trust dated January 2, 1926,
as amended through April 28, 1992 (Exhibit 3 to 1994 NEES
Form 10-K, File No. 1-3446).
(4) Instruments Defining the Rights of Security Holders
(a) Massachusetts Electric Company First Mortgage
Indenture and Deed of Trust, dated as of July 1,
1949, and twenty-one supplements thereto (Exhibit
7-A, File No. 1-8019; Exhibit 7-B, File No. 2-8836;
Exhibit 4-C, File No. 2-9593; Exhibit 4 to 1980
Form 10-K, File No. 2-8019; Exhibit 4 to 1982 Form
10-K, File No. 0-5464; Exhibit 4 to 1986 Form 10-K,
File No. 0-5464; Exhibit 4(a) to 1988 Form 10-K,
File No. 1-3446; Exhibit 4(a) to 1989 Form 10-K,
File No. 1-3446; Exhibit 4(a) to 1992 Form 10-K,
File No. 1-3446; Exhibit 4(a) to 1993 Form 10-K,
File No. 1-3446; Twenty-first Supplemental
Indenture (filed herewith)).
(b) The Narragansett Electric Company First Mortgage
Indenture and Deed of Trust, dated as of September
1, 1944, and twenty-two supplements thereto
(Exhibit 7-1, File No. 2-7042; Exhibit 7-B, File
No. 2-7490; Exhibit 4-C, File No. 2-9423; Exhibit
4-D, File No. 2-10056; Exhibit 4 to 1980 Form 10-K,
File No. 0-898; Exhibit 4 to 1982 Form 10-K, File
No. 0-898; Exhibit 4 to 1983 Form 10-K, File No.
0-898; Exhibit 4 to 1985 Form 10-K, File No. 0-898;
Exhibit 4 to 1986 Form 10-K, File No. 0-898;
Exhibit 4 to 1987 Form 10-K, File No. 0-898;
Exhibit 4 to 1991 Form 10-K, File No. 0-898;
Exhibit 4(b) to 1992 Form 10-K, File No. 1-3446;
Exhibit 4(b) to 1993 Form 10-K, File No. 1-3446;
Twenty-second Supplemental Indenture (filed
herewith)).
(c) The Narragansett Electric Company Preference
Provisions, as amended, dated March 23, 1993
(Exhibit 4(c) to 1993 NEES Form 10-K, File No. 1-
3446).
(d) New England Power Company Indentures General and
Refunding Mortgage Indenture and Deed of Trust
dated as of January 1, 1977 and twenty supplements
thereto (Exhibit 4(b) to 1980 Form 10-K, File No.
0-1229; Exhibit 4(b) to 1982 Form 10-K, File No.
0-1229; Exhibit 4(b) to 1983 Form 10-K, File No.
0-1229; Exhibit 4(b) to 1985 Form 10-K, File No.
0-1229; Exhibit 4(b) to 1986 Form 10-K, File No.
0-1229; Exhibit 4(c)(ii) to 1988 Form 10-K, File
No. 1-3446; Exhibit 4(c)(ii) to 1989 Form 10-K,
File No. 1-3446; Exhibit 4(c)(ii) to 1990 Form
10-K, File No. 1-3446; Exhibit 4(c)(ii) to 1991
Form 10-K, File No. 1-3446; Exhibit 4(c)(ii) to
1992 Form 10-K, File No. 1-3446; Exhibit 4(d) to
1993 Form 10-K, File No. 1-3446; Twentieth
Supplemental Indenture (filed herewith)).
(10) Material Contracts
(a) Boston Edison Company et al. and New England Power
Company: Amended REMVEC Agreement dated August 12,
1977 (Exhibit 5-4(d), File No. 2-61881).
(b) The Connecticut Light and Power Company et al. and
New England Power 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 1990 Form 10-K, File No. 1-3446).
Transmission Support Agreement dated August 9,
1974; Instrument of Transfer to NEP 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
New England Power Company: Stockholders Agreement
dated July 1, 1964 (Exhibit 13-9-A, File No.
2-23006); Power Purchase Contract dated July 1,
1964 (Exhibit 13-9-B, File No. 2-23006);
Supplementary Power Contract dated as of April 1,
1987 (Exhibit 10(c) to 1987 Form 10-K, File No.
1-3446); 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 1979 Form 10-K, File No. 1-3446);
Amendment revising Transmission Agreement dated as
of January 19, 1994 (filed herewith); Guarantee
Agreement dated as of November 13, 1981 (Exhibit
10(d) to 1981 Form 10-K, File No. 1-3446);
Guarantee Agreement dated as of August 1, 1985
(Exhibit 10(c) to 1985 Form 10-K, File No. 1-3446).
(d) Maine Yankee Atomic Power Company et al. and New
England Power 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 1983 Form 10-K, File No.
1-3446), October 1, 1984, and August 1, 1985
(Exhibit 10(d) to 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 1985
Form 10-K, File No. 1-3446); Guarantee Agreement
dated as of September 23, 1985 (Exhibit 10(d) to
1985 Form 10-K, File No. 1-3446).
(e) New England Energy Incorporated Contracts
(i) Capital Funds Agreement with NEES dated
November 1, 1974 (Exhibit 10-29(b), File No.
2-52969); Amendment dated July 1, 1976, and
Amendment dated July 26, 1979 (Exhibit
10(g)(i) to 1980 Form 10-K, File No. 1-3446);
Amendment dated August 26, 1981 (Exhibit
10(f)(i) to 1981 Form 10-K, File No. 1-3446);
Amendment dated March 26, 1985 (Exhibit
10(e)(i) to 1985 Form 10-K, File No. 1-3446);
Amendment dated as of April 28, 1989 (Exhibit
10(e)(i) to 1989 Form 10-K, File No. 1-3446);
Amendment dated as of June 1, 1990 (Exhibit
10(e)(i) to 1990 Form 10-K, File No. 1-3446).
