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EXHIBIT 4
ONE MAIN STREET P.O. BOX 9150 CAMBRIDGE, MASSACHUSETTS 02142
January 26, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Employees Savings Plan of Commonwealth Energy
System and Subsidiary Companies
Dear Commissioners:
Commonwealth Energy System (the "System") is seeking to register 500,000
Common Shares of Beneficial Interest, par value $4 each, ("Common Shares") of
the System in connection with the Employees Savings Plan of Commonwealth
Energy System and Subsidiary Companies (the "Plan"). The System has requested
that I furnish to you an opinion as to the legality of these securities, which
opinion is to be filed as Exhibit 4 to the System's Registration Statement on
Form S-8 relating to such securities. It is my understanding that the Plan
Trustee (Vanguard Fiduciary Trust Company) appointed pursuant to the Plan will
purchase Common Shares to be held by the Plan on the open market, through the
Dividend Reinvestment and Common Share Purchase Plan of the System or
directly from the System.
I have acted as counsel for the System in connection with its proposed
registration of the aforementioned Common Shares. I have examined the
System's Declaration of Trust dated December 31, 1926, as amended, copies of
votes of the Board of Trustees of the System, the Form S-8 Registration
Statement (the "Registration Statement") which the System proposes to file
with the Securities and Exchange Commission relative to the above-described
offering, applicable provisions of the Employment Retirement Income Security
Act of 1974 ("ERISA"), and such other documents as I have deemed pertinent. I
and members of my staff have made such examination of law as I have felt
necessary in order to render this opinion.
Based upon the foregoing, I am of the opinion and advise you as follows:
1. The Common Shares to be purchased by the Trustee on the open market
(other than those sought to be registered through the Registration
Statement) to be held by the Plan have been duly authorized for
issuance and are now validly issued, fully-paid and non-assessable,
and the Common Shares under the Dividend Reinvestment and Common Share
Purchase Plan are duly authorized for issuance and when issued in
accordance with such Dividend Reinvestment and Common Share Purchase
Plan will then be validly issued, fully paid and non-assessable.
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2. The Common Shares to be registered under the Registration Statement
will be, when issued, validly issued, fully-paid and non-assessable.
I have reviewed the terms of the System's Declaration of Trust and am of the
opinion that the purpose of the above-described offering is among those
permitted under Section 22 of the System's Declaration of Trust.
The System is an unincorporated business trust with transferable shares. The
Supreme Judicial Court of Massachusetts has in some circumstances imposed
personal liability upon shareholders of an unincorporated business where the
trust provides for ultimate control by shareholders. In my opinion, while a
partnership may technically exist among the System's common shareholders, the
possibility of any such personal liability of the System's shareholders is
remote because of the provisions of the System's Declaration of Trust, which
state that shareholders are protected from personal liability on contract
obligations containing the so-called limited liability clause which the System
customarily inserts in all contract obligations, including debt securities,
and because of certain other factors.
Attached to this opinion is a copy of an undated Internal Revenue Service
("IRS") determination letter that the Plan, as amended and restated January 1,
1993, is qualified under Section 401 of the Internal Revenue Code. Further, I
have examined the First Amendment to the Plan, effective as of October 1,
1994, and on the basis of the foregoing, am of the opinion that said amendment
is in conformity with the provisions of Title I of ERISA.
I hereby consent that this opinion may be filed as an exhibit to the
Registration Statement to be filed by the System with the Securities and
Exchange Commission. I further consent to the use of my name and to all
references to me included in or made a part of the Registration Statement.
Very truly yours,
MICHAEL P. SULLIVAN
Michael P. Sullivan
Vice President, Secretary
and General Counsel
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INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
Employer Identification Number:
Date: 04-1662010
File Folder Number:
113028829
COMMONWEALTH ENERGY SYSTEM AND Person to Contact:
SUBSIDIARY COMPANIES ALLAN FELSEN
ONE MAIN STREET Contact Telephone Number:
CAMBRIDGE, MA 02142-9150 (516) 683-5395
Plan Name:
EES SAVINGS PLAN OF COMMONWEALTH
ENERGY SYSTEM & SUBS COMPANIES
Plan Number: 002
Dear Applicant:
We have made a favorable determination an your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section 1.401-l(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodical-
ly.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal
or local statutes.
This determination applies to plan year(s) beginning after January 1,
1993.
This determination letter is applicable for the amendment(s) adopted on
January 15, 1993.
This letter does not consider whether the coverage and nondiscrimination
requirements have been satisfied with respect to former employees.
This letter does not consider whether the coverage and nondiscrimination
requirements have been satisfied with respect to former employees or whether
the plan is nondiscriminatory with respect to current availability of rights,
benefits or features that may have been prospectively eliminated. This letter
is based upon the demonstrations you submitted under Revenue Procedure 93-10,
1993-5 I.R.B. 13. Therefore, these demonstrations are considered an integral
part of this letter. Accordingly, YOU MUST KEEP A COPY OF THESE DOCUMENTS AS
A PERMANENT RECORD OR YOU MAY NOT BE ABLE TO REPLY ON THE ISSUES DESCRIBED IN
REVENUE PROCEDURE 93-10.
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The Information on the enclosed addendum is an integral part of this
determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as indicated in
the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
Herbert J. Huff
District Director
Enclosures:
Publication 794
Addendum
As provided by Revenue Procedure 93-6 this determination letter does not
rule on any medical benefit provisions within the jurisdiction of section 105
of the IRC.
This letter is based on the adoption of the amended plan submitted in
your representatives letter dated November 8, 1993.