UNITED STATES 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 December 31, 1999 				 OR 	 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 	 OF THE SECURITIES EXCHANGE ACT OF 1934 	 Exact name of Registrants as specified in 	 their charters, State of Incorporation, IRS Employer Commission address of principal executive offices and Identification File Number Registrants' telephone number Number - ----------- ------------------------------------------ -------------- 33-87902 ESI Tractebel Funding Corp. 04-3255377 	 (a Delaware corporation) 33-87902-02 Northeast Energy Associates, 04-2955642 	 A Limited Partnership 	 (a Massachusetts limited partnership) 33-87902-01 North Jersey Energy Associates, 04-2955646 	 A Limited Partnership 	 (a New Jersey limited partnership) 333-52397 ESI Tractebel Acquisition Corp. 65-0827005 	 (a Delaware corporation) 333-52397-01 Northeast Energy, LP 65-0811248 	 (a Delaware limited partnership) 	 ------------------------------------------ 	 c/o FPL Energy, LLC 	 700 Universe Boulevard 	 Juno Beach, Florida 33408-2683 	 (561) 691-7171 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: 8.43% Senior Secured Notes due 2000, Series A 9.16% Senior Secured Notes due 2002, Series A 9.32% Senior Secured Bonds due 2007, Series A 9.77% Senior Secured Bonds due 2010, Series A 7.99% Secured Bonds due 2011, Series B Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) have been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is no contained herein, and will not be contained, to the best of Registrants' 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 As of December 31, 1999, there were issued and outstanding 10,000 shares of ESI Tractebel Funding Corp.'s common stock. As of December 31, 1999, there were issued 20 shares of ESI Tractebel Acquisition Corp.'s common stock. 		 ---------------------------------- This combined Form 10-K represents separate filings by ESI Tractebel Funding Corp., Northeast Energy Associates, A Limited Partnership, North Jersey Energy Associates, A Limited Partnership, ESI Tractebel Acquisition Corp. and Northeast Energy, LP. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes representations only as to itself and makes no representations whatsoever as to any other registrant. DEFINITIONS Acronyms and defined terms used in the text include the following: Term Meaning Acquisition Corp. ESI Tractebel Acquisition Corp. Act Securities Act of 1933, as amended avoided cost the incremental cost to an electric utility of electric energy and/or capacity that, but 			 for the purchase from a qualifying facility, such utility would generate itself or 			 purchase from another source Boston Edison Boston Edison Company Broad Street Broad Street Contract Services, Inc. Btu British thermal units, a unit of energy Cogeneration Power production technology that provides for the sequential generation of two or more 			 useful forms of energy from a single primary fuel source Commonwealth Commonwealth Electric Company ESI Energy ESI Energy, LLC ESI GP ESI Northeast Energy GP, Inc. ESI LP ESI Northeast Energy LP, Inc. ESI Northeast Acquisition ESI Northeast Energy Acquisition Funding, Inc. ESI Northeast Funding ESI Northeast Energy Funding, Inc. ESI Northeast Fuel ESI Northeast Fuel Management, Inc. ETURC ESI Tractebel Urban Renewal Corporation, previously IEC Urban Renewal Corporation FERC Federal Energy Regulatory Commission FPL Florida Power & Light Company FPL Energy FPL Energy, LLC FPL Group FPL Group, Inc. FPL Group Capital FPL Group Capital Inc FPLE Operating Services FPL Energy Operating Services, Inc. Funding Corp. ESI Tractebel Funding Corp., previously IEC Funding Corp. IEC Intercontinental Energy Corporation, a Massachusetts corporation JCP&L Jersey Central Power & Light kwh kilowatt-hour Management's Discussion Item 7. Management's Discussion and Analysis of Financial Condition and Results 			 of Operations Montaup Montaup Electric Company MMBtu millions of Btu mw megawatt(s) NE LLC Northeast Energy, LLC NE LP Northeast Energy, LP NEA Northeast Energy Associates, A Limited Partnership NJEA North Jersey Energy Associates, A Limited Partnership NEPOOL New England power pool O&M operations and maintenance Partners ESI GP and ESI LP together with Tractebel GP and Tractebel LP Partnerships NEA together with NJEA PJM Pennsylvania-New Jersey-Maryland power pool ProGas ProGas Limited of Alberta, Canada PSE&G Public Service Electric & Gas of Newark, New Jersey PURPA Public Utility Regulatory Policies Act of 1978, as amended qualifying facilities Non-utility power production facilities meeting the requirements of a qualifying 			 facility under PURPA Reform Act Private Securities Litigation Reform Act of 1995 Rule 144A Rule 144A promulgated under the Act Tractebel Tractebel, Inc. Tractebel GP Tractebel Northeast Generation GP, Inc. Tractebel LP Tractebel Associates Northeast LP, Inc. Tractebel Power Tractebel Power, Inc. Trustee State Street Bank and Trust Company, a Massachusetts banking corporation Westinghouse Siemens Westinghouse Operating Services Company Westinghouse Power Siemens Westinghouse Power Corporation SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In connection with the safe harbor provisions of the Reform Act, the Funding Corp., the Partnerships, the Acquisition Corp. and NE LP (all five entities collectively, the Registrants) are hereby filing cautionary statements identifying important factors that could cause the Registrants' actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) of the Registrants made by or on behalf of the Registrants which are made in this combined Form 10-K, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projection, outlook) are not statements of historical facts and may be forward-looking. Forward- looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause the Registrants' actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Registrants. Any forward-looking statement speaks only as of the date on which such statement is made, and the Registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Some important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include changes in laws or regulations, changing governmental policies and regulatory actions, including those of the FERC and PURPA, acquisition, disposal, depreciation and amortization of assets and facilities, operation and construction of plant facilities, recovery of fuel and purchased power costs, and present or prospective competition. The business and profitability of the Registrants are also influenced by economic and geographic factors including political and economic risks, changes in and compliance with environmental and safety laws and policies, weather conditions, population growth rates and demographic patterns, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, market demand for energy from plants or facilities, changes in tax rates or policies or in rates of inflation or in accounting standards, unanticipated delays or changes in costs for capital projects, unanticipated changes in operating expenses and capital expenditures, capital market conditions, competition for new energy development opportunities and legal and administrative proceedings (whether civil, such as environmental, or criminal) and settlements. All such factors are difficult to predict, contain uncertainties which may materially affect actual results, and are beyond the control of the Registrants. PART I Item 1. Business General. NE LP, a Delaware limited partnership, was formed on November 21, 1997 for the purpose of acquiring ownership interests in two partnerships, NEA and NJEA, each of which owns an electric power generation station in the northeastern United States. NE LP is jointly owned by ESI GP and ESI LP (indirect wholly-owned subsidiaries of FPL Energy, which is an indirect wholly-owned subsidiary of FPL Group, a company listed on the New York Stock Exchange) and Tractebel GP and Tractebel LP (indirect wholly-owned subsidiaries of Tractebel S.A., a Belgian energy and environmental services business). NE LP also formed a wholly-owned entity, NE LLC, to assist in such acquisitions. On January 14, 1998, NE LP and NE LLC acquired all of the interests in the Partnerships from IEC and from certain individuals. The Partnerships were formed in 1986 to develop, construct, own, operate and manage the power generation stations. NEA's facility commenced commercial operation in September 1991 and is located in Bellingham, Massachusetts. NJEA's facility commenced commercial operation in August 1991 and is located in Sayreville, New Jersey. In connection with the acquisition of the Partnerships' interests, the Funding Corp. was acquired by a subsidiary of ESI Energy, Tractebel Power and Broad Street from IEC. This entity was established in 1994 solely for the purpose of issuing debt. This debt was privately issued under Rule 144A to acquire outstanding bank debt and to loan funds to the Partnerships and was subsequently exchanged for public debt under the Act. On January 12, 1998, the Acquisition Corp. was formed. The Acquisition Corp.'s common stock is jointly owned by a subsidiary of ESI Energy and a subsidiary of Tractebel Power. On February 12, 1998, the Acquisition Corp. issued $220 million of debt under Rule 144A which was also subsequently exchanged for public debt under the Act. The proceeds were loaned to NE LP and then distributed to direct subsidiaries of FPL Energy and Tractebel Power. Repayment of the debt is expected from distributions from the Partnerships. None of the Registrants or the Partners have any employees. Partnerships' Operations. The Partnerships operate in the independent power industry. In the United States, regulated electric utilities have been the dominant producers and suppliers of electric energy since the early 1900s. In 1978, PURPA removed regulatory constraints relating to the production and sale of electric energy by certain non-utility power producers and required electric utilities to buy electricity from certain types of non-utility power producers under certain conditions, thereby encouraging companies other than electric utilities to enter the electric power production market. The Partnerships were created as a result of the PURPA legislation. Each of the Partnerships owns and derives substantially all of its revenues from a nominal 300 mw natural gas-fired combined-cycle cogeneration facility. The facilities were constructed by Westinghouse Power and use natural gas to produce electrical energy and thermal energy in the form of steam. The Partnerships were developed and are operated as qualifying facilities under PURPA and the regulations promulgated thereunder by the FERC. The Partnerships must satisfy certain annual operating and efficiency standards and ownership requirements to maintain qualifying facility status, which exempts the Partnerships from certain federal and state regulations. The Partnerships are, however, not exempt from state regulatory commission general supervisory powers relating to environmental and safety matters. NEA and NJEA sell substantially all of their output to regulated utilities under power purchase agreements as follows: 				 % of Power Purchase Power Purchaser MW Capacity Agreement Expiration NEA: Boston Edison 135 45% September 15, 2016 Boston Edison 84 28 September 15, 2011 Commonwealth 25 8 September 15, 2016 Commonwealth 21 7 September 15, 2016 Montaup 25 8 September 15, 2021 NEA Total 290 96% NJEA: JCP&L 250 83% August 13, 2011 The remainder of the net electrical energy produced by the Partnerships is available for sale to the marketplace either directly to third parties or via FPL Energy's power marketing group. The power purchase agreements provide for substantially continuous delivery of base load power. Certain of the power purchase agreements require the establishment of energy banks to record cumulative payments made by the utilities in excess of avoided cost rates scheduled or specified in such agreements. Some of the energy bank balances bear interest at various rates specified in the agreements. Upon termination of the agreements, remaining amounts recorded in the energy banks will be required to be repaid. Energy bank balances are partially secured by letters of credit. To meet the FERC regulations for a qualifying facility, both NEA and NJEA sell at least 5% of the thermal energy produced to unrelated third parties. NEA sells steam to a third party which leases a carbon dioxide facility owned by NEA and located on NEA's property. Approximately 80% of the natural gas that fuels the Partnerships' facilities is supplied pursuant to long-term gas supply agreements with ProGas and, in the case of NJEA, also pursuant to a long-term gas supply agreement with PSE&G. Gas is transported to, or stored for later use by, the Partnerships pursuant to long-term gas transportation and storage agreements. The remainder of the daily fuel requirements is satisfied by open-market purchases. Price escalators under the long-term gas agreements are intended to correlate to the price escalators under the power purchase agreements, thereby reducing the risk associated with increases in the price of natural gas. ESI Northeast Fuel, an indirect wholly-owned subsidiary of FPL Energy, is the fuel manager for the Partnerships and provides fuel management and administrative services by contracting with FPL Energy's power marketing group. This group buys and sells wholesale energy commodities, such as natural gas and electric power. O&M of the Partnerships was provided by Westinghouse, a subsidiary of Westinghouse Power, through December 31, 1998. Effective December 31, 1998, the O&M contracts between Westinghouse Power and the Partnerships were terminated by mutual consent of both parties and the payment of $10 million to Westinghouse. FPLE Operating Services, a wholly-owned indirect subsidiary of FPL Energy, became the new provider of O&M services for the Partnerships on January 1, 1999. See Management's Discussion - Results of Operations. Seasonality. The performance of the Partnerships is dependent on ambient conditions (principally air temperature, air pressure and humidity), which affect the efficiency and capacity of the combined-cycle facilities. Payments due to NJEA under the JCP&L power purchase agreement during winter and summer season are substantially higher than those in spring and fall. Otherwise, the business of the Partnerships is not materially subject to seasonal factors. Competition. Recent regulatory change has created additional competition in the form of wholesale power marketers that engage in purchase and resale transactions between power producers and power distributors. Although substantially all of the Partnerships' output is committed under the power purchase agreements described above, these factors may adversely affect energy prices under certain power purchase agreements that are tied to the actual costs of the purchasing utility. Deregulation. Both Massachusetts and New Jersey have enacted legislation designed to deregulate the production and sale of electricity. By allowing customers to choose their electricity supplier, deregulation is expected to result in a shift from cost-based rates to market-based rates for energy production. Similar initiatives are also being pursued on the federal level. The Partnerships operate in two power pools. NEA operates in NEPOOL and NJEA operates in PJM, each of which has an independent system operator that manages the transmission of electricity. While legislators and state regulatory commissions will decide what impact, if any, competitive forces will have on retail transactions, the FERC has jurisdiction over potential changes which could affect competition in wholesale transactions. The FERC has approved various filings submitted by NEPOOL and PJM that further electric industry deregulation initiatives. NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to prices under the Partnerships' power purchase agreements. However, the impact of electric utility industry restructuring on the companies that purchase power from the Partnerships is uncertain. Item 2. Properties As of December 31, 1999, the Partnerships had the following properties: 	Facility Type Location Principal Use NEA cogeneration facility (1) Bellingham, MA Power production NEA carbon dioxide plant (2) Bellingham, MA Carbon dioxide production NEA residential properties (3) Bellingham, MA Private residences NJEA cogeneration facility (2) Sayreville, NJ Power production (1) Subject to the liens of a first and second mortgage. (2) Subject to the lien of a first mortgage. (3) NEA owns 12 properties, most with single-family dwellings, located on land immediately adjacent to the facility site. These properties are subject to the lien of a mortgage. Item 3. Legal Proceedings None of the Registrants are involved in any material legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for the Registrants' Common Equity and Related Stockholder Matters This item is not applicable for the Registrants. Item 6. Selected Financial Data 									 Years Ended December 31, 							 1999 1998 1997 1996 1995 									 (Thousands of Dollars) SELECTED DATA OF NE LP Operating revenues ...................................... $ 336,299 $ 302,693 $ - n/a n/a Net income .............................................. $ 33,303 $ 14,098 $ - n/a n/a Total assets ............................................ $1,345,858 $1,410,343 $ - n/a n/a Long-term debt, excluding current maturities ............ $ 638,880 $ 665,213 $ - n/a n/a Amounts due utilities for energy bank balances .......... $ 168,885 $ 173,356 $ - n/a n/a SELECTED DATA OF THE PARTNERSHIPS Operating revenues ...................................... $ 336,299 $ (a)(b) $312,154 $272,262 $280,549 Net income .............................................. $ 51,329 $ (a)(b) $ 36,673 $ 9,924 $ 26,857 Total assets ............................................ $1,339,102 $1,403,045 $541,545 $566,534 $617,034 Long-term debt, excluding current maturities ............ $ 418,880 $ 445,213 $468,724 $490,287 $514,362 Amounts due utilities for energy bank balances .......... $ 168,885 $ 173,356 $230,565 $220,922 $188,053 SELECTED DATA OF THE FUNDING CORP. Operating revenues ...................................... $ - $ - $ - $ - $ - Net income .............................................. $ - $ - $ - $ - $ - Total assets ............................................ $ 445,214 $ 468,725 $490,288 $514,363 $539,567 Long-term debt, excluding current maturities ............ $ 418,880 $ 445,213 $468,724 $490,287 $514,362 SELECTED DATA OF THE ACQUISITION CORP. Operating revenues ...................................... $ - $ - n/a n/a n/a Net income .............................................. $ 9 $ 8 n/a n/a n/a Total assets ............................................ $ 220,152 $ 220,152 n/a n/a n/a Long-term debt, excluding current maturities ............ $ 220,000 $ 220,000 n/a n/a n/a (a) On January 14, 1998, NE LP and NE LLC acquired all of the interests in the Partnerships from IEC resulting in a new basis of accounting by the Partnerships (See Note 2 - Summary of Significant Accounting Policies - Acquisitions to the consolidated financial statements). (b) Split period 							 1/1 to 1/13 1/14 to 12/31 Operating revenues ................................. $13,109 $302,693 Net income ........................................ $ 2,909 $ 30,000 n/a - not applicable because entities were not in existence. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations NE LP, a Delaware limited partnership, was formed on November 21, 1997 for the purpose of acquiring ownership interests in two partnerships, NEA and NJEA, each of which owns an electric power generation station in the northeastern United States. On January 14, 1998, NE LP acquired all of the interests in the Partnerships and the Funding Corp. for approximately $545 million, including approximately $10 million of acquisition costs. The acquisition of the Partnerships was accounted for using the purchase method of accounting and was subject to pushdown accounting, which gave rise to a new basis of accounting by the Partnerships. During 1998, the Acquisition Corp. issued $220 million of 7.99% Secured Bonds Due 2011 to qualified institutional buyers as defined in Rule 144A for the purpose of reimbursing certain partners of NE LP for a portion of their equity contributions used to acquire the Partnerships and the Funding Corp. O&M of the Partnerships was provided by Westinghouse through December 31, 1998. Effective December 31, 1998, the O&M contracts between Westinghouse Power and the Partnerships were terminated by mutual consent of both parties and the payment of $10 million to Westinghouse. The Partnerships recorded a net gain of $4.2 million, the effect of which is reflected in the statement of operations for the period ended December 31, 1998. Additionally, the Partnerships agreed to pay Westinghouse a total of $15.6 million, which approximates market value, for spare parts purchased in 1999. FPLE Operating Services became the new provider of O&M services for the Partnerships on January 1, 1999. NE LP for the year ended December 31, 1999 - Revenues year to date totaled $336.3 million and were comprised of $331.4 million of power sales to utilities and $4.9 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $22.2 million (which increased reported revenues) that are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $129.7 million includes $150.5 million of fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. These fuel costs are offset by $20.8 million of deferred credit amortization for fuel contracts. O&M expenses of $14.2 million are comprised of O&M provider salaries and site expenses. Included in O&M expenses is the major maintenance accrual described in Note 2 - Summary of Significant Accounting Policies - Major Maintenance to the consolidated financial statements. Depreciation and amortization of $73.1 million is comprised of depreciation for the cogeneration and carbon dioxide facilities of $21.8 million and $51.3 million of amortization of the power purchase agreements. General and administrative expenses of $8.8 million are comprised primarily of management and professional fees and property taxes. Interest expense of $78.8 million is comprised primarily of interest on notes payable to the Funding Corp. ($43.5 million), interest on energy bank balances ($17.7 million) and interest on the Acquisition Corp. notes ($17.6 million). Interest income reflects cash balances earning investment income. NE LP for the year ended December 31, 1998 - NE LP's operations for the year ended December 31, 1998 primarily reflect the operations of the Partnerships subsequent to the acquisitions on January 14, 1998 and the related allocation of the purchase price. Revenues year to date totaled $302.7 million and were comprised of $298.2 million of power sales to utilities and $4.5 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $15.6 million (which increased reported revenues) that are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $121.4 million includes $141.5 million of fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. These fuel costs are offset by $20.1 million of deferred credit amortization for fuel contracts as a result of the purchase price allocation of the acquisitions. O&M expenses of $14.3 million are comprised of O&M provider fees and site expenses of $23.0 million offset by $4.5 million of deferred credit amortization for O&M contracts as a result of the purchase price allocation of the acquisitions and offset by a $4.2 million net gain recorded from the early termination of the O&M contracts between Westinghouse Power and the Partnerships. Included in O&M expenses is the major maintenance accrual described in Note 2 - Summary of Significant Accounting Policies - Major Maintenance to the consolidated financial statements. Depreciation and amortization of $69.5 million is comprised of depreciation for the cogeneration and carbon dioxide facilities of $21.0 million and $48.5 million of amortization of the power purchase agreements as a result of the purchase price allocation of the acquisitions. General and administrative expenses of $9.4 million are comprised primarily of management and professional fees and site expenses. Interest expense of $76.3 million is comprised primarily of interest on notes payable to the Funding Corp. ($43.7 million), interest on energy bank balances ($17.4 million) and interest on the Acquisition Corp. notes ($15.2 million). Interest income reflects cash balances earning investment income and reflects the impact of the release and distribution of debt service reserve cash and energy bank collateral restricted cash during 1998. The Partnerships for the year ended December 31, 1999 - Revenues year to date totaled $336.3 million and were comprised of $331.4 million of power sales to utilities and $4.9 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $22.2 million (which increased reported revenues) that are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $129.7 million includes $150.5 million of fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. These fuel costs are offset by $20.8 million of deferred credit amortization for fuel contracts. O&M expenses of $14.2 million are comprised of O&M provider salaries and site expenses. Included in O&M expenses is the major maintenance accrual described in Note 2 - Summary of Significant Accounting Policies - Major Maintenance to the combined financial statements. Depreciation and amortization of $73.1 million is comprised of depreciation for the cogeneration and carbon dioxide facilities of $21.8 million and $51.3 million of amortization of the power purchase agreements. General and administrative expenses of $8.8 million are comprised primarily of management and professional fees and property taxes. Interest expense of $61.2 million is comprised of interest on notes payable to the Funding Corp. ($43.5 million) and interest on energy bank balances ($17.7 million). Interest income reflects cash balances earning investment income. The Partnerships for the period from January 14, 1998 to December 31, 1998 (post-acquisition) - Subsequent to January 13, 1998, the basis of presentation of the results of operations for the Partnerships reflects the new basis of accounting discussed in Note 1 and Note 2 to the combined financial statements. Revenues period to date totaled $302.7 million and were comprised of $298.2 million of power sales to utilities and $4.5 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $15.6 million (which increased reported revenues) that are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $121.4 million includes $141.5 million of fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. These fuel costs are offset by $20.1 million of deferred credit amortization for fuel contracts as a result of the purchase price allocation of the acquisitions. O&M expenses of $14.3 million are comprised of O&M provider fees and site expenses of $23.0 million offset by $4.5 million of deferred credit amortization for O&M contracts as a result of the purchase price allocation of the acquisitions and offset by a $4.2 million net gain recorded from the early termination of the O&M contracts between Westinghouse Power and the Partnerships. Included in O&M expenses is the major maintenance accrual described in Note 2 - Summary of Significant Accounting Policies - Major Maintenance to the combined financial statements. Depreciation and amortization of $69.5 million is comprised of depreciation for the cogeneration and carbon dioxide facilities of $21.0 million and $48.5 million of amortization of the power purchase agreements as a result of the purchase price allocation of the acquisitions. General and administrative expenses of $9.2 million are comprised primarily of management and professional fees and site expenses. Interest expense of $61.2 million is comprised primarily of interest on notes payable to the Funding Corp. ($43.7 million) and interest on energy bank balances ($17.4 million). Interest income reflects cash balances earning investment income and reflects the impact of the release and distribution of debt service reserve cash and energy bank collateral restricted cash during 1998. The Partnerships for the period from January 1, 1998 to January 13, 1998 (pre-acquisition) - Revenues for the thirteen-day period totaled $13.1 million and were comprised of $12.9 million of power sales to utilities and $200 thousand of steam sales. Power sales to utilities reflect changes in utility energy bank balances which are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $5.8 million includes fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. O&M expenses of $974 thousand are comprised of O&M provider fees and site utility expenses. Depreciation and amortization of $894 thousand is comprised of depreciation for the cogeneration and carbon dioxide facilities. General and administrative expenses of $538 thousand are comprised primarily of management fees. Interest expense is comprised primarily of interest on notes payable to the Funding Corp. ($1.7 million) and interest on energy bank balances ($630 thousand). Interest income reflects cash balances earning investment income. The Partnerships for the year ended December 31, 1997 - Revenues totaled $312.2 million and were comprised of $307.5 million of power sales to utilities and $4.7 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances which are determined in accordance with scheduled or specified rates under certain power purchase agreements. Fuel expense of $151.5 million includes fuel purchased for the Partnerships and the fixed and variable costs associated with the delivery and use of the fuel for operations. O&M expenses of $25.7 million are comprised of O&M provider fees and site utility expenses. Depreciation and amortization of $25.0 million is comprised of depreciation for the cogeneration and carbon dioxide facilities. General and administrative expenses of $16.0 million are comprised primarily of management, consulting and overhead fees, as well as a write-off of approximately $1.5 million in accounts receivable. Interest expense is comprised primarily of interest on notes payable to the Funding Corp. ($47.3 million) and interest on energy bank balances ($17.4 million). Interest income reflects cash balances earning investment income. The Funding Corp. - Debt principal payments were $23.5 million, $21.6 million and $24.1 million for the years ended December 31, 1999, 1998 and 1997, respectively. Debt interest payments were $43.5 million, $45.3 million and $47.3 million for the years ended December 31, 1999, 1998 and 1997, respectively. The Acquisition Corp. - Debt interest payments of $17.6 million and $15.2 million were made by the Acquisition Corp. during 1999 and 1998, respectively. Both Massachusetts and New Jersey have enacted legislation designed to deregulate the production and sale of electricity. By allowing customers to choose their electricity supplier, deregulation is expected to result in a shift from cost-based rates to market-based rates for energy production. Similar initiatives are also being pursued on the federal level. NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to the Partnerships' power purchase agreements. However, the impact of electric utility industry restructuring on the companies that purchase power from the Partnerships is uncertain. Year 2000 - The Registrants did not experience any significant year 2000- related problems. The total cost of addressing year 2000 issues was approximately $500 thousand. