EXHIBIT 13.5
1995 Annual Report
North Atlantic Energy Corporation
Index
Contents Page
- -------- ----
Balance Sheets.............................................. 2-3
Statements of Income........................................ 4
Statements of Cash Flows.................................... 5
Statements of Common Stockholder's Equity................... 6
Notes to Financial Statements............................... 7
Report of Independent Public Accountants.................... 16
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 17
Selected Financial Data..................................... 21
Statistics.................................................. 21
Statements of Quarterly Financial Data...................... 21
Bondholder Information...................................... Back Cover
NORTH ATLANTIC ENERGY CORPORATION
BALANCE SHEETS
- ----------------------------------------------------------------------------------
At December 31, 1995 1994
- ----------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 771,794 $769,379
Less: Accumulated provision for depreciation......... 99,772 75,176
----------- ---------
672,022 694,203
Construction work in progress........................... 7,616 3,704
Nuclear fuel, net....................................... 27,482 19,797
----------- ---------
Total net utility plant............................. 707,120 717,704
----------- ---------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 15,312 10,342
Other, at cost.......................................... 222 222
----------- ---------
15,534 10,564
----------- ---------
Current Assets:
Cash.................................................... 8,384 8,166
Notes receivable from affiliated companies.............. 2,500 28,750
Receivables from affiliated companies................... 18,692 13,983
Materials and supplies, at average cost................. 12,269 10,036
Prepayments and other................................... 4,157 2,149
----------- ---------
46,002 63,084
----------- ---------
Deferred Charges:
Regulatory assets (Note 1G)<F1G>........................ 239,896 166,598
Unamortized debt expense................................ 5,619 4,834
Other................................................... 478 795
----------- ---------
245,993 172,227
----------- ---------
Total Assets........................................ $1,014,649 $963,579
=========== =========
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
BALANCE SHEETS
- -----------------------------------------------------------------------------------
At December 31, 1995 1994
- -----------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$1 par value--authorized
and outstanding 1,000 shares in 1995 and 1994........... $ 1 $ 1
Capital surplus, paid in................................. 160,999 160,999
Retained earnings........................................ 59,677 59,236
----------- ---------
Total common stockholder's equity............... 220,677 220,236
Long-term debt........................................... 540,000 540,000
----------- ---------
Total capitalization............................ 760,677 760,236
----------- ---------
Current Liabilities:
Notes payable to affiliated company...................... 8,000 -
Long-term debt--current portion.......................... 20,000 20,000
Accounts payable......................................... 6,135 4,073
Accounts payable to affiliated companies................. 143 38
Accrued interest......................................... 3,452 18,288
Accrued taxes............................................ 1,346 1,439
Other.................................................... 270 1,174
----------- ---------
39,346 45,012
----------- ---------
Deferred Credits:
Accumulated deferred income taxes (Note 1I)<F1I>......... 179,135 120,250
Deferred obligation to affiliated company................ 33,284 33,284
Other.................................................... 2,207 4,797
----------- ---------
214,626 158,331
----------- ---------
Commitments and Contingencies (Note 7)<F7>
Total Capitalization and Liabilities............ $1,014,649 $963,579
=========== =========
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues............................. $ 157,183 $ 145,751 $ 125,408
---------- ---------- ----------
Operating Expenses:
Operation --
Fuel...................................... 12,030 7,144 7,067
Other..................................... 36,737 37,929 35,656
Maintenance.................................. 12,442 14,951 7,858
Depreciation................................. 23,406 22,959 22,642
Federal and state income taxes (Note 5)<F5>.. 10,187 8,027 5,673
Taxes other than income taxes................ 10,987 11,791 12,794
---------- ---------- ----------
Total operating expenses............... 105,789 102,801 91,690
---------- ---------- ----------
Operating Income............................... 51,394 42,950 33,718
---------- ---------- ----------
Other Income:
Deferred Seabrook return--other
funds (Note 1H)<F1H>....................... 9,405 12,951 13,397
Other, net................................... 1,556 1,272 1,891
Income taxes--credit......................... 2,776 3,970 1,653
---------- ---------- ----------
Other income, net...................... 13,737 18,193 16,941
---------- ---------- ----------
Income before interest charges......... 65,131 61,143 50,659
---------- ---------- ----------
Interest Charges:
Interest on long-term debt................... 62,721 64,022 64,022
Other interest............................... (519) (280) 45
Deferred Seabrook return--borrowed funds
funds (Note 1H)<F1H>....................... (21,512) (33,134) (39,406)
---------- ---------- ----------
Interest charges, net.................. 40,690 30,608 24,661
---------- ---------- ----------
Net Income..................................... $ 24,441 $ 30,535 $ 25,998
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net Income.................................................. $ 24,441 $ 30,535 $ 25,998
Adjustments to reconcile to net cash
from operating activities:
Depreciation.............................................. 23,406 22,959 22,642
Deferred income taxes and investment tax credits, net..... 46,114 34,449 37,121
Deferred return - Seabrook................................ (30,917) (46,085) (52,803)
Other sources of cash..................................... 12,140 6,803 9,050
Other uses of cash........................................ (35,261) (2,842) (1,028)
Changes in working capital:
Receivables............................................... (4,709) 9,998 (790)
Materials and supplies.................................... (2,233) (2,683) (1,990)
Accounts payable.......................................... 2,167 (2,277) 5,026
Accrued taxes............................................. (93) 1,312 126
Other working capital (excludes cash)..................... (17,748) 2,363 822
----------- ----------- -----------
Net cash flows from operating activities...................... 17,307 54,532 44,174
----------- ----------- -----------
Financing Activities:
Issuance of long-term debt.................................. 225,000 - -
Net increase (decrease) in short-term debt.................. 8,000 - (18,500)
Reacquisitions and retirements of long-term debt............ (225,000) - -
Cash dividends on common stock.............................. (24,000) (10,000) -