(ii) Loan Agreement with NEES dated July 19, 1978
and effective November 1, 1974, and Amendment
dated July 26, 1979 (Exhibit 10(g)(iii) to
1980 Form 10-K, File No. 1-3446); Amendment
dated August 26, 1981 (Exhibit 10(f)(ii) to
1981 Form 10-K, File No. 1-3446); Amendment
dated March 26, 1985 (Exhibit 10(e)(ii) to
1985 Form 10-K, File No. 1-3446); Amendment
dated as of April 28, 1989 (Exhibit 10(e)(ii)
to 1989 Form 10-K, File No. 1-3446);
Amendment dated as of June 1, 1990 (Exhibit
10(e)(ii) to 1990 Form 10-K, File No.
1-3446).
(iii) Fuel Purchase Contract with New England Power
Company dated July 26, 1979, and Amendment
dated August 26, 1981 (Exhibit 10(f)(iii) to
1981 Form 10-K, File No. 1-3446); Amendment
dated March 26, 1985, and Amendment effective
January 1, 1984 (Exhibit 10(e)(iii) to 1985
Form 10-K, File No. 1-3446); Amendment dated
as of April 28, 1989 (Exhibit 10(e)(iii) to
1989 Form 10-K, File No. 1-3446).
(iv) Partnership Agreement with Samedan Oil
Corporation as Amended and Restated on
February 5, 1985 (Exhibit 10(e)(iv) to 1984
Form 10-K, File No. 1-3446); Amendment dated
as of January 14, 1992 (Exhibit 10(e)(iv) to
1991 Form 10-K, File No. 1- 3446).
(v) Credit Agreement dated as of April 13, 1995
(filed herewith).
(vi) Capital Maintenance Agreement dated November
15, 1985, and Assignment and Security
Agreement dated November 15, 1985 (Exhibit
10(e)(vi) to 1985 Form 10-K, File No.
1-3446); Amendment dated as of April 28, 1989
(Exhibit 10(e)(vi) to 1989 Form 10-K, File
No. 1-3446).
(f) New England Power Company and New England Electric
Transmission Corporation et al.: Phase I Terminal
Facility Support Agreement dated as of December 1,
1981 (Exhibit 10(g) to 1981 Form 10-K, File No.
1-3446); Amendments dated as of June 1, 1982, and
November 1, 1982 (Exhibit 10(f) to 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 1981 Form 10-K, File No.
1-3446); Amendments dated as of May 1, 1982, and
November 1, 1982 (Exhibit 10(f) to 1982 Form 10-K,
File No. 1-3446); Amendment dated as of January 1,
1986 (Exhibit (10)(f) 1986 Form 10-K, File No.
1-3446); Agreement for Reinforcement and
Improvement of New England Power Company's
Transmission System dated as of April 1, 1983
(Exhibit 10(f) to 1983 Form 10-K, File No. 1-3446);
Lease dated as of May 16, 1983 (Exhibit 10(f) to
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 1983 Form 10-K, File No. 1-3446).
(g) New England Electric Transmission Corporation and
PruCapital Management, Inc. et al: Note Agreement
dated as of September 1, 1986 (Exhibit 10(g) to
1986 Form 10-K, File No. 1-3446); Mortgage, Deed of
Trust and Security Agreement dated as of September
1, 1986 (Exhibit 10(g) to 1986 Form 10-K, File No.
1-3446); Equity Funding Agreement with New England
Electric System dated as of December 1, 1985
(Exhibit 10(g) to 1991 Form 10-K, File No. 1-3446).
(h) Vermont Electric Transmission Company, Inc. et al.
and New England Power 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 1982
Form 10-K, File No. 1-3446); Amendment dated as of
January 1, 1986 (Exhibit 10(h) to 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,
and 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 1981 Form 10-K,
File No. 1-3446); Amendment dated as of December 1,
1981 (Exhibit 10(h) to 1982 Form 10-K, File No.
1-3446); Amendments dated June 1, 1982, June 15,
1983, and October 1, 1983 (Exhibit 10(i) to 1983
Form 10-K, File No. 1-3446); Amendments dated
August 1, 1985, August 15, 1985, September 1, 1985,
and January 1, 1986 (Exhibit 10(i) to 1985 Form
10-K, File No. 1-3446); Amendment dated
September 1, 1986 (Exhibit 10(i) to 1986 Form 10-K,
File No. 1-3446); Amendment dated April 30, 1987
(Exhibit 10(i) to 1987 Form 10-K, File No. 1-3446);
Amendments dated March 1, 1988 and May 1, 1988
(Exhibit 10(i) to 1988 Form 10-K, File No. 1-3446);
Amendment dated March 15, 1989 (Exhibit 10(i) to
1989 Form 10-K, File No. 1-3446); Amendment dated
October 1, 1990 (Exhibit 10(i) to 1990 Form 10-K,
File No. 1-3446); Amendment dated as of September
15, 1992 (Exhibit 10(i) to 1992 Form 10-K, File No.
1-3446); Amendments dated as of June 1, 1993, July
1, 1995, and September 1, 1995 (filed herewith).