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Registrants are currently assessing the effect, if any, on their financial statements of implementing FAS 133. The Registrants will be required to adopt FAS 133 beginning in 2001. Liquidity and Capital Resources The Funding Corp. and the Partnerships - Cash flow generated by the Partnerships during 1999 was sufficient to fund operating expenses as well as fund the debt service requirements of the Funding Corp. Debt maturities of the Funding Corp. will require cash outflows of approximately $308 million in principal and interest through 2004, including $67.8 million in 2000. It is anticipated that cash requirements for principal and interest payments in 2000 will be satisfied with operational cash flow. For the year ended December 31, 1999, there were $68.9 million in distributions to partners. The Acquisition Corp. and NE LP - Cash flow generated by NE LP during 1999 was sufficient to fund operating expenses as well as fund the debt service requirements of the Acquisition Corp. and the Funding Corp. Debt maturities of the Acquisition Corp. and the Funding Corp. will require cash outflows of approximately $419.7 million in principal and interest through 2004, including $85.4 million in 2000. It is anticipated that cash requirements for principal and interest payments in 2000 will be satisfied with operational cash flow. For the year ended December 31, 1999, there were $51.5 million in distributions to partners. Item 7A. Quantitative and Qualitative Disclosures About Market Risk All financial instruments and positions held by NE LP and the Partnerships described below are held for purposes other than trading. Interest rate risk - The fair value of NE LP's and the Partnerships' long- term debt is affected by changes in interest rates. The following presents the sensitivity of the fair value of debt to a hypothetical 10% decrease in interest rates: 												 1999 											 Hypo-thetical Increase 										 Carrying Fair in Fair 										 Value Value Value 											 (Thousands of Dollars) Long-term debt of NE LP/Acquisition Corp. ......................................... $220,000 $ 204,000(a) $ 12,000 Long-term debt of Partnerships/Funding Corp. ...................................... $445,213 $ 454,000(a) $ 20,000 (a) Based on the borrowing rate currently available for debt instruments with similar terms and average maturities. Commodity price risk - The prices received by the Partnerships for power sales under their long-term contracts do not move precisely in tandem with the prices paid by the Partnerships for natural gas. To mitigate the price risk associated with purchases of natural gas, the Partnerships may, from time to time, enter into certain transactions either through public exchanges or by means of over-the-counter transactions with specific counterparties. The Partnerships mitigate their risk associated with purchases of natural gas through the use of natural gas swap agreements that require the Partnerships to pay a fixed price (absolutely or within a specified range) in return for a variable price on specified notional quantities of natural gas. The following presents the sensitivity of the fair value of gas swap agreements to a hypothetical 10% increase in natural gas prices: 												 1999 											 Hypo-thetical 													 Decrease 										 Carrying Fair in Fair 										 Value Value Value 											 (Thousands of Dollars) Gas swap agreements of NE LP/the Partnerships ...................................... $ - $ 1,668(a) $ 1,018 (a) Based on estimated cost to terminate the agreements. Item 8. Financial Statements and Supplementary Data INDEPENDENT AUDITORS' REPORT NORTHEAST ENERGY, LP NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP: We have audited the accompanying consolidated financial statements of Northeast Energy, LP (a partnership) and subsidiaries, as of December 31, 1999 and 1998, and for the years ended December 31, 1999 and 1998, and for the period from November 21, 1997 (Date of Formation) to December 31, 1997, and the combined financial statements of two of the subsidiaries of Northeast Energy, LP, named Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership, as of December 31, 1999 and 1998, and for the year ended December 31, 1999, and for the periods from January 1, 1998 to January 13, 1998, and from January 14, 1998 to December 31, 1998, listed in the accompanying index at Item 14(a)1 of this Annual Report (Form 10-K) to the Securities and Exchange Commission for the year ended December 31, 1999. These financial statements are the responsibility of the respective Partnership'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, such financial statements present fairly, in all material respects, the consolidated financial position of Northeast Energy, LP and its subsidiaries, and the combined financial position of Northeast Energy Associates, A Limited Partnership, and North Jersey Energy Associates, A Limited Partnership, and the results of their operations and their cash flows for the above-stated periods in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Certified Public Accountants West Palm Beach, Florida March 20, 2000 INDEPENDENT AUDITORS' REPORT NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP, AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP: In our opinion, the combined statements of operations, of cash flows and of partners' equity for the year ended December 31, 1997 (appearing on pages 18 through 27 of this Form 10-K Annual Report) present fairly, in all material respects, the results of operations and cash flows of Northeast Energy Associates, A Limited Partnership, and North Jersey Energy Associates, A Limited Partnership (the "Partnerships") for the year ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Partnerships' management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. We have not audited the combined financial statements of the Partnerships for any period subsequent to December 31, 1997. PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts March 24, 1998 NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Thousands of Dollars) 											 December 31, 											 1999 1998 ASSETS Current assets: Cash and cash equivalents ........................................................ $ 33,085 $ 36,038 Accounts receivable .............................................................. 32,332 29,746 Due from related party ........................................................... 152 - Spare parts inventories .......................................................... 9,977 194 Fuel inventories ................................................................. 4,361 4,935 Prepaid expenses and other current assets ........................................ 335 212 Total current assets ........................................................... 80,242 71,125 Non-current assets: Deferred debt issuance costs (net of accumulated amortization of $1,179 and $548, respectively) ............................................................ 5,781 6,412 Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $42,807 and $20,987, respectively) ............................. 470,851 492,566 Power purchase agreements (net of accumulated amortization of $99,811 and $48,545, respectively) ......................................................... 788,945 840,211 Other assets ..................................................................... 39 29 Total non-current assets ....................................................... 1,265,616 1,339,218 TOTAL ASSETS ....................................................................... $1,345,858 $1,410,343 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Current portion of notes payable - the Funding Corp. ............................. $ 26,333 $ 23,511 Accounts payable ................................................................. 16,745 12,338 Due to related parties ........................................................... 1,306 800 Other accrued expenses ........................................................... 6,974 9,384 Total current liabilities ...................................................... 51,358 46,033 Non-current liabilities: Deferred credit - fuel contracts ................................................. 292,581 313,427 Notes payable - the Funding Corp. ................................................ 418,880 445,213 Note payable - the Acquisition Corp. ............................................. 220,000 220,000 Amounts due utilities for energy bank balances ................................... 168,885 173,356 Total non-current liabilities .................................................. 1,100,346 1,151,996 Partners' equity: General partners ................................................................. 3,882 4,246 Limited partners ................................................................. 190,272 208,068 Total partners' equity ......................................................... 194,154 212,314 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,345,858 $1,410,343 The accompanying notes are an integral part of these consolidated financial statements. NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Thousands of Dollars) 													Period from 													November 21, 													1997 (Date of 									 Year Ended Year Ended Formation) to 									 December 31, December 31, December 31, 									 1999 1998 1997 REVENUES ............................................................... $336,299 $302,693 $ - COSTS AND EXPENSES: Fuel ................................................................. 129,716 121,438 - Operations and maintenance ........................................... 14,206 14,321 - Depreciation and amortization ........................................ 73,094 69,540 - General and administrative ........................................... 8,822 9,432 - Total costs and expenses ........................................... 225,838 214,731 - OPERATING INCOME ....................................................... 110,461 87,962 - OTHER EXPENSE (INCOME): Amortization of debt issuance costs .................................. 632 548 - Interest expense ..................................................... 78,790 76,336 - Interest income ...................................................... (2,264) (3,020) - Total other expense - net .......................................... 77,158 73,864 - NET INCOME.............................................................. $ 33,303 $ 14,098 $ - The accompanying notes are an integral part of these consolidated financial statements. NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of Dollars) 													Period from 													November 21, 													1997 (Date of 									 Year Ended Year Ended Formation) to 									 December 31, December 31, December 31, 									 1999 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income .......................................................... $33,303 $ 14,098 $ - Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................................... 73,724 70,091 - Amortization of fuel and O&M contracts .......................... (20,844) (24,632) - Other ........................................................... - 273 - (Increase) decrease in accounts receivable ...................... (2,586) 14,295 - (Increase) decrease in due from related party ................... (152) - - (Increase) decrease in other current assets ..................... (9,332) 2,086 - Increase (decrease) in accounts payable and accrued expenses .... 1,992 (18,965) - Increase (decrease) in amounts due utilities for energy bank 	balances ...................................................... (4,471) 1,427 - Increase (decrease) in due to related parties ................... 506 (1,479) - Net cash provided by operating activities ......................... 72,140 57,194 - CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................ (120) - - Release of restricted cash collateral ............................... - 69,156 - Acquisition purchase price, net of $62,635 cash acquired ............ - (482,167) - Net cash used in investing activities ............................. (120) (413,011) - CASH FLOWS FROM FINANCING ACTIVITIES: Contributions from partners ......................................... - 545,412 - Principal payments on the Funding Corp. notes ...................... (23,510) (21,563) - Net proceeds from loan by the Acquisition Corp. ..................... - 215,202 - Distributions to partners ........................................... (51,463) (347,196) - Net cash provided by (used in) financing activities ............... (74,973) 391,855 - Net increase (decrease) in cash and cash equivalents .................. (2,953) 36,038 Cash and cash equivalents at beginning of period ...................... 36,038 - - Cash and cash equivalents at end of period ............................ $33,085 $ 36,038 $ - Supplemental disclosure of cash flow information: Cash paid for interest .............................................. $61,241 $ 61,227 $ - The accompanying notes are an integral part of these consolidated financial statements. NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (Thousands of Dollars) 									 General Limited Partners' 									 Partners Partners Equity Balances, December 31, 1997 ............................................ $ - $ - $ - Contributions from partners .......................................... 10,908 534,504 545,412 Net income ........................................................... 282 13,816 14,098 Distributions to partners ............................................ (6,944) (340,252) (347,196) Balances, December 31, 1998 ............................................ 4,246 208,068 212,314 Net income ........................................................... 665 32,638 33,303 Distributions to partners ............................................ (1,029) (50,434) (51,463) Balances, December 31, 1999 ............................................ $ 3,882 $ 190,272 $ 194,154 The accompanying notes are an integral part of these consolidated financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED BALANCE SHEETS (Thousands of Dollars) 												 December 31, 											 1999 1998 ASSETS Current assets: Cash and cash equivalents ......................................................... $ 32,144 $ 35,152 Accounts receivable ............................................................... 32,332 29,746 Due from related party ............................................................ 152 - Spare parts inventories ........................................................... 9,977 194 Fuel inventories .................................................................. 4,361 4,935 Prepaid expenses and other current assets ......................................... 301 212 Total current assets ............................................................ 79,267 70,239 Non-current assets: Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $42,807 and $20,987, respectively) ............................. 470,851 492,566 Power purchase agreements (net of accumulated amortization of $99,811 and $48,545, respectively) ...................................................... 788,945 840,211 Other assets ...................................................................... 39 29 Total non-current assets ........................................................ 1,259,835 1,332,806 TOTAL ASSETS ........................................................................ $1,339,102 $1,403,045 LIABILITIES AND PARTNERS' EQUITY Current liabilities: Current portion of notes payable - the Funding Corp. .............................. $ 26,333 $ 23,511 Accounts payable .................................................................. 16,745 12,338 Due to related parties ............................................................ 