----------- ----------- -----------
Net cash flows used for financing activities.................. (16,000) (10,000) (18,500)
----------- ----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant.................................... (6,906) (11,256) (6,707)
Nuclear fuel.............................................. (16,609) (1,227) (13,983)
----------- ----------- -----------
Net cash flows used for investments in plant................ (23,515) (12,483) (20,690)
NU System Money Pool........................................ 26,250 (28,750) -
Other investment activities, net............................ (3,824) (3,537) (2,844)
----------- ----------- -----------
Net cash flows used for investments........................... (1,089) (44,770) (23,534)
----------- ----------- -----------
Net Increase (Decrease) In Cash For The Period................ 218 (238) 2,140
Cash - beginning of period.................................... 8,166 8,404 6,264
----------- ----------- -----------
Cash - end of period.......................................... $ 8,384 $ 8,166 $ 8,404
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid (received) during the year for:
Interest, net of amounts capitalized........................ $ 73,923 $ 64,056 $ 63,393
=========== =========== ===========
Income taxes................................................ $ (36,679) $ (34,988) $ (32,350)
=========== =========== ===========
TThe accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
- -----------------------------------------------------------------------------------
Capital Retained
Common Surplus, Earnings
Stock Paid In (a) Total
- -----------------------------------------------------------------------------------
(Thousands of Dollars)
Balance at January 1, 1993 ............. $ 1 $ 160,999 $ 12,703 $ 173,703
Net income for 1993................. 25,998 25,998
---------- ---------- --------- ----------
Balance at December 31, 1993............ 1 160,999 38,701 199,701
Net income for 1994................. 30,535 30,535
Cash dividends on common stock...... (10,000) (10,000)
---------- ---------- --------- ----------
Balance at December 31, 1994............ 1 160,999 59,236 220,236
Net income for 1995................. 24,441 24,441
Cash dividends on common stock...... (24,000) (24,000)
---------- ---------- --------- ----------
Balance at December 31, 1995............ $ 1 $ 160,999 $ 59,677 $ 220,677
========== ========== ========= ==========
(a) The company had dividend restrictions imposed by its long-term debt
agreement and was effectively prohibited by the agreement from the
distribution of any dividends through May 1993. After that time, all
retained earnings are available plus an allowance of $10 million.
The accompanying notes are an integral part of these financial statements.
North Atlantic Energy Corporation
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. PRESENTATION
North Atlantic Energy Corporation (NAEC or the company), The Connecticut
Light and Power Company (CL&P), Public Service Company of New Hampshire
(PSNH), Western Massachusetts Electric Company (WMECO), and Holyoke
Water Power Company (HWP), are the operating subsidiaries comprising the
Northeast Utilities system (the system) and are wholly-owned by
Northeast Utilities (NU).
The system furnishes retail electric service in Connecticut, New
Hampshire, and western Massachusetts through CL&P, PSNH, WMECO, and HWP.
NAEC sells all of its capacity to PSNH. In addition to its retail
service, the system furnishes firm and other wholesale electric services
to various municipalities and other utilities. The system serves about
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.
Other wholly owned subsidiaries of NU provide substantial support
services to the system. Northeast Utilities Service Company (NUSCO)
supplies centralized accounting, administrative, data processing,
engineering, financial, legal, operational, planning, purchasing, and
other services to the system companies. North Atlantic Energy Service
Corporation acts as agent for NAEC and CL&P in operating the Seabrook
nuclear generating facility. Northeast Nuclear Energy Company (NNECO)
acts as agent for CL&P, PSNH, and WMECO in operating the Millstone
nuclear generating facilities.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return on equity, and are
subject to approval by various federal and state regulatory agencies.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior years' data have been made to conform
with the current year's presentation.
B. FUTURE ACCOUNTING STANDARD
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of in
March 1995. SFAS 121 became effective January 1, 1996, and establishes
accounting standards for evaluating and recording asset impairment.
SFAS 121 requires the evaluation of long-lived assets for impairment
when certain events occur or conditions exist that indicate the carrying
amounts of assets may not be recoverable. Refer to Note 1G, "Regulatory
Accounting" for further information on the regulatory impacts of the
company's adoption of SFAS 121.
C. JOINTLY OWNED ELECTRIC UTILITY PLANT
NAEC has a 35.98 percent joint-ownership interest in Seabrook 1, a
1,148-megawatt (MW) nuclear generating unit, including the 0.4 percent
ownership interest in Seabrook 1 which NAEC acquired from Vermont
Electric Generation and Transmission Cooperative in February 1994. NAEC
sells all of its share of the power generated by Seabrook 1 to PSNH. As
of December 31, 1995 and 1994, plant-in-service included approximately
$715.7 million and $714.2 million, respectively, and the accumulated
provision for depreciation included approximately $82.2 million and
$63.1 million, respectively, for NAEC's share of Seabrook 1. NAEC's
share of Seabrook 1 expenses is included in the operating expenses on
the accompanying Statements of Income.
D. DEPRECIATION
The provision for depreciation is calculated using the straight-line
method based on estimated remaining lives of depreciable utility plant-
in-service, adjusted for salvage value and removal costs, as approved by
the Federal Energy Regulatory Commission (FERC). Except for major
facilities, depreciation factors are applied to the average plant-in-
service during the period. Major facilities are depreciated from the
time they are placed in service. When plant is retired from service,
the original cost of plant, including costs of removal, less salvage, is
charged to the accumulated provision for depreciation. The depreciation
rates for the several classes of electric plant-in-service are
equivalent to a composite rate of 3.3 percent in 1995 and 1994, and
3.2 percent in 1993. See Note 2, "Nuclear Decommissioning," for
additional information on nuclear plant decommissioning.
E. PUBLIC UTILITY REGULATION
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935
(1935 Act), and it and its subsidiaries, including the company, are
subject to the provisions of the 1935 Act. Arrangements among the
system companies, outside agencies, and other utilities covering
interconnections, interchange of electric power, and sales of utility
property are subject to regulation by the FERC and/or the SEC. The
company is subject to further regulation for rates, accounting, and
other matters by the FERC and the New Hampshire Public Utilities
Commission (NHPUC).
