FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
- ----------- ----------------------------------- ------------------
1-5324 NORTHEAST UTILITIES 04-2147929
(a Massachusetts voluntary assocation)
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-2010
Telephone: (413) 785-5871
0-11419 THE CONNECTICUT LIGHT AND POWER COMPANY 06-0303850
(a Connecticut corporation)
107 Selden Street
Berlin, Connecticut 06037-1616
Telephone: (860) 665-5000
1-6392 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 02-0181050
(a New Hampshire corporation)
1000 Elm Street
Manchester, New Hampshire 03105-0330
Telephone: (603) 669-4000
0-7624 WESTERN MASSACHUSETTS ELECTRIC COMPANY 04-1961130
(a Massachusetts corporation)
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-2010
Telephone: (413) 785-5871
33-43508 NORTH ATLANTIC ENERGY CORPORATION 06-1339460
(a New Hampshire corporation)
1000 Elm Street
Manchester, New Hampshire 03105-0330
Telephone: (603) 669-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Each Class on Which Registered
- ---------- ------------------- ---------------------
Northeast Utilities Common Shares, New York Stock Exchange, Inc.
$5.00 par value
The Connecticut 9.3% Cumulative New York Stock Exchange, Inc.
Light and Power Monthly Income
Company Preferred Securities Series A (1)
(1) Issued by CL&P Capital, L.P., a wholly owned subsidiary of The Connecticut
Light and Power Company ("CL&P"), and guaranteed by CL&P.
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Each Class
- ---------- -------------------
The Connecticut Light and Preferred Stock, par value $50.00 per share,
Power Company issuable in series, of which the following series
are outstanding:
$1.90 Series of 1947 4.96% Series of 1958
$2.00 Series of 1947 4.50% Series of 1963
$2.04 Series of 1949 5.28% Series of 1967
$2.20 Series of 1949 6.56% Series of 1968
3.90% Series of 1949 $3.24 Series G of 1968
$2.06 Series E of 1954 7.23% Series of 1992
$2.09 Series F of 1955 5.30% Series of 1993
4.50% Series of 1956
Public Service Company Preferred Stock, par value $25.00 per share,
of New Hampshire issuable in series, of which the following series
is outstanding:
10.60% Series A of 1991
Western Massachusetts Preferred Stock, par value $100.00 per share,
Electric Company issuable in series, of which the following series
is outstanding:
7.72% Series B of 1971
Class A Preferred Stock, par value $25.00 per
share, issuable in series, of which the following
series is outstanding:
7.60% Series of 1987
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of Northeast Utilities' Common Share, $5.00 Par
Value, held by nonaffiliates, was $2,584,522,278 based on a closing sales
price of $18.815 per share for the 137,383,244 common shares outstanding on
February 29, 2000. Northeast Utilities holds all of the 12,222,930 shares,
1,000 shares, 1,072,471 shares and 1,000 shares of the outstanding common
stock of The Connecticut Light and Power Company, Public Service Company of
New Hampshire, Western Massachusetts Electric Company, and North Atlantic
Energy Corporation, respectively.
Documents Incorporated by Reference:
Part of Form 10-K
into Which Document
Description is Incorporated
- ----------- -------------------
Portions of Annual Reports to Shareholders of
the following companies for the year ended
December 31, 1999:
Northeast Utilities Part II
The Connecticut Light and Power Company Part II
Public Service Company of New Hampshire Part II
Western Massachusetts Electric Company Part II
North Atlantic Energy Corporation Part II
Portions of the Northeast Utilities Proxy
Statement dated March 31, 2000 Part III
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms that
are found throughout this report:
COMPANIES
NU................................... Northeast Utilities
CL&P................................. The Connecticut Light and Power Company
Charter Oak or COE................... Charter Oak Energy, Inc.
WMECO................................ Western Massachusetts Electric Company
HWP.................................. Holyoke Water Power Company
NUSCO or the Service Company......... Northeast Utilities Service Company
NNECO................................ Northeast Nuclear Energy Company
NAEC................................. North Atlantic Energy Corporation
NAESCO or North Atlantic............. North Atlantic Energy Service Corporation
PSNH................................. Public Service Company of New Hampshire
RRR.................................. The Rocky River Realty Company
Select Energy........................ Select Energy, Inc.
Mode 1............................... Mode 1 Communications, Inc.
HEC.................................. HEC Inc.
Quinnehtuk........................... The Quinnehtuk Company
The NU system........................ The Northeast Utilities System
CYAPC................................ Connecticut Yankee Atomic Power Company
MYAPC................................ Maine Yankee Atomic Power Company
VYNPC................................ Vermont Yankee Nuclear Power Corporation
YAEC................................. Yankee Atomic Electric Company
The Yankee Companies................. CYAPC, MYAPC, VYNPC, and YAEC
GENERATING UNITS
Millstone 1.......................... Millstone Unit No. 1, a 660 MW nuclear
unit completed in 1970
Millstone 2.......................... Millstone Unit No. 2, an 870 MW nuclear
electric generating unit completed
in 1975
Millstone 3.......................... Millstone Unit No. 3, a 1,154 MW nuclear
electric generating unit completed
in 1986
Seabrook or Seabrook 1............... Seabrook Unit No. 1, a 1,148 MW nuclear
electric generating unit completed
in 1986. Seabrook 1 went into service
in 1990.
REGULATORS
DOE.................................. U.S. Department of Energy
DTE.................................. Massachusetts Department of
Telecommunications and Energy
DPUC................................. Connecticut Department of Public Utility
Control
MDEP................................. Massachusetts Department of Environmental
Protection
CDEP................................. Connecticut Department of Environmental
Protection
EPA.................................. U.S. Environmental Protection Agency
FERC................................. Federal Energy Regulatory Commission
NHDES................................ New Hampshire Department of Environmental
Services
NHPUC................................ New Hampshire Public Utilities Commission
NRC.................................. Nuclear Regulatory Commission
SEC.................................. Securities and Exchange Commission
OTHER
1935 Act............................. Public Utility Holding Company
Act of 1935
CAAA................................. Clean Air Act Amendments of 1990
DSM.................................. Demand-Side Management
Energy Act........................... Energy Policy Act of 1992
EWG.................................. Exempt wholesale generator
EAC.................................. Energy Adjustment Clause (CL&P)
FAC.................................. Fuel Adjustment Clause (CL&P)
FPPAC................................ Fuel and purchased-power adjustment
clause (PSNH)
FUCO................................. Foreign utility company
GUAC................................. Generation Utilization Adjustment Clause
(CL&P)
IRM.................................. Integrated resource management
kWh.................................. Kilowatt-hour
MW................................... Megawatt
NBFT................................. Niantic Bay Fuel Trust, lessor of nuclear
fuel used by CL&P and WMECO
NEPOOL............................... New England Power Pool
NUGs................................. Nonutility generators
NUG&T................................ Northeast Utilities Generation and
Transmission Agreement
QF................................... Qualifying facility
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTH ATLANTIC ENERGY CORPORATION
1999 Form 10-K Annual Report
Table of Contents
PART I
Page
Item 1. Business....................................................... 1
The Northeast Utilities System..................................... 1
Safe Harbor Statement.............................................. 2
Mergers and Acquisitions........................................... 3
Consolidated Edison, Inc. Merger............................... 3
Yankee Energy System, Inc. Merger.............................. 5
Rates and Electric Industry Restructuring.......................... 5
General........................................................ 5
Connecticut Rates and Restructuring............................ 6
Massachusetts Rates and Restructuring.......................... 7
New Hampshire Rates and Restructuring.......................... 8
Competitive System Businesses...................................... 9
Energy-Related Products and Service and Gas Investments........ 9
Electric Generation and Services............................... 11
Energy Management Services..................................... 11
Telecommunications............................................. 12
Financing Program.................................................. 13
1999 Financings................................................ 13
2000 Financing Requirements.................................... 14
2000 Financing Plans........................................... 14
Financing Limitations.......................................... 15
Construction Program............................................... 19
Regulated Electric Operations...................................... 19
Distribution and Sales......................................... 20
Regional and System Coordination............................... 21
Transmission Access and FERC Regulatory Changes................ 21
Nuclear Generation................................................. 21
General........................................................ 21
Nuclear Plant Performance...................................... 23
Nuclear Insurance.............................................. 24
Nuclear Fuel................................................... 24
Decommissioning................................................ 26
Other Regulatory and Environmental Matters......................... 29
Environmental Regulation....................................... 29
Electric and Magnetic Fields................................... 32
FERC Hydroelectric Project Licensing........................... 32
Employees.......................................................... 33
Year 2000.......................................................... 33
Item 2. Properties..................................................... 34
Item 3. Legal Proceedings.............................................. 39
Item 4. Submission of Matters to a Vote of Security Holders............ 42
PART II
Item 5. Market for Registrants' Common Equity and Related
Shareholder Matters............................................ 42
Item 6. Selected Financial Data........................................ 42
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 43
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.................................................... 43
Item 8. Financial Statements and Supplementary Data.................... 44
Item 9. Changes in Disagreements with Accountants on
Accounting and Financial Disclosure............................ 44
PART III
Item 10. Directors and Executive Officers of the Registrants............ 45
Item 11. Executive Compensation......................................... 50
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................... 61
Item 13. Certain Relationships and Related Transactions................. 63
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................................... 64
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTH ATLANTIC ENERGY CORPORATION
PART I
ITEM 1. BUSINESS
THE NORTHEAST UTILITIES SYSTEM
Northeast Utilities (NU) is the parent company of the Northeast Utilities
system (the NU system). The NU system furnishes franchised retail electric
service in Connecticut, New Hampshire and western Massachusetts through three
of NU's wholly owned subsidiaries (The Connecticut Light and Power Company
[CL&P], Public Service Company of New Hampshire [PSNH] and Western
Massachusetts Electric Company [WMECO]) and to a limited number of customers
through another wholly owned subsidiary, Holyoke Water Power Company (HWP).
The NU system serves approximately 30 percent of New England's electric needs
and is one of the 20 largest electric utility systems in the country as
measured by revenues.
NU, through its wholly owned subsidiary, NU Enterprises, Inc. (NUEI),
owns a number of competitive energy and telecommunications related businesses,
including Northeast Generation Company (NGC), Northeast Generation Services
Company (NGS), Select Energy, Inc. (Select Energy), HEC Inc. (HEC), Mode 1
Communications, Inc. (Mode 1) and Select Energy Portland Pipeline, Inc.
(SEPPI). For information regarding the activities of these subsidiaries, see
"Competitive System Businesses."
North Atlantic Energy Corporation (NAEC) is a wholly owned special-
purpose operating subsidiary of NU that owns a 35.98 percent interest in the
Seabrook nuclear generating facility (Seabrook) in Seabrook, New Hampshire,
and sells its share of the capacity and output from Seabrook to PSNH under
two life-of-unit, full-cost recovery contracts (Seabrook Power Contracts).
Several wholly owned subsidiaries of NU provide support services for the
NU system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized accounting,
administrative, information technology, engineering, financial, legal,
operational, planning, purchasing, and other services to the NU system
companies. North Atlantic Energy Service Corporation (NAESCO) has operational
responsibility for Seabrook. Northeast Nuclear Energy Company (NNECO) acts
as agent for the NU system companies in operating the Millstone nuclear
generating units (Millstone) in Waterford, Connecticut. Three other
subsidiaries construct, acquire or lease some of the property and facilities
used by the NU system companies.
The NU system is regulated in virtually all aspects of its business by
various federal and state agencies, including the Securities and Exchange
Commission (SEC), the Federal Energy Regulatory Commission (FERC), the
Nuclear Regulatory Commission (NRC) and various state and/or local regulatory
authorities with jurisdiction over the industry and the service areas in
which each company operates, including the Connecticut Department of Public
Utility Control (DPUC), the New Hampshire Public Utilities Commission (NHPUC)
and the Massachusetts Department of Telecommunications and Energy (DTE). In
recent years, there has been significant activity at both the legislative and
regulatory levels to change the nature of regulation of the industry. For
more information regarding these restructuring initiatives, see "Rates and
Electric Industry Restructuring" and "Regulated Electric Operations."
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), NU and its reporting subsidiaries
are hereby filing cautionary statements identifying important factors that
could cause NU or its subsidiaries' actual results to differ materially from
those projected in forward looking statements (as such term is defined in the
Reform Act) made by or on behalf of NU or its subsidiaries in this combined
Form 10-K, in any subsequent filings with the SEC, in presentations, in
response to questions, or otherwise. Any statements that express or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events, or performance (often, but not always, through the use of words
or phrases such as will likely result, are expected to, will continue, is
anticipated, estimated, projection, outlook) are not statements of historical
facts and may be forward looking. Forward looking statements involve
estimates, assumptions and uncertainties that could cause actual results to
differ materially from those expressed in the forward looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the following important factors that could cause
NU or its subsidiaries' actual results to differ materially from those
contained in forward looking statements of NU or its subsidiaries made by or
on behalf of NU or its subsidiaries.
Any forward looking statement speaks only as of the date on which such
statement is made, and NU and its subsidiaries undertake no obligation to
update any forward looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time
and it is not possible for management to predict all of such factors, nor can
it assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors may cause actual results to
differ materially from those contained in any forward looking statements;
however, NU and its subsidiaries are required by law to update and disclose
any material developments related to previously disclosed information or to
correct any material statement made in this report and in all future reports
that turns out to be false.
Some important factors that could cause actual results or outcomes to
differ materially from those discussed in the forward looking statements
include prevailing governmental policies and regulatory actions, including
those of the SEC, the NRC, the FERC, and state regulatory agencies, with
respect to allowed rates of return, industry and rate structure, operation of
nuclear power facilities, acquisition and disposal of assets and facilities,
operation and construction of plant facilities, recovery of purchased-power
costs, stranded costs, decommissioning costs, and present or prospective
wholesale and retail competition (including but not limited to retail
wheeling and transmission costs).
The business and profitability of NU and its subsidiaries are also
influenced by economic and geographic factors including political and
economic risks, changes in environmental and safety laws and policies,
weather conditions (including natural disasters), population growth rates and
demographic patterns, competition for retail and wholesale customers, pricing
and transportation of commodities, market demand for energy from plants or
facilities, changes in tax rates or policies or in rates of inflation,
changes in project costs, unanticipated changes in certain expenses and
capital expenditures, capital market conditions, competition for new energy
development opportunities, and legal and administrative proceedings (whether
civil or criminal) and settlements.
All such factors are difficult to predict, contain uncertainties which
may materially affect actual results and are beyond the control of NU or its
subsidiaries.
MERGERS AND AQUISITIONS
CONSOLIDATED EDISON, INC. (CON EDISON) MERGER
On October 13, 1999, NU and Con Edison agreed to a merger to combine the
two companies. Assuming the merger closes on December 31, 2000, and NU meets
the nuclear divestiture condition discussed below, Con Edison will pay
approximately $3.8 billion for all the common shares of NU. In addition, Con
Edison will assume NU's debt, capitalized leases and preferred securities
which totaled $3.7 billion as of December 31, 1999. As of the present time,
however, NU and Con Edison are attempting to achieve a closing in July 2000.
Under the agreement, Con Edison will pay a base price of $25 for each
share of NU in a combination of cash and Con Edison common stock. NU
shareholders will receive an additional $1 per share in value if definitive
agreements to sell CL&P's and WMECO's interests in Millstone 2 and 3 are
entered into and recommended by the Utility Operations and Management Unit of
the DPUC on or prior to the later of December 31, 2000, or the closing of the
merger (the divestiture condition). If the merger closes before the
divestiture condition is met, NU shareholders still will receive the
additional $1 per share if the divestiture condition is met prior to December
31, 2000. Further, the value of the amount of cash or stock to be received
by NU shareholders will increase by $0.0034 per share per day, or about 10
cents per month, for each day that the transaction does not close after
August 5, 2000.
NU shareholders will have the right to elect either cash or stock, but
their elections are subject to proration if the cumulative elections exceed
50 percent in either cash or stock. NU shareholders who elect to receive
stock will receive a number of shares of Con Edison stock based on the
average trading price of Con Edison shares, determined pursuant to a formula,
during a fixed period prior to the closing (pricing period).
The merger price is subject to a trading price collar on Con Edison's
share price of between $36 and $46. Assuming the divestiture condition is
satisfied, a Con Edison average stock price within the collar and a year end
2000 closing, the total value of Con Edison common stock received by the NU
shareholders for each NU share will be $26.50. However, if the average price
of Con Edison stock is below $36 per share during the pricing period, the
stock component of the transaction will decline in value. For example,
assuming a shareholder receives 50 percent stock and 50 percent cash, for
each $1 below $36 that Con Edison averages during the pricing period, the
total value of each NU share will decline by approximately 37 cents per share.
Conversely, for each $1 above $46 that Con Edison averages during the pricing
period, the value of the transaction to that NU shareholder grows by
approximately 29 cents per share.
Ultimately the value of the transaction to NU shareholders depends on
NU's ability to satisfy the divestiture condition, the actual timing of the
closing, and the average price of Con Edison shares during the pricing
period.
On July 7, 1999, the DPUC issued a decision on the determination of the
minimum bids to be utilized in the auction process to dispose of Millstone.
On December 29, 1999, the Connecticut Office of Consumer Counsel (OCC) filed
a motion with the Connecticut Superior Court for a partial stay of the
decision, which, if granted, would stay the fixing of the minimum bid prices
for CL&P's share of Millstone. Although CL&P believes that it is highly
unlikely that such a stay will be granted, such a stay would delay the
commencement of the auction process for Millstone and adversely affect NU's
ability to meet the divestiture condition.
The merger is conditioned upon the approval of the shareholders of both
companies and several state regulatory agencies, the FERC, the SEC, and
the NRC. The companies hope that these regulatory proceedings can be
completed by the end of July 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary
of Con Edison. NU's operating companies will retain their names, and their
headquarters will continue to be located in their respective service
territories. The combined company will be the nation's largest electric
distribution utility as measured by customers with over 5 million electric as
well as 1.4 million gas customers serving a diverse mix of urban and suburban
communities with a population of more than 13 million. The companies have
estimated that the combined company will have revenues on a pro forma basis
of approximately $11.9 billion and total assets of $27.3 billion, as of
December 31, 1999.
YANKEE ENERGY SYSTEM, INC. (YANKEE) MERGER
On March 1, 2000, NU acquired Yankee, and Yankee became a wholly owned
subsidiary of NU. Yankee is the parent of the Yankee Gas Services Company,
the largest natural gas distribution company in Connecticut. NU paid $45 per
share or $478 million in cash and stock for all Yankee shares. In addition,
NU assumed $164 million of Yankee's outstanding long-term debt and all of its
short-term debt which totaled $70 million at closing. Yankee shareholders
received 45 percent of the $478 million in NU common shares and 55 percent
in cash. NU arranged financing for the cash portion of the deal and met the
stock component of the deal by issuing 11.1 million new NU shares. NU expects
to redeem the majority of these shares later this year by closing out a forward
share purchase program with proceeds from restructuring. The forward share
purchase program was conducted late in 1999 and early in 2000 through two
financial institutions. With certain limited exceptions, NU is prohibited
from purchasing additional shares under its merger agreement with Con Edison.
Yankee will continue to act as the holding company of the Yankee Gas
Services Company and its four active nonutility subsidiaries, NorConn
Properties, Inc., which holds the property and facilities of Yankee; Yankee
Energy Financial Services Company, which provides customers with financing
for energy equipment installations; Yankee Energy Services Company (YESCO),
which provides energy-related services; and R.M. Services, Inc., which
provides debt collection service to utilities and other businesses
nationwide. It is expected that YESCO's business will be closely coordinated
with HEC's energy management business. For more information regarding HEC,
see "Competitive System Businesses" below.
RATES AND ELECTRIC INDUSTRY RESTRUCTURING
GENERAL
NU's electric utility subsidiaries, CL&P, WMECO and PSNH, have
undergone, or will undergo, fundamental changes in their business operations
as a result of the restructuring of the electric industry in their respective
jurisdictions. Most notably, the companies have divested, or will divest,
all of their interests in generation assets and will solely act as
transmission and distribution companies in the future. In general, their
customers will be able to choose their energy suppliers, with the electric
utility companies furnishing "standard offer" service just to those customers
who do not choose a competitive supplier. Critical to this restructuring is
the companies' ability to recover their stranded costs. Stranded costs are
expenditures incurred, or commitments for future expenditures made, on behalf
of customers with the expectation such expenditures would continue to be
recoverable in the future through rates. However, under certain circumstances
these costs might not be recoverable from customers in a fully competitive
electric utility industry (i.e., the costs may result in above-market energy
prices).
As discussed more fully below, Connecticut and Massachusetts have
enacted restructuring legislation that permits CL&P and WMECO to recover
substantially all of their prudently incurred stranded costs. NU, PSNH and
the state of New Hampshire have reached a settlement (Settlement Agreement),
which, if approved, will permit, PSNH to recover a substantial portion of its
stranded costs in connection with restructuring.
CONNECTICUT RATES AND RESTRUCTURING
Pursuant to legislation enacted in April 1998, CL&P has sold or will
sell all of its generating capacity and disposed of or renegotiated its power
supply contracts, and effective January 1, 2000, began acquiring its standard
offer energy supply on the open market through competitive bidding. On
January 1, 2000, up to 35 percent of CL&P customers located in distressed
cities became eligible to choose their electric supplier. On July 1, 2000,
100 percent of CL&P's customers will be able to choose their electric
supplier. Customers who do not choose an alternate supplier may take standard
offer service from CL&P until December 31, 2003.
CL&P had sought permission in March 1999 from the DPUC pursuant to the
restructuring legislation to recover from customers approximately $4.4
billion of its stranded costs. In a July 7, 1999 decision, the DPUC approved
the recovery of approximately $3.5 billion of stranded costs and provided for
the possible recovery of a significant portion of the remaining amount in the
future through adjustments to the decision's assumptions about future market
prices of power and other variables when the actual prices and values of
those variables are known. The OCC appealed this decision in August 1999.
The appeal is now pending.
In April 1999, CL&P filed with the DPUC for approval of its standard
offer rates. On October 1, 1999 and December 15, 1999, the DPUC issued
decisions regarding this filing. CL&P's overall rates, effective January 1,
2000, reflect a 10 percent reduction from the December 31, 1996 rate, as
mandated by the state restructuring legislation. CL&P's rates have been
unbundled into seven components, including an energy component, in order to
implement the legislation and allow customers to purchase energy from
competitive suppliers beginning on January 1, 2000.
In the October 1, 1999 decision, the DPUC also identified $470 million
of nonnuclear stranded costs that would be eligible for securitization if
customer benefits can be shown in a separate proceeding, which is expected to
be filed in the spring of 2000. Securitization is the monetizing of stranded
costs through the sale of nonrecourse debt securities, rate reduction bonds,
by a special purpose entity, as authorized by legislation, which are
collateralized by the NU system companies' interests in their stranded cost
recoveries. Securitization proceeds are applied in general to retire higher
cost capital of the utility.
The DPUC approved an interim nuclear capital recovery mechanism for the
period from January 1, 2000, until the nuclear units are sold at auction. The
DPUC, however, denied the recovery of most of the capital costs associated
with CL&P's nuclear investment subsequent to June 30, 1997, which CL&P had
expended or will expend prior to the sale of the plants, currently estimated
to occur in 2001. The DPUC has reopened the docket to reconsider this portion
of the order. Management believes the restructuring legislation provides for
the recovery of these prudently incurred expenditures. If CL&P is
unsuccessful in favorably resolving this contingency, an impairment loss of
approximately $50 million would be recorded.
CL&P's power supply to furnish standard offer service was procured
through a competitive bidding process conducted by the DPUC. On November 3,
1999, two unaffiliated companies were awarded 50 percent of CL&P's total
standard offer service load. As permitted in the restructuring legislation,
CL&P's competitive affiliate, an energy supply company, Select Energy, is
providing the remaining 50 percent, at the weighted average price of the
winning bids submitted by the unaffiliated companies. The four-year supply
contracts were effective January 1, 2000.
On December 15, 1999, as required by the restructuring legislation, CL&P
sold 2,235 megawatts (MW) of fossil-fueled generation assets in Connecticut
to an unaffiliated company for $460 million, and in March 2000, CL&P
transferred 1,057 MW of hydroelectric generation assets in Connecticut and
Massachusetts to NGC, an affiliated company, for approximately $681 million.
During the first quarter of 1999, in accordance with the Connecticut
restructuring legislation, CL&P renegotiated 15 power purchase agreements
(PPAs) with independent power producers. These renegotiations resulted in
buy out, buy down or prepayment agreements relating to the 15 PPAs. These
agreements were filed with the DPUC for approval and require that CL&P make
cash payments to the plant owners, contingent upon its receipt of proceeds
from rate reduction bonds. The DPUC has approved one of the agreements and
the DPUC proceedings concerning the remaining agreements are pending. For
CL&P's PPAs that were not renegotiated, an auction is being conducted by the
DPUC. CL&P expects that the auction results will be known in the first
quarter of 2000.
In November 1999, CL&P filed its divestiture plan for Millstone with the
DPUC. CL&P expects the auction of its share of Millstone, which will include
WMECO's and PSNH's share as well, to begin shortly after the DPUC has
approved its divestiture plan, which is currently expected to occur in March
2000. Based on this schedule a successful bidder could be chosen by mid 2000
with a closing in 2001. No NU system company will participate. CL&P intends
to auction its interest in the Seabrook nuclear plant when NAEC auctions its
Seabrook interest. The NAEC auction is contingent on approval of the PSNH
Settlement Agreement, discussed more fully below, and on NHPUC approval of a
divestiture plan.
In the fall of 1999, in order to implement the generation divestiture
provisions of the restructuring legislation, CL&P and WMECO agreed to sell
the capacity and energy associated with their unit entitlements in Millstone
2 and 3 and Seabrook to Select Energy and five unaffiliated companies
beginning January 1, 2000, and ending December 31, 2001. The price the
purchasers will pay is generally comprised of a capacity charge and an energy
charge. If the units operate as expected, the revenues that result from
these contracts over the two year period are expected to recover CL&P's and
WMECO's share of the nuclear operating costs including a return of and on the
remaining nuclear plant balances. The energy payments to CL&P and WMECO,
however, are contingent on the plants operating.
MASSACHUSETTS RATES AND RESTRUCTURING
Massachusetts enacted comprehensive electric utility industry
restructuring in November 1997. The legislation mandated, among other
things, customer choice of an energy supplier as of March 1, 1998, and
reduction of each electric utility's rates, including WMECO, by
September 1, 1999, to a level 15 percent below those in effect in August
1997, adjusted for inflation.
On September 17, 1999 and on December 20, 1999, the DTE issued orders on
WMECO'S restructuring plan. The orders permit WMECO to recover, among other
items, nonnuclear generation-related asset costs, certain nuclear generation-
related asset costs and nuclear decommissioning costs. The DTE also
approved WMECO's requested 11 percent return on equity for those transition
costs earning a return as well as the sale of WMECO's interest in Millstone
to be conducted concurrently with CL&P's sale of its interest in Millstone.
The DTE disallowed a return on WMECO's Millstone 1 investment and on its
investment in Millstone 2 and 3 from the date of retail access (March 1,
1998) until the date such units returned to service from their extended
outages (July 15, 1998 for Millstone 3 and May 19, 1999 for Millstone 2).
