SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-10721
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Yankee Energy System, Inc.
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(Exact name of registrant as specified in its charter)
Connecticut 06-1236430
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
599 Research Parkway, Meriden, CT 06450-1030
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Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 639-4000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, Par Value
$5 Per Share, and Common
Share Purchase Rights New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of class)
Indicate by check mark whether the registrant: (1) has 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 registrant was required to
file such reports), and (2) has 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 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 the voting stock held by non-
affiliates of the registrant at December 1, 1997 was
$248,759,031.78 based on the closing price of $23.94 per share.
On December 1, 1997, the Company had 10,457,061 shares of common
stock outstanding.
Documents Incorporated by Reference Part of Form 10-K
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Annual Report to Shareholders Part II
for the Fiscal Year Ended
September 30, 1997
Proxy Statement For Annual Part III
Shareholders' Meeting to be
Held on January 30, 1998
PART I
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ITEM 1. BUSINESS
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The Company
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Yankee Energy System, Inc. ("Yankee Energy" or the
"Company") is a public utility holding company incorporated in
Connecticut in 1989. The Company is primarily engaged in the
retail distribution of natural gas through its wholly-owned
subsidiary, Yankee Gas Services Company ("Yankee Gas"), a
Connecticut public service company. Yankee Gas serves
approximately 181,000 residential, commercial and industrial
customers in 68 cities and towns in Connecticut. The Company is
exempt from registration under the Public Utility Holding Company
Act of 1935.
The Company has four additional wholly-owned operating
subsidiaries which support the Company's core natural gas
distribution business or allow the Company to expand its business
of providing total energy services: NorConn Properties, Inc.
("NorConn"), which owns the Company's corporate office building
and another service building and leases both facilities to Yankee
Gas; R. M. Services, Inc. ("RMS") which provides
receivables management services to utilities and other
businesses; Yankee Energy Financial Services Company ("Yankee
Financial"), which provides energy equipment financing; and
Yankee Energy Services Company ("YESCo"), whose purpose is to
provide a full range of energy-related mechanical services for
its customers including consulting, development of on-site
generation and cogeneration systems, as well as heating,
ventilating and air-conditioning equipment services and automated
building control systems for the commercial and industrial
market.
Gas Markets and Competition
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General. Yankee Gas operates the largest natural gas
distribution system in Connecticut as measured by number of
customers and size of service territory. Total throughput (sales
and transportation) for fiscal 1997 was 48.9 billion cubic feet
("Bcf"). In fiscal 1997, total gas operating revenues were
comprised of the following: 44% residential; 30% commercial; 22%
industrial; and the remaining 4% other. Yankee Gas provides firm
gas sales service to customers who require a continuous gas
supply throughout the year, such as residential customers who
rely on gas for their heating, hot water, and cooking needs.
Yankee Gas also provides interruptible gas sales service to
certain commercial and industrial customers that have the
capability to switch from natural gas to an alternative fuel on
short notice. Yankee Gas can interrupt service to these
customers during peak demand periods. Yankee Gas offers firm and
interruptible transportation services to customers who purchase
gas from sources other than Yankee Gas. In addition, Yankee Gas
performs gas exchanges and capacity releases to marketers to
reduce its overall gas expense.
Firm Sales. In fiscal 1997, total firm gas sales of 31.4
Bcf accounted for approximately 82% of total throughput and
approximately 87% of the Company's total operating revenues.
Firm gas sales, particularly sales for residential space heating,
are highly seasonal. In fiscal 1997, about 60% of total firm
sales occurred in the five months from November through March.
The following tables set forth certain information with respect
to firm sales in fiscal 1997.
FISCAL 1997 FIRM SALES
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Average Number Volumes
of Customers in Bcf
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Residential 159,541 12.4
Commercial 18,778 9.1
Industrial 1,911 9.9
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180,230 31.4
Volumes as a
Percent of
Revenues Firm Sales
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Residential $140,417,320 40%
Commercial $ 86,004,367 29%
Industrial $ 49,877,315 31%
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$276,299,002 100%
Interruptible Sales. In fiscal 1997, total interruptible
gas sales of 6.6 Bcf accounted for approximately 17% of total
throughput and approximately 9% of the Company's total operating
revenues. The price charged for interruptible sales service is a
market price based on the cost of the customer's alternative
fuel, which is usually oil. Interruptible sales depend upon the
availability of gas supplies and, generally, have provided lower
margins than firm sales. Yankee Gas has the authorization from
the DPUC to engage in flexible pricing to meet market prices for
alternative fuels available to interruptible customers. The
following table sets forth certain information with respect to
interruptible sales in fiscal 1997.
FISCAL 1997 INTERRUPTIBLE SALES
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Average Number Volumes
of Customers in Bcf Revenues
-------------- -------- -----------
Commercial and
Industrial 246 6.6 $29,183,578
Transportation Services. Yankee Gas offers firm and
interruptible transportation service to its industrial and
commercial customers. In fiscal 1997, total transportation sales
accounted for approximately 3% of the Company's total operating
revenues. These transportation services permit customers who
desire to purchase gas from sources other than Yankee Gas to do
so, provided they have made all the necessary arrangements with
the transmission pipelines to deliver their gas
to the Yankee Gas distribution system. Industrial and commercial
customers can purchase gas directly from producers and suppliers
and contract for transportation services rather than purchase gas
solely from the local distribution system. Generally,
interruptible transportation service is highly sensitive to
alternative fuel prices as well as to the availability of
interstate pipeline capacity into the region. Under existing
tariff structures, the financial condition of the Company is
unaffected by customers electing to use transportation service in
lieu of making gas purchases from Yankee Gas.