F. SEABROOK POWER CONTRACTS
PSNH and NAEC have entered into two power contracts that obligate PSNH
to purchase NAEC's 35.98 percent ownership of the capacity and output of
Seabrook 1 for the term of Seabrook 1's Nuclear Regulatory Commission
(NRC) operating license. Under these contracts, PSNH is obligated to
pay NAEC's cost of service during this period, regardless if Seabrook 1
is operating. NAEC's cost of service includes all of its Seabrook-
related costs, including operation and maintenance expense, fuel
expense, income and property tax expense, depreciation expense, certain
overhead and other costs, and a return on its allowed investment.
The Seabrook power contracts established the value of the initial
investment in Seabrook (initial investment) at $700-million. As of
December 31, 1995, the portion of the initial investment on which NAEC
is entitled to earn a cash return was 85 percent. The initial
investment will be fully phased into NAEC's rate base as of May 1, 1996.
From June 5, 1992 (the date NU acquired PSNH and NAEC acquired Seabrook
1 from PSNH - the Acquisition Date) through December 31, 1995, NAEC
recorded $162.4 million of deferred return on the excluded portion of
its investment in Seabrook 1. The deferred return on the excluded
portion of NAEC's investment in Seabrook 1 will be recovered from PSNH
with carrying charges beginning December 1, 1997, and will be fully
recovered by May 2001. NAEC is depreciating its initial investment over
the term of Seabrook 1's operating license (39 years), and any
subsequent plant additions are depreciated on a straight-line basis over
the remaining term of the Seabrook power contracts at the time the
subsequent additions are placed in service.
If Seabrook 1 is shut down prior to the expiration of the NRC operating
license, PSNH will be unconditionally required to pay NAEC termination
costs for 39 years, less the period during which Seabrook 1 has
operated. These termination costs will reimburse NAEC for its share of
Seabrook 1 shut-down and decommissioning costs, and will pay NAEC a
return of and on any undepreciated balance of its initial investment
over the remaining term of the Seabrook power contracts, and the return
of and on any capital additions to the plant made after the Acquisition
Date over a period of five years after shut down (net of any tax
benefits to NAEC attributable to the cancellation).
G. REGULATORY ACCOUNTING
The accounting policies of the company and the accompanying financial
statements conform to generally accepted accounting principles
applicable to rate-regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS 71, Accounting for the
Effects of Certain Types of Regulation. Assuming a cost-of-service
based regulatory structure, regulators may permit incurred costs,
normally treated as expenses, to be deferred and recovered in future
revenues. Through their actions, regulators may also reduce or
eliminate the value of an asset, or create a liability. If any portion
of the company's operations were no longer subject to the provisions of
SFAS 71, as a result of a change in the cost-of-service based regulatory
structure or the effects of competition, the company would be required
to write off related regulatory assets and liabilities. The company
would also be required to determine any impairment to other assets, and
write down these assets to fair value. Based on current regulation and
recent regulatory decisions and initiatives relating to competition in
the company's markets, the company believes that its use of regulatory
accounting remains appropriate.
SFAS 121 requires that any assets, including regulatory assets, which
are no longer probable of recovery through future revenues be revalued
based on estimated future cash flows. If the revaluation is less than
the book value of the asset, an impairment loss would be charged to
earnings. As noted above, based on the current regulatory environment,
it is not expected that SFAS 121 will have a material impact on the
company's financial position or results of operations upon adoption.
This conclusion may change in the future as competitive factors
influence wholesale and retail pricing in the electric utility industry,
or if the cost-of-service based regulatory structure were to change.
For further information on the company's regulatory environment, refer
to Management's Discussion and Analysis of Financial Condition and
Results of Operations (MD&A).
The components of regulatory assets are as follows:
At December 31, 1995 1994
-------------------------------------------------------------------
(Thousands of Dollars)
Deferred costs-Seabrook 1 (Note 1H) .. $162,430 $131,513
Income taxes, net (Note 1I) .......... 43,231 30,461
Recoverable energy costs (Note 1J) ... 2,349 4,624
Unamortized loss on reacquired debt (Note 1K) 31,886 -
--------- ---------
$239,896 $166,598
======== ========
H. DEFERRED COST - SEABROOK 1
As prescribed by the Rate Agreement, NAEC is phasing into rates the
recoverable portions of its investment in Seabrook 1 and is deferring
certain costs for future collection. This plan is in compliance with
SFAS 92, Regulated Enterprises - Accounting for Phase-In Plans. See
Note 1F for terms of Seabrook 1's phase-in.
I. INCOME TAXES
The tax effect of temporary differences (differences between the periods
in which transactions affect income in the financial statements and the
periods in which they affect the determination of income subject to tax)
is accounted for in accordance with the ratemaking treatment of the
FERC. The adoption of SFAS 109, Accounting for Income Taxes, in 1993
increased the company's net deferred tax obligation. As it is probable
that the increase in deferred tax liabilities will be recovered through
the Seabrook power contracts, NAEC established a regulatory asset.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, which give rise
to the accumulated deferred tax obligation is as follows:
At December 31, 1995 1994
-----------------------------------------------------------------
(Thousands of Dollars)
Accelerated depreciation and other
plant-related differences $156,448 $ 93,486
Regulatory assets - income tax gross up 15,131 7,223
Other ................................. 7,556 19,541
---------- ---------
$179,135 $120,250
======== ========
J. RECOVERABLE ENERGY COSTS
Under the Energy Policy Act of 1992 (Energy Act), NAEC is assessed for
its proportionate shares of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (D&D assessment). The Energy Act requires that
regulators treat D&D assessments as a reasonable and necessary current
cost of fuel, to be fully recovered in rates, like any other fuel cost.
NAEC is currently recovering these costs through rates. As of December
31, 1995, the company's total D&D deferral was approximately $2.3
million.
K. UNAMORTIZED LOSS ON REACQUIRED DEBT
In December 1995, NAEC called its $205 million principal amount, 15.23
percent notes due in 2000, and replaced the issue with funding from the
proceeds of a $225 million, five-year term, variable-rate facility. As
a result of this refinancing, redemption premiums of approximately $32
million were incurred. These redemption premiums have been deferred as
a regulatory asset, and are being amortized over the five-year term of
the new variable-rate facility, until 2000. For further information on
the NAEC refinancing, refer to Note 4, "Long-Term Debt."