The pretax impact to WMECO's earnings from these dissallowances was $41
million. Two intervenors in WMECO's restructuring proceedings have appealed
the decision.
On December 30, 1999, the DTE approved the results of the auctions held
by WMECO to procure competitive standard offer service, default service and
interruptible rate standard offer service for the year 2000 from four
unaffiliated entities. Select Energy will supply customers receiving
interruptible rate standard offer service. WMECO will competitively procure
standard offer service, default service and interruptible rate standard offer
service from January 1, 2001 through February 28, 2005, at a later date.
On July 23, 1999, pursuant to the restructuring legislation, WMECO
completed the $47 million sale of 290 MW of fossil and hydroelectric
generation assets to Consolidated Edison Energy, Massachusetts, Inc., and in
March 2000, WMECO transferred 272 MW of hydro generation assets to NGC for
approximately $184 million. The net proceeds from these sales reduce WMECO's
stranded costs.
WMECO intends to file an application with the DTE in 2000, requesting
authorization to securitize a portion of its stranded costs.
NEW HAMPSHIRE RATES AND RESTRUCTURING
The state of New Hampshire's attempts to restructure the electric
utility industry in that state have resulted in extensive litigation in
various federal and state courts. In 1996, New Hampshire enacted legislation
requiring a competitive electric industry beginning in 1997. In February
1997, the NHPUC issued restructuring orders that would have forced PSNH and
NAEC to write off all of their regulatory assets and possibly seek protection
under Chapter 11 of the bankruptcy laws. Following the issuance of these
orders, PSNH immediately sought declaratory and injunctive relief on various
grounds in federal district court and received a preliminary injunction that
prevents implementation of the NHPUC's restructuring orders.
In August 1999, NU, PSNH and the state of New Hampshire signed a
Settlement Agreement intended to settle a number of pending regulatory and
court proceedings related to PSNH. Parties to the agreement included the
governor of New Hampshire, the Governor's Office of Energy and Community
Service, the New Hampshire attorney general, certain members of the staff of
the NHPUC, PSNH, and NU. The Settlement Agreement was submitted to the NHPUC
on August 2, 1999, and is awaiting approval. If approved by the NHPUC, the
Settlement Agreement would resolve 11 NHPUC dockets and PSNH's federal
lawsuit which had enjoined the state of New Hampshire from implementing its
restructuring legislation, would require PSNH to write off $225 million
after-tax of its stranded costs and would allow for the recovery of the
remaining amount. Also, implementation of the Settlement Agreement is
contingent upon the issuance of $725 million in rate reduction bonds
(securitization). Issuance of the rate reduction bonds requires the initial
approval of the NHPUC and final approval from the New Hampshire Legislature
via enactment of appropriate legislation. Other approvals are also required
from various federal and state regulatory agencies and financial lenders.
Under the terms of the Settlement Agreement, on the effective date, PSNH's
rates will be reduced from current levels by an average of 18.3 percent. A
decision on the Settlement Agreement is expected in the first quarter of
2000.
The Settlement Agreement also requires PSNH to sell its generation
assets and certain power contracts, including PSNH's current purchased-power
contract with NAEC for the output from Seabrook. The net proceeds from all
sales will be used to recover a portion of PSNH's stranded costs. The sales
would be accomplished through an auction process subject to approval by the
NHPUC. Following the divestiture, the transmission and distribution portion
of the business will continue to be cost-of-service based.
On November 2, 1999, the NHPUC approved continuation of the fuel and
purchased-power adjustment clause (FPPAC) charge for PSNH at its current
level until May 31, 2000.
COMPETITIVE SYSTEM BUSINESSES
NU is engaged in a variety of competitive businesses through Select
Energy, HEC, NGC, NGS, SEPPI, and Mode 1. With the exception of HEC whose
business is nationwide, the competitive businesses operate primarily in the
Northeast region of the United States.
ENERGY-RELATED PRODUCTS AND SERVICES AND GAS INVESTMENTS
Select Energy sells electricity, natural gas and oil to wholesale and
retail customers in the northeastern United States. Select Energy is the
largest wholesale and retail electric energy marketer in New England as
measured by MW load. In addition, Select Energy also markets natural gas and
develops and markets energy-related products and services and offers energy
management services through an affiliate, HEC, discussed more fully below.
Select Energy has recently received licenses to provide retail electric
supply from Delaware, New Jersey, Maine, Pennsylvania, New York,
Massachusetts, Rhode Island, and New Hampshire. The DPUC has also granted
Select Energy a six-month provisional license expiring on June 30, 2000, to
serve customers in Connecticut. Proceedings at the DPUC are ongoing to
extend Select Energy's license. Select Energy is currently registered with
approximately 50 electric distribution companies and 50 gas distribution
companies to provide retail services.
Select Energy's goal is to be the regional and national leader in
providing standard offer service to those Northeast markets opened to retail
competition. Currently, Select Energy provides more than 5,000 MW of
standard offer load, making it the largest provider of standard offer service
in the Northeast. On December 22, 1999, Select Energy and a Massachusetts
utility signed a six-month power supply agreement, effective January 1, 2000,
to meet the utility's standard offer service requirements, which are expected
to exceed 3,000 MW. This contract does not include renewal or termination
provisions. Select Energy has been serving this standard offer load since
December 1998. During 1999, revenues billed to this customer totaled $276.1
million, or approximately 46 percent of Select Energy's revenues. On January
1, 2000, Select Energy began serving CL&P with one-half of its approximately
2,000 MW standard offer requirement for a four-year period. The CL&P
standard offer contract does not include renewal provisions. Select Energy
can terminate the contract if the FERC or DPUC require changes to the
contract which create material adverse economic impact to Select Energy which
cannot be cured. These power supply contracts are expected to provide Select
Energy with over 50 percent of its revenues in the year 2000. In addition,
beginning in January 2000, Select Energy assumed responsibility for serving
approximately 500 MW of market-based wholesale contracts throughout New
England with electric energy supply that was previously provided by CL&P and
WMECO. For the most part, the prices are fixed by contract and applicable to
actual volumes.
As of December 31, 1999, Select Energy had contracts with retail electric
customers in states throughout the Northeast with primarily one-year
terms. These contracts represent approximately 650 MW of load and 17,000
service locations and include predominantly commercial, institutional and
industrial accounts. This retail load establishes Select Energy as the
largest competitive retail supplier in New England as measured by MW load.
There is no single retail customer that accounts for over 5 percent of Select
Energy's expected retail revenues.
The energy marketing and brokering business is intensely competitive,
with many large companies with larger financial resources than NU's bidding
for business in the increasingly restructured New England market. Sharply
fluctuating cost of power supply caused by, among other things, weather
extremes, plant outages and fuel costs, and a lack of load-following
generating facilities, have made it difficult for Select Energy to
economically match its wholesale power purchases with its power supply
obligations. In 1998, Select Energy recorded a net loss of $13.4 million on
revenues of $29.3 million, and in 1999 Select Energy recorded a net loss of
$38.8 million on revenues of $554.9 million.
Disputes with respect to interpretation and implementation of the New
England Power Pool (NEPOOL) market rules have arisen with respect to various
competitive product markets. In certain cases, Select Energy and the NU
operating companies stand to gain as a result of resolution of such disputes.
In other cases, Select Energy and the NU operating companies could incur
additional costs as a result of resolution of the disputes. The various
disputes are in different stages of resolution through alternative dispute
resolution and regulatory review. It is too early to tell the level of
potential gain or loss that may result upon resolution of these issues.
Select Energy's ability to economically compete has also been affected by
NU's weakened financial position caused by the extended Millstone outages
which ended in mid 1999.
In order to support and complement its growing wholesale and retail
business, Select Energy has contracted with NGC, NU's generation holding
company affiliate, to purchase 1,329 MW from resources acquired at auction
from CL&P and WMECO for a six-year period beginning in 2000. In addition,
Select Energy is purchasing approximately 200 MW of coal and hydroelectric
generating resources from HWP and more than 1,500 MW of electrical supply from
various New England generating facilities on a long-term basis. In addition,
Select Energy utilizes generation failure insurance, options and energy
futures to hedge its supply requirements.
In May of 1999, Select Energy signed a $26 million asset purchase
agreement with Aurora Natural Gas LLC (Aurora). Aurora is a privately
held natural gas marketing and trading company based in Dallas, Texas which
serves the producer, wholesale and retail market segments. Select Energy
acquired Aurora's retail customer contracts and associated natural gas
supplies in New England, making Select Energy one of the region's largest
competitive retail gas providers as measured by volume. As of December 31,
1999, Select Energy had contracts with approximately 650 retail gas
customers, primarily located in Connecticut, Massachusetts and Pennsylvania.
These contracts generally have one-year terms and include only commercial,
institutional and industrial accounts. There is no single retail gas
customer that accounts for over 5 percent of Select Energy's expected retail
gas revenues. In 1999, Select Energy's retail gas revenues were
approximately $20 million.
SEPPI was formed in March 1999 to hold a 5 percent partnership interest
in the Portland Natural Gas Transmission System. SEPPI's investment in the
project was $9.6 million as of December 31, 1999.
ELECTRIC GENERATION AND SERVICES
NGC was formed in 1999 to acquire generating facilities. In March 2000,
1,329 MW of hydroelectric and pumped storage generating assets in Connecticut
and Massachusetts were transferred to NGC from CL&P and WMECO. These assets
include seven facilities of CL&P's Housatonic River System (123 MW), three
facilities that make up CL&P's Eastern Connecticut System, including one gas
turbine (27 MW), the Northfield Mountain pumped storage station (owned 81% by
CL&P and 19% by WMECO) and the Cabot and Turners Falls No. 1 hydroelectric
stations located in Massachusetts and owned by WMECO (1,179 MW in aggregate).
NGC has sold the capacity and output of the plants to Select Energy for a
period of six years.
NGS was formed in 1999 to provide energy-related operation and maintenance
services to owners of generation facilities and the industrial market in the
Northeast. NGS currently focuses on providing turnkey management and operation
services and also a full range of industrial and consulting services. NGS has
entered into contracts to operate the generating facilities of NGC and HWP.
NGS's industrial services include maintenance, permitting, and
environmental and specialized electrical testing services to large and
medium-sized industrial businesses. NGS also provides consulting services to
these customers, including engineering and design, construction management,
asset development, due diligence reviews and environmental regulatory
compliance and permitting services. During 1999, NGS's revenues were
approximately $5.3 million, but are expected to grow significantly in 2000 as
a result of the NGC and HWP contracts referenced above, which are expected to
account for over 60 percent of NGS's revenues in 2000.
ENERGY MANAGEMENT SERVICES
In general, HEC contracts to reduce its customers' energy costs, improve
their facilities and conserve energy and other resources. HEC's energy
management and consulting services have primarily been directed to the
commercial, industrial and institutional markets and utilities in the eastern
United States. HEC has been awarded energy-saving contracts for federal
installations throughout the United States. In competitive procurements by
the U.S. Departments of Energy and Defense, HEC has been selected as an
"Energy Saving Performance Contractor" (ESPC) for all 50 states and overseas
bases. Specific task orders have been placed with HEC to date by Fort
Huachuca in Arizona, Portsmouth Naval Shipyard in Maine and Tobyhanna Army
Depot in Pennsylvania. The Tobyhanna award is the largest and calls for HEC
to build a 13.5-mile gas pipeline, replace the inefficient central plant,
upgrade controls and lighting, and provide gas and maintenance services for
22 years. In 1999, federal ESPC work constituted 38% of HEC's revenues.
NU's aggregate equity investment in HEC was approximately $19 million as of
December 31, 1999. HEC's 1999 revenues were approximately $46.6 million,
double their 1998 total revenues.
In August 1999, HEC acquired through a wholly owned subsidiary, Select
Energy Contracting, Inc., the name and substantially all of the assets of
Denron Plumbing and HVAC, Inc. of Manchester, New Hampshire, the largest
mechanical contractor in northern New England. HEC's revenues from the
acquisition were $6.3 million in 1999.
TELECOMMUNICATIONS
Mode 1 was established in 1996 to participate in a wide range of
telecommunications activities both within and outside New England. NU's
cumulative, total investment in Mode 1 was approximately $6.3 million as of
December 31, 1999. Mode 1 is a licensed competitive local exchange carrier
authorized to provide local phone service within the state of Connecticut.
In 1999, Mode 1 constructed a fiber optic network called "HELPNET"
connecting 41 public schools and libraries in the city of Hartford. Mode 1
was awarded a $3.3 million contract from the city for the HELPNET project,
under a grant from the federal government.
Mode 1 currently owns approximately 26 percent, fully diluted, or
approximately 4.8 million, of the common shares of NorthEast Optic Network,
Inc. (NEON), which is constructing a fiber optic communications network
through New England, New York, Philadelphia, and Washington, D.C., utilizing a
portion of the NU system companies' transmission and distribution facilities.
An officer of NU and an officer of NUSCO are members of the Board of
Directors of NEON. In addition, NU is a party to an agreement with Central
Maine Power Company (CMP), an owner of approximately 33 percent of NEON's
common shares, fully diluted, wherein NU and CMP each agree that, as long as
NU owns at least 10 percent of the outstanding common stock of NEON, fully
diluted, and the cumulative holdings of NU and CMP are at least 33 1/3
percent, fully diluted, neither NU nor CMP will take any action which will
allow NEON to merge, consolidate, liquidate or sell, lease or transfer
substantially all of its assets or commence or acquiesce to any action or
proceeding under any bankruptcy laws.
In November 1999, NEON entered into subscription agreements with
Consolidated Edison Communications, Inc. (CEC), a subsidiary of Con Edison,
and another unaffiliated company for NEON to issue stock in exchange for
contributions to NEON by each utility of telecommunications assets in kind
and cash. Under the agreements, CEC and the other party, subject to certain
vesting conditions, ultimately would receive 10.75 and 9.25 percent of NEON
stock, respectively, and would each nominate one member to the NEON board of
directors. The agreements are subject to regulatory approvals, which are
expected by the spring of 2000.
FINANCING PROGRAM
1999 FINANCINGS
On April 14, 1999, PSNH entered into two letters of credit and
reimbursement agreements totaling $115.4 million, which support its Series D
and E pollution control revenue bonds (PCRBs). The new letters of credit,
which replaced similar letters of credit that were set to expire on April 22,
1999, allow the PCRBs to remain in their flexible, floating interest rate
mode and expire on April 12, 2000. In connection with these letter of credit
transactions, on April 14, 1999, PSNH terminated its $75 million revolving
credit facility that was set to expire on April 22, 1999.
On November 19, 1999, NU entered into a $350 million, 364-day revolving
credit facility which allows NU access to $200 million in cash and allows
Select Energy and other competitive subsidiaries, subject to the overall $350
million limit, access to $250 million in letters of credit.
On November 19, 1999, CL&P and WMECO entered into a new 364-day
revolving credit facility for $500 million, replacing the previous $313.75
million facility which was to expire on November 21, 1999. Under this
agreement, CL&P and WMECO may draw up to $300 million and $200 million,
respectively. Once CL&P and WMECO receive the proceeds of securitization,
the borrowing limits will be reduced to $300 million, with a $200 million
limit for CL&P and a $100 million limit for WMECO.
In connection with the sale of CL&P's fossil units, CL&P redeemed in
December 1999, the following series of first mortgage bonds: 1994 Series B 6
1/8%, Series YY 7 1/2% and Series ZZ 7 3/8% and a portion of its Series XX 5
3/4%.
On September 14, 1999, the NU Board of Trustees approved the payment of
NU's first common share dividend since March 1997. NU paid a dividend of 10
cents per share on December 30, 1999, to shareholders of record as of the
close of business December 1, 1999. On January 11, 2000, the NU Board of
Trustees declared a regular quarterly dividend of 10 cents per share, payable
March 31, 2000, to shareholders of record of March 1, 2000. The record date
for this dividend was changed on January 31, 2000 to March 6, 2000, to
provide Yankee shareholders who received NU common shares the opportunity to
receive the dividend following the Yankee merger.
Total NU system debt, including short-term and capitalized lease
obligations, was $3.3 billion as of December 31, 1999, compared with $3.9
billion as of December 31, 1998. For more information regarding NU system
financing, see "Notes to Consolidated Statements of Capitalization" in NU's
financial statements, other footnotes related to long-term debt, short-term
debt and the sale of accounts receivables, as applicable, in the notes to
NU's, CL&P's, PSNH's, WMECO's, and NAEC's financial statements and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
2000 FINANCING REQUIREMENTS
The NU system's aggregate capital requirements for 2000 are approximately
as follows:
CL&P PSNH WMECO NAEC Other NU system
(Millions)
Construction $205.8 $ 51.6 $24.2 $ 4.5 $23.6 $309.7
Nuclear Fuel 47.5 1.2 10.7 14.8 - 74.2
Maturities 159.0 - 60.0 200.0 - 419.0
Cash Sinking Funds 19.8 25.0 1.5 70.0 28.1 144.4
------ ------ ----- ------ ----- ------
Total $432.1 $ 77.8 $96.4 $289.3 $51.7 $947.3
====== ====== ===== ====== ===== ======
For further information on the NU system's 2000 and five-year financing
requirements, see "Notes to Consolidated Statements of Capitalization" in
NU's financial statements, "Long-Term Debt" in the notes to CL&P's, PSNH's,
WMECO's, and NAEC's financial statements and "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations."
2000 FINANCING PLANS
As a result of industry restructuring and new business initiatives, the
NU system companies are likely to undertake a much higher level of financing,
refinancing, and debt and preferred stock retirement in 2000 than they have
in previous years. CL&P, PSNH and WMECO all intend to work with authorities
in their respective states in 2000 to securitize stranded costs. More than
$2.5 billion could become available to those three regulated companies and
NAEC to retire debt and preferred stock and return common equity to the
parent company. Additionally, the transfer of 1,329 MW of generating assets
to NGC in March 2000 provided CL&P and WMECO with $681 million and $184
million, respectively, of additional proceeds, approximately $390 million of
which is expected to be returned to NU in the form of stock repurchases
($300 million from CL&P and $90 million from WMECO) and the balance was used
primarily to pay off debt and preferred stock. By the end of 2000, assuming
securitization occurs in each state, NU anticipates that the total
capitalization of CL&P, PSNH, WMECO, and NAEC will be materially reduced from
levels at the start of the year. Each of the regulated subsidiaries'
construction needs, nuclear fuel purchases, maturities, and sinking funds is
expected to be largely met through internally generated funds and short-term
borrowings.
NU's merger with Yankee on March 1, 2000, was financed with a combination
of 11.1 million newly issued NU shares and a $263 million senior term loan
credit facility. NGC expects to finance the acquisition of certain of CL&P's
and WMECO's hydroelectric assets with a $430 million credit facility that will
mature on December 29, 2000. NGC is examining various options for refinancing
that facility prior to its maturity.
As discussed above, PSNH has approximately $110 million of letters of
credit that support certain variable-rate pollution control bonds. These
letters of credit will expire on April 12, 2000. On March 1, 2000, the NHPUC
approved PSNH's application to renew them for a 12-month period from April 4,
2000.
FINANCING LIMITATIONS
Many of the NU system companies' charters and borrowing facilities
contain financial limitations that must be satisfied before borrowings can be
made and for outstanding borrowings to remain outstanding.
Under their current revolving credit agreement, CL&P and WMECO are
required to maintain a ratio of common equity to total capitalization of at
least 28 percent through December 31, 1999, and 30 percent thereafter. At
December 31, 1999, CL&P's and WMECO's common equity ratios were 34.61 percent
and 34.65 percent, respectively. This agreement also requires, beginning in
the fourth quarter of 1999, both CL&P and WMECO to maintain a quarterly ratio
of 12-month operating income to interest expense (interest coverage ratio) of
at least 2 to 1. For the quarter ended December 31, 1999, CL&P's and WMECO's
interest coverage ratios were 3.44 to 1 and 2.69 to 1, respectively.
Under NU's revolving short-term credit agreement and its Yankee-related
short-term loan agreement, NU is required to maintain a consolidated common
equity ratio of at least 28 percent through December 31, 1999, and 30 percent
thereafter. At December 31, 1999, NU's consolidated common equity ratio was
35.31 percent. In addition, NU is required to maintain a consolidated
quarterly interest coverage ratio of 2 to 1. For the quarter ended
December 31, 1999, NU's consolidated interest coverage ratio was 2.67 to 1.
NU is also required to maintain as of the end of each quarter commencing with
the quarter ending March 31, 2000, a ratio of operating cash flow to fixed
charges of at least 1.50 to 1.
These agreements also limit NU's ability, without creditor approval, to
incur additional debt, except for debt incurred in connection with pending
matters, and limit NU's ability to make future investments, including
investments in Select Energy and other subsidiaries in excess of $100 million
and $50 million, respectively.
PSNH and NAEC are parties to a variety of financing agreements which
provide that the credit thereunder can be terminated or accelerated if each
does not maintain specified minimum ratios of common equity to capitalization
(as defined in each agreement). For PSNH, the minimum common equity ratio
required in certain letters of credit and reimbursement agreements is not
less than 32.5 percent. At December 31, 1999, PSNH's common equity ratio was
56.6 percent. For NAEC, the minimum common equity ratio required under its
term loan agreement is 25 percent; at December 31, 1999, NAEC's common equity
ratio was 30.02 percent.
In addition, PSNH's letters of credit and reimbursement agreements
require that for PSNH to obtain and maintain borrowings thereunder, it must
demonstrate that its ratio of operating income to interest expense will be at
least 2.35 to 1 at the end of each fiscal quarter for the remaining term of
the agreements. The NAEC term loan agreement requires a ratio of adjusted
net income to interest expense of 1.50 to 1 at the end of each fiscal quarter
for the remaining term of the agreement. For the 12-month period ended
December 31, 1999, the corresponding ratios for PSNH and NAEC were 4.98 to 1
and 2.84 to 1, respectively.
PSNH's letters of credit and reimbursement agreements limit PSNH's
unsecured debt to $25 million. In addition, these financing agreements
provide in effect that the credit thereunder can be terminated or accelerated
if there are actions taken, either by PSNH or NAEC or by the state of New
Hampshire, that deprive PSNH and/or NAEC of the benefits of the Rate
Agreement and/or the Seabrook Power Contracts.
The amount of short-term debt that may be incurred by NU, CL&P, WMECO,
HWP, and NAEC are also subject to periodic approval by the SEC under the 1935
Act. PSNH's short-term debt is regulated by the NHPUC. The following table
shows the amount of short-term borrowings authorized by the SEC or the NHPUC
for each company, as the case may be, as of December 31, 1999, and the net
amounts of outstanding short-term debt and cash investments of those
companies at the end of 1999 and as of March 1, 2000:
Short-Term Debt
Maximum Authorized Outstanding
Short-Term Debt and (Cash Investments)*
------------------ -----------------------
December 31, March 1,
1999 2000
(Millions)
NU.................. $400.0 $ 19.7 $ 34.7
CL&P ............... 375.0 101.7 9.6
PSNH**.............. 68.3 (180.1) (237.1)
WMECO............... 250.0 132.4 133.4
HWP................. 5.0 (15.5) (17.2)
NAEC................ 60.0 (56.4) (61.0)
OTHER............... N/A 45.1 74.5
------- -------
Total $ 46.9 $(63.1)
======= =======
* These columns include borrowings of or cash investments by various NU
system companies from NU and other NU system companies. Total NU system
short-term indebtedness to unaffiliated lenders was $278 million at
December 31, 1999, and $288 million at March 1, 2000.
** Under applicable NHPUC provisions, PSNH can incur short-term debt up to
10 percent of net fixed plant. As of December 31, 1999, PSNH's net fixed plant
as measured by FERC was approximately $683 million, so PSNH could borrow up
to $68.3 million of short-term debt.
The supplemental indentures under which NU issued $175 million in
principal amount of 8.58 percent amortizing notes in December 1991 and $75
million in principal amount of 8.38 percent amortizing notes in March 1992
contain restrictions on dispositions of certain NU system companies' stock,
limitations of liens on NU assets and restrictions on distributions on and
acquisitions of NU stock. Under these provisions, NU, CL&P, PSNH, and WMECO
may not dispose of voting stock of CL&P, PSNH or WMECO other than to NU or
another NU system company, except that CL&P may sell voting stock for cash to
third persons if so ordered by a regulatory agency so long as the amount sold
is not more than 19 percent of CL&P's voting stock after the sale. The
restrictions also generally prohibit NU from pledging voting stock of CL&P,
PSNH or WMECO or granting liens on its other assets in amounts greater than
five percent of the total common equity of NU. Many of the NU system
companies' loan agreements have similar restrictions. As of December 31,
1999, no NU debt was secured by liens on NU assets. Furthermore, NU may not
declare or make distributions on its capital stock, acquire its capital stock
(or rights thereto), or permit a NU system company to do the same, at times
when there is an event of default under the supplemental indentures under
which the amortizing notes were issued.
Pursuant to its revolving short-term credit agreement and the Yankee
credit agreement, NU may not declare dividends or make distributions, except
for dividends not to exceed $53 million during any 12-month period and stock
repurchases of up to $215 million in connection with the Yankee merger.
Similar restrictions are found in NU's merger agreement with Con Edison.
The charters of CL&P and WMECO contain preferred stock provisions
restricting the amount of unsecured debt those companies may incur. As of
December 31, 1999, CL&P's and WMECO's charters permit CL&P and WMECO to incur
an additional $322 million and $132 million, respectively, of unsecured debt.
The indentures securing the outstanding first mortgage bonds of CL&P,
PSNH, WMECO, and NAEC provide that additional bonds may not be issued, except
for certain refunding purposes, unless earnings (as defined in each indenture
and before income taxes, and, in the case of PSNH, without deducting the
amortization of PSNH's regulatory asset), are at least twice the pro forma
annual interest charges on outstanding bonds, and certain prior lien
obligations and bonds to be issued. While CL&P's and WMECO's 1999 earnings
permit them to meet those earnings coverage tests, their loan agreements
prohibit the issuance of additional first mortgage bonds.
The preferred stock provisions of CL&P's and WMECO's charters also
prohibit the issuance of additional preferred stock (except for refinancing
purposes) unless income before interest charges (as defined and after income
taxes and depreciation) is at least 1.5 times the pro forma annual interest
charges on indebtedness and the annual dividend requirements on preferred
stock that will be outstanding after the additional stock is issued. CL&P
and WMECO are currently unable to issue additional preferred stock under
these provisions.
The supplemental indentures under which CL&P's first mortgage bonds have
been issued limit the amount of cash dividends and other distributions these
subsidiaries can make to NU out of their retained earnings. As of December
31, 1999, CL&P had an accumulated deficit of approximately $359 million that
must be made up before it is able to make such distributions to NU. CL&P,
however, has requested approval from the SEC permitting it to make up to $310
million of distributions to NU arising out of restructuring. The indenture
under which NAEC's Series A Bonds have been issued also limits the amount of
cash dividends or distributions NAEC can make to NU to retained earnings plus
$10 million. At December 31, 1999, approximately $23 million was available
to be paid under this provision.