1,167 663 Other accrued expenses ............................................................ 6,974 9,384 Total current liabilities ....................................................... 51,219 45,896 Non-current liabilities: Deferred credit - fuel contracts .................................................. 292,581 313,427 Notes payable - the Funding Corp. ................................................. 418,880 445,213 Amounts due utilities for energy bank balances .................................... 168,885 173,356 Total non-current liabilities ................................................... 880,346 931,996 Partners' equity: General partner ................................................................... 4,075 4,252 Limited partners .................................................................. 403,462 420,901 Total partners' equity .......................................................... 407,537 425,153 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,339,102 $1,403,045 The accompanying notes are an integral part of these combined financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF OPERATIONS (Thousands of Dollars) 											Period from 								 Period from January 1, 								 January 14, 1998 to Year Ended 							Year Ended 1998 to January 13, December 31, 						 December 31, December 31, 1998 1997 							 1999 1998 (Prior Basis) (Prior Basis) REVENUES ......................................... $336,299 $302,693 $ 13,109 $312,154 COSTS AND EXPENSES: Fuel ........................................... 129,716 121,438 5,774 151,476 Operations and maintenance ..................... 14,206 14,321 974 25,689 Depreciation and amortization .................. 73,094 69,540 894 24,992 General and administrative ..................... 8,817 9,150 538 15,984 Total costs and expenses ..................... 225,833 214,449 8,180 218,141 OPERATING INCOME ................................. 110,466 88,244 4,929 94,013 OTHER EXPENSE (INCOME): Interest expense ............................... 61,208 61,154 2,422 67,271 Interest income ................................ (2,071) (2,910) (402) (9,931) Total other expense - net .................... 59,137 58,244 2,020 57,340 NET INCOME ....................................... $ 51,329 $ 30,000 $ 2,909 $ 36,673 The accompanying notes are an integral part of these combined financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF CASH FLOWS (Thousands of Dollars) 										 Period from 								 Period from January 1, 								 January 14, 1998 to Year Ended 							 Year Ended 1998 to January 13, December 31, 							 December 31, December 31, 1998 1997 							 1999 1998 (Prior Basis) (Prior Basis) CASH FLOWS FROM OPERATING ACTIVITIES: Net income ......................................... $ 51,329 $ 30,000 $ 2,909 $ 36,673 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization................... 73,092 69,543 894 27,155 Amortization of fuel and O&M contracts.......... (20,844) (24,632) - - (Increase) decrease in due from related party .. (152) - 114 - (Increase) decrease in accounts receivable ..... (2,586) 14,295 (10,005) 9,635 (Increase) decrease in other current assets .... (9,298) 2,086 426 (34) Increase (decrease) in accounts payable and 	accrued expenses.............................. 1,993 (18,809) 7,217 (996) Increase (decrease) in amounts due utilities 	for energy bank balances...................... (4,471) 1,427 (52) 9,643 Increase (decrease) in due to related parties... 504 663 (71) 99 Net cash provided by operating activities ........ 89,567 74,573 1,432 82,175 CASH FLOWS FROM INVESTING ACTIVITIES: Release of restricted cash collateral .............. - 69,156 - - Capital expenditures ............................... (120) - - (378) Net cash provided by (used in) investing activities ..................................... (120) 69,156 - (378) CASH FLOWS FROM FINANCING ACTIVITIES: Contributions from partners ........................ - 10,000 - - Principal payments on notes ........................ (23,510) (21,563) - (24,075) Distributions to partners .......................... (68,945) (159,649) - (46,380) Net cash used in financing activities ............ (92,455) (171,212) - (70,455) Net increase (decrease) in cash and cash equivalents . (3,008) (27,483) 1,432 11,342 Cash and cash equivalents at beginning of period ..... 35,152 62,635 61,203 49,861 Cash and cash equivalents at end of period ........... $ 32,144 $ 35,152 $ 62,635 $ 61,203 Supplemental disclosure of cash flow information: Cash paid for interest ............................. $ 43,663 $ 46,045 $ - $ 48,794 Supplemental schedule of noncash investing and financing activities: Accrued capitalized facility costs ................. $ - $ - $ - $ 240 The accompanying notes are an integral part of these combined financial statements. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF PARTNERS' EQUITY(DEFICIT) (Thousands of Dollars) 									 General Limited Partners' 									 Partner Partners Equity Prior Basis Balances, December 31, 1996 ............................................ $(4,616) $(182,863) $(187,479) Net income............................................................ 366 36,307 36,673 Distributions to partners ............................................ (464) (45,916) (46,380) Balances, December 31, 1997 ............................................ (4,714) (192,472) (197,186) Net income from January 1 to January 13, 1998 ........................ 29 2,880 2,909 Balances, January 13, 1998.............................................. (4,685) (189,592) (194,277) New Basis Adjustment of balance due to adoption of new basis.................... 10,133 728,946 739,079 Capital contributions from partners................................... 100 9,900 10,000 Net income............................................................ 300 29,700 30,000 Distributions to partners ............................................ (1,596) (158,053) (159,649) Balances, December 31, 1998 ............................................ 4,252 420,901 425,153 Net income............................................................ 512 50,817 51,329 Distributions to partners ............................................ (689) (68,256) (68,945) Balances, December 31, 1999 ............................................ $ 4,075 $ 403,462 $ 407,537 The accompanying notes are an integral part of these combined financial statements. NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS Year Ended December 31, 1999 Period From January 14, 1998 to December 31, 1998 Period From January 1, 1998 to January 13, 1998 Year Ended December 31, 1997 1. Nature of Business Northeast Energy, LP (NE LP), a Delaware limited partnership, was formed on November 21, 1997 for the purpose of acquiring ownership interests in two partnerships, each of which owns an electric power generation station in the northeastern United States (Northeast Energy Associates, A Limited Partnership (NEA) and North Jersey Energy Associates, A Limited Partnership (NJEA), collectively the Partnerships). NE LP is jointly owned by subsidiaries of ESI Energy, LLC (ESI Energy) and Tractebel Power, Inc. (Tractebel Power). ESI Energy is wholly-owned by FPL Energy, LLC (FPL Energy), which is an indirect wholly-owned subsidiary of FPL Group, Inc., a company listed on the New York Stock Exchange. Tractebel Power is a direct wholly-owned subsidiary of Tractebel, Inc., which is a direct wholly-owned subsidiary of Tractebel S.A., a Belgian energy and environmental services business. NE LP also formed a wholly-owned subsidiary, Northeast Energy, LLC (NE LLC) to assist in such acquisitions. NE LP had no financial activity prior to January 1, 1998. On January 14, 1998, NE LP and NE LLC acquired all of the interests in the Partnerships from Intercontinental Energy Corporation (IEC), a Massachusetts corporation. NE LP holds a one percent (1%) general partner and ninety-eight percent (98%) limited partner interest in the Partnerships; NE LLC holds the remaining one percent (1%) limited partner interest. See Note 2 - Acquisitions for additional information relating to the acquisitions. The Partnerships were formed in 1986 to develop, construct, own, operate and manage two separate 300 megawatt (mw) natural gas-fired combined-cycle cogeneration facilities. NEA's facility is located in Bellingham, Massachusetts and NJEA's facility is located in Sayreville, New Jersey. NEA commenced commercial operation in September 1991 and NJEA commenced commercial operation in August 1991. The Partnerships operate in the independent power industry and have been granted permission by the Federal Energy Regulatory Commission to operate as qualifying facilities defined in the Public Utility Regulatory Policies Act of 1978, as amended and as defined in federal regulations. In connection with the acquisitions of the Partnerships' interests, an existing special purpose funding corporation was acquired by an entity related to FPL Energy and Tractebel Power. The funding corporation's name was changed from IEC Funding Corp. to ESI Tractebel Funding Corp (Funding Corp.). Additionally, as a means of funding portions of the purchase price of the acquisitions of the Partnerships, ESI Tractebel Acquisition Corp. (Acquisition Corp.), also an affiliate of FPL Energy and Tractebel Power, was formed. On February 12, 1998, the Acquisition Corp. issued new debt which was registered with the Securities and Exchange Commission in an exchange offer. The proceeds were distributed to ESI Energy and Tractebel Power. Repayment of the new debt is expected from distributions from the Partnerships and is guaranteed by all interests in the Partnerships. See Note 4 for additional information. The partners share profits and losses and have interests in assets and liabilities and cash flows in proportion to their tax basis capital accounts. Distributions to the partners may be made only after all funding requirements of the Partnerships have been met, as described in the trust indenture. 2. Summary of Significant Accounting Policies Basis of Presentation - The accompanying consolidated financial statements include the accounts of the Partnerships subsequent to the acquisitions, as they are indirectly wholly-owned by NE LP. All material intercompany balances and transactions have been eliminated in consolidation. Certain amounts included in prior years' consolidated and combined financial statements have been reclassified to conform to the current year's presentation. The accompanying combined financial statements include the accounts of the Partnerships for all periods and are combined based on common ownership. All material intercompany transactions have been eliminated in the combination. Acquisitions - On January 14, 1998, NE LP and NE LLC acquired all of the interests in the Partnerships for approximately $545 million, including approximately $10 million of acquisition costs (the Acquisitions). The Acquisitions were accounted for using the purchase method of accounting and was subject to pushdown accounting, which gave rise to a new basis of accounting by the Partnerships. The purchase price has been allocated to the assets and liabilities acquired based on their fair values. The following is a summary of the Partnerships' assets acquired and liabilities assumed in the Acquisitions (thousands of dollars): Assets: Current assets ........................................ $114,286 Restricted cash ....................................... $ 69,156 Cogeneration facilities and carbon dioxide facility.... $513,523 Power purchase agreements ............................. $888,756 Other assets .......................................... $ 36 Liabilities: Current liabilities ................................... $ 48,404 Operations and maintenance (O&M) contracts ............ $ 18,749 Fuel contracts ........................................ $333,544 Energy bank balances .................................. $171,530 Notes payable ......................................... $468,724 Carrying values of current assets, restricted cash and current liabilities were considered to closely approximate fair value and were not adjusted. Power purchase agreements were assigned a value based on the estimated amount to be received over the contract period in excess of an independent appraiser's assessment of market rates for power, discounted to the date of acquisition. The cogeneration facilities and carbon dioxide facility were initially assigned value based on an assessment of current replacement cost for similar capacity, without the acquired power purchase agreements. In accordance with Accounting Principles Board Opinion No. 16, the values assigned to these long-lived assets were reduced by the net excess of the fair values of all assets acquired over the purchase price. O&M and fuel contract obligations were determined based on expected cash flows during contract periods compared to estimated cash flows for similar services if contracted for currently, discounted to the date of acquisition. Notes payable include the previously existing debt of the Partnerships that was considered to approximate market value. Energy bank balances were assigned a value representing the estimated present value of future payments to utilities in connection with certain existing power purchase agreements. Cash and Cash Equivalents - Investments purchased with an original maturity of three months or less are considered cash equivalents. Excess cash is invested in high-grade money market accounts and commercial paper and is subject to minimal credit and market risk. At December 31, 1999 and 1998, the recorded amount of cash approximates its fair value. Accounts Receivable and Revenue - Accounts receivable primarily consist of receivables from three Massachusetts utilities and one New Jersey utility for electricity delivered and sold under six power purchase agreements. Prices are based on initial floor prices per kilowatt-hour (kwh), subject to adjustment based on actual volumes of electricity purchased, escalation factors and other conditions. Revenue is recognized based on power delivered at rates stipulated in the power purchase agreements, except that revenue is deferred to the extent that stipulated rates are in excess of amounts, either scheduled or specified, in the agreements to the extent the Partnerships have an obligation to repay such excess. The amount deferred is reflected as amounts due utilities for energy bank balances on the balance sheets. Revenue from steam sales is recognized upon delivery. Cogeneration Facilities, Carbon Dioxide Facility and Other Assets - Effective January 14, 1998, all facilities were revalued as a result of applying the purchase method of accounting mentioned above. The facilities are depreciated using the straight-line method over their estimated useful life which was increased from 20 years to 34 years effective January 14, 1998. Major Maintenance - Effective January 14, 1998, maintenance expenses are accrued for certain identified major maintenance and repair items related to the Partnerships' facilities. The expenses are accrued ratably over each major maintenance cycle. The amounts accrued relate to maintenance costs required for the equipment to operate over its depreciable life. For the periods ended December 31, 1999 and 1998, the Partnerships recorded major maintenance expense of $5.1 million and $2.8 million, respectively. At December 31, 1999 and 1998, the Partnerships had $3.3 million and $4.1 million of accrued major maintenance, respectively. Inventories - Fuel inventories consist of natural gas and fuel oil and are stated at the lower of cost, determined on an average cost basis, or market. Prior to January 14, 1998, inventories were determined on a first-in, first- out (FIFO) basis. The change did not have a significant impact on the financial statements. Spare parts inventories consist primarily