SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: May 20, 1997
NEW ENGLAND ELECTRIC SYSTEM
(exact name of registrant as specified in charter)
Massachusetts 1-3446 04-1663060
(state or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
(508) 389-2000
(Registrant's telephone number, including area code)
Item 5. Other Events
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Industry Restructuring Update
As previously reported, the Massachusetts settlement and the
Rhode Island statute and a related settlement covering customer
choice and electric utility restructuring provide for full
recovery of the costs of generating assets and oil and gas
related assets (including regulatory assets) not recoverable
through the divestiture of New England Power Company's (NEP)
generating business. NEP is a subsidiary of New England Electric
System (NEES). The Massachusetts Offer of Settlement was signed
by Massachusetts Electric Company (a retail subsidiary of NEES),
NEP, the Massachusetts Attorney General and the Massachusetts
Division of Energy Resources and was approved by the
Massachusetts Department of Public Utilities (MDPU) in February
1997. The Rhode Island Offer of Settlement was signed by The
Narragansett Electric Company (a retail subsidiary of NEES), NEP,
the Rhode Island Public Utilities Commission (RIPUC) and the
Rhode Island Division of Public Utilities and Carriers. Federal
Energy Regulatory Commission (FERC) approval is also required for
the Massachusetts and Rhode Island stranded cost recovery. The
Massachusetts and Rhode Island Settlements were filed with the
FERC at the end of May 1997. On July 11, 1997, a FERC
administrative law judge certified the Settlements to the full
Commission. If accepted by the FERC, the Settlements will
complete the regulatory proceedings necessary to implement retail
access and recover stranded costs for the companies in
Massachusetts and Rhode Island.
On July 3 and 7, 1997, the Governor of Rhode Island signed
into law bills further implementing utility restructuring in
Rhode Island. The Securitization Act establishes a framework at
the RIPUC for utilities to seek approval to securitize stranded
costs through the issuance of transition bonds. The 1997
Amendments to the Utility Restructuring Act bill changes the Act
so that utilities will not have to transfer their transmission
assets to another company and makes other technical amendments.
On May 20, 1997, the Utility Workers Union of America and
the Massachusetts Alliance of Utility Unions withdrew their
appeal to the Massachusetts Supreme Judicial Court of the MDPU
approval of the Massachusetts settlement.
Maine Yankee
NEP has a 20 percent equity ownership interest in Maine
Yankee Atomic Power Company (Maine Yankee) which owns an 880 MW
nuclear generating station. On May 27, 1997, the Maine Yankee
owners announced that the economic viability of the station was
under review and the station would likely be permanently shutdown
unless a buyer can be found.
Town of Norwood Litigation
As previously reported, the Town of Norwood, Massachusetts
filed a lawsuit against NEP in United States District Court.
Norwood alleges that NEP's proposal to divest its power
generation assets violates the terms of a 1983 agreement with
Norwood. On May 13, 1997, NEP filed a motion to dismiss the
lawsuit based its belief that Norwood's claims are within the
FERC's exclusive jurisdiction. On June 24, 1997, Norwood filed a
motion for summary judgment and in the alternative for a
preliminary injunction restraining the divestiture of NEP's
generating business. The court has delayed consideration of
Norwood's motion until after the court decides NEP's motion to
dismiss.
Hydro-Quebec Arbitration
On July 11, 1996, various New England utilities which are
members of the New England Power Pool, including NEP, submitted a
dispute to arbitration regarding their Firm Energy Purchased
Power Contract with Hydro-Quebec. In June 1997, Hydro-Quebec
presented a damage claim of approximately $37 million for past
damages. If Hydro-Quebec were to prevail, NEP's share of such
damages would be approximately $6-9 million. The claims involve
a dispute over the components of a pricing formula and additional
costs under the contract. With respect to on-going claims, NEP
has been paying Hydro-Quebec the higher amount (additional costs
of approximately $3-4 million per year) since July 1996 under
protest and subject to refund. A decision by the arbitrator is
expected in September 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this Current Report on
Form 8-K to be signed on its behalf by the undersigned thereunto
duly authorized.
NEW ENGLAND ELECTRIC SYSTEM
s/Alfred D. Houston
By
Alfred D. Houston
Executive Vice President and
Chief Financial Officer
Date: July 14, 1997
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.