PSNH's letters of credit and reimbursement agreements prohibit it from
declaring or paying any cash dividends or distributions on any of its capital
stock, except for dividends on preferred stock, unless minimum interest
coverage and common equity ratio tests discussed above are satisfied. These
agreements also require creditor approval for PSNH to pay more than an
aggregate of $40 million of certain restricted payments (dividends or other
distributions to NU and NUG settlement payments). PSNH's preferred stock
provisions also limit the amount of cash dividends and other distributions
PSNH can make to NU if, after taking the dividend or other distribution into
account, PSNH's common stock equity is less than 20 percent of total
capitalization. At December 31, 1999, approximately $1,047 million was
available to be paid under these provisions. NAEC is also subject to a
similar test under its term note agreement. At December 31, 1999, $29
million was available to be paid by NAEC under this provision.
In March 2000, in connection with the approval of PSNH's extension of
certain letter of credit and reimbursement agreements, the NHPUC restated a
previous order requiring PSNH to obtain NHPUC approval before paying any
dividends on its common stock and before investing any PSNH funds in the NU
system money pool during the expected 364-day term of the facilities. It is
expected that the NHPUC will address this issue in connection with its decision
on the Settlement Agreement.
Applicable merger accounting rules require that upon acquisition by NU,
Yankee's and its subsidiaries' retained earnings are converted to capital
surplus. Also, the merger premium NU paid to acquire Yankee will be
allocated among Yankee and its subsidiaries, "pushed down" to their balance
sheets and amortized to expense. The majority of the merger premium will be
amortized over 40 years. Under the 1935 Act, subsidiaries of registered
holding companies are only allowed to pay dividends out of retained earnings
unless the SEC allows otherwise. The effect of this rule would be to prevent
Yankee from paying dividends to NU from any source other than post-merger
earnings, as reduced by the merger premium amortization. NU has sought
permission from the SEC for Yankee and its subsidiaries to pay dividends up
to the amount of Yankee's pre-merger retained earnings and post-merger
retained earnings and without regard to merger premium amortization
thereafter, and expects to receive this authorization during the second
quarter of 2000.
NU also intends to apply to the SEC for waivers of these rules so that,
following the merger with Con Edison, it and its subsidiaries, including
Yankee, will be able to pay dividends utilizing the pre-merger retained
earnings of the NU system and compute current earnings without regard to the
amortization of the NU merger premium. If this order is not granted NU's
ability to pay dividends to Con Edison would be constrained.
NU is required under the 1935 Act to maintain its consolidated common
equity at a level equal to at least 30 percent of its consolidated
capitalization. Following the issuance of rate reduction bonds by its
subsidiaries, NU will temporarily be unable to meet this standard because
such bonds, although nonrecourse to the NU system company issuers, are
considered to be indebtedness of the companies under generally accepted
accounting principles. The SEC has granted a waiver to NU allowing it to
maintain its consolidated common equity ratio below 30 percent for one year
following the date all of the NU system companies have issued the maximum
amount of rate reduction bonds. The 30 percent test also applies to NU's
electric operating subsidiaries. The SEC has granted them a waiver of this
test for 12 years following the issuance of their respective rate reduction
bonds.
NU provides credit assurance in the form of guarantees, letters of
credit, performance guarantees and other assurances for the financial
performance obligation of certain of its unregulated subsidiaries,
particularly Select Energy. NU currently has authorization from the SEC to
provide up to $500 million of guarantees, but is limited under certain loan
agreements to $350 million of such arrangements without creditor approval.
As of December 31, 1999, NU had provided approximately $190 million of such
credit assurances.
Certain NU system financing agreements also have covenants or trigger
events tied to credit ratings of certain NU system companies.
CONSTRUCTION PROGRAM
The NU system's construction program expenditures, including allowance
for funds used during construction (AFUDC), in the period 2000 through 2004
are estimated to be as follows:
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
(Millions of Dollars)
CL&P $205.8 $217.2 $268.2 $302.3 $271.0
PSNH 51.6 48.1 68.2 79.1 67.3
WMECO 24.2 21.0 22.0 23.5 21.9
NAEC 4.5 5.1 - - -
NGC 3.3 9.1 8.9 12.4 1.3
Other 20.3 19.6 17.3 13.4 11.6
------ ------ ------ ------ ------
NU System Total $309.7 $320.1 $384.6 $430.7 $373.1
====== ====== ====== ====== ======
The construction program data shown above includes all anticipated
capital costs necessary for committed projects and for those reasonably
expected to become committed, regardless of whether the need for the project
arises from environmental compliance, nuclear safety, reliability
requirements, or other causes. While the data assumes the sale of Millstone
and Seabrook by June 30, 2001 and December 31, 2001, respectively, the
companies hope to close the Millstone sale by April 1, 2001. The
construction program's main focus is maintaining and upgrading the existing
transmission and distribution system and nuclear and hydroelectric generating
assets.
REGULATED ELECTRIC OPERATIONS
DISTRIBUTION AND SALES
CL&P, PSNH and WMECO furnish retail franchise service in 149, 198 and 59
cities and towns in Connecticut, New Hampshire and Massachusetts,
respectively. In December 1999, CL&P furnished retail franchise service to
approximately 1.12 million customers in Connecticut, PSNH provided retail
service to approximately 428,000 customers in New Hampshire and WMECO served
approximately 198,000 retail franchise customers in Massachusetts. HWP
serves 32 retail customers in Holyoke, Massachusetts.
The following table shows the sources of 1999 electric franchise retail
revenues based on categories of customers:
CL&P PSNH WMECO Total NU system
---- ---- ----- ---------------
Residential........... 46% 42% 41% 45%
Commercial............ 39% 35% 37% 37%
Industrial............ 13% 22% 21% 17%
Other................. 2% 1% 1% 1%
---- ---- ---- ----
Total................. 100% 100% 100% 100%
==== ==== ==== ====
The actual changes in retail kWh sales for the last two years and the
forecasted retail sales growth estimates for the ten-year period 1999 through
2009 for CL&P, PSNH and WMECO are set forth below:
1999 over 1998 over Forecast 1999-2009
1998 1997 Compound Rate of Growth
--------- --------- -----------------------
NU system....... 3.8% 1.9% 1.4%
CL&P........... 2.9% 2.2% 1.5%
PSNH........... 5.3% 2.3% 1.6%
WMECO.......... 3.6% 1.3% 1.1%
Consolidated NU retail sales grew by 3.8 percent in 1999, compared with
1998, primarily due to the continued strengthening of the regional economy and
weather that was both hotter in the summer and colder in the winter than in
1998. Residential electric sales were up 6.2 percent. Commercial sales were
up by 3 percent for the year and industrial sales increased by 1.5 percent.
Retail sales for all of the NU system electric operating companies increased
in 1999 with CL&P, WMECO and PSNH sales up 2.9 percent, 3.6 percent and 5.3
percent, respectively.
REGIONAL AND SYSTEM COORDINATION
The NU system companies and most other New England utilities are parties
to an agreement (NEPOOL Agreement), which provides for coordinated planning
and operation of the region's generation and transmission facilities. The
NEPOOL Agreement was restated and revised as of March 1997 to provide for a
pool-wide open access transmission tariff and for the creation of an
Independent System Operator (ISO). Under these new arrangements: (i) the
ISO, a nonprofit corporation whose board of directors and staff are not
controlled by or affiliated with market participants, ensures the reliability
of the NEPOOL transmission system, administers the NEPOOL tariff and oversees
the efficient and competitive functioning of the regional power market; (ii)
the NEPOOL tariff provides for nondiscriminatory open access to the regional
transmission network at one rate regardless of transmitting distance for all
transactions; and (iii) a broader governance structure for NEPOOL and a more
open, competitive market structure are established.
On April 7, 1999, the NEPOOL Executive Committee filed a comprehensive
settlement of all issues set for hearing concerning the NEPOOL transmission
tariff. The settlement resolves disputes concerning the calculation of
revenue requirements for transmission over NEPOOL facilities and resolves
disputes over alleged "double charges" under grandfathered transmission
contracts retained by individual transmission providers, including NU. The
settlement also includes a rate of return on equity ("ROE") component which
sets the ROE for each individual transmission provider owning NEPOOL
transmission facilities with respect to those facilities from March 1, 1997
through at least June 1, 2000, provided no changes to individual network
transmission tariff rates are made after December 31, 1999. NU's ROE has
been set at 11.75 percent.
There are two agreements that determine the manner in which costs and
savings are allocated among the NU system electric operating companies.
Under an agreement (NUG&T) among CL&P, WMECO and HWP, these companies pool
their electric production costs and the costs of their principal transmission
facilities. Pursuant to the merger agreement between NU and PSNH, these
companies and PSNH entered into a ten-year sharing agreement (Sharing
Agreement), expiring in June 2002, that provides, among other things, for the
allocation of the capability responsibility savings and energy expense
savings resulting from a single-system dispatch through NEPOOL.
On June 10, 1999, NUSCO, on behalf of CL&P, HWP and WMECO submitted a
filing at the FERC to amend the NUG&T in order to eliminate the generation
aspects of the agreement. Interventions were submitted by the Massachusetts
attorney general and the DTE. While the DTE raised no issues with the
proposed amendment, the Massachusetts attorney general protested the
amendment, claiming that it would result in stranded costs being transferred
unfairly to WMECO. On July 28, 1999, the FERC approved the proposed amendment
subject to the outcome of a hearing which was held in abeyance pending the
outcome of state restructuring proceedings. The DTE rejected the
Massachusetts attorney general's arguments in an order dated December 1,
1999. While the FERC hearing continues to be held in abeyance, NUSCO and the
Massachusetts attorney general filed pleadings on February 1, 2000, regarding
the final disposition of the FERC proceeding.
Under the Settlement Agreement between PSNH and the state of New
Hampshire, if approved, the Sharing Agreement would be terminated.
TRANSMISSION ACCESS AND FERC REGULATORY CHANGES
Pursuant to FERC Order 888 (issued in April 1996) NU system companies
operate their transmission system under an open access, nondiscrimatory
transmission tariff.
In December 1999, the FERC issued an order calling on all transmission
owners to voluntarily join Regional Transmission Organizations (RTOs) in
order to boost competition in electric markets. In general, these
organizations would be an independent operator over all transmission
facilities, and would perform, among other functions, tariff administration,
construction planning and reliability management for the particular regional
transmission system. NU's active voting interest in such an organization
would be limited to 5 percent under the proposal.
NU system companies and other parties have requested rehearing of this
order. Of primary concern to NU is the ratemaking authority granted to RTOs
and its impact on the ability of transmission owners to earn appropriate
returns on their transmission investment under the organizational structure
and the minimum functions proposed in the order. The NU system companies are
required to participate in a collaborative process established by the FERC
beginning in March of 2000. NU is also required to notify the FERC of its
plans with regard to joining one of these organizations no later than
January 15, 2001.
NUCLEAR GENERATION
GENERAL
Certain NU system companies have ownership interests in four nuclear
units, Millstone 1, 2 and 3 and Seabrook, and equity interests in four
regional nuclear companies (the Yankee companies) that separately own the
Connecticut Yankee nuclear unit (CY), the Maine Yankee nuclear unit (MY), the
Vermont Yankee nuclear unit (VY), and the Yankee Rowe nuclear unit (Yankee
Rowe). NU system companies operate the two Millstone units and Seabrook.
Yankee Rowe, CY, MY, and Millstone 1 have been permanently removed from
service.
CL&P and WMECO own 100 percent of Millstone 1 and 2 as tenants in
common. Their respective ownership interests in each unit are 81 percent and
19 percent.
CL&P, PSNH and WMECO have agreements with other New England utilities
covering their joint ownership as tenants in common of Millstone 3. CL&P's,
PSNH's and WMECO's ownership interests in the unit are 52.93, 2.85 and 12.24
percent, respectively. NAEC and CL&P have 35.98 percent and 4.06 percent
ownership interests, respectively, in Seabrook.
In 1996, one of the joint owners of Millstone 3, the Vermont Electric
Generation and Transmission Cooperative, Inc. (VEG&T), filed for bankruptcy.
The subsequent liquidation resulted in the offering of VEG&T's .35 percent
share of Millstone 3 for sale to the joint owners of Millstone 3. None of
the non-NU joint owners accepted the offer. CL&P intends, subject to approval
of the bankruptcy court and the DPUC, to include the VEG&T share in its
planned Millstone auction.
The Millstone 3 and Seabrook joint ownership agreements provide for pro-
rata sharing by the owners of each unit of the construction and operating
costs, the electrical output and the associated transmission costs. CL&P and
WMECO, through NNECO as agent, operate Millstone 3 at cost, and without
profit, under a sharing agreement that obligates them to utilize good utility
operating practice and requires the joint owners to share the risk of
employee negligence and other risks pro-rata in accordance with their
ownership shares. The sharing agreement provides that CL&P and WMECO would
only be liable for damages to the minority owners for a deliberate breach of
the agreement pursuant to authorized corporate action.
For information regarding lawsuits filed against NU by the minority
owners of Millstone 3 regarding the sharing agreement and certain arbitration
proceedings related to the ongoing Millstone outages, see "Item 3. Legal
Proceedings."
CL&P, PSNH, WMECO, and other New England electric utilities are the
stockholders of the Yankee companies. Each Yankee company owns a single
nuclear generating unit. The stockholder-sponsors of each Yankee company are
responsible for proportional shares of the operating and decommissioning
costs of the respective Yankee company and are entitled to proportional
shares of the electrical output in the case of VY, which is the only
operating unit of the four Yankee companies set forth below. The relative
rights and obligations with respect to the Yankee companies are approximately
proportional to the stockholders' percentage stock holdings, but vary
slightly to reflect arrangements under which nonstockholder electric
utilities have contractual rights to some of the output of particular units.
CL&P's, PSNH's and WMECO's stock ownership percentages in the Yankee companies
are set forth below:
CL&P PSNH WMECO NU system
Connecticut Yankee Atomic
Power Company (CYAPC)....... 34.5% 5.0% 9.5% 49.0%
Maine Yankee Atomic Power
Company (MYAPC)............. 12.0% 5.0% 3.0% 20.0%
Vermont Yankee Nuclear
Power Corporation (VYNPC)... 9.5% 4.0% 2.5% 16.0%
Yankee Atomic Electric
Company (YAEC).............. 24.5% 7.0% 7.0% 38.5%
On October 15, 1999, VYNPC agreed to sell VY for $22 million to
AmerGen Energy Company LLC (AmerGen). AmerGen, among other commitments,
agreed to assume the decommissioning cost of the unit after it is taken out
of service, and the VYNPC owners have agreed to fund the uncollected
decommissioning cost to a negotiated amount at the time of the closing of the
sale. VYNPC's owners have also agreed either to enter into a new purchased-
power agreement with AmerGen or to buy out such future power payment
obligations by making a fixed payment to AmerGen. CL&P, WMECO and PSNH have
elected the buyout option. The owners' obligations to close and pay such
amounts are conditioned upon their receipt of satisfactory regulatory
approval of the transaction, including provision for adequate recovery of
these payments.
The operators of Millstone 2 and 3, VY and Seabrook hold full term
operating licenses from the NRC and are subject to the jurisdiction of the
NRC. The NRC has broad jurisdiction over the design, construction and
operation of nuclear generating stations, including matters of public health
and safety, financial qualifications, antitrust considerations, and
environmental impact. The NRC issues 40-year initial operating licenses to
nuclear units and NRC regulations permit renewal of licenses for an
additional 20-year period. The NRC also has jurisdiction over the
decommissioning activities at Yankee Rowe, CY, MY, and Millstone 1.
The NRC also regularly conducts generic reviews of technical and other
issues, a number of which may affect the nuclear plants in which NU system
companies have interests. The cost of complying with any new requirements
that may result from these reviews cannot be estimated at this time, but such
costs could be substantial.
NUCLEAR PLANT PERFORMANCE
MILLSTONE 3
Millstone 3 has a license expiration date of November 25, 2025. In 1999,
Millstone 3 operated at a capacity factor of 81.7 percent. After a 60-day
refueling and maintenance outage, Millstone 3 returned to service on June 29,
1999, and achieved a 98.1 percent capacity factor from that date to
December 31, 1999.
MILLSTONE 2
Millstone 2 has a license expiration date of July 31, 2015. Millstone 2
returned to service on May 11, 1999, following an extended outage, which
began in February 1996 and achieved a 90.3 percent capacity factor from that
date to December 31, 1999. For the full year 1999, Millstone 2 operated at a
capacity factor of 57.9 percent.
SEABROOK
Seabrook has a license expiration date of October 17, 2026. In 1999,
Seabrook operated at a capacity factor of 86.4 percent. However, since
returning to service on May 13, 1999, after a 48-day refueling and
maintenance outage, Seabrook achieved a 99 percent capacity factor through
December 31, 1999.
VERMONT YANKEE
VY has a license expiration date of March 21, 2012. In 1999, VY operated
at a capacity factor of 88.8 percent.
NUCLEAR INSURANCE
For information regarding nuclear insurance, see "Commitments and
Contingencies - Nuclear Insurance Contingencies" in the notes to NU's, CL&P's,
PSNH's, WMECO's, and NAEC's financial statements.
NUCLEAR FUEL
GENERAL
The supply of nuclear fuel for the NU system's existing units requires
the procurement of uranium concentrates, followed by the conversion, enrichment
and fabrication of the uranium into fuel assemblies suitable for use in the NU
system's units. Fuel may also be purchased at a point after any of the above
processes are completed. The NU system expects that uranium concentrates and
related services for the units operated by the NU system and for the other
units in which the NU system companies are participating that are not covered
by existing contracts, will be available for the foreseeable future on
reasonable terms and prices.
As a result of the Energy Policy Act, the United States commercial
nuclear power industry is required to pay the United States Department of
Energy (DOE), through a special assessment, for the costs of the
decontamination and decommissioning of uranium enrichment plants owned by the
United States government, no more than $150 million per annum for 15 years
beginning in 1993. Each domestic nuclear utility's payment is based on its
pro-rata share of all enrichment services received by the United States
commercial nuclear power industry from the United States government through
October 1992. Each year, the DOE adjusts the annual assessment using the
Consumer Price Index. The Energy Policy Act provides that the assessments
are to be treated as reasonable and necessary current costs of fuel, which
costs shall be fully recoverable in rates in all jurisdictions. The NU
system's remaining share to be recovered, assuming no escalation, is
approximately $36.7 million as of December 31, 1999. Management believes
that the DOE assessments against CL&P, WMECO, PSNH, and NAEC will be
recoverable in future rates. Accordingly, each of these companies has
recognized these costs as a regulatory asset, with a corresponding obligation
on its balance sheet.
On October 22, 1998, an action was initiated by the owners of Millstone
in the U.S. Court of Federal Claims against the DOE regarding the special
annual assessment that the DOE imposes on purchasers of enriched uranium to
meet the future costs of decontaminating and decommissioning (D&D) government
owned uranium enrichment facilities. Similar actions for Seabrook and CY
were filed on October 23, 1998. The lawsuits challenge the imposition of the
D&D assessment on federal constitutional grounds, and are similar to actions
filed by a number of other utilities against DOE. Proceedings in the
Millstone, Seabrook and CY cases are stayed pending the final resolution of a
similar claim brought against the DOE by MYAPC. In July 1999, the claims
court dismissed MYAPC's complaint. MYAPC has appealed this decision. As of
December 31, 1999, the NU system companies had paid approximately $32.6
million into the fund.
Nuclear fuel costs associated with nuclear plant operations include
amounts for disposal of spent nuclear fuel. The NU system companies include
in their nuclear fuel expense spent fuel disposal costs accepted by the DPUC,
NHPUC and DTE in rate case or fuel adjustment decisions. Spent fuel disposal
costs also are reflected in the FERC-approved wholesale charges.
HIGH-LEVEL RADIOACTIVE WASTE
The Nuclear Waste Policy Act of 1982 (NWPA) provides that the federal
government is responsible for the permanent disposal of spent nuclear reactor
fuel (SNF) and high-level waste. As required by the NWPA, electric utilities
generating SNF and high-level waste are obligated to pay fees into a fund
which would be used to cover the cost of siting, constructing, developing, and
operating a permanent disposal facility for this waste. The NU system
companies have been paying for such services for fuel burned on or after
April 7, 1983, on a quarterly basis since July 1983. The DPUC, NHPUC and DTE
permit the fee to be recovered through rates. For nuclear fuel used to
generate electricity prior to April 7, 1983 (prior-period fuel), payment must
be made prior to the first delivery of spent fuel to the DOE. The DOE's
current estimate for an available site is 2010.
In return for payment of the fees prescribed by the NWPA, the federal
government is to take title to and dispose of the utilities' high-level
wastes and SNF. There have been numerous litigation proceedings involving
the DOE's statutory and contractual obligation to accept high-level waste and
SNF. While the courts have declined to order the DOE to begin accepting
spent fuel for disposal on January 31, 1998, the courts left open the
utilities' ability to bring damage claims against the DOE.
On February 18, 1998, YAEC filed a complaint against the DOE in the
United States Court of Federal Claims seeking damages in excess of $70
million resulting from the DOE's failure to accept spent nuclear fuel for
disposal. CYAPC and MYAPC filed similar complaints on March 4, 1998 and
June 2, 1998, seeking damages of over $90 million and $128 million,
respectively. On October 29, 1998, the court found liability on the part
of the DOE to YAEC for breach of the standard contract, based upon the DOE's
failure to begin disposal of SNF. In separate orders dated October 30, 1998
and November 3, 1998, respectively, the court extended its rulings in the YAEC
case to the damage claim cases filed by CYAPC and MYAPC. The DOE has appealed
the claims court decisions.
Until the federal government begins accepting nuclear waste for
disposal, nuclear generating plants will need to retain high-level waste and
spent fuel onsite or make some other provisions for their storage. With the
addition of new storage racks, storage facilities for Millstone 3 are
expected to be adequate for the projected life of the unit. With the
implementation of currently planned modifications, the storage facilities for
Millstone 2 are expected to be adequate (maintaining the capacity to
accommodate a full-core discharge from the reactor) until 2005. Fuel
consolidation, which has been licensed for Millstone 2, could provide
adequate storage capability for its projected life. Seabrook is expected to
have spent fuel storage capacity until at least 2010.
The available capacity of the VY spent fuel pool is expected to be able
to accommodate full-core removal through 2001. In 1999, VYNPC received an NRC
license amendment allowing the installation of additional storage racks in
the existing spent fuel pool. When installed, the additional storage racks
will increase the capacity of the spent fuel pool to allow full core
discharge capability through the 2008 refueling outage.
Adequate storage capacity exists to accommodate all of the SNF at
Millstone 1, CY, MY, and Yankee Rowe until that fuel is removed by the DOE.
LOW-LEVEL RADIOACTIVE WASTE
The NU system currently has contracts to dispose of its low-level
radioactive waste (LLRW) at two privately operated facilities in Clive, Utah,
and in Barnwell, South Carolina. The NU system is also supporting efforts by
the Northeast Interstate Low Level Radioactive Waste Management Compact,
consisting of Connecticut and New Jersey, to accept South Carolina as a new
member. If successful, this arrangement would entitle Millstone and CY
access to Barnwell through their decommissioning. Such an arrangement may
exclude other nuclear plants from accessing Barnwell. This option is
expected to be decided by mid 2000. Because access to LLRW disposal may be
lost at any time, the NU system has plans that will allow for onsite storage
of LLRW for at least five years.
DECOMMISSIONING
Based upon the NU system's most recent comprehensive site-specific
updates of the decommissioning costs for each of the three Millstone units
and for Seabrook, the recommended decommissioning method continues to be
immediate and complete dismantlement of those units as soon as practical
after their retirement. The table below sets forth the estimated Millstone
and Seabrook decommissioning costs for the NU system companies. The
estimates are based on the latest site studies, stated in December 31, 1999
dollars.
CL&P PSNH WMECO NAEC NU system
---- ---- ----- ---- ---------
(Millions)
Millstone 1*.... $ 580.3 $ - $136.1 $ - $ 716.4
Millstone 2..... 334.9 - 78.5 - 413.4
Millstone 3..... 327.9 17.6 75.8 - 421.3
Seabrook........ 22.9 - - 203.3 226.2
-------- ----- ------ ------ --------
Total......... $1,266.0 $17.6 $290.4 $203.3 $1,777.3
======== ===== ====== ====== ========
* The costs shown include all of the expected future billings associated
with the funding of decommissioning, recovery of remaining assets and other
closure costs associated with the early retirement of Millstone 1 as of
December 31, 1999, which have been recorded as an obligation on the books of
the NU system companies.
In 1986, the DPUC approved the establishment of separate external trusts
for the currently tax-deductible portions of decommissioning expense accruals
for Millstone 1 and 2 and for all expense accruals for Millstone 3. WMECO
has established independent trusts to hold all decommissioning expense
collections from customers. The DTE has authorized WMECO to collect its
current decommissioning estimate for the three Millstone units.
New Hampshire enacted a law in 1981 requiring the creation of a state-
managed fund to finance decommissioning of any units in that state. NAEC's
costs for decommissioning Seabrook are billed by it to PSNH and recovered by
PSNH under the Rate Agreement. During April 1999, the Nuclear Decommissioning
Finance Committee (NDFC) issued an order that adjusted the decommissioning
collection period and funding levels. The NDFC's order concluded that
Seabrook's anticipated energy producing life was 25 years from the date it
went into commercial operation, and accordingly Seabrook will end its energy
producing life in October 2015. This is 11 years earlier than the service life
established by Seabrook's NRC operating license. The order also updated
Seabrook's decommissioning estimate to $513 million (in 1998 dollars).
The cost of funding the decommissioning of Seabrook is now accrued over the
expected remaining service life of the plant, as determined by the NDFC,
and is included in depreciation expense.
As of December 31, 1999, the NU system recorded balances (at market) in
its external decommissioning trust funds are as follows:
CL&P PSNH WMECO NAEC NU system
---- ---- ----- ---- ---------
(Millions)
Millstone 1... $234.6 $ - $ 67.1 $ - $301.7
Millstone 2... 164.3 - 47.3 - 211.6
Millstone 3... 113.1 6.9 30.1 - 150.1
Seabrook...... 4.8 - - 43.7 48.5
------ ---- ------ ----- ------
Total......... $516.8 $6.9 $144.5 $43.7 $711.9
====== ==== ====== ===== ======
The decommissioning cost estimates for the NU system nuclear units are
reviewed and updated regularly to reflect inflation and changes in
decommissioning requirements and technology. Changes in requirements or
technology, or adoption of a different decommissioning method could change
these estimates. CL&P, PSNH and WMECO expect to recover sufficient amounts
through their allowed rates to cover their expected decommissioning costs.
Based on present estimates, and assuming its nuclear units operate to the end
of their respective license periods, the NU system expects that the
decommissioning trust funds will be substantially funded when those
expenditures have to be made.
Under the restructuring legislation in Connecticut and Massachusetts,
CL&P and WMECO are permitted to recover their decommissioning obligations as
a stranded cost. It is not clear at this time how decommissioning will be
treated in connection with the auction of the Millstone units.
Pursuant to the PSNH Settlement Agreement, upon a successful sale of
NAEC's share of Seabrook, the existing Seabrook Power Contract between PSNH
and NAEC will be terminated. However, subsequent to such sale, PSNH shall
continue to be responsible for funding NAEC's former ownership share of its
decommissioning liability, calculated on the basis of full funding by
December 31, 2015, using an estimated decommissioning date of 2015 or as
otherwise determined by the NDFC. PSNH may enter into a new contract to
provide for the payment of Seabrook nuclear decommissioning costs, with full
recovery of the costs of that contract to be recoverable from PSNH's
customers. Under no circumstances will PSNH's customers have any
responsibility for increases in decommissioning funding above the amount
calculated based upon the payment schedule as of the sale date.