L. DERIVATIVE FINANCIAL INSTRUMENTS
The company utilizes interest-rate swaps to manage a well-defined
interest-rate risk. Amounts receivable or payable under interest-rate
swap agreements are accrued and offset against interest expense. Any
material unrealized gains or losses on interest-rate swaps will be
deferred until realized. For further information on derivatives, see
Note 8, "Derivative Financial Instruments."
2. NUCLEAR DECOMMISSIONING
The Seabrook 1 nuclear power plant has a service life that is expected to
end in 2026. Upon retirement, this unit must be decommissioned. A 1994
Seabrook decommissioning study confirmed that complete and immediate
dismantlement at retirement is the most viable and economic method of
decommissioning Seabrook 1. Decommissioning studies are reviewed and
updated periodically to reflect changes in decommissioning requirements,
costs, technology, and inflation.
NAEC's 35.98 percent ownership of the estimated costs of decommissioning
Seabrook 1, in year-end 1995 dollars, is $152.5 million. This estimated
cost assumes escalated collections and after-tax earnings on the Seabrook
decommissioning funds of 6.1 percent. Seabrook 1 decommissioning costs will
be increased annually by an escalation rate. Nuclear decommissioning costs
are accrued over the expected service life of the unit and are included in
depreciation expense on the Statements of Income. Nuclear decommissioning
costs amounted to $3.0 million in 1995, $2.7 million in 1994, and $2.6
million in 1993. Nuclear decommissioning, as a cost of removal, is included
in the accumulated provision for depreciation on the Balance Sheets. At
December 31, 1995, the balance in the accumulated reserve for
decommissioning amounted to $15.3 million. See "Nuclear Decommissioning" in
the MD&A for a discussion of changes being considered by the FASB related to
accounting for decommissioning costs.
Under the terms of the Rate Agreement, PSNH is obligated to pay NAEC's share
of Seabrook 1's decommissioning costs, even if the unit is shut down prior
to the expiration of its operating license. NAEC's portion of the cost of
decommissioning Seabrook 1 is paid to an independent decommissioning
financing fund managed by the state of New Hampshire.
As of December 31, 1995, NAEC (including pre-Acquisition Date payments made
by PSNH) had paid approximately $13.1 million into Seabrook 1's
decommissioning financing fund. Earnings on the decommissioning financing
fund increase the decommissioning financing fund balance and the accumulated
reserve for decommissioning. Unrealized gains and losses associated with
the decommissioning financing fund also impact the balance of the fund and
the accumulated reserve for decommissioning.
Changes in fund requirements or technology, the timing of funding or
dismantling, or adoption of a decommissioning method other than immediate
dismantlement would change decommissioning cost estimates and the amounts
required to be recovered. PSNH attempts to recover sufficient amounts
through its allowed rates to cover NAEC's expected decommissioning costs.
Only the portion of currently estimated total decommissioning cost that has
been accepted by the NHPUC and the FERC is reflected in PSNH's rates. Based
on present estimates and assuming Seabrook 1 operates to the end of its
licensing period, NAEC expects that the decommissioning financing fund will
be substantially funded when Seabrook 1 is retired from service.
3. SHORT-TERM DEBT
NAEC is a limited participant in the Northeast Utilities System Money Pool
(Pool). As a limited participant, NAEC is limited to borrowing funds
provided by NU parent. The Pool provides a more efficient use of the cash
resources of the system, and reduces outside short-term borrowings. NUSCO
administers the Pool as agent for the member companies. Borrowings based on
loans from NU parent bear interest at NU parent's cost and must be repaid
based upon the terms of NU parent's original borrowing. At December 31,
1995, NAEC had $8.0 million of borrowings outstanding from the Pool. At
December 31, 1994, NAEC had no outstanding borrowings from the Pool. The
interest rate on borrowings from the Pool at December 31, 1995 was 4.7
percent.
Maturities of NAEC's short-term debt obligations were for periods of three
months or less.
The amount of short-term borrowings that may be incurred by NAEC is subject
to periodic approval by the SEC under the 1935 Act. Under the SEC
restrictions, NAEC was authorized, as of January 1, 1995, to incur short-
term borrowings up to a maximum of $50 million.
4. LONG-TERM DEBT
Details of long-term debt outstanding are:
December 31,
------------
1995 1994
----------------------------------------------------------------
(Thousands of Dollars)
First Mortgage Bonds:
9.05% Series A, due 2002 ........... $335,000 $355,000
Notes:
15.23% due 2000 .................... - 205,000
Variable rate, due 2000 ............. 225,000 -
Less: Amounts due within one year .. 20,000 20,000
--------- --------
Long-term debt, net ....... $540,000 $540,000
======== ========
Long-term debt maturities and cash sinking-fund requirements on debt
outstanding at December 31, 1995 for the years 1996 through 2000 are $20
million annually for 1996-1998, $70 million in 1999, and $295 million in
2000.
On December 11, 1995, NAEC redeemed, at a special redemption price, its $205
million, 15.23 percent notes which were due in 2000. This transaction was
executed to coincide with the funding date of NAEC's new $225 million
variable-rate bank note. The $225 million note will mature in 2000 with
quarterly interest payments scheduled to be made through maturity. In order
to mitigate the interest-rate risk inherent with the variable rate issue,
NAEC has executed a $225 million interest-rate swap agreements with four
counterparty banks. The $225 million swap effectively fixes the interest
rate on the variable-rate agreement at 7.05 percent. For more information
on the interest-rate swap, see Note 8, "Derivative Financial Instruments."
The Series A Bonds are not redeemable prior to maturity except out of
proceeds of sales of property subject to the lien of the Series A First
Mortgage Bond Indenture (Indenture), at general redemption prices
established by the Indenture, and out of condemnation or insurance proceeds
and through the operation of the sinking fund.
