EXHIBIT 99(b)

FUEL

     RECOVERY OF FUEL COSTS.  For information relating to the cost of
fuel over the last three years, see "Operating Statistics of HL&P"
below and "Results of Operations - HL&P - Fuel and Purchased Power
Expense" in Item 7 of this Report.  Utility Commission rules provide
for the recovery of certain fuel and purchased power costs through an
energy component of electric rates (fixed fuel factor).  The fixed
fuel factor is established during either a utility's general rate
proceeding or an interim fuel proceeding and is to be generally
effective for a minimum of six months, unless a substantial change in
a utility's cost of fuel occurs.  In that event, a utility may be
authorized to revise the fixed fuel factor in its rates appropriately. 
In any event, a fuel reconciliation is required every three years.

     In October 1991, the Utility Commission approved HL&P's fixed
fuel factor as contemplated in the settlement agreement reached in
February 1991 by HL&P and most other parties to Docket No. 9850.  See
Note 10(c) to the Company's Consolidated and HL&P's Financial
Statements in Item 8 of this Report.  In November 1993, the Utility
Commission authorized HL&P to implement a higher fuel factor under
Docket No. 12370.  The Company can request a revision to its fuel
factor in April and October each year.

     Reconciliation of fuel costs after March 1990 is required in
1994, and under Utility Commission rules, HL&P has anticipated that a
filing would be required in May 1994.  However, the Utility Commission
staff has requested that such filing be delayed to the fourth quarter
of 1994.  If that request is granted by the Utility Commission, HL&P
anticipates that fuel costs through some time in 1994 will be
submitted for reconciliation at that time.  No hearing would be
anticipated in that reconciliation proceeding before 1995, and the
schedule for reconciliation of those costs could be affected by the
institution of a rate proceeding by the Utility Commission and/or a
prudence inquiry concerning the outage at the South Texas Project. 
For a discussion of that outage and the possibility that a rate
proceeding may be instituted, see Notes 9(f), 10(f) and 10(g),
respectively, to the Company's Consolidated and HL&P's Financial
Statements in Item 8 of this Report, which notes are incorporated
herein by reference.