Market Expansion. Yankee Gas has increased efforts to
provide additional gas distribution service throughout its
service territory. Yankee Gas concentrates its marketing efforts
on increasing the number of residential households using natural
gas, increasing the uses of natural gas by existing Yankee Gas
customers, and increasing the overall number of both large and
small customers through expansion of Yankee Gas' distribution
system within its service territory. In the residential market,
Yankee Gas focuses marketing efforts on households along Yankee
Gas' existing mains because they present opportunities to
increase gas sales with little or no capital investment. In the
commercial and industrial markets, the Company seeks to expand
gas sales by increasing sales to existing customers for both
traditional and innovative uses, such as infrared heating,
cooling and electric generation. The Company also emphasizes
attracting new commercial and industrial customers within its
service territory.
The emergence of natural gas vehicles creates a potential
new market for the natural gas industry. The establishment of
natural gas vehicle fueling stations however is essential to the
development of this market. Yankee Gas, in cooperation with
various oil companies and gasoline retailers, has opened retail
public natural gas vehicle refueling stations in Windsor Locks,
Norwalk, and Meriden, Connecticut. Yankee Gas operates two
refueling stations for its own fleet of approximately 110 natural
gas vehicles.
Gas Supply
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In 1992, the Federal Energy Regulatory Commission ("the
FERC") issued Order No. 636, which required natural gas pipeline
companies to separate or "unbundle" their services. Prior to the
issuance of Order No. 636, natural gas pipeline companies sold
pipeline services, such as gas purchasing, storage and
transportation, as a package. In 1993, the interstate pipeline
companies that provided natural gas to Yankee Gas complied with
Order No. 636. As a result, Yankee Gas executed contracts with
interstate pipeline companies for services to transport gas from
production and underground storage areas to Yankee Gas' service
territory to replace the traditional merchant services previously
provided by the pipeline companies. Yankee Gas concurrently
replaced the gas supply traditionally obtained from the pipeline
companies' merchant services with firm purchases directly from
producers and/or marketing companies. The FERC continues to
regulate the rates charged by interstate pipeline companies for
transportation and storage of natural gas, but does not regulate
the price of natural gas purchased by the Company from producers
and marketing companies.
Interstate pipelines delivered over 99.9 percent of Yankee
Gas' 1997 fiscal year requirements to its distribution system.
Interstate pipeline capacity enabled Yankee Gas to meet its firm
customers' requirements with pipeline supplies for more than
95.6 percent of the year.
The following table sets forth sources of fiscal 1997 gas
supply (including purchases for storage injections).
Percent of
Source Total Supply
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Alberta Northeast Gas, Limited 52.98
Direct Firm Purchases 38.37
Boundary Gas 8.32
Spot Market Purchase 0.24
Other (Peaking) 0.09
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Total 100%
Yankee Gas is entitled to purchase 59,000 thousand cubic
feet ("Mcf") per day of gas, or about 21.5 Bcf annually, from
Alberta Northeast Gas, Limited ("ANE"). Yankee Gas holds a 15.9
percent equity interest in ANE, an entity formed by several
utilities in the Northeast to aggregate the purchase of natural
gas from Western Canada and to facilitate its sale to local gas
distribution company ("LDC") owners at the United States-Canadian
Border. The sales contracts between Yankee Gas and ANE expire in
2006. The gas purchased from ANE is delivered in the United
States by the Iroquois Gas Transmission System, L.P. ("Iroquois")
pipeline and the transportation contract between Yankee Gas and
Iroquois expires in 2011.
Yankee Gas is also entitled to purchase 9,500 Mcf of gas per
day, or about 3.5 Bcf annually, from Boundary Gas, Inc.
("Boundary"). Yankee Gas owns a 10.4 percent equity interest in
Boundary, an LDC consortium which imports natural gas from
Canada. The sales contract between Yankee Gas and Boundary
expires in 2003.
Yankee Gas also holds pipeline transportation and storage
service contracts with Tennessee Gas Pipeline Company
("Tennessee"), Algonquin Gas Transmission Company ("Algonquin"),
Texas Eastern Transmission Corporation ("Texas Eastern"), CNG
Transmission Corporation ("CNG Transmission"), Transcontinental
Gas Pipe Line Company ("Transco"), and National Fuel Gas Supply
Corporation ("National Fuel") as summarized below:
Transportation Service Contracts:
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Annual Transport
Pipeline Quantity Expiration
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Tennessee 26.8 Bcf 2000-2017
Algonquin 38.4 Bcf 1999-2014
Texas Eastern 37 Bcf 2000-2014
CNG Transmission 2.7 Bcf 2003-2012
Transco 0.63 Bcf 2008
National Fuel 2.63 Bcf 1999-2003
Storage Service Contracts:
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Annual Storage
Pipeline Quantity Expiration
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Tennessee 1.9 Bcf 2000
Texas Eastern 1.7 Bcf 2012-2013
CNG Transmission 1.4 Bcf 2003-2012
National Fuel 0.8 Bcf 1999
Although several contracts are scheduled to terminate during
1999 and 2000, they may be continued on a year to year basis by
mutual consent of the parties.
Yankee Gas has multiple natural gas purchase agreements with
producers and marketers which back Yankee Gas' transportation and
storage contracts. These purchase agreements provide a variety
of term lengths, pricing provisions and flexibility options to
meet Yankee Gas' current and future supply requirements.
Yankee Gas does not have sufficient capacity entitlements on
the interstate pipelines to serve its firm customers with
pipeline-delivered gas at all times. During the winter,
therefore, whenever daily firm demand exceeds the amount of gas
delivered by the pipelines, service to interruptible customers is
curtailed. Yankee Gas supplements pipeline gas with a
propane-air mixture produced at facilities within Yankee Gas'
service territory and with contracted peaking gas supplies. In
fiscal 1997, such propane-air comprised 0.2 percent and the
purchased peaking gas supplies comprised 0.7 percent of Yankee
Gas' total supply. Although Yankee Gas anticipates continued
utilization of these relatively expensive supplemental gas
supplies, the quantities used are substantially decreased from
prior periods due to the addition of the ANE supplies transported
by Iroquois.