In June 1999, NNECO filed with the NRC the Post-Shutdown Decommissioning
Activities Report for Millstone 1. The total estimated decommissioning costs,
which have been updated to reflect the early shutdown of the unit, are
approximately $716.4 million as of December 31, 1999 ($580.3 million for CL&P
and $136.1 million for WMECO).
CYAPC, YAEC, VYNPC, and MYAPC are all collecting revenues for
decommissioning from their power purchasers. The table below sets forth the
NU system companies' estimated share of decommissioning costs (and closure
costs where applicable) of the Yankee units. The estimates are based on the
latest site studies. For information on the equity ownership of the NU
system companies in each of the Yankee units and the proposed sale of VY, see
"Electric Operations - Nuclear Generation - General."
CL&P PSNH WMECO NU system
---- ---- ----- ---------
(Millions)
VY............ $ 40.8 $17.1 $10.7 $ 68.6
Yankee Rowe*.. 8.0 2.3 2.3 12.7
CY*........... 153.2 22.2 42.2 217.5
MY*........... 76.9 32.1 19.2 128.2
------ ----- ----- ------
Total....... $278.9 $73.7 $74.4 $427.0
====== ===== ===== ======
* The costs shown include all of the expected future billings
associated with the funding of decommissioning, recovery of remaining assets
and other closure costs associated with the early retirement of Yankee Rowe,
CY and MY as of December 31, 1999, which have been recorded as an obligation
on the books of the NU system companies.
As of December 31, 1999, the NU system's share of the external decommissioning
trust fund balances (at market), which have been recorded on the books of the
Yankee nuclear companies, is as follows:
CL&P PSNH WMECO NU system
---- ---- ----- ---------
(Millions)
VY.............. $ 23.5 $ 9.9 $ 6.2 $ 39.5
Yankee Rowe..... 39.3 11.2 11.2 61.8
CY.............. 64.3 9.3 17.7 91.3
MY.............. 21.7 9.1 5.4 36.2
------ ----- ----- ------
Total........... $148.8 $39.5 $40.5 $228.8
====== ===== ===== ======
In August 1998, the FERC released an initial decision regarding CY
decommissioning. If upheld, CYAPC's management has estimated the effect of
the ALJ decision on CYAPC's earnings to be approximately $37.5 million, of
which the NU's share would be approximately $18.4 million. NU continues
to support CYAPC's efforts to contest this initial decision.
On June 1, 1999, the FERC accepted an offer of settlement, which
resolved all the issues in the FERC decommissioning rate case proceeding
related to MY. The settlement provides, among other things, the following:
(1) MYAPC will collect $33.1 million annually to pay for decommissioning and
spent fuel; (2) its return on equity will be set at 6.5 percent; (3) MYAPC is
permitted full recovery of all of its unamortized investment in MY, including
fuel; and (4) an incentive budget for decommissioning is set at $436.3
million.
Effective January 1996, YAEC began billing its sponsors, including CL&P,
WMECO and PSNH, amounts based on a revised decommissioning cost estimate
approved by the FERC. Under the terms of its rate settlement agreement with
the FERC, YAEC filed a revised decommissioning cost estimate, which was
approved as of March 1, 2000. The YAEC filing assumes NRC license
termination and completion of decommissioning activities by 2004.
OTHER REGULATORY AND ENVIRONMENTAL MATTERS
ENVIRONMENTAL REGULATION
GENERAL
The NU system and its subsidiaries are subject to federal, state and
local regulations with respect to water quality, air quality, toxic
substances, hazardous waste, and other environmental matters. Additionally,
the NU system's major generation and transmission facilities may not be
constructed or significantly modified without a review by the applicable
state agency of the environmental impact of the proposed construction or
modification. Compliance with environmental laws and regulations,
particularly air and water pollution control requirements, may limit
operations or require substantial investments in new equipment at existing
facilities.
SURFACE WATER QUALITY REQUIREMENTS
The federal Clean Water Act requires every "point source" discharger of
pollutants into navigable waters to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the United States Environmental
Protection Agency (EPA) or state environmental agency specifying the
allowable quantity and characteristics of its effluent. NU system facilities
are in the process of obtaining or renewing all required NPDES permits in
effect. Compliance with NPDES and state water discharge permits has
necessitated substantial expenditures, which are difficult to estimate, and
may require further expenditures because of additional requirements that
could be imposed in the future. For information regarding civil lawsuits
related to alleged violations of certain facilities' NPDES permits, see
"Item 3. Legal Proceedings."
The Federal Oil Pollution Act of 1990 (OPA 90) sets out the requirements
for facility response plans and periodic inspections of spill response
equipment at facilities that can cause substantial harm to the environment by
discharging oil or hazardous substances into the navigable waters of the
United States and onto adjoining shorelines. The NU system companies are
currently in compliance with the requirements of OPA 90. OPA 90 includes
limits on the liability that may be imposed on persons deemed responsible for
release of oil. The limits do not apply to oil spills caused by negligence
or violation of laws or regulations. OPA 90 also does not preempt state laws
regarding liability for oil spills. In general, the laws of the states in
which the NU system owns facilities and through which the NU system
transports oil could be interpreted to impose strict liability for the cost
of remediating releases of oil and for damages caused by releases. The NU
system currently carries general liability insurance in the total amount of
$100 million annual coverage for oil spills. This amount may decrease in the
future as a result of generation asset sales due to restructuring.
AIR QUALITY REQUIREMENTS
The Clean Air Act Amendments of 1990 (CAAA) impose stringent requirements
on emissions of sulfur dioxide (SO2) and nitrogen oxide (NOX) for the purpose
of controlling acid rain and ground level ozone. In addition, the CAAA address
the control of toxic air pollutants. Installation of continuous emissions
monitors and expanded permitting provisions also are included. Compliance
with CAAA requirements has cost the NU system approximately $48 million as of
December 31, 1999: $11 million for CL&P, $33 million for PSNH, $1 million for
WMECO, and $3 million for HWP. In addition, PSNH expects to spend
approximately $2 million a year for SO2 allowances.
Further requirements for NOX reductions became effective in 1999. PSNH
spent approximately $20 million for improvements at its Merrimack and
Schiller Stations to meet these requirements. These costs were offset by the
sale of $16 million of emission credits. Following divestiture of the NU
system's fossil units, these federal and state air quality regulations are
not expected to have a material impact on the NU system companies.
HAZARDOUS WASTE REGULATIONS
As many other industrial companies have done in the past, the NU system
companies disposed of residues from operations by depositing or burying such
materials on-site or disposing of them at off-site landfills or facilities.
Typical materials disposed of include coal gasification waste, fuel oils,
gasoline, and other hazardous materials that might contain polychlorinated
biphenyls (PCBs). It has since been determined that deposited or buried
wastes, under certain circumstances, could cause groundwater contamination or
create other environmental risks. The NU system has recorded a liability for
what it believes is, based upon currently available information, its
estimated environmental remediation costs for waste disposal sites for which
the NU system companies expect to bear legal liability, and continues to
evaluate the environmental impact of its former disposal practices. Under
federal and state law, government agencies and private parties can attempt to
impose liability on NU system companies for such past disposal. At
December 31, 1999, the liability recorded by the NU system for its estimated
environmental remediation costs for known sites needing remediation including
those sites described below, exclusive of recoveries from insurance or from
third parties, was approximately $24.8 million. These costs could be
significantly higher if alternative remedies become necessary.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly known as Superfund, the EPA has
the authority to clean up or order the clean up of hazardous waste sites and
to impose the clean up costs on parties deemed responsible for the hazardous
waste activities on the sites. Responsible parties include the current owner
of a site, past owners of a site at the time of waste disposal, waste
transporters, and waste generators. The NU system currently is involved in
one Superfund site in New Jersey, one in New York, one in New Hampshire, and
one in Kentucky, which could have a material impact on the NU system. The NU
system has committed in the aggregate approximately $1.9 million to its share
of the clean up of these sites.
As discussed below, in addition to the remediation efforts for the
above-mentioned Superfund sites, the NU system has been named as a
potentially responsible party (PRP) and is monitoring developments in
connection with several state environmental actions. The level of study of
each site and the information about the waste contributed to the site by the
NU system and other parties differs from site to site. Where reliable
information is available that permits the NU system to make a reasonable
estimate of the expected total costs of remedial action and/or the NU
system's likely share of remediation costs for a particular site, those cost
estimates are provided below. All cost estimates were made in accordance
with generally accepted accounting principles where remediation costs were
probable and reasonably estimable.
In 1987, the Connecticut Department of Environmental Protection (CDEP)
published a list of 567 hazardous waste disposal sites in Connecticut. The
NU system owns two sites, in Stamford and Rockville, which are on this list.
Both sites were formerly used by CL&P predecessor companies for the
manufacture of coal gas (also known as town gas sites) from the late 1800s to
the 1950s. Site investigations have been completed at these sites and
discussions with state regulators are in progress to address the need for and
extent of remediation necessary to protect public health and the environment.
The total reserve established for these two sites is $6.5 million.
CL&P owns a section of an abandoned railroad bed in Ridgefield,
Connecticut. Past studies of portions of the railroad bed have indicated
elevated levels of arsenic in the upper two to three feet of soil at the
location. The NU system has reserved approximately $1.2 million for future
remediation efforts. A similar site in Portland, Connecticut has been
remediated.
PSNH contacted the New Hampshire Department of Environmental Services
(NHDES) in December 1993 concerning possible coal tar contamination in
Laconia, New Hampshire, in Lake Opechee and the Winnipesaukee River near an
area where PSNH and a second PRP formerly owned and operated a coal
gasification plant from the late 1800's to the 1950's. A comprehensive site
investigation was completed in December 1996. This study has shown that
byproducts from the operation of the former manufactured gas plant are
present in groundwater, subsurface soil and in the sediments of the adjacent
Winnipesaukee River. A remediation action plan was approved by the NHDES in
March of 1999. PSNH entered into a cash settlement with the other PRP at the
site. A reserve of $8.4 million has been established for this site,
including amounts received in the settlement.
PSNH has also received requests from NHDES to conduct site
investigations at three additional former manufactured gas plant sites.
These sites are located in Keene, Nashua, and Dover, New Hampshire. Studies
are now being planned to understand site conditions and any environmental
impacts. PSNH is also involved in other site studies to assess
contamination, but PSNH's liability at these sites is not expected to be
material.
Environmental contaminants have been identified at the former Manchester
Steam generating station in Manchester, New Hampshire. A reserve of $4.1
million has been established to abate and remediate this station.
In Massachusetts, NU system companies have been designated by the
Massachusetts Department of Environmental Protection (MDEP) as PRPs for
12 sites under the MDEP's hazardous waste and spill remediation program. At
two sites, the NU system may incur remediation costs that may be material to
HWP depending on the remediation requirements. At one site, HWP has been
identified by the MDEP as one of three PRPs in a coal tar site in Holyoke,
Massachusetts. HWP owned and operated the Holyoke Gas Works from 1859 to
1902. The site is located on the east side of Holyoke, adjacent to the
Connecticut River and immediately downstream of HWP's Hadley Falls Station.
MDEP has designated both the land and river deposit areas as priority waste
disposal sites. The PRPs have been notified of the need to remove tar
deposits from the river. The total estimated costs for removal of tar
patches in the river range from $2 million to $3 million. HWP has agreed to
complete the removal of tar patches subject to negotiations of an acceptable
consent decree with various state and federal regulatory agencies.
The second site is a former manufactured gas plant facility in
Easthampton, Massachusetts. WMECO predecessor companies owned and operated
the Easthampton Gas Works from 1864 to 1924. Previous investigations have
identified coal tar deposits on the land portion of the site. An analysis of
the human, health and ecological risks at the site and a remedial action plan
was submitted to the MDEP in 1999. WMECO has reserved approximately $4.3
million for remediation costs for the site.
Environmental contaminants have been identified at the former Riverside
generating station in Holyoke, Massachusetts. A reserve of $2.3 million has
been established for HWP to abate and remediate fuel oil outside the former
generating station, asbestos inside the station and to demolish a section of
the existing structure.
In the past, the NU system has received other claims from government
agencies and third parties for the cost of remediating sites not currently
owned by the NU system but affected by past NU system disposal activities and
may receive more such claims in the future. The NU system expects that the
costs of resolving claims for remediating sites about which it has been
notified will not be material, but cannot estimate the costs with respect to
sites about which it has not been notified.
ELECTRIC AND MAGNETIC FIELDS
Published reports have discussed the possibility of adverse health
effects from electric and magnetic fields (EMF) associated with electric
transmission and distribution facilities and appliances and wiring in
buildings and homes. Most researchers, as well as numerous scientific review
panels considering all significant EMF epidemiological and laboratory studies
to date, agree that current information remains inconclusive, inconsistent
and insufficient for characterizing EMF as a health risk.
Based on this information, management does not believe that a causal
relationship between EMF exposure and adverse health effects has been
established or that significant capital expenditures are appropriate to
minimize unsubstantiated risks. The NU system companies have closely
monitored research and government policy developments for many years and will
continue to do so.
If further investigation were to demonstrate that the present
electricity delivery system is contributing to increased risk of cancer or
other health problems, the industry could be faced with the difficult problem
of delivering reliable electric service in a cost-effective manner while
managing EMF exposures. To date, no courts have concluded that individuals
have been harmed by EMF from electric utility facilities, but if utilities
were to be found liable for damages, the potential monetary exposure for all
utilities, including the NU system companies, could be enormous. Without
definitive scientific evidence of a causal relationship between EMF and
health effects, and without reliable information about the kinds of changes
in utilities' transmission and distribution systems that might be needed to
address the problem, if one is found, no estimates of the cost impacts of
remedial actions and liability awards are available.
FERC HYDROELECTRIC PROJECT LICENSING
Federal Power Act licenses may be issued for hydroelectric projects for
terms of 30 to 50 years as determined by the FERC. Upon the expiration of a
license, any hydroelectric project so licensed is subject to reissuance by
the FERC to the existing licensee or to others upon payment to the licensee
of the lesser of fair value or the net investment in the project plus
severance damages less certain amounts earned by the licensee in excess of a
reasonable rate of return.
The NU system companies currently hold FERC licenses for 12 hydroelectric
projects aggregating approximately 1,411 MW of capacity, located in
Connecticut, Massachusetts and New Hampshire. CL&P's and WMECO's five
licenses with approximately 1,302 MW of capacity were transferred to NGC in
March 2000. As part of the Settlement Agreement, PSNH has proposed to auction
its six hydroelectric projects with approximately 65 MW of capacity upon
approval of the agreement.
The license for HWP's Holyoke Project expired in late 1999. On August 20,
1999, the FERC issued a new 40-year license to HWP. HWP was the successful
co-applicant in a contested license application proceeding for the project,
winning over co-applicants, the City of Holyoke Gas & Electric Department, the
Massachusetts Municipal Wholesale Electric Company and the Ashburnham
Municipal Light Plant. HWP filed a motion for stay and motion for rehearing
of the FERC's order, requesting that the FERC reconsider various aspects of
the license, including mandatory Section 18 fishway prescriptions, bypass reach
minimum flows and compliance schedules. Motions for rehearing of the FERC's
order were also filed by various other parties. The FERC issued an order
granting rehearing. HWP is awaiting further action by the FERC. In a
separate but related proceeding, HWP filed an appeal of the state water
quality certificate conditions and requested an adjudicatory hearing with the
MDEP. Settlement discussions in this proceeding are ongoing.
NGC's FERC licenses for operation of the Falls Village and Housatonic
hydroelectric projects expire in 2001. A license application, which proposed
to combine both projects under one license, was submitted to the FERC on
August 31, 1999.
The FERC has issued a notice indicating that it has authority to order
project licensees to decommission projects that are no longer economic to
operate. The potential costs of decommissioning a project, however, could be
substantial. The FERC has recently ordered its first project decommissioning
under this authority. It is likely that this FERC decision will be appealed.
EMPLOYEES
As of December 31, 1999, the NU system companies had 9,099 full and
part-time employees on their payrolls, of which 2,377 were employed by CL&P,
1,258 by PSNH, 482 by WMECO, 78 by HWP, 1,859 by NNECO, 2,220 by NUSCO, and
825 by NAESCO. NU, NAEC, Mode 1, NUEI, NGC, NGS, SEPPI, and Select Energy
have no employees. On March 5, 2000, approximately 119 employees of NUSCO
were transferred to Select Energy.
Approximately 2,379 employees of CL&P, PSNH, WMECO, NAESCO, and HWP are
covered by ten union agreements, which expire between October 1, 2000 and
May 31, 2002.
YEAR 2000
For information regarding the NU system's efforts to address this issue,
see "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 2. PROPERTIES
The physical properties of the NU system are owned or leased by
subsidiaries of NU. CL&P's principal plants and other properties are
located either on land which is owned in fee or on land, as to which CL&P
owns perpetual occupancy rights adequate to exclude all parties except
possibly state and federal governments, which has been reclaimed and filled
pursuant to permits issued by the United States Army Corps of Engineers.
The principal properties of PSNH are held by it in fee. In addition, PSNH
leases space in an office building under a 30-year lease expiring in 2002.
WMECO's principal plants and a major portion of its other properties are
owned in fee, although one hydroelectric plant is leased. NAEC owns a 35.98
percent interest in Seabrook and approximately 560 acres of exclusion area
land located around the unit. In addition, CL&P, PSNH and WMECO have
certain substation equipment, data processing equipment, nuclear fuel,
nuclear control room simulators, vehicles, and office space that are leased.
With few exceptions, the NU system companies' lines are located on or under
streets or highways, or on properties either owned or leased, or in which
the company has appropriate rights, easements or permits from the owners.
CL&P's and PSNH's properties are subject to the lien of each company's
respective first mortgage indenture. WMECO's properties are subject to the
lien of its first mortgage indenture. NAEC's First Mortgage Bonds are
secured by a lien on the Seabrook interest described above, and all rights
of NAEC under the Seabrook Power Contracts. In addition, CL&P's and WMECO's
interests in Millstone 1 are subject to second liens for the benefit of
lenders under agreements related to pollution control revenue bonds. Also,
CL&P and WMECO granted, as collateral, their second mortgage ownership
interests in Millstone 2 and 3 that secure their borrowings under the New
Credit Agreement. Various of these properties are also subject to minor
encumbrances which do not substantially impair the usefulness of the
properties to the owning company.
The NU system companies' properties are well maintained and are in good
operating condition.
TRANSMISSION AND DISTRIBUTION SYSTEM
At December 31, 1999, the NU system companies owned 104 transmission
and 373 distribution substations that had an aggregate transformer capacity
of 23,573,489 kilovoltamperes (kVa) and 8,933,772 kVa, respectively; 3,075
circuit miles of overhead transmission lines ranging from 69 kilovolt (kV)
to 345 kV, and 196 cable miles of underground transmission lines ranging
from 69 kV to 138 kV; 33,069 pole miles of overhead and 2,119 conduit bank
miles of underground distribution lines; and 419,651 line transformers in
service with an aggregate capacity of 18,068,000 kVa.
ELECTRIC GENERATING PLANTS
As of December 31, 1999, the electric generating plants of the NU system
companies and the NU System companies' entitlement in the generating plant of
the VYnpc were as follows (See "Item 1. Business - Electric Operations - Nuclear
Generation" for information on ownership and operating results for the year):
Claimed
Year Capability*
Owner Plant Name (Location) Type Installed (kilowatts)
- ----- -------------------- ---- --------- -----------
CL&P Millstone (Waterford, CT)
Unit 2 Nuclear 1975 705,814
Unit 3 Nuclear 1986 603,436
Seabrook (Seabrook, NH) Nuclear 1990 47,135
VT Yankee (Vernon, VT) Nuclear 1972 45,189
---------
Total Nuclear-Steam Plants ( 4 units) 1,401,574
Total Hydro-Conventional (25 units) 1903-55 98,970
Total Hydro-Pumped Storage ( 7 units) 1928-73 905,200
Total Internal Combustion ( 5 units) 1969-70 216,400
---------
Total CL&P Generating Plant (41 units) 2,622,144
=========
PSNH Millstone (Waterford, CT)
Unit 3 Nuclear 1986 32,461
VT Yankee (Vernon, VT) Nuclear 1972 18,999
---------
Total Nuclear-Steam Plants ( 2 units) 51,460
Total Fossil-Steam Plants ( 7 units) 1952-78 1,060,398
Total Hydro-Conventional (20 units) 1917-83 67,930
Total Internal Combustion ( 5 units) 1968-70 104,530
---------
Total PSNH Generating Plant (34 units) 1,284,318
=========
WMECO Millstone (Waterford, CT)
Unit 2 Nuclear 1975 165,561
Unit 3 Nuclear 1986 139,519
VT Yankee (Vernon, VT) Nuclear 1972 11,904
---------
Total Nuclear-Steam Plants ( 3 units) 316,984
Total Hydro-Conventional (14 units) 1905-30 93,210**
Total Hydro-Pumped Storage ( 4 units) 1972-73 205,200
---------
Total WMECO Generating Plant (21 units) 615,394
=========
NAEC Seabrook (Seabrook, NH) Nuclear 1990 417,751
=========
HWP Mt. Tom (Holyoke, MA) Fossil-Steam 1960 147,000
Total Hydro-Conventional (15 units) 1905-1983 43,560
---------
Total HWP Generating Plant (16 units) 190,560
=========
NU System Millstone (Waterford, CT)
Unit 2 Nuclear 1975 871,375
Unit 3 Nuclear 1986 775,416
Seabrook (Seabrook, NH) Nuclear 1990 464,886
VT Yankee (Vernon, VT) Nuclear 1972 76,092
---------
Total Nuclear-Steam Plants ( 4 units) 2,187,769
Total Fossil-Steam Plants ( 8 units) 1952-78 1,207,398
Total Hydro-Conventional (74 units) 1903-83 303,670
Total Hydro-Pumped Storage ( 7 units) 1928-73 1,110,400
Total Internal Combustion (10 units) 1968-70 320,930
---------
Total NU system
Generating Plant
Including Vermont Yankee (103 units) 5,130,167
=========
Excluding Vermont Yankee (102 units) 5,054,075
=========
* Claimed capability represents winter ratings as of December 31, 1999.
** Total Hydro-Conventional capability includes the Cobble Mtn. plant's
33,960 kW which is leased from the City of Springfield, MA.
FRANCHISES
CL&P. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, CL&P has,
subject to certain exceptions not deemed material, valid franchises free from
burdensome restrictions to provide electric transmission and distribution
services, and, until January 2000, to sell electricity, in the respective
areas in which it is now supplying such service.
In addition to the right to provide electric transmission and
distribution services as set forth above, the franchises of CL&P include,
among others, limited rights and powers, as set forth in Title 16 of the
Connecticut General Statutes and the special act of the General Assembly
constituting its charter, to manufacture, generate, purchase, and sell
electricity at retail, including to provide standard offer, backup and
default service, to sell electricity at wholesale to other utility companies
and municipalities and to erect and maintain certain facilities on public
highways and grounds, all subject to such consents and approvals of public
authority and others as may be required by law. The franchises of CL&P
include the power of eminent domain.
PSNH. The NHPUC, pursuant to statutory requirement, has issued orders
granting PSNH exclusive franchises free from burdensome restrictions to sell
electricity in the respective areas in which it is now supplying such
service.
In addition to the right to sell electricity as set forth above, the
franchises of PSNH include, among others, rights and powers to manufacture,
generate, purchase, transmit, and distribute electricity, to sell electricity
at wholesale to other utility companies and municipalities and to erect and
maintain certain facilities on certain public highways and grounds, all
subject to such consents and approvals of public authority and others as may
be required by law. The franchises of PSNH include the power of eminent
domain.
NNECO. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, NNECO has a
valid franchise free from burdensome restrictions to sell electricity to
utility companies doing an electric business in Connecticut and other states.
In addition to the right to sell electricity as set forth above, the
franchise of NNECO includes, among others, rights and powers to manufacture,
generate and transmit electricity, and to erect and maintain facilities on
certain public highways and grounds, all subject to such consents and
approvals of public authority and others as may be required by law.
WMECO. WMECO is authorized by its charter to conduct its electric
business in the territories served by it, and has locations in the public
highways for transmission and distribution lines. Such locations are granted
pursuant to the laws of Massachusetts by the Department of Public Works of
Massachusetts or local municipal authorities and are of unlimited duration,
but the rights thereby granted are not vested. Such locations are for
specific lines only, and, for extensions of lines in public highways, further
similar locations must be obtained from the Department of Public Works of
Massachusetts or the local municipal authorities. In addition, WMECO has
been granted easements for its lines in the Massachusetts Turnpike by the
Massachusetts Turnpike Authority.
Pursuant to the Massachusetts restructuring legislation, the DTE is
required to define service territories for each distribution company,
including WMECO, based on the service territories actually served on July 1,
1997, and following to the extent possible municipal boundaries. The DTE has
not yet defined service territories. After established by the DTE, until
terminated by effect of law or otherwise, the distribution company shall have
the exclusive obligation to provide distribution service to all retail
customers within its service territory, and no other person shall provide
distribution service within such service territory without the written
consent of such distribution company.
HWP and Holyoke Power and Electric Company (HP&E). HWP, and its wholly
owned subsidiary HP&E, are authorized by their charters to conduct their
businesses in the territories served by them. HWP's electric business is
subject to the restriction that sales be made by written contract in amounts
of not less than 100 horsepower to purchasers who use the electricity in
their own business in the counties of Hampden or Hampshire, Massachusetts and
cities and towns in these counties, and customers who occupy property in
which HWP has a financial interest, by ownership or purchase money mortgage.
HWP also has certain dam and canal and related rights, all subject to such
consents and approvals of public authorities and others as may be required by
law. The two companies have locations in the public highways for their
transmission and distribution lines. Such locations are granted pursuant to
the laws of Massachusetts by the Department of Public Works of Massachusetts
or local municipal authorities and are of unlimited duration, but the rights
thereby granted are not vested. Such locations are for specific lines only
and, for extensions of lines in public highways, further similar locations
must be obtained from the Department of Public Works of Massachusetts or the
local municipal authorities. HP&E has no retail service territory area and
sells electric power exclusively at wholesale.
ITEM 3. LEGAL PROCEEDINGS
1. Connecticut Attorney General - Civil Environmental Lawsuit
On October 5, 1998, the Connecticut Superior Court, after hearing
arguments, approved a settlement which resolved a civil lawsuit by the CDEP
against NNECO and NUSCO for violations of the Millstone water permit and
Connecticut water discharge regulations. The settlement required NNECO to
pay a $700,000 civil penalty and expend $500,000 to fund three supplemental
environmental projects. NNECO is also required to perform and have a third-
party review of two environmental audits of its water compliance program and
to inform the CDEP of major changes to its environmental management system.
An intervening party has appealed the approval of the settlement to
Connecticut Appellate Court. On March 3, 2000, the Connecticut Supreme Court
assumed jurisdiction over this matter.
2. Connecticut Superior Court - Fish Unlimited Lawsuits
On March 11, 1999, Fish Unlimited and several other parties brought a
civil suit in Connecticut Superior Court against NNECO and NUSCO seeking a
temporary and a permanent injunction to prevent the restart of Millstone 2
until a fish return system and cooling tower are installed. On April 27,
1999, a temporary restraining order (TRO) was issued to prevent NNECO from
starting up Millstone 2 until the temporary injunction request was heard. On
May 7, 1999, the TRO was dissolved and the applications for both temporary
and permanent injunctions were denied. Fish Unlimited has appealed to the
Connecticut Appellate Court.