Essentially all of NAEC's utility plant is subject to the lien of its
Indenture.
5. INCOME TAX EXPENSE
The components of the federal and state income tax provisions are:
For the Years Ended December 31, 1995 1994 1993 (Note 1I)
---------------------------------------------------------------------
(Thousands of Dollars)
Current income taxes:
Federal ...................... $(38,703) $(30,553) $(33,225)
State ........................ - 161 124
--------- --------- ----------
Total current .............. (38,703) (30,392) (33,101)
--------- --------- ---------
Deferred income taxes, net:
Federal ....................... 41,885 34,449 37,199
State ......................... 4,229 - (78)
----------- -------- ----------
Total deferred ............. 46,114 34,449 37,121
--------- --------- --------
Total income tax expense ... $ 7,411 $ 4,057 $ 4,020
========== ======== ========
The components of total income tax expense are classified as follows:
For the Years Ended December 31, 1995 1994 1993 (Note 1I)
---------------------------------------------------------------------
(Thousands of Dollars)
Income taxes charged to operating
expenses ..................... $ 10,187 $ 8,027 $ 5,673
Other income taxes ............. (2,776) (3,970) (1,653)
--------- --------- --------
Total income tax expense $ 7,411 $ 4,057 $ 4,020
======== ========= ========
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
For the Years Ended December 31, 1995 1994 1993 (Note 1I)
---------------------------------------------------------------------
(Thousands of Dollars)
Depreciation ................... $24,444 $22,783 $23,000
Alternative minimum tax ........ - 73 1,250
Bond redemptions ............... 12,087 - -
Seabrook 1 return .............. 8,109 11,597 13,792
Property taxes ................. - - (1,003)
Other .......................... 1,474 (4) 82
-------- --------- ----------
Deferred income taxes, net $46,114 $34,449 $37,121
======= ======= =======
A reconciliation between income tax expense and the expected tax expense at
the applicable statutory rate is as follows:
For the Years Ended December 31, 1995 1994 1993 (Note 1I)
-----------------------------------------------------------------------------
(Thousands of Dollars)
Expected federal income tax
at 35 percent of pretax income $11,148 $12,107 $10,506
Tax effect of differences:
Depreciation ................. (2,159) (2,087) (1,481)
Deferred Seabrook 1 return ... (3,292) (4,533) (4,689)
State income taxes, net of federal benefit 2,749 104 30
Other, net ..................... (1,035) (1,534) (346)
-------- -------- -------
Total income tax expense ....... $ 7,411 $ 4,057 $ 4,020
======= ======= =======
6. DEFERRED OBLIGATION TO AFFILIATED COMPANY
At the time PSNH emerged from bankruptcy on May 16, 1991, in accordance with
the phase-in under the contracts, it began accruing a deferred return on the
unphased-in portion of its Seabrook 1 investment. From May 16, 1991 to the
Acquisition Date, PSNH accrued a deferred return of $50.9 million. On the
Acquisition Date, PSNH transferred the $50.9 million deferred return to NAEC
as part of the Seabrook-related assets.
At the time PSNH transferred the deferred return to NAEC, it realized, for
income tax purposes, a gain that is deferred under the consolidated income
tax rules. This gain will be restored for income tax purposes when the
deferred return of $50.9 million, and the associated income taxes of
$33.3 million, are collected by NAEC through the Seabrook power contracts.
When NAEC recovers the $33.3 million in years eight through ten of the Rate
Agreement, it is obligated to make corresponding payments to PSNH.
7. COMMITMENTS AND CONTINGENCIES
A. SEABROOK 1 CONSTRUCTION PROGRAM
The construction program for Seabrook 1 is subject to periodic review
and revision. NAEC currently forecasts construction expenditures for
its share of Seabrook 1 to be $34.1 million for the years 1996-2000,
including $6.0 million for 1996. In addition, NAEC estimates that its
share of Seabrook 1 nuclear fuel requirements will be $44.7 million for
the years 1996-2000, including $0.6 million for 1996.
B. ENVIRONMENTAL MATTERS
NAEC is subject to regulation by federal, state, and local authorities
with respect to air and water quality, handling the disposal of toxic
substances and hazardous and solid wastes, and the handling and use of
chemical products. NAEC has an active environmental auditing and
training program and believes that it is in substantial compliance with
current environmental laws and regulations.
Environmental requirements could hinder future construction. The
cumulative long-term, cost impact of increasingly stringent
environmental requirements cannot accurately be estimated. Changing
environmental requirements could also require extensive and costly
modifications to NAEC's existing investment in Seabrook 1 and could
raise operating costs significantly. As a result, NAEC may incur
significant additional environmental costs, greater than amounts
included in cost of removal and other reserves, in connection with the
generation of electricity and the storage, transportation, and disposal
of by-products and wastes. NAEC may also encounter significantly
increased costs to remedy the environmental effects of prior waste
handling activities.
NAEC cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against
it. However, considering known facts, existing laws, and regulatory
practices, management does not believe the matters disclosed above will
have a material effect on NAEC's financial position or future results of
operations.
C. NUCLEAR INSURANCE CONTINGENCIES
Under certain circumstances, in the event of a nuclear incident at one
of the nuclear facilities covered by the federal government's third-
party liability indemnification program, the company could be assessed
in proportion to its ownership interest in a nuclear unit up to $75.5
million not to exceed $10 million per nuclear unit in any one year. The
maximum assessment is to be adjusted at least every five years for
inflationary changes. Based on the ownership interest in Seabrook 1,
NAEC's maximum liability, including any additional potential assessments
would be $28.5 million per incident. Payments for NAEC's ownership
interest would be limited to a maximum of $3.6 million per incident per
year.
Insurance has been purchased to cover certain extra costs incurred in
obtaining replacement power during prolonged accidental outages and the
excess cost of repair, replacement, or decontamination or premature
decommissioning of utility property resulting from insured occurrences.
NAEC is subject to retroactive assessments if losses exceed the
accumulated funds available to the insurer. The maximum potential
assessments against NAEC with respect to losses arising during current
policy years are approximately $8.1 million under the replacement power
policies. The cost of a nuclear incident could exceed available
insurance proceeds.