(j) Public Service Company of New Hampshire et al. and
New England Power 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, December 31, 1980
(Exhibit 10(i) to 1980 Form 10-K, File No. 1-3446);
Amendments dated June 1, 1982, April 27, 1984,
June 15, 1984 (Exhibit 10(j) to 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 1986 Form 10-K, File No. 1-3446);
Amendment dated November 12, 1987 (Exhibit 10(j) to
1987 Form 10-K, File No. 1-3446); Amendment dated
January 13, 1989 (Exhibit 10(j) to 1989 Form 10-K,
File No. 1-3446); Amendment dated as of November 1,
1990 (Exhibit 10(j) to 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 NEP 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 10-16(c), File No.
2-57831); Seventh Amendment To and Restated
Agreement for Seabrook Project Disbursing Agent
(Exhibit 10(j) to 1991 Form 10-K, File No. 1-
3446); Amendments dated as of June 29, 1992
(Exhibit 10(j) to 1992 Form 10-K, File No. 1-
3446); Seabrook Project Managing Agent Operating
Agreement dated as of June 29, 1992, and amendment
to Seabrook Project Managing Agent Agreement dated
as of June 29, 1992 (Exhibit 10(j) to 1992 Form 10-
K, File No. 1-3446).
(k) Vermont Yankee Nuclear Power Corporation et al. and
New England Power 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 and April 15, 1983
(Exhibit 10(k) to 1983 Form 10-K, File No. 1-3446)
and April 24, 1985 (Exhibit 10(k) to 1985 Form
10-K, File No. 1-3446); Amendment dated as of June
1, 1985 (Exhibit 10(k) to 1987 Form 10-K, File No.
1-3446); Amendments dated as of May 6, 1988
(Exhibit 10(k) to 1988 Form 10-K, File No. 1-3446);
Amendment dated as of June 15, 1989 (Exhibit 10(k)
to 1989 Form 10-K, File No. 1-3446); Additional
Power Contract dated as of February 1, 1984
(Exhibit 10(k) to 1983 Form 10-K, File No. 1-3446);
Guarantee Agreement dated as of November 5, 1981
(Exhibit 10(j) to 1981 Form 10-K, File No. 1-3446).
(l) Yankee Atomic Electric Company et al. and New
England Power Company: Amended and Restated Power
Contract dated April 1, 1985 (Exhibit 10(l) to 1985
Form 10-K, File No. 1-3446); Amendment dated May 6,
1988 (Exhibit 10(l) to 1988 Form 10-K, File No.
1-3446); Amendments dated as of June 26, 1989 and
July 1, 1989 (Exhibit 10(l) to 1989 Form 10-K, File
No. 1-3446); Amendment dated as of February 1, 1992
(Exhibit 10(l) to 1992 Form 10-K, File No. 1-3446).
*(m) New England Electric Companies' Deferred
Compensation Plan as amended dated January 1, 1995
(filed herewith).
*(n) New England Electric System Companies Retirement
Supplement Plan as amended dated December 1, 1995
(filed herewith).
*(o) New England Electric Companies' Executive
Supplemental Retirement Plan as amended dated
January 1,1995 (filed herewith).
*(p) New England Electric Companies' Incentive
Compensation Plan as amended dated January 1, 1995
(filed herewith).
*(q) New England Electric Companies' Senior Incentive
Compensation Plan as amended dated January 1, 1995
(filed herewith).
*(r) New England Electric Companies' Incentive
Compensation Plan II as amended dated January 1,
1995 (filed herewith).
*(s) New England Electric System Directors Deferred
Compensation Plan as amended dated November 24,
1992 (Exhibit 10(s) to 1992 Form 10-K, File No.
1-3446).
*(t) Forms of Life Insurance Program (Exhibit 10(s) to
1986 Form 10-K, File No. 1-3446); and Form of Life
Insurance (Collateral Assignment) (Exhibit 10(t) to
1991 Form 10-K, File No. 1-3446).
*(u) New England Electric Companies' Incentive Share
Plan as amended dated January 1, 1994 (filed
herewith).
(v) New England Power Company and New England
Hydro-Transmission Electric Company, Inc. et al:
Phase II Massachusetts Transmission Facilities
Support Agreement dated as of June 1, 1985 (Exhibit
10(t) to 1986 Form 10-K, File No. 1-3446);
Amendment dated as of May 1, 1986 (Exhibit 10(t) to
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 1987
Form 10-K, File No. 1-3446); Amendment dated as of
August 1, 1988 (Exhibit 10(u) to 1988 Form 10-K,
File No. 1-3446); Amendment dated January 1, 1989
(Exhibit 10(u) to 1990 Form 10-K, File No. 1-3446).
(w) New England Power Company and New England
Hydro-Transmission Corporation et al: Phase II New
Hampshire Transmission Facilities Support Agreement
dated as of June 1, 1985 (Exhibit 10(u) to 1986
Form 10-K, File No. 1-3446); Amendment dated as of
May 1, 1986 (Exhibit 10(u) to 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 1987 Form 10-K,
File No. 1-3446); Amendment dated as of August
1,1988 (Exhibit 10(v) to 1988 Form 10-K, File No.
1-3446); Amendments dated January 1, 1989 and
January 1, 1990 (Exhibit 10(v) to 1990 Form 10-K,
File No. 1-3446).
(x) New England Power Company et al: Phase II New
England Power AC Facilities Support Agreement dated
as of June 1, 1985 (Exhibit 10(v) to 1986 Form
10-K, File No. 1-3446); Amendment dated as of May
1, 1986 (Exhibit 10(v) to 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 1987 Form 10-K, File No. 1-3446); Amendment
dated as of August 1, 1988 (Exhibit 10(w) to 1988
Form 10-K, File No. 1-3446).