On June 2, 1999, Fish Unlimited and eight other plaintiffs filed another
suit in Connecticut Superior Court against NNECO and NUSCO. The plaintiffs'
primary claim was that Millstone is discharging pollutants into navigable
waters without a valid NPDES permit. On July 15, 1999, NUSCO and NNECO's
motion to dismiss this lawsuit was granted. Fish Unlimited has appealed the
decision to the Connecticut Appellate Court.
On March 3, 2000, the Connecticut Supreme Court assumed jurisdiction
over these matters.
3. Shareholder Securities Class Actions - Nuclear Matters
Consolidated Federal Court Actions: Pursuant to a court order dated
October 1, 1997, the six class actions separately filed against NU in 1996
were consolidated for pre-trial and trial purposes. The actions are based on
various federal securities law and common law theories alleging
misrepresentations and omissions in public disclosures related to the NU
system's nuclear problems, which resulted in extended outages at Millstone
and impacted the financial condition of NU and certain of its subsidiaries.
These complaints represent classes of plaintiffs who purchased or otherwise
acquired NU common stock during periods ranging from March 1994 to April
1996.
The parties have reached an agreement in principal to settle all of the
shareholder class actions. Final settlement is subject to the plaintiffs'
completion of discovery to confirm the reasonableness of the proposed
settlement and approval by the court. Discovery has been completed, and court
approval is expected in the spring of 2000.
State Court Actions: NU has been served with two separately filed class
actions based on various state securities law and common law theories
alleging misrepresentations and omissions in public disclosures related to
the NU system's nuclear problems. These complaints represent classes of
plaintiffs who purchased or otherwise acquired NU common stock during periods
ranging from December 1993 to April 1996. Plaintiffs' counsel in both state
actions agreed to stay the actions pending the outcome of the consolidated
federal court actions described above.
4. Shareholder Securities Class Actions - Con Edison Merger
On October 13, 1999 and October 19, 1999, virtually identical complaints
were filed in the Supreme Court of New York against NU and its trustees.
Both complaints purport to be "class action complaints" and allege that the
trustees have breached their fiduciary duties to the plaintiffs and other
members of the class by not (i) obtaining the best price for NU's assets and
businesses and (ii) entrenching themselves and their corporate offices. The
plaintiffs seek equitable relief, including an order that the trustees
maximize shareholder value and award attorneys' fees. NU removed the cases
from the state court to federal court in New York City and has filed motions
to dismiss the actions on various grounds. NU believes that all of these
class actions are without merit and intends to vigorously defend against all
such actions.
5. Millstone 3 - Joint Owner Litigation
CL&P and WMECO, through NNECO as agent, operate Millstone 3, at cost and
without profit, under a sharing agreement. On August 7, 1997, the non-NU
owners of Millstone 3 (minority owners) filed demands for arbitration with
CL&P and WMECO as well as three lawsuits in Massachusetts Superior Court
against NU and its current and many of its former trustees. The minority
owners raise a number of contract, tort and statutory claims, arising out of
the operation of Millstone 3. The demands and lawsuits seek to recover
compensatory damages totaling approximately $300 million, punitive damages,
treble damages, and attorneys' fees.
Hearings in the arbitration proceeding commenced on November 16, 1999,
and an initial decision on liability is not expected before the third quarter
of 2000. One of the three lawsuits has been dismissed as a result of the
settlements discussed below. The remaining lawsuits have been consolidated,
but no firm trial date has been set.
NU, CL&P and WMECO have reached settlements with three of the minority
owners, who hold approximately 58 percent of the minority owners' interest.
The agreements involve the payment of $36.4 million and certain contingent
payments, and provide for the inclusion of their Millstone 3 interests in
CL&P's nuclear auction process. No agreements have been reached with the
other seven minority owners.
6. Maine Yankee - Secondary Purchasers Dispute
A number of municipalities and cooperatives (Secondary Purchasers)
notified the sponsors of MY, including CL&P, WMECO and PSNH, that they
consider their purchase and payment obligations under their purchase
agreements to have been terminated as a result of the August 6, 1997 decision
by the MYAPC Board of Directors (MY Board) to retire MY. Accordingly, these
Secondary Purchasers informed the sponsors that they would be making no
further payments under the contracts for the period following the MY Board's
decision. Through such contracts, the sponsors agreed to deliver a portion
of the capacity and electrical output from MY until the year 2003 in exchange
for payment by the Secondary Purchasers of a pro-rata share of the plant's
costs and expenses.
Following a series of regulatory and legal proceedings related to this
matter at the FERC and in Maine state courts, on February 5, 1999, the
parties have filed settlements with the FERC in this matter, which the FERC
accepted on June 1, 1999. As a result, the Secondary Purchasers will make a
total settlement payment of $16.5 million in full satisfaction of their
obligations with respect to all past and future MY-related operations and
decommissioning costs.
7. Amended Partial Requirements Agreement
On September 30, 1999, PSNH announced that it reached a settlement
agreement with the New Hampshire Electric Cooperative (NHEC), the state's
second largest utility. The agreement resolves all outstanding issues
between PSNH and NHEC, its largest wholesale electric customer. As part of
the agreement, PSNH has opened its transmission and distribution facilities
to NHEC, which provides NHEC members the opportunity to purchase power from
a competitive energy supplier. NHEC paid PSNH a one-time payment of $18
million as a contract termination payment which will be used to reduce PSNH's
stranded costs. In connection with the settlement, PSNH recorded a loss of
approximately $6 million.
8. Other Legal Proceedings
The following sections of Item 1. "Business" discuss additional legal
proceedings: See "Rates and Electric Industry Restructuring" for information
about various state restructuring proceedings and civil lawsuits related
thereto; "Regulated Electric Operations- Transmission Access and FERC
Regulatory Changes" for information about proceedings relating to power and
transmission issues; "Regulated Electric Operations - Nuclear Generation" and
"Regulated Electric Operations - Nuclear Plant Performance" for information
related to nuclear plant performance, nuclear fuel enrichment pricing,
high-level and low-level radioactive waste disposal, decommissioning matters,
and NRC regulation; "Other Regulatory and Environmental Matters" for
information about proceedings involving surface water and air quality, toxic
substances and hazardous waste, electric and magnetic fields, licensing of
hydroelectric projects, and other matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No event that would be described in response to this item occurred
with respect to NU, CL&P, PSNH, WMECO, or NAEC.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
NU. The common shares of NU are listed on the New York Stock Exchange.
The ticket symbol is "NU," although it is frequently presented as "Noeast
Util" and/or "NE Util" in various financial publications. The high and low
sales prices for the past two years, by quarters, are shown below.
Year Quarter High Low
---- ------- ---- ---
1999 First $16 7/16 $ 13 3/4
Second 18 5/16 13 9/16
Third 19 17 3/8
Fourth 22 17 3/4
1998 First $14 5/16 $ 11 11/16
Second 17 13 5/8
Third 17 1/16 14 3/8
Fourth 17 1/4 15 7/16
As of January 31, 2000, there were 81,132 common shareholders of record
of NU. As of the same date, there were a total of 137,388,633 common shares
issued, including 5,483,268 million unallocated ESOP shares held in the ESOP
trust.
On September 14, 1999, the NU Board of Trustees approved the payment of
NU's first common share dividend since March 1997. NU paid a dividend of 10
cents per share on December 30, 1999, to shareholders of record as of the
close of business December 1, 1999.
No dividends were declared or paid in 1998.
Information with respect to dividend restrictions for NU and its
subsidiaries is contained in Item 1. Business under the caption "Financing
Program - Financing Limitations" and in Note (a) to the "Consolidated
Statements of Shareholders' Equity" on page 34 of NU's 1999 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P, PSNH, WMECO, and NAEC. The information required by this item is
not applicable because the common stock of CL&P, PSNH, WMECO, and NAEC, is
held solely by NU.
ITEM 6. SELECTED FINANCIAL DATA
NU. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 54 of NU's 1999 Annual Report
to Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the heading "Selected
Financial Data" contained on page 44 of CL&P's 1999 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading "Selected
Financial Data" contained on page 43 of PSNH's 1999 Annual Report, which
information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Selected
Financial Data" contained on page 41 of WMECO's 1999 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Selected
Financial Data" contained on page 30 of NAEC's 1999 Annual Report, which
information is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS; AND
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NU. Reference is made to information under the heading "Management's
Discussion and Analysis and Results of Operations" contained on pages 21
through 29 in NU's 1999 Annual Report to Shareholders, which information is
incorporated herein by reference.
CL&P. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 11 in CL&P's 1999 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained on pages 1 through 9 in PSNH's 1999
Annual Report, which information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 10 in WMECO's 1999 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 7 in NAEC's 1999 Annual Report, which
information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NU. Reference is made to information under the headings "Company
Report," "Report of Independent Public Accountants," "Consolidated Statements
of Income," "Consolidated Statements of Comprehensive Income," "Consolidated
Balance Sheets," "Consolidated Statements of Shareholders' Equity,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Income
Taxes," "Consolidated Statements of Capitalization," "Notes to Consolidated
Financial Statements," and "Consolidated Statements of Quarterly Financial
Data" contained on pages 30 through 53 in NU's 1999 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Statements of Quarterly Financial Data" contained on pages
12 through 44 in CL&P's 1999 Annual Report, which information is incorporated
herein by reference.
PSNH. Reference is made to information under the headings "Report of
Independent Public Accountants," "Statements of Income," "Statements of
Comprehensive Income," "Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," and
"Statements of Quarterly Financial Data" contained on pages 10 through 43 in
PSNH's 1999 Annual Report, which information is incorporated herein by
reference.
WMECO. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Statements of Quarterly Financial Data" contained on pages
11 through 41 in WMECO's 1999 Annual Report, which information is incorporated
herein by reference.
NAEC. Reference is made to information under the headings "Report of
Independent Public Accountants," "Statements of Income," "Statements of
Comprehensive Income," "Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," and
"Statements of Quarterly Financial Data" contained on pages 8 through 30 in
NAEC's 1999 Annual Report, which information is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
No event that would be described in response to this item has occurred
with respect to NU, CL&P, PSNH, WMECO, or NAEC.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
NU.
In addition to the information provided below concerning the executive
officers of NU, incorporated herein by reference is the information contained
in the sections "Proxy Statement," "Committee Composition and Responsibility,"
"Common Stock Ownership of Certain Beneficial Owners," "Common Stock Ownership
of Management," "Compensation of Trustees," "Executive Compensation," "Pension
Benefits," and "Report on Executive Compensation" of the definitive proxy
statement for solicitation of proxies by NU's Board of Trustees, dated
March 31, 2000, which will be filed with the Commission pursuant to Rule
14a-6 under the Securities Exchange Act of 1934 (the Act).
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
John H. Forsgren EVP, CFO 02/01/96 n/a
William T. Frain, Jr. OTH 02/01/94 n/a
Cheryl W. Grise SVP, SEC, GC 06/01/91 n/a
Bruce D. Kenyon P 09/03/96 n/a
Hugh C. MacKenzie P 07/01/88 n/a
Michael G. Morris CHB, P, CEO, T 08/19/97 08/19/97
Gary D. Simon OTH 04/15/98 n/a
Lisa J. Thibdaue OTH 01/01/98 n/a
CL&P.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 09/09/96 06/30/99
John H. Forsgren (1) OTH 02/10/96 n/a
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon (3) OTH 09/03/96 n/a
Hugh C. MacKenzie P, D 07/01/88 06/06/90
Michael G. Morris (4) OTH 08/19/97 n/a
Rodney O. Powell VP, D 10/18/98 06/30/99
Lisa J. Thibdaue (5) OTH 01/01/98 n/a
PSNH.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 06/05/92 06/30/99
John C. Collins D n/a 10/19/92
John H. Forsgren (1) OTH, D 02/01/96 08/05/96
William T. Frain, Jr. P, COO, D 03/18/71 02/01/94
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon (3) OTH 09/03/96 n/a
Gerald Letendre D n/a 10/19/92
Hugh C. MacKenzie (6) D n/a 02/01/94
Michael G. Morris CH, CEO, D 08/19/97 08/19/97
Jane E. Newman D n/a 10/19/92
Lisa J. Thibdaue (5) OTH 01/01/98 n/a
WMECO.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 09/09/96 06/30/99
James E. Byrne D n/a 09/17/99
John H. Forsgren (1) OTH, D Note 1 06/10/96
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon (3) OTH 09/03/96 n/a
Kerry J. Kuhlman P, COO, D 10/18/98 04/01/99
Hugh C. MacKenzie (6) OTH, D Note 2 06/06/90
Paul J. McDonald D n/a 09/17/99
Michael G. Morris CH, CEO, D 08/19/97 08/19/97
Melinda M. Phelps D n/a 09/17/99
Lisa J. Thibdaue (5) OTH 01/01/98 n/a
NAEC.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
William A. DiProfio D n/a 06/30/99
Ted C. Feigenbaum EVP, CNO, D 10/21/91 06/30/99
John H. Forsgren (1) OTH 02/01/96 n/a
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon P, CEO, D 09/03/96 09/03/96
Michael G. Morris (4) OTH 08/19/97 n/a
1. Mr. Forsgren resigned as Executive Vice President and Chief Financial
Officer of CL&P, PSNH, WMECO, and NAEC and as a Director of CL&P and
NAEC, effective June 30, 1999. He is considered an Executive Officer of
CL&P, PSNH, WMECO, and NAEC because of his policy-making function for the
NU system.
2. Mrs. Grise resigned as Senior Vice President, Secretary and General Counsel
of CL&P, PSNH and NAEC and as Senior Vice President, Secretary, Assistant
Clerk, and General Counsel of WMECO, effective June 30, 1999. She is
considered an Executive Officer of CL&P, PSNH, WMECO, and NAEC because of
her policy-making function for the NU system.
3. Mr. Kenyon resigned as President-Generation Group and as a Director of
CL&P, PSNH and WMECO, effective June 30, 1999. He is considered an
Executive Officer of CL&P, PSNH and WMECO because of his policy-making
function for the NU system.
4. Mr. Morris resigned as Chairman and as a Director of CL&P and NAEC,
effective June 30, 1999. He is considered an Executive Officer of CL&P
and NAEC because of his policy-making function for the NU system.
5. Ms. Thibdaue resigned as Vice President of CL&P, PSNH and WMECO, effective
June 30, 1999. She is considered an Executive Officer of CL&P, PSNH and
WMECO because of her policy-making function for the NU system.
6. Mr. MacKenzie resigned as President of WMECO, effective April 1, 1999.
He is considered an Executive Officer of PSNH and WMECO because of
his policy-making function for the NU system.
Key:
AC - Assistant Clerk EVP - Executive Vice President
CAO - Chief Administrative Officer GC - General Counsel
CEO - Chief Executive Officer OTH - Executive Officer of Registrant
because of policy-making function
for NU System
CFO - Chief Financial Officer P - President
CH - Chairman SEC - Secretary
CHB - Chairman of the Board SVP - Senior Vice President
COO - Chief Operating Officer T - Trustee
D - Director VP - Vice President
Name Age Business Experience During Past 5 Years
- ------------------------- --- ---------------------------------------
David H. Boguslawski 45 Vice President-Energy Delivery of CL&P, PSNH
and WMECO, since 1996; previously Vice
President-Customer Operations of PSNH from
January 1994 to September 1996.
James E. Byrne 45 Partner, Finneran, Byrne & Dreshsler, L.L.P.,
since 1982.
John C. Collins (1) 54 Chief Executive Officer, Dartmouth-Hitchcock
Clinic, Dartmouth - Hitchcock Medical Center
since 1977.
William A. DiProfio 57 Seabrook Station Director, North Atlantic
Energy Service Corporation since 1992.
Ted C. Feigenbaum (2) 49 Executive Vice President and Chief Nuclear
Officer of NAEC since February, 1996;
previously Senior Vice President of NAEC
since 1991; Senior Vice President and Chief
Nuclear Officer of PSNH from June 1992 to
August 1992; President and Chief Executive
Officer-New Hampshire Yankee Division of PSNH
from 1990 to 1992 and Chief Nuclear
Production Officer of PSNH from 1990 to 1992.
John H. Forsgren (3) 53 Executive Vice President and Chief Financial
Officer of NU since February 1996; previously
Executive Vice President and Chief Financial
Officer of CL&P, PSNH, WMECO, and NAEC from
February 1996 to June 1999; Managing Director
of the Chase Manhattan Bank from 1995 to 1996
and Senior Vice President of The Walt Disney
Company from 1990 to 1994.
William T. Frain, Jr.(4) 58 President and Chief Operating Officer of PSNH
since February 1994; previously Senior Vice
President of PSNH from 1992 to 1994.
Cheryl W. Grise 47 Senior Vice President, Secretary and General
Counsel of NU since July 1998; previously
Senior Vice President, Secretary and General
Counsel of CL&P, PSNH and NAEC and Senior
Vice President, Secretary, Assistant Clerk
and General Counsel of WMECO from July 1998
to June 1999; Senior Vice President and Chief
Administrative Officer of CL&P, PSNH and
NAEC, and Senior Vice President of WMECO from
1995 to 1998; Senior Vice President-Human
Resources and Administrative Services of
CL&P, WMECO and NAEC from 1994 to 1995 and
Vice President-Human Resources of CL&P, WMECO
and NAEC from 1992 to 1994.
Bruce D. Kenyon (5) 57 President and Chief Executive Officer of NAEC
since September 1996 and President-Generation
Group of NU since March 1999; previously
President-Generation Group of CL&P, PSNH and
WMECO from March 1999 to June 1999;
President-Nuclear Group of NU, CL&P, PSNH, and
WMECO from September 1996 to March 1999;
President and Chief Operating Officer of
South Carolina Electric and Gas Company from
1990 to 1996.
Kerry J. Kuhlman 49 President and Chief Operating Officer of
WMECO since April 1999; previously Vice
President-Customer Operations of WMECO from
October 1998 to April 1999; Vice President-
Central Region of CL&P from August 1997 to
October 1998; and Vice President-Eastern
Region of CL&P from July 1994 to August 1997.
Gerald Letendre 58 President, Diamond Casting & Machine Co.,
Inc. since 1972.
Hugh C. MacKenzie 57 President-Retail Business Group of NU since
February 1996 and President of CL&P since
January 1994; previously President of WMECO
from January 1994 to April 1999; Senior Vice
President-Customer Service Operations of CL&P
and WMECO from 1990 to 1994.
Paul J. McDonald (6) 56 Advisor to the Board of Directors, Friendly
Ice Cream Corporation since January 2000;
previously Senior Executive Vice President
and Chief Financial Officer, Friendly Ice
Cream Corporation, from 1986 to 1999.
Michael G. Morris 53 Chairman of the Board, President and Chief
Executive Officer of NU, Chairman and Chief
Executive Officer of PSNH, and Chairman of
WMECO since August 1997; previously Chairman
of CL&P and NAEC from August 1997 to June
1999; President and Chief Executive Officer
of Consumers Power Company from 1994 to 1997
and Executive Vice President and Chief
Operating Officer of Consumers Power Company
from 1992 to 1994.
Jane E. Newman (7) 54 Managing Director, The CommerceGroup, LLC,
since January 1999; previously Dean,
Whittemore School of Business and Economics
of the University of New Hampshire from
January 1998 to January 1999; Executive Vice
President and Director, Exeter Trust Company
from 1995 to 1997 and President, Coastal
Broadcasting Corporation from 1992 to 1995.
Melinda M. Phelps 56 Partner, Keyes and Donnellan, P.C., since
1992 and Police Commissioner, City of
Springfield, Massachusetts since 1998.
Rodney O. Powell 47 Vice-President-Central Region of CL&P since
October 1998; previously General Manager-
Simsbury of CL&P from October 1997 to October
1998; Manager-Regulatory Relations of NUSCO
from December 1995 to October 1997 and Senior
Customer Engineering and Marketing Services
Consultant of NUSCO from January 1994 to
December 1995.
Gary D. Simon (8) 51 Senior Vice President-Strategy and
Development of NUSCO since April 1998.
Lisa J. Thibdaue 46 Vice President-Rates, Regulatory Affairs and
Compliance of Northeast Utilities Service
Company since January 1998; previously Vice
President-Rates, Regulatory Affairs and
Compliance of CL&P, PSNH and WMECO from
January 1998 to June 1999; Executive
Director, Rates and Regulatory Affairs,
Consumers Power Company from 1996 to 1998
and Director of Regulatory Affairs, Consumers
Power Company from 1991 to 1996.
(1) Director of Blue Cross and Blue Shield of Vermont, Fleet Bank -
New Hampshire, Hamden Assurance Company Limited and the Business and
Industry Association of New Hampshire.
(2) Director of Connecticut Yankee Atomic Power Company, Maine Yankee Atomic
Power Company, Vermont Yankee Nuclear Power Corporation, and Yankee
Atomic Electric Company.
(3) Director of NorthEast Optic Network, Inc.
(4) Director of the Business and Industry Association of New Hampshire and
the Greater Manchester Chamber of Commerce; Trustee of Saint Anselm
College.
(5) Trustee of Columbia College and Director of Connecticut Yankee Atomic
Power Company.
(6) Director of CIGNA Investments, Inc.
(7) Director of Exeter Trust Company and Perini Corporation.
(8) Director of NorthEast Optic Network, Inc.
There are no family relationships between any director or executive
officer and any other director or executive officer of NU, CL&P, PSNH, WMECO,
or NAEC.
ITEM 11. EXECUTIVE COMPENSATION
NU.
Incorporated herein by reference is the information contained in the
sections "Executive Compensation," "Summary Compensation Table," "Option/SAR
Grants in Last Fiscal Year," "Fiscal Year End Option/SAR Values," "Pension
Benefits," and "Report on Executive Compensation" of the definitive proxy
statement for solicitation of proxies by NU, dated March 31, 2000, which will
be filed with the Commission pursuant to Rule 14a-6 under the Act.
CL&P, PSNH, WMECO, AND NAEC SUMMARY COMPENSATION TABLE
The following tables present the cash and non-cash compensation received by the Chief Executive Officer
and the next four highest paid executive officers of CL&P, PSNH, WMECO and NAEC, in accordance with rules of
the SEC:
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------- -----------------------------------------------
Awards Payouts
------------------------- ---------------------
Restricted Securities Long-Term All
Stock Underlying Incentive Other
Other Annual Award(s) Options/Stock Program Compen-
Name and Salary Compensation ($) Appreciation Payouts sation ($)
Principal Position Year ($) Bonus ($) ($) Note 1) (Note 2) Rights (#) ($) (Note 3)
- ---------------------------------------------------------------------------------------------------------------
Michael G. Morris 1999 783,173 1,253,300 92,243 348,611 118,352 - 23,210
Chairman of the
Board, President 1998 757,692 891,000 134,376 255,261 64,574 - 22,731
and Chief Executive
Officer 1997 258,333 1,350,000 - - 500,000 - -
Bruce D. Kenyon 1999 500,000 - - 77,690 20,804 462,500 15,000
President -
Generation Group 1998 500,000 300,000 - - 21,236 - 14,800
1997 500,000 300,000 - 306,522 139,745 - -
John H. Forsgren 1999 429,904 400,000 - 122,682 32,852 87,003 12,888
Executive Vice
President and 1998 373,077 - - - 73,183 - 104,800
Chief Financial
Officer 1997 350,000 - - 378,787 184,382 - 50,000
Hugh C. MacKenzie 1999 270,000 250,000 - 73,612 19,712 - 108,100
President - Retail
Business Group 1998 270,000 - - - 15,496 42,972 7,500
1997 270,000 - - 189,778 142,549 26,998 4,800
Cheryl W. Grise 1999 244,712 250,000 - 73,612 19,712 - 82,247
Senior Vice
President, 1998 209,231 - - - 12,916 20,720 6,123
Secretary and
General Counsel 1997 200,000 - - 119,109 89,467 15,188 4,800
(in CL&P, PSNH and
WMECO tables only)
Ted C. Feigenbaum 1999 260,000 130,000 - 28,620 7,664 24,827 5,849
Executive Vice
President and 1998 260,000 48,750 - 40,961 10,044 20,723 7,800
Chief Nuclear Officer
of NAEC 1997 260,000 30,119 - - - 21,498 4,800
(in NAEC table only)
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------
Individual Grants Grand Date Value
----------------- ----------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees Base Price Expiration Present
Name Granted (#) in Fiscal Year ($/sh) Date Value ($)
- ----------------------------------------------------------------------------------------------------
Michael G. Morris 93,352 (Note 4) 14.7% 14.9375 2/23/2009 620,791
25,000 (Note 5) 3.9% 17.5625 9/13/2009 198,000
Bruce D. Kenyon 20,804 (Note 5) 3.3% 14.9375 2/23/2009 138,347
John H. Forsgren 32,852 (Note 4) 5.2% 14.9375 2/23/2009 218,466
Hugh C. MacKenzie 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Cheryl W. Grise 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Ted C. Feigenbaum 7,664 (Note 4) 1.2% 14.9375 2/23/2009 50,966
AGGREGATED OPTIONS/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------------
Shares With
Respect to Number of Securities Value of Unexercised
Which Underlying Unexercised In-the-Money
SARs Were Value Options/SARs Options/SARs
Exercised Realized at Fiscal Year End (#) at Fiscal Year End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
Michael G. Morris - - 318,049 364,877 2,992,333 3,350,961
Bruce D. Kenyon 98,509 332,468 52,410 27,883 344,674 147,108
John H. Forsgren 129,974 438,662 99,259 57,247 582,727 288,471
Hugh C. MacKenzie 100,486 339,140 49,351 24,877 334,118 132,831
Cheryl W. Grise 63,067 212,851 33,101 24,017 218,741 129,176
Ted C. Feigenbaum - - 6,696 11,012 28,458 57,339
Notes to Summary Compensation and Option/SAR Grants Tables:
1. Other annual compensation for Mr. Morris consists of 1998 and 1999 relocation expense
reimbursements.
2. At December 31, 1999, the aggregate restricted stock holdings by the five individuals named in
the table for CL&P, WMECO and PSNH were 51,989 shares with a value of $1,069,024 and for NAEC
were 49,814 shares with a value of $1,024,301. Awards shown for 1997 have vested. Awards
shown for 1999 vest one-third on February 23, 2000, one-third on February 23, 2001, and one-
third on February 23, 2002. During 1999, a total of 51,989 restricted shares were awarded to
the individuals shown in the table for CL&P, WMECO and PSNH, and a total of 48,977 restricted
shares were awarded to the individuals shown in the table for NAEC. Dividends paid on
restricted stock are either paid out or reinvested into additional shares.
3. "All Other Compensation" for 1999 consists of employer matching contributions under the
Northeast Utilities Service Company 401k Plan, generally available to all eligible employees
($4,800 for each named officer), matching contributions under the Deferred Compensation Plan
for Executives (Mr. Morris - $18,710, Mr. Kenyon - $10,200, Mr. Forsgren - $8,088,
Mr. MacKenzie - $3,300, Mrs. Grise - $2,447, and Mr. Feigenbaum - $1,049), and retention
payments (Mr. MacKenzie - $100,000 and Mrs. Grise - $75,000).