Insurance has been purchased aggregating $200 million on an industry
basis for coverage of worker claims. All participating reactor
operators insured under this coverage are subject to retrospective
assessments of $3.0 million per reactor. The maximum potential
assessment against NAEC with respect to losses arising during the
current policy period is approximately $1.1 million.
Under the terms of the Seabrook power contracts, any nuclear insurance
assessments described above would be passed on to PSNH as a "cost of
service."
8. DERIVATIVE FINANCIAL INSTRUMENTS
The company utilizes derivative financial instruments to manage well-defined
interest-rate rates. The company does not use them for trading purposes.
NAEC uses interest-rate swap agreements with financial institutions to hedge
against interest-rate risk associated with its $225 million variable-rate
bank note. The interest-rate swaps minimize exposure associated with rising
interest rates, and effectively fix the interest rate for this borrowing
arrangement. Under the swap agreements, NAEC exchanges quarterly payments
based on a differential between a fixed contractual interest rate and the
three-month LIBOR rate at a given time. As of December 31, 1995, NAEC had
outstanding agreements with a total notional value of approximately $225
million, and a negative mark-to-market position of approximately $3.8
million.
These swap agreements have been made with various financial institutions,
each of which are rated "A" or better by Standard & Poor's rating group.
NAEC is exposed to credit risk on the interest-rate swaps if the
counterparties fail to perform their obligations. However, NAEC anticipates
that the counterparties will be able to fully satisfy their obligations
under the contracts.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each of the following financial instruments:
Cash and nuclear decommissioning trust: The carrying amounts approximate
fair value.
SFAS 115, Accounting for Certain Investments in Debt and Equity Securities,
requires investment in debt and equity securities to be presented at fair
value and was adopted by the company on a prospective basis as of January 1,
1994. During 1995, the investments held by the company's decommissioning
trust increased by approximately $0.3 million as of December 31, 1995, and
decreased by approximately $0.9 million as of December 31, 1994, with a
corresponding offset to the accumulated provision for depreciation. The $0.3
million increase in 1995 represents cumulative gross unrealized holding
gains. The cumulative gross unrealized holding losses were immaterial for
1995. The $0.9 million decrease in 1994 represents cumulative gross holding
losses of $0.9 million. There were no material cumulative gross unrealized
holding gains in 1994. There was no change in the funding requirements of
the trust nor any impact on earnings as a result of the adoption of SFAS
115.
Long-term debt: The fair value of NAEC's long-term debt is based upon the
quoted market price for those issues or similar issues.
The carrying amounts of NAEC's financial instruments and the estimated fair
values are as follows:
Carrying Fair
At December 31, 1995 Amount Value
------------------------------------------------------------------------
(Thousands of Dollars)
First Mortgage Bonds ..................... $335,000 $336,575
Other long-term debt ..................... $225,000 $225,000
-------------------------------------------------------------------
Carrying Fair
At December 31, 1994 Amount Value
------------------------------------------------------------------------
(Thousands of Dollars)
First Mortgage Bonds ..................... $355,000 $351,450
Other long-term debt ..................... $205,000 $242,925
The fair values shown above have been reported to meet the disclosure
requirements and do not purport to represent the amounts at which those
obligations would be settled.
10. NUCLEAR PERFORMANCE
On January 31, 1996, the NRC announced that the three Millstone nuclear
power plants, operated by NNECO, had been placed on its "watch list" because
of long-standing performance concerns. The NRC cited a number of
operational problems which have arisen since 1990 at the Millstone plants.
The NRC recognized that there are significant current variations in the
performance of the three units. The performance concerns cited by the NRC,
combined with NU's failure to maintain previous performance improvements,
have resulted in the NRC requiring close monitoring of Millstone unit
operations and the implementation of a corrective action program.
North Atlantic Energy Corporation
Report of Independent Public Accountants
- ---------------------------------------------------------------------------
To the Board of Directors
of North Atlantic Energy Corporation:
We have audited the accompanying balance sheets of North Atlantic Energy
Corporation (a New Hampshire corporation and a wholly owned subsidiary of
Northeast Utilities) as of December 31, 1995 and 1994, and the related
statements of income, common stockholder's equity, and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of North Atlantic Energy
Corporation as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1996
NORTH ATLANTIC ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------------
This section contains management's assessment of NAEC's (the company) financial
condition and the principal factors having an impact on the results of opera-
tions. The company is a wholly owned subsidiary of Northeast Utilities (NU).
This discussion should be read in conjunction with NAEC's financial statements
and footnotes.
FINANCIAL CONDITION
OVERVIEW
On June 5, 1992 (the Acquisition Date), NU acquired Public Service Company of
New Hampshire (PSNH), and PSNH's 35.58 percent share of the Seabrook 1 nuclear
power plant (Seabrook 1) and other Seabrook-related assets were transferred to
the company. At the Acquisition Date, PSNH and the company entered into the
Seabrook Power Contract (the Contract), under which PSNH is obligated to buy
from the company, and the company is obligated to sell to PSNH, all of the
company's capacity and output of Seabrook 1 for a period equal to the length of
the Nuclear Regulatory Commission (NRC) full-power operating license for
Seabrook (through 2026). Under the Contract, PSNH is unconditionally obligated
to pay the company's "cost of service" during the period whether or not Seabrook
1 is operating and without regard to the cost of alternative sources of power.
In addition, PSNH will be obligated to pay decommissioning and project
cancellation costs after the termination of the operating license. NAEC does
not have any employees of its own and does not operate Seabrook 1. North
Atlantic Energy Service Corporation (NAESCO) is the managing agent and
represents the Seabrook 1 joint owners, including NAEC, in the operation of
Seabrook 1.
On February 15, 1994, NAEC acquired Vermont Electric Generation and Transmission
Cooperative's (VEG&T) 0.4 percent ownership interest of Seabrook 1 for
approximately $6.4 million, giving NAEC a total joint-ownership interest in
Seabrook 1 of 35.98 percent. NAEC sells the output from the Seabrook interest
purchased from VEG&T to PSNH under an agreement which is substantially similar
to the Seabrook Power Contract discussed above (the Contracts).