Regulation and Rates
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Federal Regulation. Although Yankee Gas is not subject to
FERC jurisdiction, the FERC does regulate the interstate
pipelines serving Yankee Gas' service territory. Yankee Gas,
therefore, is directly and substantially affected by the FERC's
policies and actions. Accordingly, Yankee Gas closely follows
and, when appropriate, participates in proceedings before the
FERC.
Connecticut Regulation. Yankee Gas is subject to regulation
by the Connecticut Department DPUC, which, among other things,
has jurisdiction over rates, accounting procedures, certain
dispositions of property and plant, mergers and consolidations,
issuances of securities, standards of service, management
efficiency and construction and operation of distribution,
production and storage facilities.
The DPUC may, after a special public hearing, order an
interim rate decrease if it finds that Yankee Gas' return on
equity exceeds a reasonable rate of return and rates are more
than just, reasonable and adequate as determined by the DPUC.
The DPUC also is empowered to grant an interim rate increase
under compelling circumstances.
Yankee Gas sells gas to its retail customers under rate
schedules filed with and approved by the DPUC. Firm sales rates
are subject to monthly adjustments pursuant to a Purchased Gas
Adjustment ("PGA") clause approved by the DPUC. The PGA passes
through to customers most changes in the cost of gas purchased by
Yankee Gas. These adjustments are designed to collect or refund
differences in purchased gas costs from the costs included in the
base rates. In 1997, the DPUC conducted a review of the
Connecticut LDCs' PGA mechanism to determine if any
changes were warranted. The DPUC held that LDCs could pass on to
customers the costs of the Connecticut Gross Earnings Tax related
to PGA revenues.
Yankee Gas' rate order, effective for service
rendered on and after October 1, 1992, allowed a return on equity
(ROE) of 12.43 percent and provided for favorable accounting
treatment for environmental cleanup costs, post-retirement
benefits and certain other major items.
On August 25, 1996, Yankee Gas filed an application with the
DPUC relating to a Financial and Operation Review (Review) of
Yankee Gas. This Review was required to be undertaken by the
DPUC under Connecticut statutes if Yankee Gas had not undergone a
rate proceeding within the last four years. Because Yankee Gas'
last general rate application was approved on August 26, 1992,
this Review was necessary to comply with the statutes. The DPUC
issued a decision on July 9, 1997, concluding that the allowed
ROE be reduced from 12.43 percent to 11.15 percent and Yankee Gas
would over-earn during fiscal year 1998 based on the newly
authorized ROE. On October 1, 1997, the DPUC approved an
amendment to the settlement agreement between Yankee Gas and the
Connecticut Office of Consumer Counsel that, among other things,
requires Yankee Gas to credit $3.2 million to firm sales
customers through the PGA during the period from November 1997
through March 1998. In addition, Yankee Gas agreed that
statutory reviews of potential over-earnings would be triggered
by the 11.15 percent ROE determined in this proceeding, unless
the DPUC authorizes a different ROE. Additionally, the under-
recovery of gas costs for fiscal 1997 of $6.7 million (current
year deferred gas costs) will be added to the existing deferred
assets subject to the settlement agreement. This under recovery
will be funded with capacity release credits and excess
interruptible margin rather than direct billing to firm sales
customers through the PGA.
Pursuant to the settlement agreement with the Connecticut Office
of Consumer Counsel, Yankee Gas agreed not to apply for a rate
increase prior to October 1, 2000, except in the event of certain
circumstances that would have a significant adverse effect on
Yankee Gas' financial condition. If such an event arises, Yankee
Gas has the option to apply to the DPUC for a rate increase or to
retain up to 80% of any off system sales margin and excess
interruptible margin.
FERC Order No. 636. In implementing Order No. 636, the FERC
recognized that the restructuring of the pipelines' traditional
services would cause pipelines to incur transition costs in
several areas. The FERC has permitted certain transition costs
to be recovered by the pipeline companies from their customers.
In July 1994, the DPUC issued an order permitting the
recovery of transition costs billed by pipelines under Order No.
636 through various mechanisms authorized by the DPUC. Through
September 30, 1997, Yankee Gas has paid approximately $19.5
million of transition costs and an additional $3.5 million are
anticipated. To date, Yankee Gas has collected $44.2 million
through a combination of gas supplier refunds, deferred gas costs
credits and excess interruptible margins. The DPUC approved the
settlement agreement in January 1996 and an amendment thereto in
October 1997 between Yankee Gas and the Connecticut Office of
Consumer Counsel which permits Yankee Gas to retain
over-collected transition cost credits to offset certain deferred
regulatory assets. As of September 30, 1997, excess collections
of approximately $24.7 million were applied against the deferred
regulatory assets specified in the agreement.
In January 1996, the DPUC, in response to Order No. 636,
authorized the Connecticut LDCs to offer unbundled firm
transportation rates to its commercial and industrial customers.
The DPUC's decision permits Yankee Gas to offer a variety of
service options to its commercial and industrial firm
transportation customers. Yankee Gas implemented new firm
transportation rates and services in April 1996. As of September
30, 1997, Yankee Gas had 1,460 customers under the new firm
transportation service. The conversion by existing customers to
transportation service will result in decreased revenues for
Yankee Gas, as that portion of revenues representing gas costs
will be borne directly by these customers who will purchase their
own gas directly. Yankee Gas, however, does not expect customer
conversions to transportation services to affect its net income
because the cost of gas has traditionally been a pass through
item with no income impact. The DPUC's decision did not address
Yankee Gas' revenue requirement.
Order No. 636 also authorizes LDCs to make off system sales
or to release firm pipeline capacity and Yankee Gas has engaged
in these activities to maximize revenues and for effective gas
supply planning.
Energy Services
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The Company has broadened its mission to diversify into
energy-related businesses. YESCo is engaged in the business of
providing a full range of energy-related services for customers,
including consulting, development of on-site
generation and cogeneration systems as well as heating,
ventilating and air-conditioning equipment services and automated
building control systems for the commercial and industrial
market. YESCo also offers consulting services to help commercial
and industrial customers solve complex new energy purchasing
problems brought about by deregulation of the energy industry.