(y) New England Hydro-Transmission Electric Company,
Inc. and New England Electric System et al: Equity
Funding Agreement dated as of June 1, 1985 (Exhibit
10(w) to 1986 Form 10-K, File No. 1-3446);
Amendment dated as of May 1, 1986 (Exhibit 10(w) to
1986 Form 10-K, File No. 1-3446); Amendment dated
as of September 1, 1987 (Exhibit 10(x) to 1987
Form 10-K, File No. 1-3446); Amendment dated as of
August 1, 1988 (Exhibit 10(x) to 1988 Form 10-K,
File No. 1-3446).
(z) New England Hydro-Transmission Corporation and New
England Electric System et al: Equity Funding
Agreement dated as of June 1, 1985 (Exhibit 10(x)
to 1986 Form 10-K, File No. 1-3446); Amendment
dated as of May 1, 1986 (Exhibit 10(x) to 1986 Form
10-K, File No. 1-3446); Amendment dated as of
September 1, 1987 (Exhibit 10(y) to 1987 Form 10-K,
File No. 1-3446); Amendment dated as of August 1,
1988 (Exhibit 10(y) to 1988 Form 10-K, File No.
1-3446).
(aa) Ocean State Power, et al., and Narragansett Energy
Resources Company: Equity Contribution Agreement
dated as of December 29, 1988 (Exhibit 10(aa) to
1988 Form 10-K, File No. 1-3446); Amendment dated
as of September 29, 1989 (Exhibit 10(aa) to 1989
Form 10-K File No. 1-3446); Ocean State Power, et
al., and New England Electric System: Equity
Contribution Support Agreement dated as of
December 29, 1988 (Exhibit 10(aa) to 1988 Form
10-K, File No. 1-3446); Amendment dated as of
September 29, 1989 (Exhibit 10(aa) to 1989 Form
10-K, File No. 1-3446); Ocean State Power II, et
al., and Narragansett Energy Resources Company:
Equity Contribution Agreement dated as of September
29, 1989 (Exhibit 10(aa) to 1989 Form 10-K File No.
1-3446); Ocean State Power II, et al., and New
England Electric System: Equity Contribution
Support Agreement dated as of September 29, 1989
(Exhibit 10(aa) to 1989 Form 10-K File No. 1-3446).
*(bb) New England Power Service Company and Joan T. Bok:
Service Credit Letter dated October 21, 1982
(Exhibit 10(cc) to 1992 Form 10-K, File No.
1-3446).
*(cc) New England Electric System and John W. Rowe:
Service Credit Letter dated December 5, 1988
(Exhibit 10(dd) to 1992 Form 10-K, File No.
1-3446).
*(dd) New England Power Service Company and the Company:
Form of Supplemental Pension Service Credit
Agreement (Exhibit 10(ee) to 1992 Form 10-K, File
No. 1-3446).
*(ee) New England Electric System and Frederic E.
Greenman: Service Credit Letter dated February 23,
1994 (Exhibit 10(ee) to 1994 Form 10-K, File No. 1-
3446).
*(ff) New England Electric System and John W. Newsham;
Pension Service Credit Agreement dated February 23,
1994 (Exhibit 10(ff) to 1994 Form 10-K, File No. 1-
3446).
* Compensation related plan, contract, or arrangement.
(13) 1995 Annual Report to Shareholders (filed herewith).
(21) Subsidiary list appears in Part I of this document.
(24) Power of Attorney (filed herewith).
(27) Financial Data Schedule (filed herewith).
NEP
---
(3) (a) Articles of Organization as amended through June
27, 1987 (Exhibit 3(a) to 1988 Form 10-K, File No.
0-1229).
(b) By-laws of the Company as amended May 10, 1995
(filed herewith).
(4) General and Refunding Mortgage Indenture and Deed of Trust
dated as of January 1, 1977 and twenty supplements thereto
(Exhibit 4(b) to 1980 Form 10-K, File No. 0-1229; Exhibit
4(b) to 1982 Form 10-K, File No. 0-1229; Exhibit 4(b) to
1983 Form 10-K, File No. 0-1229; Exhibit 4(b) to 1985 Form
10-K, File No. 0-1229; Exhibit 4(b) to 1986 Form 10-K,
File No. 0-1229; Exhibit 4(b) to 1986 Form 10-K, File No.
0-1229; Exhibit 4(b) to 1988 Form 10-K, File No. 0-1229;
Exhibit 4(c)(ii) to 1989 NEES Form 10-K, File No. 1-3446;
Exhibit 4(c)(ii) to 1990 NEES Form 10-K, File No. 1-3446;
Exhibit 4(c)(ii) to 1991 NEES Form 10-K, File No. 1-3446;
Exhibit 4(c)(ii) to 1992 NEES Form 10-K, File No. 1-3446;
Exhibit 4(d) to 1993 NEES Form 10-K, File No. 1-3446;
Exhibit 4(d) to 1995 NEES Form 10-K, File No. 1-3446).
(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).
(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); 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); Guarantee Agreement dated
as of November 13, 1981 (Exhibit 10(d) to NEES'
1981 Form 10-K, File No. 1-3446); Guarantee
Agreement dated as of August 1, 1985 (Exhibit 10(c)
to NEES' 1985 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); Guarantee Agreement dated
as of September 23, 1985 (Exhibit 10(d) to NEES'
1985 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).
(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 (filed
herewith).
(g) Time Charter between International Shipholding
Corp., and New England Power Company dated as of
October 27, 1994 (filed herewith); Amendments dated
as of September 22, 1995 (filed herewith).
(h) Consent and Agreement among New England Power
Company, Central Gulf Lines, Inc., Enterprise Ship
Company, Inc., and The Bank of New York dated as of
September 28, 1995 (filed herewith).
(i) 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).
(j) 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).