4. These options were granted on February 23, 1999, under the Incentive Plan. All options granted
vest one-third on February 23, 2000, one-third on February 23, 2001, and one-third on February 23,
2002. Valued using the Black-Scholes option pricing model, with the following assumptions:
Volatility: 36.52 percent (36 months of monthly data); Risk-free rate: 5.61 percent; Dividend
yield: 1.89 percent; Exercise date: February 23, 2009.
5. These options were granted on September 14, 1999, and were fully exercisable on the date of
grant. Valued using the Black-Scholes option pricing model, with the following assumptions:
Volatility: 34.66 percent (36 months of monthly data); Risk-free rate: 6.45 percent; Dividend
yield: 1.89 percent; Exercise date: September 13, 2009.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Overview and Strategy
The Compensation Committee of the Board of Trustees (the Committee) is
the administrator of executive compensation for the executives of the
Northeast Utilities system (the Company) with authority to establish and
interpret the terms of the Company's executive salary and incentive programs.
The goal of the Committee's executive compensation program for 1999 was to
provide a competitive compensation package to enable the Company to attract
and retain key executives with an eye towards the future in a more
competitive environment. The Committee further sought to align executive
interests with those of Northeast Utilities' shareholders and with Company
performance by continuing with the increased use of share-based incentives.
To help achieve these goals, the Committee drew upon information from a
variety of sources, including compensation consultants, utility and general
industry surveys, and other publicly available information, including proxy
statements. In 1999, the Company's comparison groups for purposes of
executive compensation consisted of a consultant's database of roughly 1,000
companies from a broad variety of industries, a consultant's database of over
75 electric and combination electric and gas utilities, and a smaller group
of ten electric utilities whose operating characteristics were substantially
similar to those of the Company in terms of generation mix and customer size.
Nine of the ten companies are included in the Standard & Poor's (S&P)
Electric Companies Index, which is the index used in the share performance
chart shown in the NU Proxy Statement.
Base Salary
The Committee sets the annual base salary for each executive officer
except for the Chief Executive Officer (CEO), whose base salary is set by the
Board of Trustees following a recommendation by the Committee pursuant to an
evaluation process developed by the Committee in conjunction with the
Corporate Governance Committee of the Board of Trustees. In 1999 the
Committee reviewed the base salary levels of the Company's entire officer
group against those of the 75 utility market comparison group with a goal of
targeting aggregate officer base salary to the median. The Committee
periodically adjusts officers' base salaries to reflect considerations such
as changes in responsibility, market sensitivity, individual performance and
internal equity. The CEO's base salary was increased by 3.23 percent in 1999
based on the market review and the Committee's judgment as to his past and
expected future performance.
Annual Incentive Awards
The Committee again implemented an Annual Incentive Program during 1999.
The incentive payout target was 80 percent of base salary for the CEO, and
varied from 25 to 50 percent of base salary for the other officers. The
Annual Incentive Program was designed to calculate actual aggregate payouts
based on the Company's performance against an earnings per share goal and
pre-established individual goals. Individual awards were made in cash in
February 2000. The CEO received an award under this program of $1,253,300, or
20 percent of target, determined solely on the fulfillment of the earnings-
per-share goal. In addition, during September 1999, the Board approved an
award of 25,000 stock options for the CEO on account of a highly successful
year in 1999 including the sale of the fossil/hydroelectric plants and the
restart of Millstone Unit 2.
Long-Term Incentive Grants
Long-term stock-based incentive grants were made in February 1999 to
each executive officer and other officers and certain key employees of the
Company. The Committee targeted these awards such that the total of base
pay, target annual incentive awards, and long-term incentive awards for the
officer group would be at the 75th percentile of the utility market
comparison group. Approximately one-half of the grants' intended value was
made in restricted stock and one-half was made in stock options. The CEO's
grant was targeted at 110 percent of base salary based upon the consultant's
survey database of utilities and general industry and the Committee's goal of
making long-term incentive awards competitive with these companies.
Internal Revenue Service Limitation on Deductibility of Executive
Compensation
The Committee believes that its compensation program adequately responds
to issues raised by the deductibility cap placed on executive salaries by
Section 162(m) of the Internal Revenue Code because of the use of stock
options and qualified performance-based compensation in Company incentive
programs.
Respectfully submitted,
Robert E. Patricelli, Chairman
William J. Pape II, Vice Chairman
Cotton Mather Cleveland
E. Gail de Planque
Elizabeth T. Kennan
John F. Swope
Dated: February 22, 2000
PENSION BENEFITS
The following table shows the estimated annual retirement benefits
payable to an executive officer of Northeast Utilities upon retirement,
assuming that retirement occurs at age 65 and that the officer is at that
time not only eligible for a pension benefit under the Northeast Utilities
Service Company Retirement Plan (the Retirement Plan) but also eligible for
the make-whole benefit and the target benefit under the Supplemental
Executive Retirement Plan for Officers of Northeast Utilities System
Companies (the Supplemental Plan). The Supplemental Plan is a non-qualified
pension plan providing supplemental retirement income to system officers.
The make-whole benefit under the Supplemental Plan, available to all
officers, makes up for benefits lost through application of certain tax code
limitations on the benefits that may be provided under the Retirement Plan,
and includes as "compensation" awards under the executive incentive plans and
deferred compensation (as earned). The target benefit further supplements
these benefits and is available to officers at the Senior Vice President
level and higher who are selected by the Board of Trustees to participate in
the target benefit and who remain in the employ of Northeast Utilities
companies until at least age 60 (unless the Board of Trustees sets an earlier
age).
The benefits presented below are based on a straight life annuity
beginning at age 65 and do not take into account any reduction for joint and
survivorship annuity payments. Final average compensation for purposes of
calculating the target benefit is the highest average annual compensation of
the participant during any 36 consecutive months compensation was earned.
Compensation taken into account under the target benefit described above
includes salary, bonus, restricted stock awards, and long-term incentive
payouts shown in the Summary Compensation Table, but does not include
employer matching contributions under the 401k Plan. In the event that an
officer's employment terminates because of disability, the retirement
benefits shown above would be offset by the amount of any disability benefits
payable to the recipient that are attributable to contributions made by
Northeast Utilities and its subsidiaries under long term disability plans and
policies.
ANNUAL BENEFIT
Final Average Years of Credited Service
Compensation
15 20 25 30 35
$200,000 $ 72,000 $96,000 $120,000 $120,000 $120,000
250,000 90,000 120,000 150,000 150,000 150,000
300,000 108,000 144,000 180,000 180,000 180,000
350,000 126,000 168,000 210,000 210,000 210,000
400,000 144,000 192,000 240,000 240,000 240,000
450,000 162,000 216,000 270,000 270,000 270,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
Each of the executive officers of Northeast Utilities named in the
Summary Compensation Table is currently eligible for a target benefit, except
Messrs. Morris and Kenyon, whose Employment Agreements provide specially
calculated retirement benefits, based on their previous arrangements with CMS
Energy/Consumers Energy Company (CMS) and South Carolina Electric and Gas,
respectively. Mr. Morris's agreement provides that upon retirement after
reaching the fifth anniversary of his employment date (or upon disability or
termination without cause or following a change in control, as defined) he
will be entitled to receive a special retirement benefit calculated by
applying the benefit formula of the CMS Supplemental Executive Retirement
Plan to all compensation earned from the NU system and to all service rendered
to the Company and CMS. If Mr. Kenyon retires with at least three years of
service with the Company, he will be deemed to have two extra years of service
for purpose of his special retirement benefit. If after achieving three years
of service he voluntarily terminates employment following a "substantial
change, in responsibilities resulting from a material change in the business
of Northeast Utilities", he will be deemed to have an additional year of
service for purpose of his special retirement benefit, and if he retires with
at least three years of service with the Company, he will receive a lump sum
payment of $500,000.
In addition, Mr. Forsgren's Employment Agreement provides for
supplemental pension benefits based on crediting up to ten years additional
service and providing payments equal to 25 percent of salary for up to 15
years following retirement, reduced by four percentage points for each year
that his age is less than 65 years at retirement.
As of December 31, 1999, the executive officers named in the Summary
Compensation Table had the following years of credited service for purposes
of calculating target benefits under the Supplemental Plan (or in the case of
Messrs. Morris and Kenyon, for purposes of calculating the special retirement
benefits under their respective Employment Agreements): Mr. Morris - 21,
Mr. Kenyon - 5, Mr. Forsgren - 3, Mr. MacKenzie - 34, Mrs. Grise - 19, and
Mr. Feigenbaum - 14. In addition, Mr. Forsgren had 6 years of service for
purposes of his supplemental pension benefit and would have 25 years of
service for such purpose if he were to retire at age 65. Assuming that
retirement were to occur at age 65 for these officers, retirement would occur
with 33, 13, 15, 41, 37, and 29 years of credited service, respectively.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
NUSCO has entered into employment agreements (the Officer Agreements)
with each of the named executive officers. The Officer Agreements are also
binding on Northeast Utilities and on each majority-owned subsidiary of
Northeast Utilities.
Each Officer Agreement obligates the officer to perform such duties as
may be directed by the NUSCO Board of Directors or the Northeast Utilities
Board of Trustees, protect the Company's confidential information, and
refrain, while employed by the Company and for a period of time thereafter,
from competing with the Company in a specified geographic area. Each Officer
Agreement provides that the officer's base salary will not be reduced below
certain levels without the consent of the officer, and that the officer will
participate in specified benefits under the Supplemental Executive Retirement
Plan or other supplemental retirement programs (see Pension Benefits, above)
and/or in certain executive incentive programs at specified incentive
opportunity levels.
Each Officer Agreement provides for a specified employment term and for
automatic one-year extensions of the employment term unless at least six
months' notice of non-renewal is given by either party. The employment term
may also be ended by the Company for "cause", as defined, at any time (in
which case no supplemental retirement benefit, if any, shall be due), or by
the officer on 30 days' prior written notice for any reason. Absent
"cause", the Company may remove the officer from his or her position on 60
days' prior written notice, but in the event the officer is so removed and
signs a release of all claims against the Company, the officer will receive
one or two years' base salary and annual incentive payments, specified
employee welfare and pension benefits, and vesting of stock appreciation
rights, options and restricted stock.
Under the terms of an Officer Agreement, upon any termination of
employment following a change of control, as defined, between (a) the earlier
of the date shareholders approve a change of control transaction or a change
of control transaction occurs and (b) the earlier of the date, if any, on
which the Board of Trustees abandons the transaction or the date two years
following the change of control, if the officer signs a release of all claims
against the Company, the officer will be entitled to certain payments
including a multiple (not to exceed four) of annual base salary, annual
incentive payments, specified employee welfare and pension benefits, and
vesting of stock appreciation rights, options and restricted stock. Certain
of the change in control provisions may be modified by the Board of Trustees
prior to a change in control, on at least two years' notice to the affected
officer(s).
Besides the terms described above, the Officer Agreements of Messrs.
Morris, Kenyon and Forsgren provide for a specified salary, cash, restricted
stock and/or stock options upon employment, special incentive programs, and/or
special retirement benefits. See Pension Benefits, above, for further
description of these provisions. During 1999, the Officer Agreements of
Messrs. Morris, Kenyon and Forsgren and Mrs. Grise were amended to provide
that a termination of employment initiated by such officer upon the
imposition of a limitation of scope of the officer's responsibilities
following a change of control such that the officer's responsibilities relate
primarily to a company whose common equity is not publicly held shall
constitute a termination upon a change of control. Mr. Kenyon's Officer
Agreement also provides for a special short term incentive compensation
program in lieu of a portion of the Stock Price Recovery Incentive Program.
Under this special program Mr. Kenyon is eligible to receive a payment up to
100 percent of base salary depending on his fulfillment of certain incentive
goals for each of the years ending August 31, 1997 and August 31, 1998, and
for the 16 month period ending December 31, 1999.
The descriptions of the various agreements set forth above are for
purpose of disclosure in accordance with the proxy and other disclosure rules
of the SEC and shall not be controlling on any party; the actual terms of the
agreements themselves determine the rights and obligations of the parties.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
NU.
Incorporated herein by reference is the information contained in the
sections "Common Stock Ownership of Certain Beneficial Owners," "Common Stock
Ownership of Management," "Compensation of Trustees," "Executive
Compensation," "Pension Benefits," and "Report on Executive Compensation" of
the definitive proxy statement for solicitation of proxies by NU, dated
March 31, 1999 which will be filed with the Commission pursuant to Rule 14a-6
under the Act.
CL&P, PSNH, WMECO, and NAEC.
NU owns 100% of the outstanding common stock of registrants CL&P, PSNH,
WMECO, and NAEC. As of February 24, 2000, the Directors and Executive
Officers of CL&P, PSNH, WMECO, and NAEC beneficially owned the number of
shares of each class of equity securities of NU listed below. No equity
securities of CL&P, PSNH, WMECO, or NAEC are owned by the Directors and
Executive Officers of CL&P, PSNH, WMECO, and NAEC. Unless otherwise noted,
each Director and Executive Officer of CL&P, PSNH, WMECO, and NAEC has sole
voting and investment power with respect to the listed shares.
CL&P, PSNH, WMECO, and NAEC DIRECTORS AND EXECUTIVE OFFICERS
- ------------------------------------------------------------------------------
Title of Amount and Nature of Percent of
Class Name Beneficial Ownership Class (1)
- ------------------------------------------------------------------------------
NU Common David H. Boguslawski 14,981 (2)
NU Common James E. Byrne 0
NU Common John C. Collins 0
NU Common William A. DiProfio 4,648 (3)
NU Common Ted C. Feigenbaum 36,357 (4)
NU Common John H. Forsgren 78,746 (5)
NU Common William T. Frain, Jr. 17,516 (6)
NU Common Cheryl W. Grise 32,347 (7)
NU Common Bruce D. Kenyon 87,377 (8)
NU Common Kerry J. Kuhlman 9,457 (9)
NU Common Gerald Letendre 0
NU Common Hugh C. MacKenzie 35,034 (10)
NU Common Paul J. McDonald 500
NU Common Michael G. Morris 400,496 (11)
NU Common Jane E. Newman 0
NU Common Melinda M. Phelps 0
NU Common Rodney O. Powell 4,094 (12)
Amount beneficially owned by Directors and Executive Officers as a group:
Amount and Nature of
Company Number of Persons Beneficial Ownership
- ------- ----------------- --------------------
CL&P 8 667,240 (13)
PSNH 11 680,027 (13)
WMECO 11 671,968 (13)
NAEC 6 639,971
(1) As of February 24, 2000, there were 137,388,633 common shares of NU
outstanding. The percentage of such shares beneficially owned by any
Director or Executive Officer, and by all Directors and Executive
Officers of CL&P, PSNH, WMECO, and NAEC as a group, does not exceed one
percent.
(2) Includes 2,016 restricted shares, as to which Mr. Boguslawski has sole
voting power but no dispositive power. Includes 7,368 shares that could
be acquired by Mr. Boguslawski pursuant to currently exercisable options.
(3) Includes 879 shares that could be acquired by Mr. DiProfio pursuant to
currently exercisable options.
(4) Includes 2,114 restricted shares, as to which Mr. Feigenbaum has sole
voting power but no dispositive power. Includes 9,251 shares that could
be acquired by Mr. Feigenbaum pursuant to currently exercisable options.
(5) Includes 174 shares held in an employee stock ownership plan and 5,475
restricted shares, as to which Mr. Forsgren has sole voting power but no
dispositive power. Includes 59,739 shares that could be acquired by
Mr. Forsgren pursuant to currently exercisable options.
(6) Includes 2,149 restricted shares, as to which Mr. Frain has sole voting
power but no dispositive power. Includes 7,892 shares that could be
acquired by Mr. Frain pursuant to currently exercisable options.
(7) Includes 3,285 restricted shares, as to which Mrs. Grise has sole voting
power, but no dispositive power. Includes 15,182 shares that could be
acquired by Mrs. Grise pursuant to currently exercisable options.
Includes 261 shares held by Mrs. Grise's husband as custodian for her
children, with whom she shares voting and dispositive power.
(8) Includes 305 shares held in an employee stock ownership plan and 3,467
restricted shares, as to which Mr. Kenyon has sole voting power but no
dispositive power. Includes 21,092 shares that could be acquired by
Mr. Kenyon pursuant to currently exercisable options.
(9) Includes 947 restricted shares, as to which Ms. Kuhlman has sole voting
power but no dispositive power. Includes 3,474 shares that could be
acquired by Ms. Kuhlman pursuant to currently exercisable options.
(10) Includes 3,285 restricted shares, as to which Mr. MacKenzie has sole
voting power but no dispositive power. Includes 16,902 shares that
could be acquired by Mr. MacKenzie pursuant to currently exercisable
options.
(11) Includes 265 shares held in an employee stock ownership plan and 20,939
restricted shares, as to which Mr. Morris has sole voting power but no
dispositive power. Includes 349,167 shares that could be acquired by
Mr. Morris pursuant to currently exercisable options. Includes 13,095
shares held jointly by Mr. Morris and his wife, who share voting and
investment power.
(12) Includes 631 restricted shares, as to which Mr. Powell has sole voting
power but no dispositive power. Includes 2,946 shares that could be
acquired by Mr. Powell pursuant to currently exercisable options.
(13) Includes 196 shares held in an employee stock ownership plan and 1,995
restricted shares held by an executive officer other than those named in
the table above as to which such officer has sole voting power but no
dispositive power. Includes 7,759 shares that could be acquired by such
officer pursuant to currently exercisable options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NU.
Incorporated herein by reference is the information contained in the
section "Certain Relationships and Related Transactions" of the definitive
proxy statement for solicitation of proxies by NU's Board of Trustees, dated
March 31, 2000, which will be filed with the Commission pursuant to Rule
14a-6 under the Act.
CL&P, PSNH, WMECO, and NAEC.
No relationships or transactions that would be described in response to
this item exist now or existed during 1999 with respect to CL&P, PSNH, WMECO,
and NAEC.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements:
The Report of Independent Public Accountants and financial statements
of NU, CL&P, PSNH, WMECO, and NAEC are hereby incorporated by
reference and made a part of this report (see "Item 8. Financial
Statements and Supplementary Data").
Report of Independent Public Accountants on Schedules S-1
Consent of Independent Public Accountants S-3
2. Schedules:
Financial Statement Schedules for NU (Parent), NU and
Subsidiaries, CL&P and Subsidiaries, PSNH, and WMECO
and Subsidiary are listed in the Index to Financial
Statements Schedules S-4
3. Exhibits Index E-1
(b) Reports on Form 8-K:
NU and CL&P filed 8-Ks dated January 28, 1999, disclosing terms
contained within the January 1999 issued Connecticut DPUC draft
decision, and its proposed effects on the NU system companies.
NU filed a Form 8-K dated February 23, 1999, disclosing the NU
Board of Trustees adopted a shareholder rights plan (subject to
regulatory approval) together with a brief summary of the terms of
the Rights Plan.
NU, CL&P and WMECO filed Form 8-Ks dated April 27, 1999, disclosing:
o On April 27, 1999, the Connecticut Superior Court granted a
plaintiff's request for a temporary restraining order to prevent
Millstone 2 from resuming operations until at least June 15, 1999;
o On April 29, 1999, the NRC notified NNECO that it could restart
Millstone 2; although NNECO received NRC approval, the unit
could not commence operations, until the temporary restraining
order initiated by Fish Unlimited is lifted.
o NU filed a Form 8-K dated May 7, 1999, announcing the distribution
of rights to shareholders under its shareholder rights plan dated
February 23, 1999.
NU filed a Form 8-K dated June 14, 1999, disclosing:
o On June 15, 1999, NU and Yankee announced that they have agreed
to a merger in which Yankee will become a subsidiary of NU.
NU, PSNH and NAEC filed Form 8-Ks dated June 14, 1999, disclosing:
o NU, its subsidiary, PSNH, and the state of New Hampshire signed
a Memorandum of Understanding intended to settle a number of
pending regulatory and court proceedings related to PSNH.
NU, CL&P and WMECO filed Form 8-Ks dated July 6, 1999, disclosing:
o The results of the auction of CL&P's and the remainder of
WMECO's nonnuclear generation assets held in conformity with
the electric utility restructuring laws of Connecticut and
Massachusetts, respectively.
NU filed a Form 8-K dated September 14, 1999, disclosing:
o On September 14, 1999, the NU Board of Trustees approved the
payment of NU's first common stock dividend since March 1997.
NU, CL&P, PSNH, and WMECO filed Form 8-Ks dated September 14, 1999,
disclosing:
o On September 15, 1999, NU announced that the Millstone Station
nuclear power plant assets of its subsidiaries, CL&P and WMECO,
will be put up for public auction as soon as practical. The
35.98 percent share of the Seabrook Nuclear Station in New
Hampshire owned by NU's subsidiary NAEC also will put up for
public auction.
NU filed a Form 8-K dated October 13, 1999, disclosing:
o On October 13, 1999, NU and Con Edison announced that they have
agreed to a merger to combine the two companies.
o On October 13, 1999, a NU shareholder class action complaint
was filed in New York Supreme Court for the County of New York.
An additional class action complaint was filed with the same
court on October 18, 1999. The complaints name as defendants
NU and ten individual Trustees of NU.
NU, CL&P and WMECO filed Form 8-Ks dated October 27, 1999,
disclosing:
o On October 27, 1999, NU and its subsidiaries, CL&P and WMECO,
agreed to settle various arbitration and litigation claims
arising out of the operation of the Millstone 3 nuclear power
plant.
o NU, CL&P, WMECO, and PSNH filed Form 8-Ks dated December 2,
1999, disclosing:
o On December 2, 1999, NU and its subsidiaries CL&P, WMECO and
PSNH, agreed in principle with a non-NU joint owner to settle
various arbitration and litigation claims arising out of the
operation of Millstone 3.
o On December 15, 1999, CL&P completed the sale of 2,235 MW of
fossil-fueled generation in Connecticut to an unaffiliated
company.
o On December 15, 1999, the DPUC issued a supplemental decision
in Docket No. 99-03-36 approving the components of CL&P's rates
for standard offer service commencing on January 1, 2000.
o On December 20, 1999, the DTE issued an order related to WMECO's
October 18, 1999, compliance filing.
o On December 29, 1999, the DPUC approved the merger between NU
and Yankee.
o As of January 11, 2000, NU and Con Edison entered into an
amended and restated agreement and plan of merger replacing the
agreement and plan of merger executed on October 12, 1999.
NU filed Form 8-K dated February 29, 2000, disclosing:
o The 1999 financial statements for NU Consolidated and notes
thereto. In addition, it includes, Management's Discussion and
Analysis of Financial Condition and Results of Operations
relating to the 1999 financial statements.
o The completion of the merger of NU and Yankee.
NORTHEAST UTILITIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NORTHEAST UTILITIES
-------------------
(Registrant)
Date: March 15, 2000 By /s/ Michael G. Morris
-----------------------------------------
Michael G. Morris
Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 15, 2000 Chairman of the Board, /s/ Michael G. Morris
President and Michael G. Morris
Chief Executive Officer
and a Trustee
March 15, 2000 Executive Vice /s/ John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
March 15, 2000 Vice President and /s/ John J. Roman
Controller John J. Roman
March 15, 2000 Trustee /s/ Cotton M. Cleveland
Cotton M. Cleveland
March 15, 2000 Trustee /s/ William F. Conway
William F. Conway
March 15, 2000 Trustee /s/ E. Gail de Planque
E. Gail de Planque
March 15, 2000 Trustee /s/ Raymond L. Golden
Raymond L. Golden
March 15, 2000 Trustee /s/ Elizabeth T. Kennan
Elizabeth T. Kennan
March 15, 2000 Trustee /s/ William J. Pape II
William J. Pape II
March 15, 2000 Trustee /s/ Robert E. Patricelli
Robert E. Patricelli
March 15, 2000 Trustee /s/ John F. Swope
John F. Swope
March 15, 2000 Trustee /s/ John F. Turner
John F. Turner
THE CONNECTICUT LIGHT AND POWER COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
---------------------------------------
(Registrant)
March 15, 2000 By /s/ Hugh C. MacKenzie
---------------------
Hugh C. MacKenzie
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 15, 2000 President and Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 15, 2000 Treasurer /s/ Randy A. Shoop
Randy A. Shoop
March 15, 2000 Controller /s/ John P. Stack
John P. Stack
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ Rodney O. Powell
Rodney O. Powell
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
---------------------------------------
(Registrant)
Date: March 15, 2000 By /s/ Michael G. Morris
----------------------------------------
Michael G. Morris
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 15, 2000 Chairman and Chief /s/ Michael G. Morris
Executive Officer Michael G. Morris
and a Director
March 15, 2000 President and Chief /s/ William T. Frain, Jr.
Operating Officer and William T. Frain, Jr.
a Director
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ John C. Collins
John C. Collins
March 15, 2000 Director /s/ Gerald Letendre
Gerald Letendre
March 15, 2000 Director /s/ John H. Forsgren
John H. Forsgren
March 15, 2000 Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 15, 2000 Director /s/ Jane E. Newman
Jane E. Newman
WESTERN MASSACHUSETTS ELECTRIC COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
--------------------------------------
(Registrant)
Date: March 15, 2000 By /s/ Michael G. Morris
----------------------------------------
Michael G. Morris
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 15, 2000 Chairman and Chief Executive /s/ Michael G. Morris
Officer and a Director Michael G. Morris
March 15, 2000 President and Chief Operating /s/ Kerry J. Kuhlman
Officer and a Director Kerry J. Kuhlman
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ James E. Byrne
James E. Byrne
March 15, 2000 Director /s/ John H. Forsgren
John H. Forsgren
March 15, 2000 Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 15, 2000 Director /s/ Paul J. McDonald
Paul J. McDonald
March 15, 2000 Director /s/ Melinda M. Phelps
Melinda M. Phelps
NORTH ATLANTIC ENERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NORTH ATLANTIC ENERGY CORPORATION
---------------------------------
(Registrant)
Date: March 15, 2000 By /s/ Bruce D. Kenyon
---------------------------------
Bruce D. Kenyon
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 15, 2000 President and Chief Executive /s/ Bruce D. Kenyon
Officer and a Director Bruce D. Kenyon
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ William A. DiProfio
William A. DiProfio
March 15, 2000 Director /s/ Ted C. Feigenbaum
Ted C. Feigenbaum
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
We have audited in accordance with generally accepted auditing standards, the
financial statements included in Northeast Utilities' annual report to
shareholders and The Connecticut Light and Power Company's and Western
Massachusetts Electric Company's annual reports, incorporated by reference in
this Form 10-K, and have issued our reports thereon dated January 25, 2000.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in the accompanying Index to
Financial Statements Schedules are the responsibility of the companies'
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not a part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
January 25, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
We have audited in accordance with generally accepted auditing standards, the
financial statements included in North Atlantic Energy Corporation's and
Public Service Company of New Hampshire's annual reports, incorporated by
reference in this Form 10-K and have issued our reports thereon dated January
25, 2000. Our reports on the financial statements included an explanatory
paragraph regarding the existence of conditions which raise substantial doubt
about the companies' abilities to continue as going concerns. Our audit was
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedules listed in the accompanying Index to
Financial Statements Schedules are the responsibility of the companies'
management and are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not a part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
January 25, 2000
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports dated January 25, 2000, included (or incorporated by reference) in
this Form 10-K into the Company's previously filed Registration Statements
No. 33-55279 of The Connecticut Light and Power Company, No. 33-56537 of CL&P
Capital, LP and No. 33-34622, No. 33-44814, No. 33-63023, No. 33-40156,
No. 333-52413, No. 333-52415, and No. 333-85613 of Northeast Utilities. It
should be noted that we have not audited any financial statements of the
Company subsequent to December 31, 1999 or performed any audit procedures
subsequent to the date of our report.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
March 23, 2000
INDEX TO FINANCIAL STATMENTS SCHEDULES
Schedule
I. Financial Information of Registrant:
Northeast Utilities (Parent) Balance
Sheets 1999 and 1998 S-5
Northeast Utilities (Parent) Statements
of Income 1999, 1998, and 1997 S-6
Northeast Utilities (Parent) Statements
of Cash Flows 1999, 1998, and 1997 S-7
II. Valuation and Qualifying Accounts and Reserves
1999, 1998, and 1997:
Northeast Utilities and Subsidiaries S-8 - S-10
The Connecticut Light and Power Company
and Subsidiaries S-11 - S-13
Public Service Company of New Hampshire S-14 - S-16
Western Massachusetts Electric Company
and Subsidiary S-17 - S-19
All other schedules of the companies' for which provision is made in the
applicable regulations of the SEC are not required under the related
instructions or are not applicable, and therefore have been omitted.