Competition
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Yankee Gas' principal competitors are unregulated fuel-oil
retailers and regulated electric utilities. Natural gas competes
with oil and electricity in many commercial and industrial
applications and in residential space and water heating, clothes
drying and cooking. Demand for natural gas is affected by the
marketing and pricing of competing sources of energy.
Yankee Gas may also face competition from other LDCs. In
the past, LDCs did not directly compete with other LDCs for
retail customers because the territories they serve are fixed by
franchise. However, since 1993, LDCs began marketing efforts
within the service territory of other LDCs under blanket
certificates granted by the FERC. These certificates allow gas
to be sold, but not necessarily delivered, in the service
territory of another LDC. Within Yankee Gas' service territory,
Yankee makes available its transportation services to move other
parties' gas through its distribution system. The Company's
strategic plan focuses on its core business of gas distribution
and expansion of the development of its energy services business
through the efforts of its unregulated subsidiary, YESCo, to help
customers through changes brought about by deregulation in the
natural gas industry.
Federal regulation also permits customers within Yankee Gas'
distribution system to connect directly with transmission
pipelines and bypass Yankee Gas' distribution system. A
Connecticut statute currently prohibits an interstate pipeline
from bypassing an LDC without the DPUC's prior approval.
Although one potential customer bypassed Yankee Gas' distribution
system in fiscal 1997, the Company believes that Yankee Gas is
successfully addressing the threat of bypass by its industrial
customers by understanding what services they need and executing
market-competitive gas service agreements. There is, however, a
potential risk of loss of revenues from bypass of Yankee Gas'
distribution system.
Environmental Matters
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The Company is subject to federal and state environmental
regulation of its operations and properties and has an ongoing
monitoring program to review compliance with existing
environmental standards. Such regulation may result in future
environmental liabilities that may include significant expenses
to remove, contain or remediate contamination, including coal tar
deposits, caused by operations of former gas manufacturing
plants by Yankee Gas' predecessor companies in the mid-20th
century. Those predecessor companies disposed of the coal tar
deposits in accordance with the standard operating practices of
the time.
Fourteen sites containing coal tar became the property of
Yankee Gas at the time of divestiture from its former parent
company. Yankee Gas has reported the results of environmental
studies conducted at these sites to the Connecticut Department of
Environmental Protection ("DEP"). Eight of the fourteen sites
are currently listed on the Connecticut Inventory of Hazardous
Waste Sites. Inclusion of a site on this list is an indication
that remediation may be required in the future.
Significant remediation efforts have been conducted at three
of these properties. In addition, the Company has developed a
cost estimate for the remaining sites based on various factors
including the probability of clean-up. The Company recorded a
liability of $35 million in fiscal year 1993 for future
environmental cleanup.
Management does not believe that the Company's environmental
expenditures will have a material adverse effect on its
operations, liquidity or financial position, based on known facts
and existing laws and regulations and the anticipated period over
which expenditures will be made.
Recovery of remediation costs has been specifically allowed
by Yankee Gas' 1992 rate case decision. Currently, $325,000 is
allowed annually in rates and an additional $2.5 million annually
may be deferred. If costs are expected to exceed $2.5 million on
an annual basis, Yankee Gas is required to go to the DPUC for
review and additional authorization. The DPUC has stated that
"to the extent that coal tar remediation expenses are prudently
incurred, they should be allowed as proper operating expenses."
The Company has received funds from certain of its insurance
carriers in settlement of certain claims for actual or potential
contamination at certain sites that may give rise to
environmental liabilities. The terms of the aforementioned
settlements are subject to confidentiality provisions in
agreements between Yankee Gas and its insurance carriers. Yankee
Gas currently is actively pursuing additional claims against some
of its insurers.
Franchises
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Yankee Gas and its predecessors in interest have held valid
franchises to sell gas in the areas in which Yankee Gas supplies
gas service. Such franchises are perpetual but remain subject
to the power of alteration, amendment or repeal by the General
Assembly of the State of Connecticut, the power of revocation by
the DPUC and certain approvals, permits and consents of public
authorities and others prescribed by statute. Yankee Gas
franchises include, among other rights and powers, the rights and
powers to manufacture, generate, purchase, transmit and
distribute gas, to sell gas 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 authorities and others as may be
required by law. The franchises include the power of eminent
domain.
Self-generation and Cogeneration
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With the current industry deregulation, two expanding gas
markets in Connecticut and elsewhere are self-generation and
cogeneration of electricity. Self-generation is the generation
of some or all of a user's electricity requirements, typically
for commercial or industrial purposes. Cogeneration involves
sequential production of electricity and thermal or mechanical
energy.
Under an agreement between Yankee Gas and The Dexter
Corporation ("Dexter"), Yankee Gas' largest customer, Dexter has
a contract to purchase annually approximately 3.9 Bcf of natural
gas sales service for use in its 56-megawatt cogeneration
facility for an initial term of 20 years (1989-2009).
Employees
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Yankee Energy and its subsidiaries employ approximately 703
people.
Forward-Looking Statements
- --------------------------
This report contains statements which, to the extent they are not
recitations of historical fact, constitute "forward-looking
statements" within the meaning of the Securities Litigation
Reform Act of 1995. Such forward-looking statements involve
risks and uncertainties. Actual results may differ materially
from such forward-looking statements for reasons including, but
not limited to, changes to and developments in the legislative
and regulatory environments affecting the Company's business, the
impact of competitive products and services, changes in the
natural gas industry caused by deregulation and other factors,
and certain environmental matters.