(k) New England Energy Incorporated and the Company:
Fuel Purchase Contract dated July 26, 1979, and
Amendment dated August 26, 1981 (Exhibit 10(f)(iii)
to NEES' 1981 Form 10-K, File No. 1-3446);
Amendment dated March 26, 1985, and Amendment
effective January 1, 1984 (Exhibit 10(e)(iii) to
NEES' 1985 Form 10-K, File No. 1-3446); Amendment
dated as of April 28, 1989 (Exhibit 10(e)(iii) to
1989 NEES Form 10-K, File No. 1-3446).
(l) 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).
(m) New England Power Service Company and the Company:
Specimen of Service Contract (Exhibit 10(l) to 1994
Form 10-K, File No. 0-1229).
(n) 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).
(o) 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).
(p) 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).
*(q) New England Electric Companies' Deferred
Compensation Plan as amended dated January 1, 1995
(Exhibit 10(m) to NEES' 1995 Form 10-K, File No.
1-3446).
*(r) New England Electric System Companies Retirement
Supplement Plan as amended dated December 1, 1995
(Exhibit 10(n) to NEES' 1995 Form 10-K, File No.
1-3446).
*(s) New England Electric Companies' Executive
Supplemental Retirement Plan as amended dated
January 1, 1995 (Exhibit 10(o) to NEES' 1995 Form
10-K, File No. 1-3446).
*(t) New England Electric Companies' Incentive
Compensation Plan as amended dated January 1, 1995
(Exhibit 10(p) to NEES' 1995 Form 10-K, File No.
1-3446); New England Electric Companies' Senior
Incentive Compensation Plan as amended dated
January 1, 1995 (Exhibit 10(q) to NEES' 1995 Form
10-K, File No. 1-3446).
*(u) 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).
*(v) New England Electric Companies' Incentive
Compensation Plan II as amended dated January 1,
1995 (Exhibit 10(r) to NEES' 1995 Form 10-K, File
No. 1-3446).
*(w) New England Electric Companies' Incentive Share
Plan as amended dated January 1, 1994 (Exhibit 10
(u) to NEES 1995 Form 10-K, File No. 1-3446).
(x) 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).
(y) 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).
(z) 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).
(aa) TransCanada Pipelines Limited and the Company: Firm
Service Contract for Firm Transportation Service
for natural gas dated as of January 6, 1992;
Amendment dated as of March 2, 1992 (Exhibit 10(y)
to 1992 Form 10-K, File No. 0-1229); Amendment
dated as of October 29, 1993 (Exhibit 10(y) to 1994
Form 10-K, File No. 0-1229); Temporary Assignment
effective as of October 26, 1995 (filed herewith).
(bb) Renaissance Energy Ltd. and the Company: Temporary
Transportation Contract Assignment (capacity swap)
for Firm Transportation Service for natural gas
dated as of October 27, 1993; Amendment dated as of
October 25, 1994 (Exhibit 10(z) to 1994 Form 10-K,
File No. 0-1229).
(cc) Algonquin Gas Transmission Company and the Company:
X-38 Service Agreement for Firm Transportation of
natural gas dated July 3, 1992; Amendment dated
July 31, 1992 (Exhibit 10(aa) to 1992 Form 10-K,
File No. 0-1229); Amendment dated April 15, 1994
(Exhibit 10(aa) to 1994 Form 10-K, File No. 0-
1229).
(dd) ANR Pipeline Company and the Company: Gas
Transportation Agreement dated July 18, 1990
(Exhibit 10(bb) to 1992 Form 10-K, File No.
0-1229).
(ee) Columbia Gas Transmission Corporation and the
Company: Service Agreement for Service under FTS
Rate Schedule dated June 13, 1991 (Exhibit 10(cc)
to 1993 Form 10-K, File No. 0-1229).
(ff) Iroquois Gas Transmission System, L.P. and the
Company: Gas Transportation Contract for Firm
Reserved Service dated as of June 5, 1991 (Exhibit
10(dd) to 1992 Form 10-K, File No. 0-1229).
(gg) Tennessee Gas Pipeline Company and the Company:
Firm Natural Gas Transportation Agreement dated
July 9, 1992 (Exhibit 10(ee) to 1992 Form 10-K,
File No. 0-1229).
* Compensation related plan, contract, or arrangement.
(13) 1995 Annual Report to Stockholders (filed herewith).
(21) Subsidiary list (filed herewith).
(24) Power of Attorney (filed herewith).
(27) Financial Data Schedule (filed herewith).
Mass. Electric
--------------
(3) (a) Articles of Organization of the Company as amended
March 5, 1993, August 11, 1993, September 20, 1993,
and November 15, 1993 (Exhibit 3(a) to 1993 Form
10-K, File No. 0-5464).
(b) By-Laws of the Company as amended February 4, 1993,
July 30, 1993, and September 15, 1993 (Exhibit 3(b)
to 1993 Form 10-K, File No. 0-5464).
(4) First Mortgage Indenture and Deed of Trust, dated as of
July 1, 1949, and twenty-one supplements thereto (Exhibit
7-A, File No. 1-8019; Exhibit 7-B, File No. 2-8836;
Exhibit 4-C, File No. 2-9593; Exhibit 4 to 1980 Form 10-K,
File No. 2-8019; Exhibit 4 to 1982 Form 10-K, File No.
0-5464; Exhibit 4 to 1986 Form 10-K, File No. 0-5464);
Exhibit 4 to 1988 Form 10-K, File No. 0-5464; Exhibit 4(a)
to 1989 NEES Form 10-K, File No. 1-3446; Exhibit 4(a) to
1992 NEES Form 10-K, File No. 1-3446; Exhibit 4(a) to 1993
NEES Form 10-K, File No. 1-3446; Exhibit 4(a) to 1995 NEES
Form 10-K, File No. 1-3446).