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AT DECEMBER 31, 1999 AND 1998
(Thousands of Dollars)
1999 1998
---------- ----------
ASSETS
- ------
Other Property and Investments:
Investments in subsidiary companies, at
equity................................................... $2,252,175 $2,161,901
Investments in transmission companies, at equity.......... 16,460 17,692
Other, at cost............................................ 54 67
----------- -----------
2,268,689 2,179,660
----------- -----------
Current Assets:
Notes receivable from affiliated companies................ 45,300 34,400
Notes and accounts receivable............................ 625 723
Receivables from affiliated companies..................... 8,351 1,033
Taxes receivable...................................... 418 7,969
Prepayments............................................... 1,192 96
----------- -----------
55,886 44,221
----------- -----------
Deferred Charges:
Accumulated deferred income taxes......................... - 5,236
Unamortized debt expense.................................. 6 101
Other..................................................... 122 256
Deferred Yankee Energy System, Inc. acquisition expenses.. 3,427 -
----------- -----------
3,555 5,593
----------- -----------
Total Assets......................................... $2,328,130 $2,229,474
=========== ===========
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common Shareholders' Equity:
Common shares, $5 par value--Authorized
225,000,000 shares; 137,393,829 shares issued and
131,870,284 shares outstanding in 1999 and
137,031,264 shares issued and
130,954,740 outstanding in 1998......................... $ 686,969 $ 685,156
Capital surplus, paid in.................................. 940,726 940,661
Deferred contribution plan--employee stock ownership plan. (127,725) (140,619)
Retained earnings......................................... 581,817 560,769
Accumulated other comprehensive income.................... 1,524 1,405
----------- -----------
Total common shareholders' equity....................... 2,083,311 2,047,372
Long-term debt............................................ 138,000 158,000
----------- -----------
Total capitalization.................................... 2,221,311 2,205,372
----------- -----------
Current Liabilities:
Long-term debt--current portion........................... 20,000 19,000
Notes payable to banks.................................... 65,000 -
Accounts payable.......................................... 7,258 1,882
Accounts payable to affiliated companies.................. 1,201 714
Accrued taxes............................................. - 15
Accrued interest.......................................... 1,705 2,097
Accrued Con Edison/Northeast Utilities merger fees........ 6,143 -
----------- -----------
101,307 23,708
----------- -----------
Accumulated deferred income taxes........................... 5,302 -
Other Deferred Credits...................................... 210 394
----------- -----------
5,512 394
----------- -----------
Total Capitalization and Liabilities $2,328,130 $2,229,474
=========== ===========
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Thousands of Dollars Except Share Information)
1999 1998 1997
------------- ------------- -------------
Operating Revenues................ $ - $ - $ -
------------- ------------- -------------
Operating Expenses:
Other........................... 19,126 7,674 8,657
Federal income taxes............ (4,849) 1,569 (10,697)
------------- ------------- -------------
Total operating expenses....... 14,277 9,243 (2,040)
------------- ------------- -------------
Operating (Loss)/Income........... (14,277) (9,243) 2,040
------------- ------------- -------------
Other Income/(Loss):
Equity in earnings of
subsidiaries................... 56,812 (145,874) (118,195)
Equity in earnings of
transmission companies......... 2,608 2,903 2,968
Other, net...................... 2,628 21,995 2,184
Income taxes.................... 2,057 - -
------------- ------------- -------------
Other income/(loss), net...... 64,105 (120,976) (113,043)
------------- ------------- -------------
Income/(loss) before interest
charges...................... 49,828 (130,219) (111,003)
------------- ------------- -------------
Interest Charges.................. 15,612 16,534 18,959
------------- ------------- -------------
Earnings/(Loss) for Common Shares. $ 34,216 $ (146,753) $ (129,962)
============= ============= =============
Earnings/(Loss) Per Common Share--
Basic and Diluted............... $ 0.26 $ (1.12) $ (1.01)
============= ============= =============
Common Shares Outstanding
(average)........................ 131,415,126 130,549,760 129,567,708
============= ============= =============
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Thousands of Dollars)
1999 1998 1997
------------ -------------- --------------
Operating Activities:
Net income\(loss)........................................ $ 34,216 $ (146,753) $ (135,708)
Adjustments to reconcile to net cash
provided by operating activities:
Equity in earnings of subsidiary companies............. (56,812) 145,874 123,941
Cash dividends received from subsidiary companies...... 66,000 47,000 132,994
Deferred income taxes.................................. 74 777 1,558
Other sources of cash.................................. 16,655 20,926 9,637
Changes in working capital:
Receivables.......................................... (7,220) (84) 6,247
Accounts payable..................................... 5,863 523 (14,031)
Other working capital (excludes cash)................ 12,191 (15,981) 5,490
------------ -------------- --------------
Net cash flows provided by operating activities............ 70,967 52,282 130,128
------------ -------------- --------------
Financing Activities:
Issuance of common shares................................ 5,318 2,659 6,502
Net increase/(decrease) in short-term debt............... 65,000 - (38,750)
Reacquisitions and retirements of long-term debt......... (19,000) (17,000) (16,000)
Cash dividends on common shares.......................... (13,168) - (32,134)
------------ -------------- --------------
Net cash flows used in financing activities................ 38,150 (14,341) (80,382)
------------ -------------- --------------
Investment Activities:
NU system Money Pool..................................... (10,900) (200) (28,725)
Investment in subsidiaries............................... (99,462) (40,029) (22,583)
Other investment activities, net......................... 1,245 2,278 1,562
------------ -------------- --------------
Net cash flows used in investing activities................ (109,117) (37,951) (49,746)
------------ -------------- --------------
Net decrease in cash for the period........................ 0 (10) 0
Cash - beginning of period................................. 0 10 10
------------ -------------- --------------
Cash - end of period....................................... $ 0 $ 0 $ 10
============ ============== ==============
Supplemental Cash Flow Information
Cash paid/(refunded) during the year for:
Interest, net of amounts capitalized..................... $ 15,724 $ 16,610 $ 18,960
============ ============== ==============
Income taxes............................................. $ 28,982 $ 16,929 $ (16,000)
============ ============== ==============
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,417 $ 8,026 $ - $ 5,548 (a) $ 4,895
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $40,438 $18,597 $ - $14,040 (b) $44,995
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1998
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,052 $ 3,042 $ - $ 2,677 (a) $ 2,417
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $34,437 $12,427 $ - $ 6,426 (b) $40,438
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $17,062 $14,854 $ - $29,864 (a) $ 2,052
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $36,260 $ 9,542 $ - $11,365 (b) $34,437
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 300 $ 290 $ - $ 290 (a) $ 300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $16,656 $ 5,422 $ - $ 6,009 (b) $16,069
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1998
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 300 $ 183 $ - $ 183 (a) $ 300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $14,962 $ 5,612 $ - $ 3,918 (b) $16,656
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $13,241 $10,509 $ - $23,450 (a) $ 300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $18,879 $ 4,458 $ - $ 8,375 (b) $14,962
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,041 $ 1,590 $ - $ 2,272 (a) $ 1,359
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 9,906 $ 7,268 $ - $ 5,769 (b) $11,405
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1998
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,702 $ 2,726 $ - $ 2,387 (a) $ 2,041
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 7,788 $ 4,136 $ - $ 2,018 (b) $ 9,906
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,700 $ 3,259 $ - $ 3,257 (a) $ 1,702
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 7,265 $ 1,647 $ - $ 1,124 (b) $ 7,788
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 50 $ 4,564 $ - $ 2,974 (a) $ 1,640
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,960 $ 3,085 $ - $ 1,857 (b) $ 7,188
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1998
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 50 $ 106 $ - $ 106 (a) $ 50
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,503 $ 816 $ - $ 359 (b) $ 5,960
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee medical
expenses, and expenses in connection therewith.
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
-----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,121 $ 1,086 $ - $ 3,157 (a) $ 50
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,575 $ 1,093 $ - $ 1,165 (b) $ 5,503
======= ======= ====== ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
EXHIBIT INDEX
Each document described below is incorporated by reference to the files
of the Securities and Exchange Commission, unless the reference to the
document is marked as follows:
* - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Reports on Form 10-K for CL&P, PSNH, WMECO, and NAEC.
# - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for CL&P.
@ - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for PSNH.
** - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for WMECO.
## - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for NAEC.
Exhibit
Number Description
2 Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Agreement and Plan of Merger (Exhibit 1 in NU's Current Report
on Form 8-K dated June 14, 1999, File No. 1-5324)
2.2 Agreement and Plan of Merger (Exhibit 1 to NU's Current Report
on Form 8-K dated October 13, 1999, File No. 1-5324).
3 Articles of Incorporation and By-Laws
3.1 Northeast Utilities
3.1.1 Declaration of Trust of NU, as amended through May 24,
1988. (Exhibit 3.1.1, 1988 NU Form 10-K, File No.
1-5324)
3.2 The Connecticut Light and Power Company
3.2.1 Certificate of Incorporation of CL&P, restated to
March 22, 1994. (Exhibit 3.2.1, 1993 NU Form 10-K,
File No. 1-5324)
3.2.2 Certificate of Amendment to Certificate of
Incorporation of CL&P, dated December 26, 1996.
(Exhibit 3.2.2, 1996 NU Form 10-K, File No. 1-5324)
3.2.3 Certificate of Amendment to Certificate of
Incorporation of CL&P, dated April 27, 1998. (Exhibit
3.2.3, 1998 NU Form 10-K, File No. 1-5324)
3.2.4 By-laws of CL&P, as amended to January 1, 1997.
(Exhibit 3.2.3, 1996 NU Form 10-K, File No. 1-5324)
3.3 Public Service Company of New Hampshire
3.3.1 Articles of Incorporation, as amended to May 16, 1991.
(Exhibit 3.3.1, 1993 NU Form 10-K, File No. 1-5324)
3.3.2 By-laws of PSNH, as amended to November 1, 1993.
(Exhibit 3.3.2, 1993 NU Form 10-K, File No. 1-5324)
3.4 Western Massachusetts Electric Company
3.4.1 Articles of Organization of WMECO, restated to
February 23, 1995. (Exhibit 3.4.1, 1994 NU Form 10-K,
File No. 1-5324)
3.4.2 By-laws of WMECO, as amended to April 1, 1999.
(Exhibit 3.1, 1999 NU Form 10-Q for the Quarter Ended
June 30, 1999, File No. 1-5324)
3.5 North Atlantic Energy Corporation
3.5.1 Articles of Incorporation of NAEC dated September 20,
1991. (Exhibit 3.5.1, 1993 NU Form 10-K, File No.
1-5324)
3.5.2 Articles of Amendment dated October 16, 1991, and
June 2, 1992, to Articles of Incorporation of NAEC.
(Exhibit 3.5.2, 1993 NU Form 10-K, File No. 1-5324)
3.5.3 By-laws of NAEC, as amended to November 8, 1993.
(Exhibit 3.5.3, 1993 NU Form 10-K, File No. 1-5324)
4 Instruments defining the rights of security holders, including
indentures
4.1 Northeast Utilities
4.1.1 Indenture dated as of December 1, 1991, between
Northeast Utilities and IBJ Schroder Bank & Trust
Company, with respect to the issuance of Debt
Securities. (Exhibit 4.1.1, 1991 NU Form 10-K,
File No. 1-5324)
4.1.2 First Supplemental Indenture dated as of December 1,
1991, between Northeast Utilities and IBJ Schroder
Bank & Trust Company, with respect to the issuance
of Series A Notes. (Exhibit 4.1.2, 1991 NU Form 10-K,
File No. 1-5324)
4.1.3 Second Supplemental Indenture dated as of March 1,
1992 between Northeast Utilities and IBJ Schroder
Bank & Trust Company with respect to the issuance of
8.38% Amortizing Notes. (Exhibit 4.1.3, 1992 NU Form
10-K, File No. 1-5324)
4.1.4 Credit Agreements among NU, CL&P, WMECO, and the Co-
Agents and Banks named therein, dated as of November
19, 1999 (includes Open End Mortgages), (Exhibits No.
B.13, B.14, B.15, and B.16, File No. 70-8875)
4.1.5 First Amendment and Waiver dated as of May 30, 1997,
to Credit Agreement dated as of November 21, 1996,
among NU, CL&P, WMECO, and the Co-Agents and Banks
named therein. (Exhibit B.4(a) (Execution Copy),
File No. 70-8875)
4.1.6 Second Amendment and Waiver dated as of September 11,
1998, to Credit Agreement dated as of November 21,
1996, among NU, CL&P, WMECO, and the Co-Agents and
Banks named therein. (Exhibit B.10 (Execution Copy),
File No. 70-8875)
4.1.7 Third Amendment and Waiver dated as of March 3, 1999
to Credit Agreement dated as of November 21, 1996
among NU, CL&P, WMECO, and the Co-Agents and Banks
named therein. (Exhibit B.11 (Execution Copy), File
No. 70-8875)
4.1.8 Credit Agreement dated as of February 10, 1998, among
NU, the Lenders named therein, and Toronto Dominion
(Texas), Inc., as Administrative Agent, TD Securities
(USA) Inc., as Arranger. (Exhibit B.9 (Execution
Copy), File No. 70-8875)
4.1.9 First Amendment dated as of February 8, 1999, to
Credit Agreement dated as of February 10, 1998,
among NU, the Lenders named therein, and Toronto
Dominion (Texas), Inc., as Administrative Agent,
TD Securities (USA) Inc., as Arranger. (Exhibit A
(Execution Copy), File No. 70-8875)
4.1.10 Second Amendment dated as of March 9, 1999 to Credit
Agreement dated as of February 10, 1998 among NU, the
Lenders named therein, and Toronto Dominion (Texas),
Inc., as Administrative Agent, TD Securities (USA)
Inc., as Arranger. (Exhibit B.12 (Execution Copy),
File No. 70-8875)
4.2 The Connecticut Light and Power Company
4.2.1 Indenture of Mortgage and Deed of Trust between CL&P
and Bankers Trust Company, Trustee, dated as of May 1,
1921. (Composite including all twenty-four amendments
to May 1, 1967.) (Exhibit 4.1.1, 1989 NU Form 10-K,
File No. 1-5324)
Supplemental Indentures to the Composite May 1, 1921,
Indenture of Mortgage and Deed of Trust between CL&P
and Bankers Trust Company, dated as of:
4.2.2 December 1, 1969. (Exhibit 4.2.2, 1998 NU Form 10-K,
File No. 1-5324)
4.2.3 June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.2.4 December 1, 1989. (Exhibit 4.1.26, 1989 NU Form 10-K,
File No. 1-5324)
4.2.5 July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.2.6 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.7 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.8 December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K,
File No. 1-5324)
4.2.9 February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K,
File No. 1-5324)
4.2.10 June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K, File
No. 1-5324)
4.2.11 October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K,
File No. 1-5324)
4.2.12 June 1, 1996. (Exhibit 4.2.16, 1996 NU Form 10-K, File
No. 1-5324)
4.2.13 January 1, 1997. (Exhibit 4.2.17, 1996 NU Form 10-K,
File No. 1-5324)
4.2.14 May 1, 1997. (Exhibit 4.19, File No. 333-30911)
4.2.15 June 1, 1997. (Exhibit 4.20, File No. 333-30911)
4.2.16 June 1, 1997. (Exhibit 4.2.17, 1997 NU Form 10-K, File
No. 1-5324)
4.2.17 May 1, 1998. (Exhibit 4.2.17, 1998 NU Form 10-K, File
No. 1-5324)
4.2.18 May 1, 1998. (Exhibit 4.2.18, 1998 NU Form 10-K, File
No. 1-5324)
4.2.19 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds, 1986 Series) dated as of
December 1, 1986. (Exhibit C.1.47, 1986 NU Form U5S,
File No. 30-246)
4.2.20 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds, 1988 Series) dated as of
October 1, 1988. (Exhibit C.1.55, 1988 NU Form U5S,
File No. 30-246)
4.2.21 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds) dated as of December 1,
1989. (Exhibit C.1.39, 1989 NU Form U5S, File No.
30-246)
4.2.22 Loan and Trust Agreement among Business Finance
Authority of the State of New Hampshire, CL&P and the
Trustee (Pollution Control Bonds, 1992 Series A) dated
as of December 1, 1992. (Exhibit C.2.33, 1992 NU
Form U5S, File No. 30-246)
4.2.23 Loan Agreement between Connecticut Development
Authority and CL&P (Pollution Control Bonds -
Series A, Tax Exempt Refunding) dated as of
September 1, 1993. (Exhibit 4.2.21, 1993 NU Form
10-K, File No. 1-5324)
4.2.24 Loan Agreement between Connecticut Development
Authority and CL&P (Pollution Control Bonds -
Series B, Tax Exempt Refunding) dated as of
September 1, 1993. (Exhibit 4.2.22, 1993 NU
Form 10-K, File No. 1-5324)
4.2.25 Amended and Restated Loan Agreement between
Connecticut Development Authority and CL&P (Pollution
Control Revenue Bond - 1996A Series) dated as of
May 1, 1996 and Amended and Restated as of January 1,
1997. (Exhibit 4.2.24, 1996 NU Form 10-K, File No.
1-5324)
4.2.25.1 Amended and Restated Indenture of Trust
between Connecticut Development Authority
and the Trustee (CL&P Pollution Control
Revenue Bond-1996A Series), dated as of
May 1, 1996, and Amended and Restated as of
January 1, 1997. (Exhibit 4.2.24.1, 1996
NU Form 10-K, File No. 1-5324)
4.2.25.2 Standby Bond Purchase Agreement among CL&P,
Societe Generale, New York Branch and the
Trustee, dated January 23, 1997. (Exhibit
4.2.24.2, 1996 NU Form 10-K, File No.
1-5324)
4.2.25.3 Amendment No. 1, dated January 21, 1998, to
the Standby Bond Purchase Agreement, dated
January 23, 1997. (Exhibit 4.2.24.3, 1997
NU Form 10-K, File No. 1-5324)
4.2.25.4 Amendment No. 2, dated December 9, 1998, to
the Standby Bond Purchase Agreement, dated
January 23, 1997. (Exhibit 4.2.25.4, 1998
NU Form 10-K, File No. 1-5324)
4.2.25.5 Amendment No. 3, dated November 5, 1999, to
the Standby Bond Purchase Agreement, dated
January 23, 1997.
4.2.25.6 AMBAC Municipal Bond Insurance Policy
issued by the Connecticut Development
Authority (CL&P) Pollution Control Revenue
Bond-1996A Series), effective January 23,
1997. (Exhibit 4.2.24.3, 1996 NU Form 10-K,
File No. 1-5324)
4.2.26 Amended and Restated Limited Partnership Agreement
(CL&P Capital, L.P.) among CL&P, NUSCO, and the
persons who became limited partners of CL&P Capital,
L.P. in accordance with the provisions thereof dated
as of January 23, 1995 (MIPS). (Exhibit A.1 (Execution
Copy), File No. 70-8451)
4.2.27 Indenture between CL&P and Bankers Trust Company,
Trustee (Series A Subordinated Debentures), dated as
of January 1, 1995 (MIPS). (Exhibit B.1 (Execution
Copy), File No. 70-8451)
4.2.28 Payment and Guaranty Agreement of CL&P dated as of
January 23, 1995 (MIPS). (Exhibit B.3 (Execution
Copy), File No. 70-8451)
4.3 Public Service Company of New Hampshire
4.3.1 First Mortgage Indenture dated as of August 15, 1978,
between PSNH and First Fidelity Bank, National
Association, New Jersey, Trustee, (Composite including
all amendments to May 16, 1991). (Exhibit 4.4.1, 1992
NU Form 10-K, File No. 1-5324)
4.3.1.1 Tenth Supplemental Indenture dated as of
May 1, 1991, between PSNH and First
Fidelity Bank, National Association.
(Exhibit 4.1, PSNH Current Report on
Form 8-K dated February 10, 1992, File
No. 1-6392)
4.3.3 Series A (Tax Exempt New Issue) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.2, PSNH
Current Report on Form 8-K dated February 10, 1992,
File No. 1-6392)
4.3.4 Series B (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.3, PSNH
Current Report on Form 8-K dated February 10, 1992,
File No. 1-6392)
4.3.5 Series C (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.4, PSNH
Current Report on Form 8-K dated February 10, 1992,
File No. 1-6392)
4.3.6 Series D (Taxable New Issue) Amended and Restated PCRB
Loan and Trust Agreement dated as of April 1, 1999.
4.3.6.1 Third Series D Letter of Credit and
Reimbursement Agreement dated as of
April 14, 1999.
4.3.6.2 Amended and Restated Second Series D
(May 1, 1991 Taxable New Issue) PCRB Letter
of Credit and Reimbursement Agreement dated
as of April 23, 1998. (Exhibit 4.3.6.3,
1998 NU Form 10-K, File No. 1-5324)
4.3.7 Series E (Taxable New Issue) Amended & Restated PCRB
Loan and Trust Agreement dated as of April 14, 1999.
4.3.7.1 Third Series E Letter of Credit and
Reimbursement Agreement dated as of
April 14, 1999.
4.3.7.2 Amended and Restated Second Series E
(May 1, 1991 Taxable New Issue) PCRB Letter
of Credit and Reimbursement Agreement dated
as of April 23, 1998. (Exhibit 4.3.7.3,
1998 NU Form 10-K, File No. 1-5324)
4.4 Western Massachusetts Electric Company
4.4.1 First Mortgage Indenture and Deed of Trust between
WMECO and Old Colony Trust Company, Trustee, dated as
of August 1, 1954. (Exhibit 4.4.1, 1993 NU Form 10-K,
File No. 1-5324)
Supplemental Indentures thereto dated as of:
4.4.2 October 1, 1954. (Exhibit 4.4.2, 1998 NU Form 10-K,
File No. 1-5324)
4.4.3 March 1, 1967. (Exhibit 4.4.3, 1997 NU Form 10-K,
File No. 1-5324)
4.4.4 July 1, 1973. (Exhibit 2.10, File No. 2-68808)
4.4.5 December 1, 1992. (Exhibit 4.15, File No. 33-55772)
4.4.6 January 1, 1993. (Exhibit 4.5.13, 1992 NU Form 10-K,
File No. 1-5324)
4.4.7 March 1, 1994. (Exhibit 4.4.12, 1993 NU Form 10-K,
File No. 1-5324)
4.4.8 May 1, 1997. (Exhibit 4.11, File No. 33-51185)
4.4.9 July 1, 1997. (Exhibit 4.4.10, 1997 NU Form 10-K,
File No. 1-5324)
4.4.10 May 1, 1998. (Exhibit 4.4.10, 1998 NU Form 10-K, File
No. 1-5324)
4.4.11 May 1, 1998. (Exhibit 4.4.11, 1998 NU Form 10-K, File
No. 1-5324)
4.4.12 Loan Agreement between Connecticut Development
Authority and WMECO, (Pollution Control Bonds -
Series A, Tax Exempt Refunding) dated as of
September 1, 1993. (Exhibit 4.4.13, 1993 NU Form
10-K, File No. 1-5324)
4.5 North Atlantic Energy Corporation
4.5.1 First Mortgage Indenture and Deed of Trust between
NAEC and United States Trust Company of New York,
Trustee, dated as of June 1, 1992. (Exhibit 4.6.1,
1992 NU Form 10-K, File No. 1-5324)
4.5.2 Term Credit Agreement dated as of November 9, 1995.
(Exhibit 4.5.2, 1995 NU Form 10-K, File No. 1-5324)
10 Material Contracts
10.1 Stockholder Agreement dated as of July 1, 1964, among the
stockholders of Connecticut Yankee Atomic Power Company
(CYAPC). (Exhibit 10.1, 1994 NU Form 10-K, File No. 1-5324)
10.2 Form of Power Contract dated as of July 1, 1964, between CYAPC
and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.2, 1994
NU Form 10-K, File No. 1-5324)
10.2.1 Form of Additional Power Contract dated as of
April 30, 1984, between CYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.2.1, 1994 NU Form 10-K, File
No. 1-5324)
10.2.2 Form of 1987 Supplementary Power Contract dated as of
April 1, 1987, between CYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.2.6, 1987 NU Form 10-K, File
No. 1-5324)
10.3 Capital Funds Agreement dated as of September 1, 1964, between
CYAPC and CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.3, 1994 NU
Form 10-K, File No. 1-5324)
10.4 Stockholder Agreement dated December 10, 1958, between Yankee
Atomic Electric Company (YAEC) and CL&P, HELCO, PSNH, and WMECO.
(Exhibit 10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 Form of Amendment No. 3, dated as of April 1, 1985, to Power
Contract between YAEC and each of CL&P, PSNH and WMECO,
including a composite restatement of original Power Contract
dated June 30, 1959 and Amendment No. 1 dated April 1, 1975, and
Amendment No. 2 dated October 1, 1980. (Exhibit 10.5, 1988 NU
Form 10-K, File No. 1-5324.)
10.5.1 Form of Amendment No. 4 to Power Contract, dated
May 6, 1988, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.1, 1989 NU Form 10-K,
File No. 1-5324)
10.5.2 Form of Amendment No. 5 to Power Contract, dated
June 26, 1989, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.2, 1989 NU Form 10-K,
File No. 1-5324)
10.5.3 Form of Amendment No. 6 to Power Contract, dated
July 1, 1989, between YAEC and each of CL&P, PSNH and
WMECO. (Exhibit 10.5.3, 1989 NU Form 10-K, File
No. 1-5324)
10.5.4 Form of Amendment No. 7 to Power Contract, dated
February 1, 1992, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.4, 1993 NU Form 10-K, File
No. 1-5324)
10.6 Stockholder Agreement dated as of May 20, 1968 among
stockholders of MYAPC. (Exhibit 10.6, 1997 NU Form 10-K, File
No. 1-5324)
10.7 Form of Power Contract dated as of May 20, 1968, between MYAPC
and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.7, 1997
Form 10-K, File No. 1-5324)
10.7.1 Form of Amendment No. 1 to Power Contract dated as of
March 1, 1983 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.7.1, 1993 NU Form 10-K, File No.