The company's "cost of service" includes all of its prudently incurred Seabrook
1-related costs, including operation and maintenance expense, fuel expense,
property tax expense, depreciation expense, certain overhead and other costs,
and a phased-in return on its Seabrook 1 investment. The Contract established
the initial recoverable investment in Seabrook 1 at $700 million (Initial
Investment), plus any capital additions, net of depreciation.
The company's only assets are Seabrook 1 and other Seabrook 1-related assets and
its only source of revenue are the Contracts. PSNH's obligations under the
Contracts are solely its own and have not been guaranteed by NU. The Contracts
contain no provisions entitling PSNH to terminate its obligations. If, however,
PSNH were to fail to perform its obligations under the Contracts, the company
would be required to find other purchasers for Seabrook power.
The electric-power industry is continuing to move toward a more competitive
environment. The New Hampshire Public Utilities Commission (NHPUC) is reviewing
the rates charged by its electric-power suppliers. Although the NHPUC has some
limited authority over the company's Contracts with PSNH, its rates are subject
to regulation by the Federal Energy Regulatory Commission (FERC). During 1995,
FERC issued a proposal for restructuring the electric-power industry, which
calls for open access to transmission facilities, a standard formula for
calculating rates, and full recovery of stranded investments. The impact of
this proposal, which is expected to be finalized in 1996, is not expected to
have a material impact on NAEC's financial position or results of operations.
NAEC's net income was approximately $24 million in 1995, a decrease of
approximately $7 million, from approximately $31 million in 1994. The 1995 net
income was lower primarily due to a one-time adjustment to correct the deferred
Seabrook 1 return balance and lower state income taxes.
WORKFORCE REDUCTIONS
In January 1996, NU and NAESCO completed their nuclear workforce reduction plan.
Approximately 36 positions were eliminated at Seabrook 1, through a combination
of early retirements, attrition, and layoffs. The total pretax cost of the
workforce reduction, which was recognized in 1995, was approximately $2 million.
RATE MATTERS
NAEC follows accounting principles in accordance with Statement of Financial
Accounting Standards (SFAS) 71, "Accounting for the Effects of Certain Types of
Regulation" that allows the economic effects of rate regulation to be
reflected. Under these principles, regulators may permit incurred costs for
certain events or transactions, which would be treated as expenses by
nonregulated enterprises, to be deferred as regulatory assets and recovered in
revenues at a later date.
The creation of these regulatory assets has kept down electric rates in past
years, at the expense of having higher rates in the future. At December 31,
1995, NAEC's regulatory assets totaled approximately $240 million. The largest
regulatory asset, nearly $162 million, is related to the deferred return
associated with the amount of the Seabrook 1 investment that has not been
included in rates. As of December 31, 1995, NAEC has included in rates $595
million of its Seabrook 1 investment. The remaining investment ($105 million)
will be phased into rates in May 1996. An additional amount of deferred
Seabrook 1 return of approximately $51 million is recorded as utility plant. The
deferred amounts associated with the Seabrook 1 phase-in will be recovered under
NAEC's Contracts with PSNH over the period December 1997 through May 2001.
In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of." SFAS 121, which was effective January 1, 1996, requires
assets, including regulatory assets, that are no longer probable of recovery
through future revenues be charged to earnings.
If future competition or regulatory actions in New Hampshire cause any portion
of its operations to no longer be subject to SFAS 71, NAEC would be required to
determine the fair value of the related regulatory assets and liabilities and
record any necessary write-downs. Additionally, if events create uncertainty
about the recoverability of any of NAEC's remaining long-lived assets, a similar
analysis would be required for those assets in accordance with SFAS 121. Under
its current regulatory environment, NAEC believes that its use of SFAS 71
remains appropriate and that the adoption of SFAS 121 will not have a material
impact on its financial position or results of operations.
See the "Notes to Financial Statements," Note 1G, for further details on
regulatory accounting.
NUCLEAR PERFORMANCE
On January 31, 1996, the NRC placed Millstone 1, 2, and 3 (Millstone) on its
"watch list." The NRC's action was in response to a number of performance
concerns which have arisen since 1990 and a failure to resolve employee safety
concerns. The NRC's action will result in close monitoring of programs and
performance at Millstone to assure the development and implementation of
effective corrective actions.
NU's management plans to continue its extensive efforts already under way to
address these concerns. Concurrent with the NRC's action, NU provided the NRC
with the results of a comprehensive self-assessment review of the employee
concern program at Millstone. Additionally, in January 1996, NU announced a
reorganization of its nuclear operations which included the creation of a new
office of Nuclear Safety and Oversight.
Although the start-up of Millstone 1, which is currently in outage, will be
affected by its placement on the NRC's "watch list," operations at Millstone 2
and 3 have not been restricted. NU's management expects that the increased NRC
attention will inevitably have effects and costs that are not known at this
time.
The Seabrook plant operated at 83.2 percent of capacity for the year ended
December 31, 1995, compared with 61.6 percent in 1994 and a 1995 national
average of 77.6 percent. The higher 1995 capacity factor was primarily the
result of unplanned and extended outages in 1994. The unit had a 37.5-day
planned refueling and maintenance outage in 1995, the unit's shortest to date.
ENVIRONMENTAL MATTERS
NU devotes substantial resources to identify and comply with the multitude of
environmental requirements it faces. NU has active auditing programs addressing
a variety of regulatory requirements, including an environmental auditing
program to detect and remedy noncompliance with environmental laws or
regulations.
See the "Notes to Financial Statements," Note 7B, for further information
regarding other environmental matters.
NUCLEAR DECOMMISSIONING
NAEC's estimated cost to decommission its share of Seabrook 1 is approximately
$153 million in year-end 1995 dollars. These costs are being recognized over the
life of the unit and a portion is being recovered through PSNH's rates. PSNH is
obligated to pay NAEC's share of Seabrook's decommissioning costs even if the
unit is shut down prior to the expiration of its license.