ITEM 2. PROPERTIES
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Yankee Gas' property consists primarily of its gas
distribution facilities including, distribution lines (mains and
services), meters, pumps, valves and pressure and flow
controllers. Yankee Gas owns various propane facilities with a
combined storage capacity equivalent to approximately 238,000 Mcf
and seven gas storage holders with a total capacity of
approximately 5.8 Bcf. In the opinion of management, Yankee Gas'
distribution system is in good condition. Virtually all of the
gas properties are subject to the lien of the Yankee Gas first
mortgage bond indenture. Yankee Gas also owns service facilities
in Meriden, Waterbury, Torrington, Mystic, Bristol, Shelton,
Bethel and Danielson, Connecticut.
NorConn owns the Company's headquarters building in Meriden,
Connecticut and currently leases it to Yankee Gas. This is the
site of the Company's corporate administrative and staff
functions including the Customer Service Center. NorConn also
owns and leases to Yankee Gas a service building in East Windsor.
ITEM 3. LEGAL PROCEEDINGS
-----------------
Municipal Tax Assessment. In November 1995, Yankee Gas
received revised tax bills for the years 1991 through 1994 from
the City of Meriden, Connecticut (the "City"). The City is
asserting a claim for the payment of approximately $5.0 million
of back taxes and interest resulting from a retroactive
reassessment and revaluation of Yankee Gas' personal property
filings. The City did not locate or identify any property which
Yankee Gas omitted from its filings. The tax bills reflect a
reassessment of property at higher rates than those previously
accepted by the City. Yankee Gas is currently
contesting this retroactive reassessment. On November 17, 1995,
Yankee Gas filed a lawsuit in Connecticut Superior Court against
the City and certain City officials alleging that the Connecticut
state statutes prohibit the City from retroactively reassessing
personal property after grand lists are filed and requesting that
the City's order to pay additional taxes be invalidated.
Although no assurances can be given and no determination can be
made at this time as to the outcome of the City's claim or Yankee
Gas' lawsuit, the Company does not anticipate that the outcome of
this matter will have a material adverse effect on the Company's
consolidated results of operations or financial position.
Licensing Issue. In November 1995, The Connecticut Heating
and Cooling Contractors Association, Inc. and others filed a
suit against Yankee Gas and Connecticut's two other
LDCs, Connecticut Natural Gas Corporation and The Southern
Connecticut Gas Company, claiming the LDCs engaged in unfair
trade practices. The action alleges that the LDCs unfairly
competed with licensed plumbers and contractors by performing
customer service work using customer service employees who did
not possess Connecticut state trade licenses. The plaintiffs are
attempting to have the action certified as a "class action" and
are seeking injunctive relief and unspecified punitive and actual
damages. Yankee Gas is currently vigorously contesting this
lawsuit.
The LDCs have asserted that such licenses are not required
for this work based on a statutory exemption enacted in 1965 and
amended in 1967. However, in a separate proceeding, a
Connecticut Superior Court has upheld an administrative ruling
against the LDCs' position which was affirmed on appeal.
In 1995, the Connecticut General Assembly enacted legislation
that established prospectively a separate procedure for State
certification of gas service employees. While the ultimate
results of the suit cannot be determined, management
does not expect that it will have a material adverse effect on
the Company's consolidated results of operations or financial
position.
Other legal proceedings involving the Company and its
subsidiaries are litigation incidental to the conduct of the
Company's business which, in management's opinion, will not have
a material impact on the Company's financial condition or results
of operation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There was no matter submitted to a vote of security holders
during the fourth quarter of 1997.
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
Position and Business Experience
Name Age During Past Five Years
- ---- --- ---------------------------------
Branko Terzic 50 Chairman, President and Chief Executive
Officer of the Company and Chairman and
Chief Executive Officer of its direct
subsidiaries. Mr. Terzic became
Chairman in August 1995, Chief Executive
Officer in March 1995 and President in
September 1994. From June 1993 to
September 1994, Mr. Terzic was Managing
Director of Arthur Andersen Economic
Consulting, Washington, D.C. From
October 1990 to May 1993, he served as a
Commissioner of the Federal Energy
Regulatory Commission.
Charles E. Gooley 44 Executive Vice President of the Company
and its direct subsidiaries, NorConn,
and Yankee Financial, since July 1994,
and President of Yankee Gas since May
1997. Previously, he served as Vice
President, General Counsel and Assistant
Secretary of the Company from July 1989
to July 1994.
James M. Sepanski 40 Vice President and Chief Financial
Officer of the Company and its direct
subsidiaries, Yankee Gas, NorConn, and
Yankee Financial, since July 1997. From
1989 to June 1997, he was a partner at
Arthur Andersen LLP.
Michael E. Bielonko 45 Vice President of the Company since 1989
and President of YESCo since December
1996. He also served as President of
RMS, a subsidiary of the Company, from
December 1996 to October 1997.
Previously, he served as Vice President
of the Company's direct subsidiaries
from July 1989 to December 1996, and as
Chief Financial Officer of the Company
from July 1990 to July 1997. From July
1989 to July 1990 and from September
1992 to May 1995, he also served as
Treasurer of the Company.
Thomas J. Houde 50 Vice President of the Company and its
direct subsidiary, Yankee Gas, since
January 1992. Previously, he served as
Director, Corporate Planning, Rates and
Economic Analysis of Yankee Gas from
March 1990 to December 1991.
Mary J. Healey 46 Vice President, General Counsel and
Secretary of the Company and its direct
subsidiaries since January 1995.
Previously, she served as Secretary and
Assistant General Counsel of the Company
from January 1992 to January 1995 and as
Secretary and Counsel of the Company
from July 1989 to January 1992.
J. Kingsley Fink 45 Vice President-Operations of Yankee Gas
since October 1997. Previously, he was
President of his own consulting company
from 1996 to 1997. Prior thereto he
served in various operating positions at
Florida Power and Light Company over a
14 year period.
Ellen J. Quinn 41 Vice President of the Company and its
direct subsidiaries, Yankee Gas and
RMS, since May 1995. Previously, she
served as Director, Corporate and
Environmental Planning from October 1992
to May 1995, and as Manager, Corporate
and Environmental Planning from March
1990 to October 1992.