(10) Material Contracts
(a) Boston Edison Company et al. and Company: Amended
REMVEC Agreement dated August 12, 1977 (Exhibit
5-4(d), File No. 2-61881).
(b) New England Power Company and the Company: Primary
Service for Resale dated February 15, 1974 (Exhibit
5-17(a), File No. 2-52969); Amendment of Service
Agreement dated July 22, 1983 (Exhibit 10(b) to
1986 Form 10-K, File No. 0-5464); Amendment of
Service Agreement effective November 1, 1993
(Exhibit 10(e) to 1993 NEP Form 10-K, File No. 0-
1229); Memorandum of Understanding effective May
22, 1994 (Exhibit 10(e) to 1994 NEP Form 10-K, File
No. 0-1229).
(c) New England Power Pool Agreement: (Exhibit 4(e),
File No. 2-43025); Amendments dated July 1, 1972,
and 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 as of
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 No. 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); Amendments
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 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).
(d) New England Power Service Company and the Company:
Specimen of Service Contract (Exhibit 10(l) to 1994
NEP Form 10-K, File No. 0-1229).
(e) New England Telephone and Telegraph Company and the
Company: Specimen of Joint Ownership Agreement for
Wood Poles (Exhibit 4(e), File No. 2-24458).
*(f) New England Electric Companies' Deferred
Compensation Plan as amended dated January 1, 1995
(Exhibit 10(m) to NEES' 1995 Form 10-K, File No.
1-3446).
*(g) New England Electric System Companies Retirement
Supplement Plan as amended dated December 1, 1995
(Exhibit 10(n) to NEES' 1995 Form 10-K, File No.
1-3446).
*(h) New England Electric Companies' Executive
Supplemental Retirement Plan as amended dated
January 1, 1995 (Exhibit 10(o) to NEES' 1995 Form
10-K, File No. 1-3446).
*(i) New England Electric Companies' Incentive
Compensation Plan as amended dated January 1, 1995
(Exhibit 10(p) to NEES' 1995 Form 10-K, File No.
1-3446).
*(j) New England Electric Companies' Form of Deferred
Compensation Agreement for Directors (Exhibit 10(p)
to NEES' 1980 Form 10-K, File No. 1-3446).
*(k) New England Electric Companies' Senior Incentive
Compensation Plan as amended dated January 1, 1995
(Exhibit 10(q) to NEES' 1995 Form 10-K, File No.
1-3446).
*(l) 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).
*(m) New England Electric Companies' Incentive
Compensation Plan II as amended dated January 1,
1995 (Exhibit 10(r) to NEES' 1995 Form 10-K, File
No. 1-3446).
*(n) New England Electric Companies' Incentive Share
Plan as amended dated January 1, 1994 (Exhibit
10(u) to NEES' 1995 Form 10-K, File No. 1-3446).
*(o) New England Power Service Company and the Company:
Form of Supplemental Pension Service Credit
Agreement (Exhibit 10(ee) to 1992 NEES Form 10-K,
File No. 1-3446).
* Compensation related plan, contract, or arrangement.
(12) Statement re computation of ratios for incorporation by
reference into the Mass. Electric registration statement
on Form S-3, Commission File No. 33-59145 (filed
herewith).
(13) 1995 Annual Report to Stockholders (filed herewith).
(24) Power of Attorney (filed herewith).
(27) Financial Data Schedule (filed herewith).
Narragansett
------------
(3) (a) Articles of Incorporation as amended June 9, 1988
(Exhibit 3(a) to 1988 Form 10-K, File No. 0-898).
(b) By-Laws of the Company (Exhibit 3 to 1980 Form
10-K, File No. 0-898).
(4) (a) First Mortgage Indenture and Deed of Trust, dated
as of September 1, 1944, and twenty-two supplements
thereto (Exhibit 7-1, File No. 2-7042; Exhibit 7-B,
File No. 2-7490; Exhibit 4-C, File No. 2-9423;
Exhibit 4-D, File No. 2-10056; Exhibit 4 to 1980
Form 10-K, File No. 0-898; Exhibit 4 to 1982 Form
10-K, File No. 0-898; Exhibit 4 to 1983 Form 10-K,
File No. 0-898; Exhibit 4 to 1985 Form 10-K, File
No. 0-898; Exhibit 4 to 1986 Form 10-K, File No.
0-898; Exhibit 4 to 1987 Form 10-K, File No. 0-898;
Exhibit 4(b) to 1991 NEES Form 10-K, File No.
1-3446; Exhibit 4(b) to 1992 NEES Form 10-K, File
No. 1-3446; Exhibit 4(b) to 1993 NEES Form 10-K,
File No. 1-3446; Exhibit 4(b) to 1995 NEES Form 10-
K, File No. 1-3446).
(b) The Narragansett Electric Company Preference
Provisions, as amended, dated March 23, 1993
(Exhibit 4(c) to 1993 NEES Form 10-K, File No. 1-
3446).
(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).
(b) New England Power 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 10(f) to
1990 NEP Form 10-K, File No. 0-1229); Amendment of
Service Agreement dated July 24, 1991 (Exhibit 4(f)
to 1991 NEP Form 10-K, File No. 0-1229); Amendment
of Service Agreement effective November 1, 1993
(Exhibit 10(f) to 1993 NEP Form 10-K, File No. 0-
1229); Memorandum of Understanding effective May
22, 1994 (Exhibit 10(f) to 1994 NEP Form 10-K, File
No. 0-1229); Amendment of Service Agreement
effective January 1, 1995 (Exhibit 10(f) to 1995
NEP Form 10-K, File No. 0-1229).
