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: November 29, 1999
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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On November 29, 1999, Massachusetts Electric Company and New
England Power Company (NEP), subsidiaries of New England Electric
System (NEES), together with Eastern Edison Company and Montaup
Electric Company (Montaup), subsidiaries of Eastern Utilities
Associates (EUA)(together "the Companies"), announced that they
had reached agreement with the Massachusetts Attorney General,
the Massachusetts Division of Energy Resources, Associated
Industries of Massachusetts, and The Energy Consortium regarding
rates that will become effective after the completion of the
proposed merger of the Companies.
In April 1999, the Companies filed a proposed rate plan with
the Massachusetts Department of Telecommunications and Energy
(MDTE) as part of an overall request seeking MDTE approval of the
merger of Eastern Edison into Massachusetts Electric Company and
the merger of Montaup into NEP. The proposed rate agreement
calls for a total of $170 million in rate reductions for the
customers of Massachusetts Electric, Eastern Edison and Nantucket
Electric Company over the next five years. This rate agreement
is subject to MDTE approval and, if approved, would also
constitute approval of the Companies' mergers.
On the effective date of the rate agreement, distribution
rates for customers of the merged company will be reduced by $10
million annually, and frozen through February 28, 2005. From
March 1, 2005 through December 31, 2009, the distribution rates
will be adjusted annually to follow, but remain at least 10%
below, the regional average distribution rates of similarly
unbundled investor-owned utilities in New England, New York, New
Jersey, and Pennsylvania. The effective date of the rate
agreement occurs on the later of (i) 120 days after the NEES/EUA
merger closes, (ii) the first cycle of the billing month after
the NEES/National Grid Group plc merger closes, or (iii) April 1,
2000.
The proposed rate agreement also contains a comprehensive
service quality plan for the consolidated Massachusetts Electric
Company that implements a system of annual incentives and
penalties based on performance in the areas of reliability,
customer satisfaction, and safety. In 2009, the Massachusetts
Electric must perform an analysis to quantify savings resulting
from cost-saving measures undertaken during the previous 10
years. Savings generated from the mergers or other efficiency
initiatives will be shared between customers and investors over
the subsequent 10 years. This earned savings mechanism is the
sole means by which costs associated with the NEES/EUA or
NEES/National Grid mergers may be recovered.
If the NEES/EUA merger closes by early 2000, as anticipated,
the rate agreement and its associated rate plan are expected to
become effective in the spring of 2000.
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/ Michael E. Jesanis
By
Michael E. Jesanis
Senior Vice President and
Chief Financial Officer
Date: December 3, 1999
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.