Steven P. Laden 49 Vice President of the Company and its
direct subsidiaries, Yankee Gas, YESCo,
and Yankee Financial, since July 1996.
From October 1991 to July 1996,he served
as Vice President of Marketing of
Southern Union Company, a company
engaged in various aspects of the energy
business including the distribution of
natural gas in Texas and Missouri.
All executive officers are elected annually by the Company's
Board of Directors. There are no family relationships among the
executive officers and directors nor are there any arrangements
or understandings between any executive officer and any other
person pursuant to which the officer was selected.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
--------------------------------------
Yankee Energy declared and paid regular quarterly cash
dividends in 1997. The dividend paid for the first two quarters
of 1997 was $.325 per share and $.335 per share in the last two
quarters of 1997. Other information required by this item is
incorporated herein by reference to Yankee Energy's 1997 Annual
Report to Shareholders ("1997 Annual Report"), on the inside back
cover, subsections entitled "Market for Common Stock", and
"Dividends".
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
Information required by this item is incorporated herein by
reference to the 1997 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
-------------------------------------------------
Information required by this item is incorporated herein by
reference to the 1997 Annual Report.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
-----------------------------------------------------
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The Consolidated Financial Statements of Yankee Energy and
the Notes thereto, together with the report thereon of the
Company's Management and of Arthur Andersen LLP are incorporated
herein by reference to the 1997 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
-------------------------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
-----------------------------------------------
Information regarding Yankee Energy's directors is
incorporated herein by reference to the Company's Proxy Statement
for its Annual Meeting of Shareholders to be held on January 30,
1998 (the "1998 Proxy Statement").
Information regarding the Company's executive officers
follows Item 4 in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Information regarding compensation of Yankee Energy's
executive officers, except the Report of the Organization and
Compensation Committee and the Stock Performance Graph, is
incorporated herein by reference to the 1998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
-----------------------------------------------
Information regarding the beneficial ownership of shares of
Common Stock of the Company by certain persons is incorporated
herein by reference to the 1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Information regarding certain transactions of the Company is
incorporated herein by reference to the 1998 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
---------------------------------------------------
(a) 1. Financial Statements:
The following Consolidated Financial Statements of
Yankee Energy are incorporated herein by reference to the
Company's 1997 Annual Report in response to Item 8 hereof:
(i) Report of Independent Public Accountants
(ii) Consolidated Statements of Income for the years
ended September 30, 1997, 1996 and 1995.
(iii) Consolidated Balance Sheets at September 30, 1997
and 1996.
(iv) Consolidated Statements of Cash Flows for the
years ended September 30, 1997, 1996 and 1995.
(v) Consolidated Statements of Capitalization at
September 30, 1997 and 1996.
(vi) Consolidated Statements of Common Shareholders'
Equity for the years ended September 30, 1997,
1996 and 1995.
(vii) Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
The following schedules of the Company are included on
the attached pages as indicated:
Page
----
Report of Independent Public Accountants on Schedules...S-1
Schedule II Valuation and Qualifying Accounts and
Reserves for the years ended September
30, 1997, 1996 and 1995..................S-2
3. Exhibits:
Exhibits for Yankee Energy are listed in the Index
to Exhibits........................................E-1
(b)Reports on Form 8-K:
On July 22, 1997, the Company filed a Current Report on Form
8-K dated July 9, 1997, reporting in Item 5 thereof the issuance
by the DPUC of a decision in its Financial and Operations Review
of Yankee Gas.
On October 29, 1997, the Company filed a Current Report on
Form 8-K dated October 1, 1997 reporting in Item 5 thereof the
DPUC's final approval in its Financial and Operations Review of
Yankee Gas of an amendment to the settlement agreement between
Yankee Gas and the Connecticut Office of Consumer Counsel.
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.
YANKEE ENERGY SYSTEM, INC.
--------------------------
(Registrant)
Date: December 10, 1997 By /s/ Branko Terzic
-----------------------
Chairman, 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
- ---- ----- ---------
December 10, 1997 Chairman, President /s/Branko Terzic
and Chief Executive Branko Terzic
Officer
December 10, 1997 Vice President /s/James M. Sepanski
and Chief Financial James M. Sepanski
Officer
December 10, 1997 Controller /s/Nicholas A. Rinaldi
Nicholas A. Rinaldi
December 10, 1997 Director /s/Sanford Cloud, Jr.
Sanford Cloud, Jr.
December 10, 1997 Director /s/Eileen S. Kraus
Eileen S. Kraus
December 10, 1997 Director /s/Frederick M. Lowther
Frederick M. Lowther
December 10, 1997 Director /s/Emery G. Olcott
Emery G. Olcott
December 10, 1997 Director /s/John Rando
John Rando
December 10, 1997 Director /s/Nicholas L. Trivisonno
Nicholas L. Trivisonno
December 10, 1997 Director /s/Patricia M. Worthy
Patricia M. Worthy
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Yankee Energy System, Inc.:
We have audited, in accordance with generally accepted auditing
standards, the financial statements included in Yankee Energy
System, Inc.'s annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon
dated November 7, 1997. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedule listed in the index of financial statements is presented
for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial
statements. The schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
Arthur Andersen LLP
Hartford, Connecticut
November 7, 1997
INDEX TO FINANCIAL STATEMENT SCHEDULES
SCHEDULE
II Valuation and Qualifying Accounts and Reserves
for Years Ended September 30, 1997, 1996 and 1995
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED SEPTEMBER 30, 1997
SCHEDULE II
(Thousands of Dollars)
Col. A Col. B Col. C Col. D Col. E
Additions
__________
(1) (2)
Charged
Balance Charged to Balance
at to other at end
beginning costs and accounts Deductions of
Descrip. of period expenses describe describe period
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves
for
uncol-
lectible
accounts $7,259 $4,673 $ - $4,219(a) $7,713
RESERVES NOT APPLIED
AGAINST ASSETS:
Injuries and
damages(b) $1,510 $1,230 $ - $1,702 $1,038
Medical(d) 1,118 2,385 $ - 2,461 1,042
_____ ______ ____ _______ _______
Total $2,628 $3,615 $ - $4,163 $2,080
______ ______ ____ ______ ______
______ ______ ____ ______ ______
(a) Amounts charged off as uncollectible after deducting
customers' deposits and recoveries of accounts previously charged
off.