1-5324)
10.7.2 Form of Amendment No. 2 to Power Contract dated as of
January 1, 1984, between MYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.7.2, 1993 NU Form 10-K, File
No. 1-5324)
10.7.3 Form of Amendment No. 3 to Power Contract dated as of
October 1, 1984, between MYAPC and each of CL&P, PSNH
and WMECO. (Exhibit No. 10.7.3, 1994 NU Form 10-K,
File No. 1-5324)
10.7.4 Form of Additional Power Contract dated as of
February 1, 1984, between MYAPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.7.4, 1993 NU Form 10-K,
File No. 1-5324)
10.8 Capital Funds Agreement dated as of May 20, 1968 between MYAPC
and CL&P, PSNH, HELCO, and WMECO. (Exhibit 10.8, 1997 NU Form
10-K, File No. 1-5324)
10.8.1 Amendment No. 1 to Capital Funds Agreement, dated as
of August 1, 1985, between MYAPC, CL&P, PSNH, and
WMECO. (Exhibit No. 10.8.1, 1994 NU Form 10-K,
File No. 1-5324)
10.9 Sponsor Agreement dated as of August 1, 1968, among the sponsors
of Vermont Yankee Nuclear Power Corporation (VYNPC).
(Exhibit 10.9, 1997 NU Form 10-K, File No. 1-5324)
10.10 Form of Power Contract dated as of February 1, 1968, between
VYNPC and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.10,
1997 NU Form 10-K, File No. 1-5324)
10.10.1 Form of Amendment to Power Contract dated as of
June 1, 1972, between VYNPC and each of CL&P, HELCO,
PSNH, and WMECO. (Exhibit 5.22, File No. 2-47038)
10.10.2 Form of Second Amendment to Power Contract dated as
of April 15, 1983, between VYNPC and each of CL&P,
PSNH and WMECO. (Exhibit 10.10.2, 1993 NU Form 10-K,
File No. 1-5324)
10.10.3 Form of Third Amendment to Power Contract dated as
of April 24, 1985, between VYNPC and each of CL&P,
PSNH and WMECO. (Exhibit No. 10.10.3, 1994 NU Form
10-K, File No. 1-5324)
10.10.4 Form of Fourth Amendment to Power Contract dated as of
June 1, 1985, between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.10.4, 1996 NU Form 10-K, File
No. 1-5324)
10.10.5 Form of Fifth Amendment to Power Contract dated as of
May 6, 1988, between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.5, 1990 NU Form 10-K, File
No. 1-5324)
10.10.6 Form of Sixth Amendment to Power Contract dated as of
May 6, 1988. between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.6, 1990 NU Form 10-K, File No.
1-5324)
10.10.7 Form of Seventh Amendment to Power Contract dated as
of June 15, 1989, between VYNPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.10.7, 1990 NU Form 10-K,
File No. 1-5324)
10.10.8 Form of Eighth Amendment to Power Contract dated as
of December 1, 1989, between VYNPC and each of CL&P,
PSNH and WMECO. (Exhibit 10.10.8, 1990 NU Form 10-K,
File No. 1-5324)
10.10.9 Form of Additional Power Contract dated as of
February 1, 1984, between VYNPC and each of CL&P, PSNH
and WMECO. (Exhibit 10.10.9, 1993 NU Form 10-K, File
No. 1-5324)
10.11 Capital Funds Agreement dated as of February 1, 1968, between
VYNPC and CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.11, 1997
NU Form 10-K, File No. 1-5324)
10.11.1 Form of First Amendment to Capital Funds Agreement
dated as of March 12, 1968, between VYNPC and CL&P,
HELCO, PSNH, and WMECO. (Exhibit 10.11.1, 1997 NU
Form 10-K, File No. 1-5324)
10.11.2 Form of Second Amendment to Capital Funds Agreement
dated as of September 1, 1993, between VYNPC and CL&P,
HELCO, PSNH, and WMECO. (Exhibit 10.11.2, 1993 NU
Form 10-K, File No. 1-5324)
10.12 Amended and Restated Millstone Plant Agreement dated as of
December 1, 1984, by and among CL&P, WMECO and Northeast Nuclear
Energy Company (NNECO). (Exhibit 10.12, 1994 NU Form 10-K,
File No. 1-5324)
10.13 Sharing Agreement dated as of September 1, 1973, with respect to
1979 Connecticut nuclear generating unit (Millstone 3). (Exhibit
6.43, File No. 2-50142)
10.13.1 Amendment dated August 1, 1974, to Sharing Agreement -
1979 Connecticut Nuclear Unit. (Exhibit 5.45, File
No. 2-52392)
10.13.2 Amendment dated December 15, 1975, to Sharing
Agreement - 1979 Connecticut Nuclear Unit. (Exhibit
7.47, File No. 2-60806)
10.13.3 Amendment dated April 1, 1986, to Sharing
Agreement - 1979 Connecticut Nuclear Unit. (Exhibit
10.17.3, 1990 NU Form 10-K, File No. 1-5324)
10.14 Agreement dated July 19, 1990, among NAESCO and Seabrook Joint
owners with respect to operation of Seabrook. (Exhibit 10.53,
1990 NU Form 10-K, File No. 1-5324)
10.15 Sharing Agreement between CL&P, WMECO, HP&E, HWP, and PSNH dated
as of June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K, File
No. 1-5324)
10.16 Rate Agreement by and between NUSCO, on behalf of NU, and the
Governor of the State of New Hampshire and the New Hampshire
Attorney General dated as of November 22, 1989. (Exhibit 10.44,
1989 NU Form 10-K, File No. 1-5324)
10.16.1 First Amendment to Rate Agreement dated as of
December 5, 1989. (Exhibit 10.16.1, 1995 NU Form
10-K, File No. 1-5324)
10.16.2 Second Amendment to Rate Agreement dated as of
December 12, 1989. (Exhibit 10.16.2, 1995 NU Form
10-K, File No. 1-5324)
10.16.3 Third Amendment to Rate Agreement dated as of
December 3, 1993. (Exhibit 10.16.3, 1995 NU Form 10-K,
File No. 1-5324)
10.16.4 Fourth Amendment to Rate Agreement dated as of
September 21, 1994. (Exhibit 10.16.4, 1995 NU Form
10-K, File No. 1-5324)
10.16.5 Fifth Amendment to Rate Agreement dated as of
September 9, 1994. (Exhibit 10.16.5, 1995 NU Form
10-K, File No. 1-5324)
10.17 Agreement to Settle PSNH Restructuring (Exhibit 10.2, 1999
NU Form 10-Q for the Quarter Ended June 30, 1999, File No.
1-5324)
10.18 Form of Seabrook Power Contract between PSNH and NAEC, as
amended and restated. (Exhibit 10.45, 1992 NU Form 10-K,
File No. 1-5324)
10.19 Agreement (composite) for joint ownership, construction and
operation of New Hampshire nuclear unit, as amended through the
November 1, 1990 twenty-third amendment. (Exhibit No. 10.17,
1994 NU Form 10-K, File No. 1-5324)
10.19.1 Memorandum of Understanding dated November 7, 1988,
between PSNH and Massachusetts Municipal Wholesale
Electric Company (Exhibit 10.17, PSNH 1989 Form 10-K,
File No. 1-6392)
10.19.2 Agreement of Settlement among Joint Owners dated as of
January 13, 1989. (Exhibit 10.13.21, 1988 NU Form
10-K, File No. 1-5324)
10.19.2.1 Supplement to Settlement Agreement, dated
as of February 7, 1989, between PSNH and
Central Maine Power Company. (Exhibit
10.18.1, PSNH 1989 Form 10-K, File No.
1-6392)
10.20 Amended and Restated Agreement for Seabrook Project Disbursing
Agent dated as of November 1, 1990. (Exhibit 10.4.7, File No.
33-35312)
10.20.1 Form of First Amendment to Exhibit 10.19. (Exhibit
10.4.8, File No. 33-35312)
10.20.2 Form (Composite) of Second Amendment to Exhibit 10.19.
(Exhibit 10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.21 Agreement dated November 1, 1974, for Joint Ownership,
Construction and Operation of William F. Wyman Unit No. 4 among
PSNH, Central Maine Power Company and other utilities. (Exhibit
5.16 , File No. 2-52900)
10.21.1 Amendment to Exhibit 10.20 dated June 30, 1975.
(Exhibit 5.48, File No. 2-55458)
10.21.2 Amendment to Exhibit 10.20 dated as of August 16,
1976. (Exhibit 5.19, File No. 2-58251)
10.21.3 Amendment to Exhibit 10.20 dated as of December 31,
1978. (Exhibit 5.10.3, File No. 2-64294)
10.22 Form of Service Contract dated as of July 1, 1966 between each
of NU, CL&P and WMECO, and the Service Company. (Exhibit 10.20,
1993 NU Form 10-K, File No. 1-5324)
10.22.1 Service Contract dated as of June 5, 1992 between PSNH
and the Service Company. (Exhibit 10.12.4, 1992 NU
Form 10-K, File No. 1-5324)
10.22.2 Service Contract dated as of June 5, 1992 between NAEC
and the Service Company. (Exhibit 10.12.5, 1992 NU
Form 10-K, File No. 1-5324)
10.22.3 Form of Service Agreement dated as of June 29, 1992,
between PSNH and North Atlantic Energy Service
Corporation, and the First Amendment thereto.
(Exhibits B.7 and B.7.1, File No. 70-7787)
10.22.4 Form of Annual Renewal of Service Contract. (Exhibit
10.20.3, 1993 NU Form 10-K, File No. 1-5324)
10.23 Memorandum of Understanding between CL&P, HELCO, HP&E, HWP, and
WMECO dated as of June 1, 1970, with respect to pooling of
generation and transmission. (Exhibit 13.32, File No. 2-38177)
10.23.1 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of February 2,
1982, with respect to pooling of generation and
transmission. (Exhibit 10.21.1, 1993 NU Form 10-K,
File No. 1-5324)
10.23.2 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP, and WMECO dated as of January 1,
1984, with respect to pooling of generation and
transmission. (Exhibit 10.21.2, 1994 NU Form 10-K,
File No. 1-5324)
#** 10.23.3 Second Amendment to Memorandum of Understanding
between CL&P, HELCO, HP&E, HWP, and WMECO dated as of
June 8, 1999 with respect to pooling of generation and
transmission.
10.24 New England Power Pool (NEPOOL) Agreement effective as of
November 1, 1971, as amended to December 1, 1996. (Exhibit
10.15, 1988 NU Form 10-K, File No. 1-5324.)
10.24.1 Form of Interim Independent System Operator (ISO)
Agreement (Attachment to Thirty-third Amendment to
Exhibit 10.23 dated as of December 31, 1996).
(Exhibit 10.23.6, 1996 NU Form 10-K, File No. 1-5324)
10.24.2 Restated NEPOOL Power Pool Agreement (restated by the
Thirty-Sixth Agreement dated as of July 20, 1998, and
includes the Restated NEPOOL Open Access Transmission
Tariff). (Exhibit 10.23.2, 1998 NU Form 10-K, File
No. 1-5324)
10.24.3 Thirty-Seventh Agreement dated as of August 15, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.3, 1998 NU
Form 10-K, File No. 1-5324)
10.24.4 Thirty-Eighth Agreement dated as of October 30, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.4, 1998 NU
Form 10-K, File No. 1-5324)
10.24.5 Thirty-Ninth Agreement dated as of November 13, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.5, 1998 NU
Form 10-K, File No. 1-5324)
10.24.6 Fortieth Agreement dated as of December 15, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.6, 1998 NU
Form 10-K, File No. 1-5324)
10.24.7 ISO New England Inc., FERC Tariff for Transmission
Dispatch and Power Administration Services. (Exhibit
10.23.7, 1998 NU Form 10-K, File No. 1-5324)
* 10.24.8 Restated NEPOOL Power Pool Agreement (restated by
the fifty-first Agreement dated as of May 7, 1999, and
includes the Restated NEPOOL Open Access Transmission
Tariff).
10.25 Agreements among New England Utilities with respect to the
Hydro-Quebec interconnection projects. (See Exhibits 10(u) and
10(v); 10(w), 10(x), and 10(y), 1990 and 1988, respectively,
Form 10-K of New England Electric System, File No. 1-3446.)
10.26 Trust Agreement dated February 11, 1992, between State Street
Bank and Trust Company of Connecticut, as Trustor, and Bankers
Trust Company, as Trustee, and CL&P and WMECO, with respect to
NBFT. (Exhibit 10.23, 1991 NU Form 10-K, File No. 1-5324)
10.26.1 Nuclear Fuel Lease Agreement dated as of February 11,
1992, between Bankers Trust Company, Trustee, as
Lessor, and CL&P and WMECO, as Lessees. (Exhibit
10.23.1, 1991 NU Form 10-K, File No. 1-5324)
#** 10.26.2 Modification and Amendment to Nuclear Fuel Lease
Agreement dated as of May 17, 1999, between Bankers
Trust Company, Trustee, as Lessor, and CL&P and WMECO,
as Lessees.
10.27 Simulator Financing Lease Agreement, dated as of February 1,
1985, by and between ComPlan and NNECO. (Exhibit 10.25, 1994
NU Form 10-K, File No. 1-5324)
10.28 Simulator Financing Lease Agreement, dated as of May 2, 1985,
by and between The Prudential Insurance Company of America and
NNECO. (Exhibit No. 10.26, 1994 NU Form 10-K, File No. 1-5324)
10.29 Lease dated as of April 14, 1992, between The Rocky River Realty
Company (RRR) and Northeast Utilities Service Company (NUSCO)
with respect to the Berlin, Connecticut headquarters (office
lease). (Exhibit 10.29, 1992 NU Form 10-K, File No. 1-5324)
10.29.1 Lease dated as of April 14, 1992, between RRR and
NUSCO with respect to the Berlin, Connecticut
headquarters (project lease). (Exhibit 10.29.1,
1992 NU Form 10-K, File No. 1-5324)
10.30 Millstone Technical Building Note Agreement dated as of
December 21, 1993, between, by and between The Prudential
Insurance Company of America and NNECO. (Exhibit 10.28, 1993
NU Form 10-K, File No. 1-5324)
10.31 Lease and Agreement, dated as of December 15, 1988, by and
between WMECO and Bank of New England, N.A., with BNE Realty
Leasing Corporation of North Carolina. (Exhibit 10.63, 1988 NU
Form 10-K, File No. 1-5324.)
10.32 Note Agreement dated April 14, 1992, by and between The Rocky
River Realty Company (RRR) and Purchasers named therein
(Connecticut General Life Insurance Company, Life Insurance
Company of North America, INA Life Insurance Company of New
York, Life Insurance Company of Georgia), with respect to RRR's
sale of $15 million of guaranteed senior secured notes due 2007
and $28 million of guaranteed senior secured notes due 2017.
(Exhibit 10.52, 1992 NU Form 10-K, File No. 1-5324)
10.32.1 Amendment to Note Agreement, dated September 26, 1997.
(Exhibit 10.31.1, 1997 NU Form 10-K, File No. 1-5324)
10.32.2 Note Guaranty dated April 14, 1992, by Northeast
Utilities pursuant to Note Agreement dated April 14,
1992 between RRR and Note Purchasers, for the benefit
of The Connecticut National Bank as Trustee, the
Purchasers and the owners of the notes. (Exhibit
10.52.1, 1992 NU Form 10-K, File No. 1-5324)
10.32.2.1 Extension of Note Guaranty, dated
September 26, 1997. (Exhibit 10.31.2.1,
1997 NU Form 10-K, File No. 1-5324)
10.32.3 Assignment of Leases, Rents and Profits, Security
Agreement and Negative Pledge, dated as of April 14,
1992 among RRR, NUSCO and The Connecticut National
Bank as Trustee, securing notes sold by RRR pursuant
to April 14, 1992 Note Agreement. (Exhibit 10.52.2,
1997 NU Form 10-K, File No. 1-5324)
10.32.3.1 Modification of and Confirmation of
Assignment of Leases, Rents and Profits,
Security Agreement and Negative Pledge,
dated as of September 26, 1997. (Exhibit
10.31.3.1, 1997 NU Form 10-K, File No.
1-5324)
10.32.4 Purchase and Sale Agreement, dated July 28, 1997, by
and between RRR and the Sellers and Purchasers named
therein. (Exhibit 10.31.4, 1997 NU Form 10-K, File No.
1-5324)
10.32.5 Purchase and Sale Agreement, dated September 26, 1997,
by and between RRR and the Purchaser named therein.
(Exhibit 10.31.5, 1992 NU Form 10-K, File No. 1-5324)
10.33 Master Trust Agreement dated as of September 2, 1986, between
CL&P and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 1 decommissioning costs. (Exhibit
No. 10.32, 1996 NU Form 10-K, File No. 1-5324)
10.33.1 Notice of Appointment of Mellon Bank, N.A. as
Successor Trustee, dated November 20, 1990, and
Acceptance of Appointment. (Exhibit 10.41.1, 1992 NU
Form 10-K, File No. 1-5324)
10.34 Master Trust Agreement dated as of September 2, 1986, between
CL&P and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 2 decommissioning costs. (Exhibit
No. 10.33, 1996 NU Form 10-K, File No. 1-5324)
10.34.1 Notice of Appointment of Mellon Bank, N.A. as
Successor Trustee, dated November 20, 1990, and
Acceptance of Appointment. (Exhibit 10.42.1, 1992
NU Form 10-K, File No. 1-5324)
10.35 Master Trust Agreement dated as of April 23, 1986, between CL&P
and WMECO and Colonial Bank as Trustee, with respect to reserve
funds for Millstone 3 decommissioning costs. (Exhibit No. 10.34,
1996 NU Form 10-K, File No. 1-5324)
10.35.1 Notice of Appointment of Mellon Bank, N.A. as
Successor Trustee, dated November 20, 1990, and
Acceptance of Appointment. (Exhibit 10.43.1, 1992 NU
Form 10-K, File No. 1-5324)
10.36 Rights Agreement dated as of February 23, 1999, between
Northeast Utilities and Northeast Utilities Service Company, as
Rights Agent (Exhibit 1 to NU's Registration Statement on
Form 8-A, filed on 4/12/99, File No. 001-05324).
10.36.1 Amendment to Rights Agreement (Exhibit 3 to NU's
Current Report on Form 8-K dated October 13, 1999,
File No. 1-5324).
10.37 NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.37.1 NU Incentive Plan, effective as of January 1, 1998.
(Exhibit 10.35.1, 1998 NU Form 10-K, File No. 1-5324)
10.37.1.1 Amendment to Exhibit 10.35.1, effective as
of February 23, 1999. (Exhibit 10.35.1.1,
1998 NU Form 10-K, File No. 1-5324)
10.38 Supplemental Executive Retirement Plan for Officers of NU system
companies, Amended and Restated effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30,
1992, File No. 1-5324)
10.38.1 Amendment 1 to Exhibit 10.38, effective as of
August 1, 1993. (Exhibit 10.35.1, 1993 NU Form 10-K,
File No. 1-5324)
10.38.2 Amendment 2 to Exhibit 10.38, effective as of
January 1, 1994. (Exhibit 10.35.2, 1993 NU Form 10-K,
File No. 1-5324)
10.38.3 Amendment 3 to Exhibit 10.38, effective as of
January 1, 1996. (Exhibit 10.36.3, 1995 NU Form
10-K, File No. 1-5324)
10.39 Special Severance Program for Officers of NU system companies,
as adopted on July 15, 1998. (Exhibit 10.37, 1998 NU Form 10-K,
File No. 1-5324)
10.39.1 Amendment to Exhibit 10.39, effective as of
February 23, 1999. (Exhibit 10.37.1, 1998 NU Form
10-K, File No. 1-5324)
10.39.2 Amendment to Exhibit 10.39, effective as of
September 14, 1999. (Exhibit 10.3, 1999 NU Form 10-Q
for the Quarter Ended September 30, 1999, File No.
1-5324)
10.40 Loan Agreement dated as of December 2, 1991, by and between NU
and Mellon Bank, N.A., as Trustee, with respect to NU's loan of
$175 million to an ESOP Trust. (Exhibit 10.46, 1991 NU Form
10-K, File No. 1-5324)
10.40.1 First Amendment to Exhibit 10.40 dated February 7,
1992. (Exhibit 10.36.1, 1993 NU Form 10-K, File No.
1-5324)
10.40.2 Loan Agreement dated as of March 19, 1992, by and
between NU and Mellon Bank, N.A., as Trustee, with
respect to NU's loan of $75 million to the ESOP
Trust. (Exhibit 10.49.1, 1992 NU Form 10-K,
File No. 1-5324)
10.40.3 Second Amendment to Exhibit 10.40 dated April 9,
1992. (Exhibit 10.36.3, 1993 NU Form 10-K, File
No. 1-5324)
10.41 Employment Agreement with Michael G. Morris. (Exhibit 10.39,
1997 NU Form 10-K, File No. 1-5324)
10.41.1 Amendment to Exhibit 10.41, dated as of February 23,
1999. (Exhibit 10.39.1, 1998 NU Form 10-K, File No.
1-5324)
10.42 Transition and Retirement Agreement with Bernard M. Fox.
(Exhibit 10.39, 1996 NU Form 10-K, File No. 1-5324)
10.43 Employment Agreement with Bruce M. Kenyon. (Exhibit 10.40,
1996 NU Form 10-K, File No. 1-5324)
10.43.1 Amendment to Exhibit 10.43, dated as of January 13,
1998. (Exhibit 10.41.1, 1998 NU Form 10-K, File
No. 1-5324)
10.43.2 Amendment to Exhibit 10.43, dated as of February 23,
1999. (Exhibit 10.41.2, 1998 NU Form 10-K, File
No. 1-5324)
10.43.3 Amendment to Exhibit 10.43, dated as of May 14,
1999. (Exhibit 10.3, 1999 NU Form 10-Q for the Quarter
Ended June 30, 1999, File No. 1-5324)
10.44 Employment Agreement with John H. Forsgren. (Exhibit 10.41, 1996
NU Form 10-K, File No. 1-5324)
10.44.1 Amendment to Exhibit 10.44, dated as of January 13,
1998. (Exhibit 10.42.1, 1998 NU Form 10-K, File
No. 1-5324)
10.44.2 Amendment to Exhibit 10.44, dated as of February 23,
1999. (Exhibit 10.42.2, 1998 NU Form 10-K, File No.
1-5324)
10.44.3 Amendment to Exhibit 10.44, dated as of May 10, 1999.
(Exhibit 10.1, 1999 NU Form 10-Q for the Quarter Ended
March 31, 1999, File No. 1-5324)
10.44.4 Amendment to Exhibit 10.44, dated as of September 14,
1999. (Exhibit 10.4, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.45 Employment Agreement with Hugh C. MacKenzie. (Exhibit 10.42,
1996 NU Form 10-K, File No. 1-5324)
10.45.1 Amendment to Exhibit 10.45, dated as of January 13,
1998. (Exhibit 10.43.1, 1998 NU Form 10-K, File
No. 1-5324)
10.45.2 Amendment to Exhibit 10.45, dated as of February 23,
1999. (Exhibit 10.43.2, 1998 NU Form 10-K, File No.
1-5324)
10.46 Employment Agreement with Cheryl W. Grise. (Exhibit 10.44, 1998
NU Form 10-K, File No. 1-5324)
10.46.1 Amendment to Exhibit 10.46, dated as of January 13,
1998. (Exhibit 10.44.1, 1998 NU Form 10-K, File
No. 1-5324)
10.46.2 Amendment to Exhibit 10.46, dated as of February 23,
1999. (Exhibit 10.44.2, 1998 NU Form 10-K, File
No. 1-5324)
10.46.3 Amendment to Exhibit 10.46, dated as of September 14,
1999. (Exhibit 10.5, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.47 Northeast Utilities Deferred Compensation Plan for Trustees,
Amended and Restated December 13, 1994. (Exhibit 10.39, 1995 NU
Form 10-K, File No. 1-5324)
10.48 Deferred Compensation Plan for Officers of Northeast Utilities
system companies adopted September 23, 1986. (Exhibit 10.40,
1995 NU Form 10-K, File No. 1-5324)
10.49 Northeast Utilities Deferred Compensation Plan for Executives,
adopted January 13, 1998. (Exhibit A.5, File No. 70-09185)
10.50 Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC,
and NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form
10-K, File No. 1-5324)
10.51 Receivables Purchase and Sale Agreement (CL&P and CL&P
Receivables Corporation), dated as of September 30, 1997.
(Exhibit 10.49, 1997 NU Form 10-K, File No. 1-5324)
10.51.1 Amendment to Exhibit 10.51 dated September 29, 1998.
(Exhibit 10.49.1, 1998 NU Form 10-K, File No. 1-5324)
10.51.2 Purchase and Contribution Agreement (CL&P and CL&P
Receivables Corporation), dated as of September 30,
1997. (Exhibit 10.49.1, 1997 NU Form 10-K, File No.
1-5324)
10.52 Receivables Purchase Agreement (WMECO and WMECO Receivables
Corporation), dated as of May 22, 1997. (Exhibit 10.50, 1997 NU
Form 10-K, File No. 1-5324)
10.52.1 Purchase and Sale Agreement (WMECO and WMECO
Receivables Corporation), dated as of May 22, 1997.
(Exhibit 10.50.1, 1997 NU Form 10-K, File No. 1-5324)
10.53 Master Lease Agreement between General Electric Capital
Corporation and CL&P, dated as of June 21, 1996. (Exhibit
10.50, 1996 NU Form 10-K, File No. 1-5324)
10.53.1 Amendment No. 1 to Master Lease Agreement, dated as
of August 29, 1997. (Exhibit 10.51.1, 1997 NU Form
10-K, File No. 1-5324)
10.54 NU Guaranty, dated as of November 30, 1998, made by NU, in
favor of the Participating Banks, the Issuing Banks and the
Administrative Agent, all named in a $50,000,000 Letter of
Credit and Reimbursement Agreement, dated as of November 30,
1998, among Select Energy, Inc., the Participating Banks,
the Administrative Agent, the Issuing Bank and Documentation
Agent, and the Syndication Agent named therein. (Exhibit B.1
(Execution Copy), File No. 70-9343)
10.54.1 Amendment No. 1 dated as of November 30, 1998 to
Exhibit 10.52. (Exhibit B.1 (Execution Copy), File
No. 70-9343)
*10.55 Confirmation Agreement between Credit Suisse First Boston and
NU, dated as of November 3, 1999.
*10.56 Confirmation Agreement between Bank One and NU, dated as of
December 9, 1999.
13 Annual Report to Security Holders (Each of the Annual Reports is filed
only with the Form 10-K of that respective registrant.)
* 13.1 Portions of the Annual Report to Shareholders of NU
(pages 21-55) that have been incorporated by reference into
this Form 10-K.
13.2 Annual Report of CL&P.
13.3 Annual Report of WMECO.
13.4 Annual Report of PSNH.
13.5 Annual Report of NAEC.
*21 Subsidiaries of the Registrant.
27 Financial Data Schedules (Each Financial Data Schedule is filed only
with the Form 10-K of that respective registrant.)
27.1 Financial Data Schedule of NU.
27.2 Financial Data Schedule of CL&P.
27.3 Financial Data Schedule of WMECO.
27.4 Financial Data Schedule of PSNH.
27.5 Financial Data Schedule of NAEC.