of spare parts purchased from the previous O&M provider. Spare parts inventories are stated at lower of cost or market and are determined by specific identification. Power Purchase Agreements - Effective January 14, 1998, power purchase agreements which were determined to be in excess of prevailing rates for similar agreements were adjusted as a result of applying the purchase method of accounting mentioned above. These amounts are being amortized over the respective agreement periods, ranging from 14 to 24 years, on a straight-line basis or matched to scheduled fixed-price increases under the power purchase agreements, as applicable. Fuel Contracts - Effective January 14, 1998, fuel contracts which were determined to be in excess of prevailing rates for similar contracts were adjusted as a result of applying the purchase method of accounting mentioned above. The fuel contracts are being amortized on a straight-line basis over the remaining terms of the contracts, 16 years. O&M Contracts - Effective January 14, 1998, O&M contracts which were determined to be in excess of prevailing rates for similar contracts were adjusted as a result of applying the purchase method of accounting mentioned above. The O&M contracts were initially assigned a value of $18.7 million. For the period ended December 31, 1998, the Partnerships recorded $4.5 million of amortization expense for the O&M contracts. Effective December 31, 1998, the O&M contracts between the previous O&M provider and the Partnerships were terminated by mutual consent of both parties and the payment of $10 million to the previous O&M provider. See Note 7 - Commitments and Contingencies - O&M of the Cogeneration Facilities for further disclosure on the O&M contracts. Interest Rate Swaps - Interest rate swaps that do not qualify for hedge accounting are recorded at fair value, with changes in the fair value recognized currently in income as adjustments to interest expense. See Note 6 for further disclosure regarding interest rate swap agreements. Natural Gas Hedging Instruments - Periodic settlements on natural gas swap agreements are recognized as adjustments to fuel costs at monthly settlement dates. Purchases of natural gas under forward purchase agreements are accounted for as fuel costs at their contract price at delivery. See Note 6 for further disclosure regarding natural gas hedging instruments. Deferred Debt Issuance Costs - Deferred debt issuance costs of NE LP are being amortized over the approximate 14-year term of the Acquisition Corp.'s note payable using the interest method. Income Taxes - Partnerships are not taxable entities for Federal and state income tax purposes. As such, no provision has been made for income taxes since such taxes, if any, are the responsibilities of the individual partners. Accounting for Derivative Instruments and Hedging Activities - In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Registrants are currently assessing the effect, if any, on their financial statements of implementing FAS 133. The Registrants will be required to adopt FAS 133 beginning in 2001. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and 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. 3. Cogeneration Facilities, Power Purchase Agreements and Carbon Dioxide Facility Power Purchase Agreements - In 1986, NEA entered into five power purchase agreements with three Massachusetts utilities to sell approximately 290 mw at initial floor prices per kwh subject to adjustment based on actual volumes purchased, escalation factors and other conditions. Performance under certain of these agreements is secured by a second mortgage on the NEA facility. In 1987, NJEA entered into an agreement with a New Jersey utility to sell 250 mw at an initial fixed price per kwh subject to adjustments, as defined in the agreement. These power purchase agreements have initial terms with expiration dates ranging from 2011 to 2021. The majority of the Partnerships' power sales to utilities are generated through these agreements. As such, the Partnerships are directly affected by changes in the power generation industry. Substantially all of the Partnerships' accounts receivable are with these utilities. The Partnerships do not require collateral or other security to support their receivables. However, management does not believe significant credit risk exists at December 31, 1999. For the years ended December 31, 1999, 1998 and 1997, power sale revenues from two different utilities accounted for approximately 45% and 41%, 47% and 40% and 46% and 40%, respectively, of total revenues. Both Massachusetts and New Jersey have enacted legislation designed to deregulate the production and sale of electricity. While NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to the Partnerships' power purchase agreements, the impact of electric utility industry restructuring on the companies that purchase power from the Partnerships is uncertain. Energy Bank Balances - Certain of the power purchase agreements require the establishment of energy banks to record cumulative payments made by the utilities in excess of avoided cost rates scheduled or specified in such agreements. Some of the energy bank balances bear interest at various rates specified in the agreements. Upon termination of the agreements, remaining amounts recorded in the energy banks will be required to be repaid. Energy bank balances are partially secured by letters of credit (see Note 7 - Energy Bank and Loan Collateral). Steam Sales Agreements and Carbon Dioxide Facility - In order for the Partnerships' facilities to maintain qualifying facility status, the facilities are required to generate five percent of the thermal energy produced for sale to unrelated third parties. In 1990, NEA entered into an amended and restated steam sales agreement with a processor and seller of carbon dioxide. The amended and restated NEA steam sales agreement extends for the same terms as the carbon dioxide facility's lease, with automatic extension for any renewal period under the carbon dioxide facility's lease. Pursuant to the steam sales agreement, NEA sells a portion of the steam generated by the NEA facility at a price that fluctuates based on changes in the price of a specified grade of fuel oil. In conjunction with this contract, NEA constructed the carbon dioxide facility and, in 1989, entered into a 16- year agreement to lease the facility to the steam user. Base rent under the lease is $100,000 per month, adjusted by the operating results of the facility as outlined in the lease agreement. Additionally, NEA pays the steam user $100,000 annually for administrative services rendered related to the operation of the carbon dioxide facility. In 1989, NJEA entered into a 20-year steam sales agreement with a steam user adjacent to the NJEA facility. Under this agreement, NJEA sells a quantity of steam at a floor price that can increase based on changes in prices of coal. This agreement automatically renews for two consecutive five-year terms unless either party gives notice not to renew two years before the expiration of each of the prior terms. Fuel Supply, Transportation and Storage Agreements - Natural gas is provided to the NEA and NJEA facilities primarily under long-term contracts for supply, transportation and storage. The remaining fuel requirements are provided under short-term spot arrangements. The long-term natural gas supply is provided under contracts with ProGas Limited (ProGas) and Public Service Electric and Gas Company (PSE&G). Various pipeline companies provide transportation of the natural gas. Gas storage agreements provide contractual arrangements for the storage of limited volumes of natural gas with third parties for future delivery to the Partnerships. The ProGas contracts commenced in 1991, and the initial 15-year terms were subsequently extended an additional seven years. The maximum total volumes of gas to be delivered under the ProGas contracts are approximately 48,800 and 22,000 millions of British thermal units (MMBtu) per day for NEA and NJEA, respectively. The contract price, including transportation, of the ProGas supply delivered to the import point is determined with reference to a base price in 1990, re-determined annually thereafter based on specified inflation indices. The PSE&G contract commenced in 1991 and provides for the sale and delivery to NJEA of up to 25,000 MMBtu per day of gas for a term of 20 years. The contract price of the PSE&G gas is established monthly using a contractually specified mechanism. With the exception of the PSE&G arrangement, all of the Partnerships' long- term contractual arrangements call for monthly demand charge payments. These demand charge payments reserve certain pipeline transportation capacity and are made regardless of the Partnerships' specified fuel requirements in any month and regardless of whether the Partnerships utilize the capacity reserved. These demand charges totaled approximately $43 million, $46 million and $46 million for the years ended December 31, 1999, 1998 and 1997, respectively. Total payments under such contracts were approximately $126.9 million, $125.4 million and $112.5 million in 1999, 1998 and 1997, respectively, inclusive of demand charges. Total charges under the contract with PSE&G, including transportation costs, during 1999, 1998 and 1997, were approximately $27.0 million, $24.6 million and $28.1 million, respectively. In the event the available capacity under these agreements is not utilized by the operations of the facilities, the Partnerships have the opportunity under certain of these contractual arrangements to sell unused capacity to third parties, but have not yet done so. NEA's facility also has the capability to burn No. 2 fuel oil which is stored on site for contingency supply. 4. Loans Payable Funding Corp. - The proceeds from the Funding Corp. Securities were used to make loans to the Partnerships and notes of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. The Funding Corp. has borrowings outstanding as follows: 												December 31, 											 1999 1998 8.43% Senior Secured Notes Due 2000 ................................................ $ 26,333,000 $ 49,844,000 9.16% Senior Secured Notes Due 2002 ................................................ 31,500,000 31,500,000 9.32% Senior Secured Bonds Due 2007 ................................................ 215,740,000 215,740,000 9.77% Senior Secured Bonds Due 2010 ................................................ 171,640,000 171,640,000 Total long-term debt ............................................................. 445,213,000 468,724,000 Less current maturities ........................................................ 26,333,000 23,511,000 Long-term debt, excluding current maturities ................................... $418,880,000 $445,213,000 Interest on the Funding Corp. Securities is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture. Future principal payments are as follows: Year ending December 31: 2000 .................................................. $ 26,333,000 2001 .................................................. $ 20,160,000 2002 .................................................. $ 22,688,000 2003 .................................................. $ 23,818,000 2004 .................................................. $ 28,564,000 Thereafter ............................................ $323,650,000 The Funding Corp. Securities are not subject to optional redemption but are subject to mandatory redemption in certain limited circumstances involving the occurrence of an event of loss, as defined in the trust indenture, for which the Partnerships fail to or are unable to restore a facility. The Funding Corp. Securities are unconditionally guaranteed, jointly and severally, by the Partnerships and are secured by a lien on, and a security interest in, substantially all of the assets of the Partnerships. The Partnerships are jointly and severally required to make scheduled payments on the notes on dates and in amounts identical to the scheduled payments of principal and interest on the Funding Corp. Securities. The Funding Corp. Securities, the guarantees thereon provided by the Partnerships and the notes are nonrecourse to the partners and are payable solely from the collateral pledged as security. The trust indenture governing the Funding Corp. Securities contains certain restrictions on certain activities of the Partnerships, including incurring additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements, the use of proceeds from the issuance of the Funding Corp. Securities and the execution of mergers, consolidations and sales of assets. Under the terms of a previous loan and credit agreement, the Partnerships were required to enter into interest rate swap agreements providing for the payments on a notional principal amount to be made by the Partnerships at fixed interest rates, in exchange for payments to be made by such financial institutions at floating interest rates. As a result of the repayment of such loans with the proceeds of the Funding Corp. Securities, the original interest swap agreements no longer qualified for hedge accounting and were recorded at fair value at December 31, 1998. The swaps expired during 1999. Changes in fair value are recognized in the statements of operations for the periods ended December 31, 1999, 1998 and 1997. Acquisition Corp. - During 1998, the Acquisition Corp. issued $220 million of 7.99% Secured Bonds Due 2011 (Acquisition Corp. Securities) for the purpose of reimbursing certain partners of NE LP for a portion of $545 million in equity contributions used to acquire the Partnerships. The proceeds from the Acquisition Corp. Securities were loaned to NE LP, evidenced by a promissory note. Interest on the Acquisition Corp. Securities is payable semiannually on each June 30 and December 30. Principal repayments are made annually commencing on June 30, 2002 and are in amounts stipulated in the trust indenture. Future principal payments are as follows: Year ending December 31: 2002 .................................................. $ 8,800,000 2003 .................................................. $ 8,800,000 2004 .................................................. $ 8,800,000 Thereafter ............................................ $193,600,000 The Acquisition Corp. Securities are subject to optional redemption after June 30, 2008 at the redemption prices set forth in the trust indenture and are subject to extraordinary mandatory redemption at a redemption price of 100% of the principal amount thereof in certain limited circumstances as defined in the trust indenture. The Acquisition Corp. Securities are unconditionally guaranteed by NE LP and are payable solely from payments to be made by NE LP under the promissory note and bond guaranty. NE LP's obligations to make payments under the promissory note are nonrecourse to the direct and indirect owners of NE LP. Payments with respect to the promissory note and, therefore, in respect of the Acquisition Corp. Securities will be effectively subordinated to payment of all indebtedness and other liabilities and commitments of the Partnerships, including the guarantee by the Partnerships of their indebtedness. Repayment of the Acquisition Corp. Securities is guaranteed by all interests in the Partnerships. The Acquisition Corp. Securities will rank senior to all subordinated indebtedness and rank evenly with all senior indebtedness that the Acquisition Corp. incurs in the future. 