(c) New England Power Pool Agreement: (Exhibit 4(e),
File No. 2-43025); Amendments dated July 1, 1972,
and 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 No. 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 as of September 15,
1992 (Exhibit 10(i) to NEES' 1992 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 NEES' 1995 Form 10-K, File No. 1-3446).
(d) New England Power Service Company and the Company:
Specimen of Service Contract (Exhibit 4(l) to 1994
NEP Form 10-K, File No. 0-1229).
(e) New England Telephone and Telegraph Company and the
Company: Specimen of Joint Ownership Agreement for
Wood Poles (Exhibit 3(d), File No. 2-24458).
*(f) New England Electric Companies' Deferred
Compensation Plan for Officers, as amended January
1, 1995 (Exhibit 10(m) to NEES' 1995 Form 10-K,
File No. 1-3446).
*(g) New England Electric System Companies Retirement
Supplement Plan, as amended December 1, 1995
(Exhibit 10(n) to NEES' 1995 Form 10-K, File No.
1-3446).
*(h) New England Electric Companies' Executive
Supplemental Retirement Plan, as amended dated
January 1, 1995 (Exhibit 10(o) to NEES' 1995
Form 10-K, File No. 1-3446).
*(i) New England Companies' Incentive Compensation Plan,
as amended dated January 1, 1995 (Exhibit 10(p) to
NEES' 1995 Form 10-K, File No. 1-3446).
*(j) New England Electric Companies' Form of Deferred
Compensation Agreement for Directors (Exhibit 10(p)
to NEES' 1980 Form 10-K, File No. 1-3446).
*(k) New England Electric Companies' Senior Incentive
Compensation Plan as amended dated January 1, 1995
(Exhibit 10(q) to NEES' 1995 Form 10-K, File No.
1-3446).
*(l) 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).
*(m) New England Electric Companies' Incentive
Compensation Plan II as amended dated January 1,
1995 (Exhibit 10(r) to NEES' 1995 Form 10-K, File
No. 1-3446).
*(n) New England Electric Companies' Incentive Share
Plan as amended dated January 1, 1994 (Exhibit
10(u) to NEES' 1995 Form 10-K, File No. 1-3446).
*(o) New England Power Service Company and the Company:
Form of Supplemental Pension Service Credit
Agreement (Exhibit 10(ee) to 1992 NEES Form 10-K,
File No. 1-3446).
* Compensation related plan, contract, or arrangement.
(12) Statement re computation of ratios for incorporation by
reference into the Narragansett registration statement on
Form S-3, Commission File No. 33-61131 (filed herewith).
(13) 1995 Annual Report to Stockholders (filed herewith).
(24) Power of Attorney (filed herewith).
(27) Financial Data Schedule (filed herewith).
Reports on Form 8-K
NEES
----
NEES filed reports on Form 8-K dated January 12, 1995, February
8, 1995, March 1, 1995, March 15, 1995, May 17, 1995, July 3, 1995,
August 16, 1995, September 8, 1995, and September 29, 1995, all of
which contained Item 5.
NEP
---
NEP filed reports on Form 8-K dated January 12, 1995, February
8, 1995, May 17, 1995, and August 16, 1995, all of which contained
Item 5.
Mass. Electric
--------------
Mass. Electric filed reports on Form 8-K dated March 15, 1995,
August 16, 1995, and September 29, 1995, all of which contained
Item 5.
Narragansett
------------
Narragansett filed reports on Form 8-K dated March 1, 1995,
July 3, 1995, August 16, 1995, September 8, 1995, and October 11,
1995, all of which contained Item 5.
NEW ENGLAND ELECTRIC SYSTEM
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.
NEW ENGLAND ELECTRIC SYSTEM*
s/John W. Rowe
John W. Rowe
President and
Chief Executive Officer
March 28, 1996
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.
(Signature and Title)
Principal Executive Officer
s/John W. Rowe
John W. Rowe
President and
Chief Executive Officer
Principal Financial Officer
s/Alfred D. Houston
Alfred D. Houston
Executive Vice President and
Chief Financial Officer
Principal Accounting Officer
s/Michael E. Jesanis
Michael E. Jesanis
Treasurer
Directors (a majority)
Joan T. Bok
Paul L. Joskow
John M. Kucharski
Edward H. Ladd
Joshua A. McClure
John W. Rowe s/John G. Cochrane
George M. Sage All by:
Charles E. Soule John G. Cochrane
Anne Wexler Attorney-in-fact
James Q. Wilson
James R. Winoker
Date (as to all signatures on this page)
March 28, 1996
*The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which as amended has been filed with the Secretary
of the Commonwealth of Massachusetts. Any agreement, obligation or liability
made, entered into or incurred by or on behalf of New England Electric System
binds only its trust estate, and no shareholder, director, trustee, officer
or agent thereof assumes or shall be held to any liability therefor.
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/Jeffrey D. Tranen
Jeffrey D. Tranen
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/Jeffrey D. Tranen
Jeffrey D. Tranen
President
Principal Financial Officer
s/Michael E. Jesanis
Michael E. Jesanis
Treasurer
Principal Accounting Officer
s/Howard W. McDowell
Howard W. McDowell
Controller
Directors (a majority)
Joan T. Bok
Alfred D. Houston s/John G. Cochrane
Cheryl A. LaFleur
All by:
John G. Cochrane
Attorney-in-fact
Date (as to all signatures on this page)
March 28, 1996
MASSACHUSETTS ELECTRIC 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.
