SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 14, 1999
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Commission File Number 33-43508
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NORTH ATLANTIC ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
NEW HAMPSHIRE 06-1339460
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 ELM STREET, MANCHESTER, NEW HAMPSHIRE 03105
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(Address of principal executive officers) (Zip Code)
(603) 669-4000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other events
(a) On June 14, 1999, Northeast Utilities ("NU"), its subsidiary,
Public Service Company of New Hampshire ("PSNH") and the State of New
Hampshire signed a Memorandum of Understanding ("MOU") intended to settle a
number of pending regulatory and court proceedings related to PSNH. Parties
to the agreement include the Governor of New Hampshire, the New Hampshire
Attorney General, the Staff of the New Hampshire Public Utilities Commission
("NHPUC"), PSNH and NU. A copy of the MOU is attached hereto as an exhibit
and is incorporated herein by reference.
The MOU calls for PSNH and the state of New Hampshire to jointly submit a
request to suspend all pending litigation, and, on the effective date of the
agreement, for PSNH to withdraw a Federal lawsuit which had enjoined the
state from implementing its restructuring legislation. The effective date
will occur after all regulatory and other approvals have been secured and
beginning on the first day of the month following the issuance of rate
reduction bonds (securitization), as described below.
The principal features of the MOU include:
PSNH's rates will be reduced about 18 percent from current levels after all
regulatory and other approvals have been secured and beginning the first day
of the month following the issuance of rate reduction bonds. PSNH's rates
will be stable and predictable for three years after the effective date.
PSNH's customers will be able to choose their supplier of energy effective
the same day.
PSNH expects to recover approximately $1.5 billion of stranded costs
currently on PSNH's books as well as about $1.3 billion of nominal over
market future purchases from independent power producers ("IPPs") that can
continue to be recovered in rates. PSNH will write off about $367 million
(pretax) of its stranded costs (about $225 million after tax). This write-
off amounts to more than 30 percent of the equity currently invested in PSNH
by NU shareholders. A portion of this recovery is at risk, as it is dependent
upon retail load growth and various other factors.
The issuance of $725 million of rate reduction bonds is a condition of the
agreement. However, use of rate reduction bonds requires the initial
approval of the NHPUC and final approval from the New Hampshire Legislature
via enactment of appropriate legislation.
PSNH is required to sell its power plants and certain power contracts,
including the sale of PSNH's current purchased power contract with North
Atlantic Energy Corporation ("NAEC") for the output from Seabrook Station.
The net proceeds from all sales will be used to pay off a portion of PSNH's
stranded costs. The sales will be accomplished through an auction process
subject to approval by the NHPUC. An affiliate of NU is expressly allowed to
participate in the auction of the fossil/hydro generating assets.
The MOU and a request to stay a dozen identified administrative
proceedings will be filed with the NHPUC within a week of the MOU's signing.
A detailed agreement is expected to be jointly filed with the NHPUC by the
parties in early August. The New Hampshire Legislature must review and
approve the use of securitization via enactment of appropriate legislation,
and other approvals are required from various federal and state regulatory
agencies and financial lenders. NU anticipates that the plan will become
effective in early 2000.
For more information on this matter, see NU's, PSNH's and NAEC's Form
10-K and quarterly reports on Form 10-Q for the quarter ending March 31,
1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. . Memorandum of Understanding
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHEAST UTILITIES
(registrant)
By: /S/ David R. McHale
David R. McHale
Vice President and Treasurer
Date: June 16, 1999