5. Related Party Information Administrative Services Agreement - NE LP and an entity related to FPL Energy have entered into an administrative services agreement that provides for management and administrative services to the Partnerships. The agreement expires in 2018, provides for fees of a minimum of $600 thousand per year, subject to certain adjustments, and reimburses costs and expenses of performing services. For the periods ended December 31, 1999 and 1998, the Partnerships incurred $782 thousand and $765 thousand under the agreement, respectively. O&M Agreements - NE LP and an entity related to FPL Energy have entered into operations and maintenance agreements that provide for the O&M of the Partnerships. The agreements expire in 2016, subject to extension by mutual agreement of the parties before six months preceding expiration. The agreements provide for fees of a minimum of $750 thousand per year, subject to certain adjustments, for each Partnership and reimburse costs and expenses of performing services. For the periods ended December 31, 1999 and 1998, the Partnerships incurred $1.5 million under the agreements. See Note 7 - O&M of the Cogeneration Facilities. Fuel Management Agreements - NE LP and an entity related to FPL Energy have entered into fuel management agreements that provide for the management of all natural gas and fuel oil, transportation and storage agreements, and the location and purchase of any additional required natural gas or fuel oil for the Partnerships. The agreements expire in 2023, provide for fees of a minimum of $450 thousand per year, subject to certain adjustments, for each Partnership and reimburse costs and expenses of performing services. For the periods ended December 31, 1999 and 1998, the Partnerships incurred $896 thousand and $881 thousand under the agreements, respectively. The Partnerships pay a management fee to NE LP in an amount equal to the administrative services, operations and maintenance and fuel management agreements mentioned above. Accrued expenses under the administrative services, O&M and fuel management agreements were $473 thousand at December 31, 1999 and 1998. The average balances due to related parties did not vary materially from these amounts. Additionally, power sales to an entity related to FPL Energy were $2.5 million and $1.1 million for the years ended December 31, 1999 and 1998, respectively. For the year ended December 31, 1997, certain expenses were paid by IEC and subsequently reimbursed by the Partnerships. Payments made by IEC for the year ended December 31, 1997 were $5.0 million. Reimbursements made by the Partnerships to IEC were $4.9 million for the year ended December 31, 1997. 6. Financial Instruments The Partnerships have made use of derivative financial instruments to hedge their exposure to fluctuations in both interest rates and the price of natural gas. Under the terms of a previous loan and credit agreement, the Partnerships were required to enter into fixed interest rate swap agreements as a means of managing exposure to the variable rate of interest of those borrowings. In conjunction with the refinancing of those borrowings, the Partnerships entered into counter-swap agreements so that the Partnerships would no longer be exposed to changes in interest rates. The notional amount of these interest rate swap agreements was $0 and $5.5 million at December 31, 1999 and 1998, respectively. The notional amount indicates the size of the transaction entered into, not the Partnerships exposure to loss. Changes in fair value from the interest rate swap agreements which are recognized in the statements of operations were $191 thousand, $697 thousand and $1.1 million for the years ended December 31, 1999, 1998 and 1997, respectively. The prices received by the Partnerships for power sales under their long-term contracts do not move precisely in tandem with the prices paid by the Partnerships for natural gas. To mitigate the price risk associated with purchases of natural gas, the Partnerships may, from time to time, enter into certain transactions either through public exchanges or by means of over-the- counter transactions with specific counterparties. The Partnerships mitigate their risk associated with purchases of natural gas through the use of natural gas swap agreements that require the Partnerships to pay a fixed price (absolutely or within a specified range) in return for a variable price on specified notional quantities of natural gas. The contract amount of these agreements was 4.3 million MMBtu and 13.4 million MMBtu at December 31, 1999 and 1998, respectively. The net gain included in fuel costs resulting from the gas swap agreements was $2.4 million, $2.5 million and $4.0 million for the years ended December 31, 1999, 1998 and 1997, respectively. The following estimates of the fair value of financial instruments have been made using available market information and other valuation methodologies. However, the use of different market assumptions or methods of valuation could result in different estimated fair values. 										 December 31, 									 1999 1998 								 Carrying Estimated Carrying Estimated 								 Amount Fair Value Amount Fair Value 									 (Thousands of Dollars) Long-term debt of Partnerships/Funding Corp. (a) ............. $445,213 $454,000(b) $468,724 $574,000(b) Long-term debt of NE LP/Acquisition Corp. .................... $220,000 $204,000(b) $220,000 $250,000(b) Gas swap agreements of NE LP/the Partnerships ................ $ - $ 1,668(c) $ - $ 788(c) (a) Includes current maturities. (b) Based on the borrowing rate currently available for debt instruments with similar terms and average maturities. (c) Based on estimated cost to terminate the agreements. 7. Commitments and Contingencies Energy Bank and Loan Collateral - Subsequent to the Acquisitions on January 14, 1998, certain credit arrangements were terminated and replaced with new letters of credit and a guaranty to satisfy requirements in certain power purchase agreements. Specifically, new energy bank letters of credit were issued in face amounts of $12.7 million and $54 million. The $12.7 million letter of credit expires on December 31, 2000 and can be drawn upon on one occasion in the event that a certain power purchase agreement has terminated at a time when there is a positive energy bank balance existing in favor of the power purchaser. The $54 million letter of credit expires on December 31, 2000 and can be drawn upon in multiple drawings in the event that a certain power purchase agreement has terminated at the time when there is a positive energy bank balance existing in favor of the power purchaser. The NEA power purchase agreements are also secured by a second mortgage on the NEA cogeneration facilities. A guaranty was made by a subsidiary of FPL Group, Inc. in favor of the Partnerships' trustee. The guarantor unconditionally and irrevocably guarantees the payment of an amount equal to 50% of the debt service reserve requirement with respect to the Funding Corp. Securities. The guaranty expires on December 31, 2000 and is automatically extended for successive one-year periods unless the guarantor gives notice that it will not renew. Once the new credit arrangements mentioned above were in place, cash of approximately $69.2 million (plus approximately $2.5 million in accrued interest) was released and distributed to the partners. Additionally, new letters of credit were issued in substitution for cash on deposit in Partnership trust accounts and approximately $33.2 million in cash was released and distributed to the partners. O&M of the Cogeneration Facilities - In 1989, the Partnerships entered into two separate ten-year O&M agreements with an O&M provider (the previous O&M provider) for an aggregate annual consideration of approximately $11.1 million, subject to changes in specified indices. Under these agreements, the Partnerships were required to pay the previous O&M provider a bonus payable annually over the term of the agreements based on operating performance. The Partnerships incurred $16.7 million and $19.7 million for O&M and bonus expenses for the years ended December 31, 1998 and 1997, respectively. Effective December 31, 1998, the O&M contracts between the previous O&M provider and the Partnerships were terminated by mutual consent of both parties. The Partnerships paid the previous O&M provider $10 million in cash to terminate the agreements and recorded a net gain of $4.2 million, the effect of which is reflected in the statement of operations for the period ended December 31, 1998. Additionally, the Partnerships agreed to pay the previous O&M provider a total of $15.6 million, which approximates market value, for spare parts purchased in 1999. An entity related to FPL Energy became the new provider of O&M services for the Partnerships on January 1, 1999. The Partnerships incurred $14.2 million for O&M expense for the year ended December 31, 1999, of which $3.8 million represented salaries paid to the new O&M provider. Operating Lease - NEA entered into a 26-year operating lease in 1986 for a parcel of land. The lease may be extended for another 25 years at the option of NEA. Lease payments under the operating lease are as follows: Year ending December 31: 2000 .................................................. $ 213,000 2001 .................................................. $ 225,000 2002 .................................................. $ 237,000 2003 .................................................. $ 249,000 2004 .................................................. $ 261,000 Thereafter ............................................ $2,250,000 Lease expense under this agreement is recognized on a straight-line levelized basis of approximately $198,000 annually over the lease term. INDEPENDENT AUDITORS' REPORT ESI TRACTEBEL FUNDING CORP.: We have audited the accompanying financial statements of ESI Tractebel Funding Corp. as of December 31, 1999 and 1998, and for the years ended December 31, 1999 and 1998, listed in the accompanying index at Item 14(a)1 of this Annual Report (Form 10-K) to the Securities and Exchange Commission for the year ended December 31, 1999. 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, such financial statements present fairly, in all material respects, the financial position of ESI Tractebel Funding Corp. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years ended December 31, 1999 and 1998 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Certified Public Accountants West Palm Beach, Florida March 20, 2000 INDEPENDENT AUDITORS' REPORT ESI TRACTEBEL FUNDING CORP. (FORMERLY IEC FUNDING CORP.): In our opinion, the statements of operations and of cash flows for the year ended December 31, 1997 (appearing on pages 31 through 34 of this Form 10-K Annual Report) present fairly, in all material respects, the results of operations and cash flows of ESI Tractebel Funding Corp. (formerly IEC Funding Corp.) (the "Company") for the year ended December 31, 1997, in conformity with generally accepted accounting principles. 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 audit. We conducted our audit of these statements in accordance with generally accepted auditing standards, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. We have not audited the financial statements of the Company for any period subsequent to December 31, 1997. PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts March 24, 1998 ESI TRACTEBEL FUNDING CORP. BALANCE SHEETS (Thousands of Dollars) 												 December 31, 											 1999 1998 ASSETS Current assets: Cash .............................................................................. $ 1 $ 1 Current portion of notes receivable from the Partnerships.......................... 26,333 23,511 Total current assets ............................................................ 26,334 23,512 Notes receivable from the Partnerships .............................................. 418,880 445,213 TOTAL ASSETS ........................................................................ $ 445,214 $ 468,725 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of securities payable ............................................. $ 26,333 $ 23,511 Securities payable .................................................................. 418,880 445,213 Stockholders' equity: Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 445,214 $ 468,725 The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL FUNDING CORP. STATEMENTS OF OPERATIONS (Thousands of Dollars) 										 Years Ended December 31, 										1999 1998 1997 Interest income ......................................................... $43,468 $45,327 $47,303 Interest expense ........................................................ (43,468) (45,327) (47,303) NET INCOME .............................................................. $ - $ - $ - The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL FUNDING CORP. STATEMENTS OF CASH FLOWS (Thousands of Dollars) 											 Years Ended December 31, 											 1999 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income ........................................................................ $ - $ - $ - Adjustment to reconcile net income to net cash provided by operating activities: Other - net.................................................................... - - - Net cash provided by operating activities ....................................... - - - CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments received from the Partnerships.................................. 23,510 21,563 24,075 Principal payments on debt ........................................................ (23,510) (21,563) (24,075) Net cash provided by financing activities ....................................... - - - Net increase in cash ................................................................ - - - Cash at beginning of period ......................................................... 1 1 1 Cash at end of period ............................................................... $ 1 $ 1 $ 1 Supplemental disclosure of cash flow information: Cash paid for interest ............................................................ $ 43,468 $ 45,327 $47,303 The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL FUNDING CORP. NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 1999, 1998 and 1997 1. Nature of Business ESI Tractebel Funding Corp. (Funding Corp.) is a Delaware corporation established in 1994 as a special purpose funding corporation for the purpose of issuing the securities described in Note 3. On January 14, 1998, the Funding Corp. was acquired by a subsidiary of ESI Energy, LLC (ESI Energy), Tractebel Power, Inc. (Tractebel Power) and Broad Street Contract Services, Inc. (Broad Street) from Intercontinental Energy Corporation (IEC), a Massachusetts corporation. Broad Street participates for the purpose of providing an independent director and has no economic interests. The Funding Corp. changed its name from IEC Funding Corp. to its current name concurrent with and related to its acquisition. The Funding Corp. acts as agent of Northeast Energy Associates, A Limited Partnership and North Jersey Energy Associates, A Limited Partnership (combined, the Partnerships) with respect to the securities and holds itself out as agent of the Partnerships in all dealings with third parties relating to the securities. The Partnerships, owners of electric power generation stations in the northeastern United States, are owned indirectly by subsidiaries of ESI Energy and Tractebel Power. 2. Summary of Significant Accounting Policies Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and 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. 3. The Securities The Funding Corp. previously issued secured notes (Securities). The proceeds from the Securities were used to make loans to the Partnerships. In connection with this transaction, the notes outstanding under a previous loan and credit agreement of the Partnerships were surrendered and new notes of the Partnerships were issued to the Funding Corp. in the aggregate principal amount of the Securities. Borrowings outstanding are as follows: 												December 31, 											 1999 1998 8.43% Senior Secured Notes Due 2000 ................................................ $ 26,333,000 $ 49,844,000 9.16% Senior Secured Notes Due 2002 ................................................ 31,500,000 31,500,000 9.32% Senior Secured Bonds Due 2007 ................................................ 215,740,000 215,740,000 9.77% Senior Secured Bonds Due 2010 ................................................ 171,640,000 171,640,000 Total long-term debt ............................................................. 445,213,000 468,724,000 Less current maturities ........................................................ 26,333,000 23,511,000 Long-term debt, excluding current maturities ................................... $418,880,000 $445,213,000 Interest on the Funding Corp. Securities is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture. Future principal payments are as follows: Year ending December 31: 2000 .................................................. $ 26,333,000 2001 .................................................. $ 20,160,000 2002 .................................................. $ 22,688,000 2003 .................................................. $ 23,818,000 2004 .................................................. $ 28,564,000 Thereafter ............................................ $323,650,000 The Securities are not subject to optional redemption but are subject to mandatory redemption in certain limited circumstances involving the occurrence of an event of loss, as defined in the trust indenture, for which the Partnerships fail to or are unable to restore a facility. The Securities are unconditionally guaranteed, jointly and severally, by the Partnerships and are secured by a lien on, and a security interest in, substantially all of the assets of the Partnerships. The Partnerships are jointly and severally required to make scheduled payments on the notes on dates and in amounts identical to the scheduled payments of principal and interest on the Securities. The Securities, the guarantees thereon provided by the Partnerships and the notes are nonrecourse to the partners and are payable solely from the collateral pledged as security. The trust indenture governing the Securities contains certain restrictions on certain activities of the Partnerships, including the incurrence of additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements, the use of proceeds from the issuance of the Securities and the execution of mergers, consolidations and sales of assets. 4. Financial Instruments The estimated fair value of the Securities and the notes receivable from the Partnerships at December 31, 1999 and 1998 was $454 million and $574 million, respectively. The estimate of the fair value has been made using available market information and other valuation methodologies. However, the use of different market assumptions or methods of valuation could result in different estimated fair values. INDEPENDENT AUDITORS' REPORT ESI TRACTEBEL ACQUISITION CORP.: We have audited the accompanying financial statements of ESI Tractebel Acquisition Corp. as of December 31, 1999 and 1998, and for the year ended December 31, 1999 and the period from January 12, 1998 (Date of Formation) to December 31, 1998, listed in the accompanying index at Item 14(a)1 of this Annual Report (Form 10-K) to the Securities and Exchange Commission for the year ended December 31, 1999. 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, such financial statements present fairly, in all material respects, the financial position of ESI Tractebel Acquisition Corp. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the year ended December 31, 1999 and the period from January 12, 1998 (Date of Formation) to December 31, 1998 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Certified Public Accountants West Palm Beach, Florida March 20, 2000 ESI TRACTEBEL ACQUISITION CORP. BALANCE SHEETS (Thousands of Dollars) 												 December 31, . 											 1999 1998 ASSETS Due from NE LP ....................................................................... $ 152 $ 152 Note receivable from NE LP ........................................................... 220,000 220,000 TOTAL ASSETS ......................................................................... $220,152 $220,152 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Income taxes payable ............................................................... $ 9 $ 4 Deferred credit - interest rate hedge ................................................ 126 140 Securities payable ................................................................... 220,000 220,000 Stockholders' equity: Common stock, $.10 par value, 100 shares authorized, 20 shares issued .............. - - Subscriptions receivable ........................................................... - - Retained earnings .................................................................. 17 8 COMMITMENTS AND CONTINGENCIES TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $220,152 $220,152 The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL ACQUISITION CORP. STATEMENTS OF OPERATIONS (Thousands of Dollars) 												 Period From 									 Year Ended January 12, 1998 									 December 31, (Date of Formation) 										 1999 to December 31, 1998 Interest income ........................................................... $ 17,578 $ 15,182 Interest expense .......................................................... (17,564) (15,170) Income before income taxes ................................................ 14 12 Income tax expense ........................................................ (5) (4) NET INCOME ................................................................ $ 9 $ 8 The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL ACQUISITION CORP. STATEMENTS OF CASH FLOWS (Thousands of Dollars) 												 Period From 										Year Ended January 12, 1998 										December 31, (Date of Formation) 										 1999 to December 31, 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income ................................................................ $ 9 $ 8 Adjustment to reconcile net income to net cash provided by operating activities: Other - net............................................................ (9) (8) Net cash provided by operating activities ............................... - - CASH FLOWS FROM INVESTING ACTIVITIES: Loan to NE LP ............................................................. - (215,202) Net cash used in investing activities ................................... - (215,202) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of debt securities ............................................... - 215,050 Proceeds from interest rate hedge ......................................... - 152 Net cash provided by financing activities ............................... - 215,202 Net increase in cash ........................................................ - - Cash at beginning of period ................................................. - - Cash at end of period ....................................................... $ - $ - Supplemental disclosure of cash flow information: Cash paid for interest .................................................... $ 17,578 $ 15,182 The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL ACQUISITION CORP. STATEMENTS OF STOCKHOLDERS' EQUITY (Thousands of Dollars) 							 Common Subscriptions Retained Stockholders' 							 Stock Receivable Earnings Equity Issuance of common stock ................................ $ - $ - $ - $ - Stock subscriptions ..................................... - - - - Net income .............................................. - - 8 8 Balances, December 31, 1998 ............................. - - 8 8 Net income .............................................. - - 9 9 Balances, December 31, 1999 ............................. $ - $ - $ 17 $ 17 The accompanying notes are an integral part of these financial statements. ESI TRACTEBEL ACQUISITION CORP. NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 1999 Period Ended December 31, 1998 1. Nature of Business ESI Tractebel Acquisition Corp. (Acquisition Corp.) is a Delaware corporation established on January 12, 1998 as a special purpose funding corporation for the purpose of issuing the securities described in Note 3. The Acquisition Corp.'s common stock is jointly owned by a subsidiary of ESI Energy, LLC (ESI Energy) and by a subsidiary of Tractebel Power, Inc. (Tractebel Power). The Acquisition Corp. acts as agent of Northeast Energy, LP (NE LP) with respect to the securities and holds itself out as agent of NE LP in all dealings with third parties relating to the securities. NE LP is a Delaware limited partnership that was established on November 21, 1997 for the purpose of acquiring ownership interests in two electric power generation stations in the northeastern United States (the Partnerships). NE LP is also owned by subsidiaries of ESI Energy and Tractebel Power. 2. Summary of Significant Accounting Policies Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and 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. 3. The Securities On February 12, 1998, the Acquisition Corp. issued $220 million of 7.99% Secured Bonds Due 2011 (Securities). The proceeds from the Securities were loaned to NE LP, evidenced by a promissory note, for the purpose of reimbursing certain partners of NE LP for a portion of $545 million in equity contributions used to acquire the Partnerships. The Securities are unconditionally guaranteed by NE LP. Borrowings outstanding at December 31, 1999 were $220 million. Interest on the Securities is payable semiannually on each June 30 and December 30. Principal repayments are made annually commencing on June 30, 2002 and are in amounts stipulated in the trust indenture. Future principal payments are as follows: Year ending December 31: 2002 ............................................... $ 8,800,000 2003 ............................................... $ 8,800,000 2004 ............................................... $ 8,800,000 Thereafter ......................................... $193,600,000 The Securities are subject to optional redemption after June 30, 2008 at the redemption prices set forth in the trust indenture and are subject to extraordinary mandatory redemption at a redemption price of 100% of the principal amount thereof in certain limited circumstances as defined in the trust indenture. The Securities are unconditionally guaranteed by NE LP and are payable solely from payments to be made by NE LP under the promissory note and bond guaranty. NE LP's obligations to make payments under the promissory note are nonrecourse to the direct and indirect owners of NE LP. Payments with respect to the promissory note and, therefore, in respect of the Securities will be effectively subordinated to payment of all indebtedness and other liabilities and commitments of the Partnerships, including the guarantee by the Partnerships of its indebtedness. Repayment of the Securities is guaranteed by all interests in the Partnerships. The Securities will rank senior to all subordinated indebtedness and rank evenly with all senior indebtedness that the Acquisition Corp. incurs in the future. 4. Financial Instruments In January 1998, the Acquisition Corp. entered into a fixed interest rate financial instrument to hedge its exposure to fluctuations in the interest rate associated with the placement of originally issued securities. The financial instrument was settled on February 17, 1998 and qualified for hedge accounting. The gain resulting from the hedge was $152 thousand and is being amortized into income using the effective interest method. The balances of the deferred gain were $126 thousand and $140 thousand as of December 31, 1999 and 1998, respectively. The estimated fair value of the Securities and the note receivable from NE LP at December 31, 1999 and 1998 was $204 million and $250 million, respectively. The estimate of the fair value has been made using available market information and other valuation methodologies. However, the use of different market assumptions or methods of valuation could result in different estimated fair values. 5. Stockholders' Equity On January 12, 1998 (Date of Formation), the Acquisition Corp. received stock subscriptions and subsequently issued 20 shares of common stock, par value $.10. 6. Income Taxes The Acquisition Corp. acts as agent of NE LP with respect to the Securities and holds itself out as agent of NE LP in all dealings with third parties relating to the Securities. Accordingly, as a result of the agency relationship, all tax activity of the Acquisition Corp. for federal and state income tax purposes represents amounts due to NE LP. Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrants Management Committee of NE LP and the Partnerships Nathan E. Hanson. Mr. Hanson, 35, is director of business management. He was appointed to the NE LP Management Committee by ESI GP in March 2000. He was formerly operations manager for Intercontinental Energy Corporation from 1995 to 1998. Eric M. Heggeseth. Mr. Heggeseth, 47, is vice president of Tractebel Power. He was appointed to the NE LP Management Committee by Tractebel GP in March 1998. John J. O'Rourke. Mr. O'Rourke, 45, is regional director of business management. He was appointed to the NE LP Management Committee by ESI GP in March 2000. Werner E. Schattner. Mr. Schattner, 54, is executive vice president of Tractebel Power. He was appointed to the NE LP Management Committee by Tractebel GP in January 1998. Directors of the Funding Corp. and the Acquisition Corp. Eric M. Heggeseth. Mr. Heggeseth, 47, is vice president of Tractebel Power. He has been a director of the Funding Corp. and the Acquisition Corp. since 1998. Werner E. Schattner. Mr. Schattner, 54, is executive vice president of Tractebel Power. He has been a director of the Funding Corp. and the Acquisition Corp. since 1998. Glenn E. Smith. Mr. Smith, 42, is senior vice president of project development of FPL Energy. He was formerly director of project development for Nations Energy Corporation from May 1995 to June 1997. Prior to that, Mr. Smith was vice president of BOT Financial Corp. He has been a director of the Funding Corp. and the Acquisition Corp. since 1998. Edward F. Tancer. Mr. Tancer, 39, is assistant secretary of FPL Energy and senior attorney of FPL. He has been a director of the Funding Corp. and the Acquisition Corp. since March 2000. Directors of the Funding Corp. and the Acquisition Corp. are elected annually and serve until their resignation, removal or until their respective successors are elected. The members of the Management Committee of NE LP and the Partnerships serve until their resignation, removal or until their respective successors are elected. Except as noted, each director or management committee member has held his position for five years or more and his employment history is continuous. Item 11. Executive Compensation None. Item 12. Security Ownership of Certain Beneficial Owners and Management The Partnerships and NE LP. The following table sets forth the direct and indirect interests of ownership: 					 Name and Address of Nature of Percentage 	 Title of Class Beneficial Owner Beneficial Ownership Interest Partnerships: General and Limited Partnership Interest NE LP(1) General Partner 98%LP 												 1%GP Limited Partnership Interest NE LLC(1) Limited Partner 1%LP NE LP: General Partnership Interest ESI GP(1) General Partner in NE LP 1%GP General Partnership Interest Tractebel GP(2) General Partner in NE LP 1%GP Limited Partnership Interest ESI LP(1) Limited Partner in NE LP 49%LP Limited Partnership Interest Tractebel LP(2) Limited Partner in NE LP 49%LP (1) The address for each of NE LP, NE LLC, ESI GP and ESI LP is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach, Florida 