MASSACHUSETTS ELECTRIC COMPANY
s/John H. Dickson
John H. Dickson
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/John H. Dickson
John H. Dickson
President
Principal Financial Officer
s/Michael E. Jesanis
Michael E. Jesanis
Treasurer
Principal Accounting Officer
s/Howard W. McDowell
Howard W. McDowell
Controller
Directors (a majority)
Urville J. Beaumont
Sally L. Collins
John H. Dickson
Kalyan K. Ghosh
Charles B. Housen s/John G. Cochrane
Patricia McGovern All by:
John F. Reilly, Jr. John G. Cochrane
Richard M. Shribman Attorney-in-fact
Roslyn M. Watson
Date (as to all signatures on this page)
March 28, 1996
THE NARRAGANSETT ELECTRIC 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.
THE NARRAGANSETT ELECTRIC COMPANY
s/Robert L. McCabe
Robert L. McCabe
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/Robert L. McCabe
Robert L. McCabe
President
Principal Financial Officer
s/Alfred D. Houston
Alfred D. Houston
Vice President and Treasurer
Principal Accounting Officer
s/Howard W. McDowell
Howard W. McDowell
Controller
Directors (a majority)
Joan T. Bok
Stephen A. Cardi s/John G. Cochrane
Joseph J. Kirby All by:
Robert L. McCabe
John W. Rowe John G. Cochrane
Willliam E. Trueheart Attorney-in-fact
Date (as to all signatures on this page)
March 28, 1996
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
References (Page)
-----------------------
1995 Annual
Form Report to
10-K Shareholders*
---- -------------
Report of Independent Accountants........................... 41
Statements of Consolidated Income,
Year Ended December 31, 1995, 1994 and 1993............. 24
Statements of Consolidated Retained Earnings,
Year Ended December 31, 1995, 1994 and 1993............. 24
Consolidated Balance Sheets, December 31, 1995 and 1994... 25
Consolidated Statements of Cash Flows,
Year Ended December 31, 1995, 1994 and 1993............. 26
Consolidated Statements of Capitalization,
December 31, 1995 and 1994.............................. 27
Notes to Financial Statements............................... 28-40
For the Year Ended December 31, 1995, 1994 and 1993:
Consent of Independent Accountants........................ 115
* Incorporated by Reference
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in the registration
statements of New England Electric System on Form S-3 of the Dividend
Reinvestment and Common Share Purchase Plan (File No. 33-12313) and on
Forms S-8 of the New England Electric System Companies Incentive Thrift
Plan (File No. 33-26066), the New England Electric System Companies
Incentive Thrift Plan II (File No. 33-35470) and the Yankee Atomic
Electric Company Thrift Plan (File No. 2-67531) of our report dated March
1, 1996 on our audits of the consolidated financial statements of New
England Electric System and subsidiaries as of December 31, 1995 and 1994
and for each of the three years in the period ended December 31, 1995,
which report is incorporated by reference in this Annual Report on Form
10-K.
We also consent to the incorporation by reference in the registration
statements of New England Power Company on Forms S-3 (File Nos. 33-48257,
33-48897, and 33-49193) Massachusetts Electric Company on Form S-3 (File
No. 33-59145) and The Narragansett Electric Company on Form S-3 (File No.
33-61131) of our reports dated March 1, 1996 on our audits of the
financial statements of New England Power Company, Massachusetts Electric
Company and The Narragansett Electric Company, respectively, as of
December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, which reports are incorporated by reference in
this Annual Report on Form 10-K.
s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
March 28, 1996
NEW ENGLAND POWER COMPANY
INDEX TO FINANCIAL STATEMENTS
References (Page)
----------------------
1995 Annual
Form Report to
10-K Shareholders*
---- -------------
Report of Independent Accountants........................... 1
Statements of Income,
Year Ended December 31, 1995, 1994 and 1993............... 10
Statements of Retained Earnings,
Year Ended December 31, 1995, 1994 and 1993............... 10
Balance Sheets, December 31, 1995 and 1994.................. 11
Statements of Cash Flows,
Year Ended December 31, 1995, 1994 and 1993............... 12
Notes to Financial Statements............................... 13-28
For the Year Ended December 31, 1995, 1994 and 1993:
Consent of Independent Accountants....................... 115
* Incorporated by Reference
MASSACHUSETTS ELECTRIC COMPANY
INDEX TO FINANCIAL STATEMENTS
References (Page)
----------------------
1995 Annual
Form Report to
10-K Shareholders*
---- -------------
Report of Independent Accountants........................... 1
Statements of Income,
Year Ended December 31, 1995, 1994 and 1993............... 8
Statements of Retained Earnings,
Year Ended December 31, 1995, 1994 and 1993............... 8
Balance Sheets, December 31, 1995 and 1994.................. 9
Statements of Cash Flows,
Year Ended December 31, 1995, 1994 and 1993............... 10
Notes to Financial Statements............................... 11-22
For the Year Ended December 31, 1995, 1994 and 1993:
Consent of Independent Accountants........................ 115
* Incorporated by Reference
THE NARRAGANSETT ELECTRIC COMPANY
INDEX TO FINANCIAL STATEMENTS
References (Page)
----------------------
1995 Annual
Form Report to
10-K Shareholders*
---- -------------
Report of Independent Accountants........................... 1
Statements of Income,
Year Ended December 31, 1995, 1994 and 1993............... 8
Statements of Retained Earnings,
Year Ended December 31, 1995, 1994 and 1993............... 8
Balance Sheets, December 31, 1995 and 1994.................. 9
Statements of Cash Flows,
Year Ended December 31, 1995, 1994 and 1993............... 10
Notes to Financial Statements............................... 11-22
For the Year Ended December 31, 1995, 1994 and 1993:
Consent of Independent Accountants........................ 115
* Incorporated by Reference