The FASB is currently reviewing the accounting for closure and removal costs,
including decommissioning and similar costs, for long-lived assets. If current
electric-power industry accounting practices for such decommissioning costs were
changed, annual provisions for decommissioning would increase and the estimated
costs for decommissioning would be recorded as a liability rather than as a
component of accumulated depreciation.
See the "Notes to Financial Statements," Note 2, for further information
regarding nuclear decommissioning.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations decreased approximately $37 million in 1995, from
1994, primarily due to the payment of accrued interest and debt expense
associated with the note refinancing discussed below. Cash used for financing
activities increased approximately $6 million in 1995, from 1994, primarily due
to an increase in the payment of cash dividends on common stock, partially
offset by an increase in short-term debt. Cash used for investments decreased
approximately $43 million in 1995, from 1994, primarily due to the repayment of
short-term loans by other NU system companies under the NU system Money Pool,
partially offset by higher nuclear fuel expenditures due to the 1995 Seabrook
refueling outage.
In October 1995, Moody's Investors Service lowered its ratings of PSNH and NAEC
securities, bringing the rating for PSNH's First Mortgage Bonds below investment
grade. Standard & Poor's had previously downgraded PSNH to below investment
grade. NAEC securities had not been previously rated at investment grade.
These downgrades could adversely affect the future availability and cost of
funds for these companies.
In December 1995, NAEC refinanced its $205-million, 15.23-percent note with a
$225 million five-year variable rate bank loan. The refinancing is expected to
save PSNH customers approximately $4 million annually for 5 years. In order to
mitigate the interest-rate risk inherent with the variable rate issue, NAEC
executed a $225 million interest-rate swap. The swap effectively fixes the
interest cost on the variable-rate loan at 7.05 percent.
See the "Notes to Financial Statements," Notes 4 and 8, for further
information on the refinancing and interest-rate swap, Note 11, for further
information on derivative financial instruments, and Notes 4 and 7A, for further
information on construction and long-term debt funding requirements.
RESULTS OF OPERATIONS
OPERATING REVENUES
Operating revenues represent amounts billed to PSNH under the terms of the
Contracts and billings to PSNH for decommissioning expense.
Operating revenues increased approximately $11 million in 1995, from 1994,
primarily due to the increased return associated with the phase-in of an
additional 15 percent of Seabrook plant's initial investment in May 1995 and May
1994, respectively.
Operating revenues increased approximately $20 million in 1994, from 1993,
primarily due to the higher operation and maintenance expenses and the increased
return associated with the phase-in of additional Seabrook plant in May 1994.
FUEL EXPENSES
Fuel expenses increased approximately $5 million in 1995, from 1994, primarily
due to the better performance of Seabrook in 1995.
The change in 1994, from 1993, was not significant.
OTHER OPERATION AND MAINTENANCE EXPENSES
Other operation and maintenance expenses, net decreased approximately $4 million
in 1995, from 1994, and increased approximately $9 million in 1994, from 1993,
primarily due to the unplanned and extended Seabrook outages in 1994.
FEDERAL AND STATE INCOME TAXES
Federal and state income taxes increased approximately $3 million in 1995, from
1994, despite a decrease in income due primarily to higher state taxes as a
result of a one-time adjustment to the deferred income tax provision.
The change in 1994, from 1993, was not significant.
DEFERRED SEABROOK RETURN
Deferred Seabrook return - other and borrowed funds decreased approximately $15
million in 1995, from 1994, primarily because additional Seabrook investment was
phased into rates in May 1995 and May 1994 and because of a one-time adjustment
of approximately $5 million made in June 1995 to correct the deferred Seabrook
return balance.
Deferred Seabrook return - other and borrowed funds decreased approximately $6
million in 1994, from 1993, primarily because additional Seabrook investment was
phased into rates in May 1994.
NORTH ATLANTIC ENERGY CORPORATION
SELECTED FINANCIAL DATA 1995 1994 1993 1992*
- ---------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues........... $ 157,183 $145,751 $125,408 $ 78,444
========== ======== ======== =========
Operating Income............. $ 51,394 $ 42,950 $ 33,718 $ 16,122
========== ======== ======== =========
Net Income................... $ 24,441 $ 30,535 $ 25,998 $ 12,703
========== ======== ======== =========
Cash Dividends on Common Stock $ 24,000 $ 10,000 $ - $ -
========== ========= ======== =========
Total Assets................. $1,014,649 $963,579 $900,821 $818,123
========== ======== ======== ========
Long-Term Debt (a)........... $ 560,000 $560,000 $560,000 $560,000
========== ======== ======== ========
(a) Includes portion due within one year.
STATISTICS 1995 1994 1993 1992*
- --------------------------------------------------------------------------------------
Gross Electric Utility Plant at December 31,
(Thousands of Dollars)....... $ 806,892 $792,880 $789,127 $774,920
========= ======== ======== ========
kWh Sales (Millions) for the twelve month
period ending December 31,. 3,016 2,229 3,218 1,268
========= ======== ======== ========
- ----------------------------------------------------------------------
STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited)
- -------------------------------------------------------
Quarter Ended
------------------------------------------------
1995 March 31 June 30 September 30 December 31
- ------------------------------------------------------------------------------
Operating Revenues.......... $33,984 $36,362 $39,696 $47,141
======= ======= ======= =======
Operating Income............ $10,974 $12,752 $13,795 $13,873
======= ======= ======= =======
Net Income.................. $ 7,501 $ 3,280 $ 6,914 $ 6,746
======= ======= ======= =======
1994
- ----------------------------------------------------------------------------
Operating Revenues.......... $32,211 $40,011 $37,603 $35,926
======= ======= ======= =======
Operating Income............ $ 8,594 $10,718 $11,851 $11,787
======= ======= ======= =======
Net Income.................. $ 6,643 $ 6,725 $ 8,161 $ 9,006
======= ======= ======== =======
*The company began commercial operations on June 5, 1992. Information presented
for 1992 covers the period June 5, 1992 through December 31, 1992.