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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) December 30, 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 December 30, 1998, Commonwealth Energy System subsidiary companies
Commonwealth Electric Company, Cambridge Electric Light Company and Canal
Electric Company completed the sale of substantially all of their non-nuclear
electric generation assets to affiliates of Southern Energy New England,
L.L.C., a subsidiary of Southern Company, for approximately $462 million.
These facilities represent 984 megawatts (mw) of electric capacity and have an
approximate book value of $79 million. This transaction is an integral part
of the system's comprehensive electric industry restructuring plan that was
approved by the Massachusetts Department of Telecommunications and Energy
(DTE) and is consistent with the Electric Industry Restructuring Act that was
passed by the Massachusetts legislature in November 1997.
The plants sold include: Canal Unit 1 (566 mw) and a one-half interest in
Canal Unit 2 (282.5 mw) located in Sandwich, MA and owned by Canal Electric;
the Kendall Station facility (67 mw) and the adjacent Kendall Jets (46 mw),
located in Cambridge, MA and owned by Cambridge Electric; five diesel
generators (13.8 mw) in Oak Bluffs and West Tisbury on the island of Martha's
Vineyard owned by Commonwealth Electric, and a 1.4 percent joint-ownership
interest (8.9 mw) in Wyman Unit No. 4 located in Yarmouth, ME, also owned by
Commonwealth Electric.
A formal divestiture filing was submitted to the DTE and the Federal
Energy Regulatory Commission (FERC) on July 31, 1998 that requested approval
of the sale of the aforementioned generating assets to Southern Energy. This
filing was approved by the DTE on October 30, 1998 and by the FERC on November
12, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
The following unaudited pro forma consolidated condensed financial
statements are filed with this report:
Pro Forma Consolidated Condensed Balance Sheet of Commonwealth
Energy System at September 30, 1998
Pro Forma Consolidated Condensed Statements of Income of
Commonwealth Energy System:
Year Ended December 31, 1997
Nine Months Ended September 30, 1998
The Pro Forma Consolidated Condensed Balance Sheet of Commonwealth
Energy System (the System) at September 30, 1998 reflects the
financial position of the System after giving effect to the
disposition of the assets discussed in Item 2 and assumes the
disposition took place on September 30, 1998. The Pro Forma
Consolidated Condensed Statements of Income for the fiscal year ended
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COMMONWEALTH ENERGY SYSTEM
December 31, 1997 and the nine months ended September 30, 1998 assume
that the disposition occurred on January 1, 1997 and are based on the
operations of the System for the year ended December 31, 1997 and the
nine months ended September 30, 1998.
The unaudited pro forma consolidated condensed financial
statements have been prepared by the System based upon assumptions
deemed reasonable by it. The unaudited pro forma consolidated
condensed financial statements presented herein are shown for
illustrative purposes only and are not indicative of the future
financial position or future results of operations of the System, or
the financial position or results of operations of the System that
would have actually occurred had the transaction been in effect as of
the date or for the periods presented. In particular, while the
disposition of the assets portrayed herein will impact the System's
results of operations, such disposition is only one component of the
restructuring that the System is undergoing at this time pursuant to
the Act. In addition, it should be noted that the System's future
financial statements will reflect the disposition only from December
30, 1998, the closing date. Additional information regarding the Act
and the System's divestiture filing is included in the System's 1997
Annual Report on Form 10-K and 1998 Quarterly Reports on Form 10-Q.
The unaudited pro forma consolidated condensed financial
statements should be read in conjunction with the historical
financial statements and related notes of the System.
(c) Exhibits
Exhibit 2. Plan of acquisition, reorganization, arrangement,
liquidation, or succession.
Filed herewith as Exhibit 4:
2.3 Asset Sale Agreement by and between Commonwealth Electric
Company and Southern Energy New England, L.L.C., dated as
of May 15, 1998.
(Exhibit 4, as filed herein, does not contain supplemental Exhibits
that are a part of the Agreement. However, the registrant agrees
to furnish supplementally a copy of any omitted exhibit to the
Securities and Exchange Commission upon request.)
Incorporated herein by reference:
2.4 Asset Sale Agreement by and between Cambridge Electric
Light Company and Southern Energy New England, L.L.C.,
dated as of May 15, 1998 (Exhibit 4 to Cambridge Electric
Light Company's Form 8-K (for event dated December 30,
1998), File No. 2-7909).
2.5 Asset Sale Agreement by and between Canal Electric
Company and Southern Energy New England, L.L.C., dated as
of May 15, 1998 (Exhibit 4 to Canal Electric Company's
Form 8-K (for event dated December 30, 1998),
File No. 2-30057).
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COMMONWEALTH ENERGY SYSTEM
Exhibit 99. Additional exhibits.
Filed herewith as Exhibit 1:
99.1 Pro Forma Consolidated Condensed Balance Sheet of
Commonwealth Energy System at September 30, 1998
Filed herewith as Exhibit 2:
99.2 Pro Forma Consolidated Condensed Statements of Income of
Commonwealth Energy System for the Year Ended December
31, 1997 and Nine Months Ended September 30, 1998
Filed herewith as Exhibit 3:
99.3 Notes to Unaudited Pro Forma Condensed Financial
Statements
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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: January 14, 1999