(b) Provided to cover claims for injuries to employees, for
workmen's compensation, for bodily injury to others and property
damage.
(c) Principally payments for various injuries and damages and
expenses in connection therewith.
(d) Provided to cover employee medical claims.
(e) Principally payments for various employee medical expenses
and expenses in connection therewith.
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED SEPTEMBER 30, 1996
SCHEDULE II
(Thousands of Dollars)
Col. A Col. B Col. C Col. D Col. E
Additions
__________
(1) (2)
Charged
Balance Charged to Balance
at to other at end
beginning costs and accounts Deductions of
Descrip. of period expenses describe describe period
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves
for
uncol-
lectible
accounts $5,481 $5,608 $ - $3,830(a) $7,259
RESERVES NOT APPLIED
AGAINST ASSETS:
Injuries and
damages(b)$ 801 $1,462 $ - $ 753(c) $1,510
Medical(d) 1,273 2,227 - 2,382 1,118
___ ______ ____ _______ _______
Total $2,074 $3,689 $ - $3,135 $2,628
______ ______ ____ ______ ______
______ ______ ____ ______ ______
(a) Amounts charged off as uncollectible after deducting
customers' deposits and recoveries of accounts previously charged
off.
(b) Provided to cover claims for injuries to employees for
workmen's compensation, for bodily injury to others and property
damage.
(c) Principally payments for various injuries and damages and
expenses in connection therewith.
(d) Provided to cover employee medical claims.
(e) Principally payments for various employee medical expenses
and expenses in connection therewith.
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED SEPTEMBER 30, 1995
SCHEDULE II
(Thousands of Dollars)
Col. A Col. B Col. C Col. D Col. E
Additions
__________
(1) (2)
Charged
Balance Charged to Balance
at to other at end
beginning costs and accounts Deductions of
Descrip. of period expenses describe describe period
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves
for
uncol-
lectible
accounts $5,444 $3,475 $ - $3,438(a) $5,481
RESERVES NOT APPLIED
AGAINST ASSETS:
Injuries and
damages(b) $1,031 $ 803 $ - $1,033(c) $ 801
Medical(d) 1,085 3,675 - 3,487 1,273
___ ______ ____ _______ _______
Total $2,116 $4,478 $ - $4,520 $2,074
______ ______ ____ ______ ______
______ ______ ____ ______ ______
(a) Amounts charged off as uncollectible after deducting
customers' deposits and recoveries of accounts previously charged
off.
(b) Provided to cover claims for injuries to employees for
workmen's compensation, for bodily injury to others and property
damage.
(c) Principally payments for various injuries and damages and
expenses in connection therewith.
(d) Provided to cover employee medical claims.
(e) Principally payments for various employee medical expenses
and expenses in connection therewith.
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
(3)
3.1 Restated Certificate of Incorporation of Yankee
Energy System, Inc. (the "Company") (Incorporated
by reference to Form 10 Registration Statement
dated April 14, 1989 and amendments thereto, File
No. 0-17605 ("Form 10")).
3.2 Amended Bylaws of the Company (Incorporated by
reference to Form 10).
(4)
4.1 Specimen of the Company's Common Stock
(Incorporated by reference to Form 10).
4.2 Rights Agreement between the Company and The
Connecticut Bank and Trust Company, N.A., as
Rights Agent, dated November 20, 1989
(Incorporated by reference to Form 8-A
Registration Statement dated December 7, 1989,
File No. 0-17605).
4.3 Amendment to Rights Agreement dated May 10, 1990
(Incorporated by reference to Form 8 dated May 30,
1990, File No. 0-17605).
4.4 Amendment to Rights Agreement dated January 23,
1991 (Incorporated by reference to Form 8 dated
January 31, 1991, File No. 0-17605).
4.5 Term Loan Agreement between NorConn Properties,
Inc. and Fleet Bank dated as of January 31, 1996.
(To be submitted to the Commission upon request.)
4.6 Bond Purchase Agreement dated July 1, 1989 between
Yankee Gas and the Purchasers identified therein
(Incorporated by reference to Form 10).
4.7 Indenture of Mortgage and Deed of Trust dated July
1, 1989 between Yankee Gas and The Connecticut
National Bank, as Trustee (Incorporated by
reference to Form 10).
4.8 Guaranty of the Company with Term Loan Agreement
dated July 20, 1989 between United Bank & Trust
Company, as Trustee of the Trust of the Company's
401(k) Employee Stock Ownership Plan and The First
National Bank of Boston (Incorporated by reference
to Form 10-K for the fiscal year ended December
31, 1989, File No. 0-17605 ("1989 Form 10-K")).
4.9 First Supplemental Indenture of Mortgage and Deed
of Trust dated April 1, 1992 between Yankee Gas
and The Connecticut National Bank, as Trustee
(Incorporated by reference to Form S-3
Registration Statement #33- 52750 dated October 2,
1992 ("Form S-3")).
4.10 Second Supplemental Indenture of Mortgage and Deed
of Trust dated December 1, 1992 between Yankee Gas
and The Connecticut National Bank, as Trustee
(Incorporated by reference to Form 10-K for the
fiscal year ended September 30, 1992, File No. 0-
17605 ("1992 Form 10-K")).
4.11 Bond Purchase Agreement dated April 1, 1992
between Yankee Gas and the Purchasers identified
therein (Incorporated by reference to Form S-3).
