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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 1, 1998
COMMONWEALTH ENERGY SYSTEM
(Exact name of registrant as specified in its Declaration of Trust)
1-7316
(Commission File Number)
Massachusetts 04-1662010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Main Street, Cambridge, Massachusetts 02142-9150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 225-4000
(Not Applicable)
(Former name, address and fiscal year, if changed since last report)
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COMMONWEALTH ENERGY SYSTEM
Item 2. Acquisition or Disposition of Assets
On June 1, 1998, Advanced Energy Systems, Inc. (AES), a wholly-owned
subsidiary of Commonwealth Energy System (the System), purchased the total
energy plant located in the Longwood Medical Area of Boston, MA (MATEP) for
$147.3 million from Medical Area Total Energy Plant, Inc., a subsidiary of
Harvard University (Harvard) of Cambridge, MA. The acquisition price was
established through a sealed bid auction process. The expectation is that
this facility will increase system revenues by approximately $45 million in
1998 and, on average, by approximately $65 million in the years 1999 through
2002.
This acquisition has been financed, on a short-term basis, through a $150
million term loan agreement with Barclay's Bank PLC that will be repaid with
the proceeds from a permanent financing plan that is expected to be completed
in late June. This plan will ultimately include a long-term bank loan to AES
for approximately $110 million and an equity contribution from the System to
AES of approximately $40 million.
MATEP, a cogeneration plant which began steam and chilled water operation
in 1980 and electricity generation in 1986, was conceived and constructed by
Harvard to provide a reliable and cost-effective supply of heating, cooling
and electricity to Harvard-affiliated hospitals, medical research centers and
teaching institutions in the 200-acre Longwood Medical Area of Boston. By
recapturing and reusing heat that would be wasted in a conventional power
plant, MATEP is designed to produce 30% more energy per gallon of oil than the
electric power generating plants in use across Massachusetts. The medical
area customers served by contracts which were assigned to AES include six
hospitals that have more than 2,000 beds and serve approximately 85,000
inpatients and 50,000 outpatients annually. MATEP equipment serves over 9
million square feet of space and includes three steam boilers, two heat-
recovery steam generators, two steam turbine generators, seven chillers, and
six diesel engines to provide the primary source of electrical power. The
plant is powered by natural gas and No. 2 fuel oil and is capable of producing
a total of 62 MW of electricity, 900,000 lb/hr of steam, and 28,000 tons/hr
for cooling. The hospitals' contracts for MATEP power, steam, and chilled
water extend through 2015. AES intends to utilize the MATEP facility for
purposes that are consistent with the previous owner.
Harvard has been a major, long-term customer of COM/Energy Steam Company,
Cambridge Electric Light Company and Commonwealth Gas Company, all of which
are subsidiaries of the System.
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COMMONWEALTH ENERGY SYSTEM
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
Exhibit 2. Plan of acquisition, reorganization, arrangement,
liquidation, or succession.
Filed herewith as Exhibit 1:
2.1 Stock and Asset Purchase Agreement dated as of January 16, 1998
by and among Advanced Energy Systems, Inc., MATEP LLC, Advanced
Energy Systems Management Company, Inc., President and Fellows
of Harvard College, Cogeneration Management Company, Inc., and
Medical Area Total Energy Plant, Inc.
(Exhibit 1, as filed herein, does not contain supplemental Exhibits
and Schedules that are a part of the Agreement. However, the
registrant agrees to furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon
request.)
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COMMONWEALTH ENERGY SYSTEM
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMONWEALTH ENERGY SYSTEM
(Registrant)
JAMES D. RAPPOLI
James D. Rappoli,
Financial Vice President
and Treasurer
Date: June 12, 1998