4.12 Bond Purchase Agreement dated December 1, 1992
between Yankee Gas and Purchaser identified
therein (Incorporated by reference to 1992 Form
10-K).
4.13 Third Supplemental Indenture of Mortgage and Deed
of Trust dated June 1, 1995 between Yankee Gas and
Shawmut Bank Connecticut, N.A., as Trustee.
(Incorporated by reference to Form 10-K for the
fiscal year ended September 30, 1995, File No.
0-10721 ("1995 Form 10-K")).
4.14 Bond Purchase Agreement dated June 22, 1995
between Yankee Gas and Purchaser identified
therein. (Incorporated by reference to 1995 Form
10-K).
4.15* Fourth Supplemental Indenture of Mortgage and Deed
of Trust dated April 1, 1997 between Yankee Gas
and Fleet National Bank, as Trustee.
4.16* Bond Purchase Agreement dated April 1, 1997
between Yankee Gas and Purchaser.
(10)
10.1 Asset Transfer Agreement among Northeast Utilities
Service Company ("NUSCO"), The Connecticut Light
and Power Company ("CL&P"), the Company, Yankee
Gas and Housatonic Corporation dated June 30, 1989
(Incorporated by reference to Form 10).
10.2 Environmental Liability Sharing and Indemnity
Agreement dated June 30, 1989 between Yankee Gas
and CL&P (Incorporated by reference to Form 10).
10.3 Rate Case Decision dated August 26, 1992
(Incorporated by reference to 1992 Form 10-K).
10.4 Lease Agreement between Yankee Gas and NorConn
Properties, Inc. dated October 1, 1990
(Incorporated by reference to Form S-1
Registration Statement #33-40758 dated May 22,
1991 and amendment thereto dated June 18, 1991
("Form S-1")).
10.5 Non-Employee Director Deferred Compensation
Plan dated December 7, 1995. (Incorporated by
reference to Form 10-K for the fiscal year ended
September 30, 1996, File No. 0-10721 ("1996 Form
10-K")).
10.6+ Long-Term Incentive Compensation Plan adopted
December 5, 1990 (Incorporated by reference
to Proxy Statement dated December 24, 1990).
10.7+ Annual Incentive Compensation Plan adopted
December 5, 1990 (Incorporated by reference
to Form 10-K for the fiscal year ended
September 30, 1991, File No. 0-17605 ("1991
Form 10-K")).
10.8+ Non-Employee Directors' Stock Compensation
Plan adopted March 21, 1991 (Incorporated by
reference to 1991 Form 10-K).
10.9 Severance Pay Plan adopted October 17,
1991(Incorporated by reference to 1991 Form
10-K).
10.10 Service Agreement #800308 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern
Transmission Company ("Texas Eastern") and
Yankee Gas (Incorporated by reference to Form
10-K for the fiscal year ended September 30,
1993, File No. 0-17605 ("1993 Form 10-K")).
10.11 Service Agreement #1596 dated September 1,
1993, applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas
Pipeline ("Tennessee") and Yankee Gas
(Incorporated by reference to 1993 Form 10-K).
10.12 Service Agreement #333 dated September 1,
1993, applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee and Yankee
Gas (Incorporated by reference to 1993 Form
10-K).
10.13 Transportation Agreement dated February 7,
1991 between Iroquois Gas Transmission
System, L.P. ("Iroquois") and Yankee Gas for
transportation of Canadian gas purchased
(Incorporated by reference to Form S-1).
10.14 Service Agreement dated February 7, 1991
between Alberta Northeast Gas Ltd. ("ANE")
and Yankee Gas for purchase of gas from ATCOR
Limited (Incorporated by reference to Form S-1).
10.15 Service Agreement dated February 7, 1991
between ANE and Yankee Gas for purchase of
gas from PROGAS Limited (Incorporated by
reference to Form S-1).
10.16 Service Agreement dated February 7, 1991
between ANE and Yankee Gas for purchase of
gas from AEC Oil and Gas Company
(Incorporated by reference to Form S-1).
10.17 Service Agreement dated February 7, 1991
between ANE and Yankee Gas for purchase of
gas from TransCanada Pipelines Limited
(Incorporated by reference to Form S-1).
10.18+ Employment Agreement between the Company and
Mr. Branko Terzic dated September 15, 1994
(Incorporated by reference to Form 10-K for
the fiscal year ended September 30,1994, File
No. 0-10721).
10.19+ Form of Change in Control Executive Severance
Agreement for Michael E. Bielonko, Charles E.
Gooley, Mary J. Healey, Thomas J. Houde, Steven P.
Laden, Ellen J. Quinn, James M. Sepanski, and J.
Kingsley Fink. (Incorporated by reference to 1995
Form 10-K).
10.20 $60 million Revolving Credit Agreement among
Yankee Gas and several banks dated February
2, 1995. (Incorporated by reference to 1995
Form 10-K).
10.21 Agreement for Systems Operations Services
among Yankee Gas and Integrated Systems
Solutions Corporation ("ISSC") dated August
12, 1991 (Incorporated by reference to 1992
Form 10-K).
10.22 Stipulation and Agreement dated January 3, 1996
between Yankee Gas and the Office of Consumer
Counsel. (Incorporated by reference to 1996 Form
10-K).
10.23*+ 1996 Long-Term Incentive Compensation Plan
(Incorporated by reference to Proxy Statement
dated December 13, 1996).
10.24* Amendment to Stipulation and Agreement dated
October 1, 1997 between Yankee Gas and Connecticut
Office of Consumer Counsel.
11* Statement re: Computation of per share earnings.
13* 1997 Annual Report to Shareholders.
21* Subsidiaries of the registrant.
23* Consent of Arthur Andersen LLP.
27* Financial date schedule pursuant to Article 5
of Regulation S-X for commercial/industrial
customers.
* Filed herewith.
+ Management contract or compensatory plan.