33408. (2) The address for each of Tractebel GP and Tractebel LP is c/o Tractebel Power, Inc., 1177 West Loop South, Suite 900, Houston, Texas 77027. The Funding Corp. The following table sets forth the number of shares and percentage owned of the Funding Corp.'s voting securities beneficially owned by each person known to be the beneficial owner of more than five percent (5%) of the voting securities: 					 Name and Address of Amount and Nature of Percent of 	 Title of Class Beneficial Owner Beneficial Ownership Class Common Stock ESI Northeast Funding (1) 3,750 37.5% Common Stock Tractebel Power (1) 3,750 37.5% Common Stock Broad Street (2) 2,500 25.0% (1) The address for ESI Northeast Funding is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach, Florida 33408 and the address for Tractebel Power, Inc. is 1177 West Loop South, Suite 900, Houston, Texas 77027. (2) The address for Broad Street is Two Wall Street, New York, New York 10005. Broad Street is a nominee of the Trustee and its sole purpose is to provide an independent director. The Acquisition Corp. The following table sets forth the number of shares and percentage owned of the Acquisition Corp.'s voting securities beneficially owned by each person known to be the beneficial owner of more than five percent (5%) of the voting securities: 						Name and Address of Amount and Nature of Percent of 	 Title of Class Beneficial Owner Beneficial Ownership Class Common Stock ESI Northeast Acquisition (1) 10 50.0% Common Stock Tractebel Power 10 50.0% (1) The address for ESI Northeast Acquisition is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach, Florida 33408. Item 13. Certain Relationships and Related Transactions Administrative Services Agreement. NE LP and an entity related to FPL Energy have entered into an administrative services agreement that provides for management and administrative services to the Partnerships. The agreement expires in 2018, provides for fees of a minimum of $600 thousand per year, subject to certain adjustments, and reimburses costs and expenses of performing services. For the periods ended December 31, 1999 and 1998, the Partnerships incurred $782 thousand and $765 thousand under the agreement, respectively. O&M Agreements. NE LP and an entity related to FPL Energy have entered into O&M agreements that provide for the operations and maintenance of the Partnerships. The agreements expire in 2016, subject to extension by mutual agreement of the parties before six months preceding expiration. The agreements provide for fees of a minimum of $750 thousand per year, subject to certain adjustments, for each Partnership and reimburse costs and expenses of performing services. For the periods ended December 31, 1999 and 1998, the Partnerships incurred $1.5 million under the agreements. Fuel Management Agreements. NE LP and an entity related to FPL Energy have entered into fuel management agreements that provide for the management of all natural gas and fuel oil, transportation and storage agreements, and the location and purchase of any additional required natural gas or fuel oil for the Partnerships. The agreements expire in 2023, provide for fees of a minimum of $450 thousand per year, subject to certain adjustments, for each Partnership and reimburse costs and expenses of performing services. For the periods ended December 31, 1999 and 1998, the Partnerships incurred $896 thousand and $881 thousand under the agreements, respectively. Power Sales. From time to time, FPL Energy's power marketing group will purchase excess power produced by the Partnerships and resell the power to the marketplace. These purchases totaled $2.5 million and $1.1 million in 1999 and 1998, respectively. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 	 (a) 1. Financial Statements Page(s) 		 NE LP: 		 Independent Auditors' Report - Deloitte & Touche LLP 11 		 Consolidated Balance Sheets 13 		 Consolidated Statements of Operations 14 		 Consolidated Statements of Cash Flows 15 		 Consolidated Statements of Partners' Equity 16 		 Notes to Consolidated Financial Statements 21-27 		 Partnerships: 		 Independent Auditors' Report - Deloitte & Touche LLP 11 		 Independent Auditors' Report - PricewaterhouseCoopers LLP 12 		 Combined Balance Sheets 17 		 Combined Statements of Operations 18 		 Combined Statements of Cash Flows 19 		 Combined Statements of Partners' Equity 20 		 Notes to Combined Financial Statements 21-27 		 Funding Corp.: 		 Independent Auditors' Report - Deloitte & Touche LLP 28 		 Independent Auditors' Report - PricewaterhouseCoopers LLP 29 		 Balance Sheets 30 		 Statements of Operations 31 		 Statements of Cash Flows 32 		 Notes to Financial Statements 33-34 		 Acquisition Corp.: 		 Independent Auditors' Report - Deloitte & Touche LLP 35 		 Balance Sheets 36 		 Statements of Operations 37 		 Statements of Cash Flows 38 		 Statements of Stockholders' Equity 39 		 Notes to Financial Statements 40-41 	 2. Financial Statement Schedules - Schedules are omitted as not applicable or not required. 	 3. Exhibits including those Incorporated by Reference 	 Exhibit No. Description 	 3.1* Certificate of Incorporation of the Funding Corp. 	 3.1.1***** Certificate of Amendment of Certificate of Incorporation of the Funding Corp. as filed 			 with the Secretary of State of the State of Delaware on February 3, 1998 	 3.1.2****** Certificate of Incorporation of the Acquisition Corp. as filed with the Secretary of 			 State of the State of Delaware on January 12, 1998 	 3.2***** By-laws of the Funding Corp. 	 3.2.1****** By-laws of the Acquisition Corp. 	 3.3***** Amended and Restated Certificate of Limited Partnership of NEA as filed with the 			 Secretary of State of the Commonwealth of Massachusetts on March 31, 1986, as amended 			 and restated on January 9, 1987 and November 6, 1987, as further amended on July 6, 1989 			 and as amended and restated on February 16, 1998 	 3.4***** Amended and Restated Certificate of Limited Partnership of NJEA as filed with the 			 Secretary of State of the State of New Jersey on November 3, 1986, as amended and 			 restated on January 14, 1987, June 25, 1987, March 4, 1988 and February 16, 1998 	 3.5***** Amended and Restated Agreement of Limited Partnership of NEA dated as of November 21, 			 1997 	 3.6***** Amended and Restated Agreement of Limited Partnership of NJEA dated as of November 21, 			 1997 	 3.7***** Certificate of Limited Partnership of NE LP, a Delaware limited partnership, as filed 			 with the Secretary of State of the State of Delaware on November 21, 1997 	 3.8***** Agreement of Limited Partnership of NE LP, a Delaware limited partnership, dated as of 			 November 21, 1997 	 4.1* Trust Indenture dated as of November 15, 1994, among the Partnerships, the Funding Corp. 			 and the Trustee 	 4.2* First Supplemental Indenture dated as of November 15, 1994, among the Partnerships, the 			 Funding Corp and the Trustee, including forms of the securities 	 4.3* Credit Agreement dated as of December 1, 1994, among the Partnerships, each of the 			 institutions referred to therein and Sanwa Bank Limited, New York Branch (Sanwa) 	 4.4* Collateral Agency Agreement dated as of December 1, 1994 among the Partnerships, the 			 Funding Corp., the Trustee, Sanwa, the Swap Providers (as defined therein) and State 			 Street Bank and Trust Company, as Collateral Agent 	 4.5* Amended and Restated Project Loan and Credit Agreement dated as of December 1, 1994, 			 between the Partnerships and the Funding Corp. 	 4.6* Partnerships' Guarantee Agreement dated as of December 1, 1994, between the Partnerships 			 and the Trustee 	 4.7* Registration Rights Agreement dated as of November 21, 1994, among the Partnerships, the 			 Funding Corp., Chase Securities, Inc., Merrill Lynch, Pierce Fenner & Smith, Incorporated 			 and Salomon Brothers, Inc. 	 4.8* Pledge, Trust and Intercreditor Agreement dated as of December 1, 1994 among the 			 Partnerships, Sanwa, and Sanwa Bank Trust Company of New York and the Trustee 	 4.9* Assignment and Security Agreement dated as of December 1, 1994, between the Funding Corp. 			 and the Trustee 	 4.10* Amended and Restated Assignment and Security Agreement dated as of December 1, 1994, 			 between the Partnerships, NE LP and the Trustee 	 4.11* Amended and Restated Assignment and Security Agreement dated as of December 1, 1994, 			 between NEA and the Trustee 	 4.12* Amended and Restated Assignment and Security Agreement dated as of December 1, 1994, 			 between NJEA and the Trustee 	 4.13* Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Filing 			 dated as of December 1, 1994, made by NEA in favor of the Trustee 	 4.14* Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Filing 			 (Additional Properties) dated as of December 1, 1994, made by NEA in favor of the Trustee 	 4.15* Amended and Restated Indenture of Mortgage, Assignment of Rents, Security Agreement and 			 Fixture Filing dated as of December 1, 1994, made by NJEA in favor of the Trustee 	 4.16* Amended and Restated Stock Pledge Agreement dated as of December 1, 1994, between NJEA 			 and the Trustee 	 4.17* Assignment of Mortgage dated as of December 1, 1994, between The Chase Manhattan Bank 			 (National Association) and the Trustee with respect to the Bellingham Mortgage dated as 			 of June 28, 1989 	 4.18* Assignment of Mortgage dated as of December 1, 1994, between The Chase Manhattan Bank 			 (National Association) and the Trustee with respect to the Bellingham Mortgage dated 			 August 10, 1989 	 4.19* Assignment of Mortgage dated as of December 1, 1994, between The Chase Manhattan Bank 			 (National Association) and the Trustee with respect to the Sayreville Mortgage dated 			 June 28, 1989 	 4.20* Assignment of Security Agreements dated as of December 1, 1994, among The Chase 			 Manhattan Bank (National Association), the Trustee, the Partnerships, the Funding Corp. 			 and NE LP 	 4.21***** Second Supplemental Trust Indenture dated as of January 14, 1998 among the Funding Corp., 			 NEA, NJEA and the Trustee 	 4.22***** Amendment to Amended and Restated Assignment and Security Agreement by and between NEA, 			 NJEA, NE LP and the Trustee dated as of January 14, 1998 	 4.23***** Termination of Pledge, Trust and Intercreditor Agreement dated as of January 30, 1998 			 among NEA, NJEA, Sanwa, Sanwa Bank and Trust Company of New York and the Trustee 	 4.24****** Indenture, dated as of February 19, 1998 among the Acquisition Corp., NE LP, NE LLC, and 			 the Trustee 	 4.25****** Registration Rights Agreement, dated as of February 19, 1998 by and among the Acquisition 			 Corp., NE LP, and Goldman Sachs & Co. 	 4.26****** Company & Partner Pledge Agreement dated as of February 19, 1998 by and among the 			 Acquisition Corp., NE LP, NE LLC in favor of the Trustee 	 4.27****** Sponsor Pledge Agreement dated as of February 19, 1998 by and among ESI Northeast 			 Acquisition, ESI GP, ESI LP, Tractebel GP, Tractebel LP, and Tractebel Power in favor 			 of the Trustee 	 10.1* Accommodation Agreement dated as of June 28, 1989, between NEA, BECO, Commonwealth, 			 Montaup, and The Chase Manhattan Bank (National Association) 	 10.2.1* Amended and Restated Operation and Maintenance Agreement dated as of June 28, 1989 (the 			 "Sayreville O&M Agreement"), between NJEA and Westinghouse Power 	 10.2.2* Letter Agreement regarding the Sayreville Heat Rate dated June 23, 1993, between NJEA 			 and Westinghouse Power 	 10.2.3* Letter Agreement regarding extension of the Sayreville O&M Agreement dated June 23, 1993, 			 between Westinghouse Power and NJEA 	 10.2.4* Second Amended and Restated Operation and Maintenance Agreement dated as of June 28, 1989 			 (the "Bellingham O&M Agreement"), between NEA and Westinghouse Power 	 10.2.5* Letter Agreement regarding the Bellingham Heat Rate dated June 23, 1993, between NEA and 			 Westinghouse 	 10.2.6* Letter Agreement regarding extension of the Bellingham O&M Agreement dated June 23, 1993, 			 between NEA and Westinghouse Power 	 10.2.7** Amendment No. 1 to the Bellingham O&M Agreement, dated as of May 1, 1995, by and between 			 NEA and Westinghouse Power 	 10.3.1* Power Purchase Agreement dated as of April 1, 1986 (the "BECO I Power Purchase 			 Agreement"), between NEA and BECO 	 10.3.2* First Amendment to the BECO I Power Purchase Agreement dated as of June 8, 1987, between 			 BECO and NEA 	 10.3.3* Second Amendment to the BECO I Power Purchase Agreement dated as of June 21, 1989, 			 between BECO and NEA 	 10.3.4* Power Purchase Agreement dated as of January 28, 1988 (the "BECO II Power Purchase 			 Agreement"), between NEA and BECO 	 10.3.5* First Amendment to the BECO II Power Purchase Agreement dated as of June 21, 1989, 			 between NEA and BECO 	 10.3.6* Power Sale Agreement dated as of November 26, 1986 (the "Commonwealth I Power Purchase 			 Agreement"), between NEA and Commonwealth 	 10.3.7* First Amendment to the Commonwealth I Power Purchase Agreement dated as of August 15, 			 1988, between Commonwealth and NEA 	 10.3.8* Second Amendment to the Commonwealth I Power Purchase Agreement dated as of January 1, 			 1989, between Commonwealth and NEA 	 10.3.9* Power Sale Agreement dated as of August 15, 1988 (the "Commonwealth II Power Purchase 			 Agreement"), between NEA and Commonwealth 	 10.3.10* First Amendment to the Commonwealth II Power Purchase Agreement dated as of January 1, 			 1989, between NEA and Commonwealth 	 10.3.11* Power Purchase Agreement dated as of October 17, 1986 (the "Montaup Power Purchase 			 Agreement"), between NEA and Montaup 	 10.3.12* First Amendment to the Montaup Power Purchase Agreement dated as of June 28, 1989, 			 between Montaup and NEA 	 10.3.13* Power Purchase Agreement dated as of October 22, 1987 (the "JCP&L Power Purchase 			 Agreement"), between NJEA and JCP&L 	 10.3.14* First Amendment to the JCP&L Power Purchase Agreement dated as of June 16, 1989, between 			 JCP&L and NJEA 	 10.4.1* Firm Transportation Service Agreement dated as of February 28, 1994, among CNG 			 Transmission Corporation, a Delaware corporation ("CNG"), NEA, ProGas U.S.A., Inc., 			 a Delaware corporation ("ProGas USA") and ProGas 	 10.4.2* Firm Gas Transportation Agreement (Rate Schedule X-320) dated as of February 27, 1991, 			 between NEA and Transcontinental Gas Pipe Line Corporation, a Delaware corporation 			 ("Transco") 	 10.4.3* Rate Schedule X-35 Firm Gas Transportation Agreement dated as of October 1, 1993, between 			 NEA and Algonquin Gas Transmission Company, a Delaware corporation ("Algonquin") 	 10.4.4* Service Agreement for Rate Schedule FTS-5 dated as of February 16, 1994, between NEA and 			 Texas Eastern Transmission Corporation, a Delaware corporation ("Texas Eastern") 	 10.4.5* ProGas/TransCanada NE Assignment Agreement dated as of July 30, 1993, between ProGas and 			 TransCanada Pipelines Limited, an Ontario corporation ("TransCanada") 	 10.4.6* Northeast Gas Substitution Agreement dated as of July 30, 1993, among ProGas, NEA and 			 TransCanada 	 10.4.7* Northeast Notice and Consent dated as of July 30, 1993, among NEA, ProGas and TransCanada 	 10.4.8* ProGas NE Producer Assignment Agreement dated as of July 30, 1993, between ProGas and 			 TransCanada 	 10.4.9* Firm Transportation Service Agreement dated as of February 28, 1994, among CNG, NJEA, 			 ProGas USA and ProGas 	 10.4.10* Firm Gas Transportation Agreement (Rate Schedule X-319) dated as of February 27, 1991, 			 between Transco and NJEA 	 10.4.11* Service Agreement for Rate Schedule FTS-5 dated as of February 16, 1994, between Texas 			 Eastern and NJEA 	 10.4.12* ProGas/TransCanada NJ Assignment Agreement dated as of July 30, 1993, between ProGas and 			 TransCanada 	 10.4.13* North Jersey Gas Substitution Agreement dated as of July 30, 1993, among ProGas, NJEA and 			 TransCanada 	 10.4.14* North Jersey Notice and Consent dated as of July 30, 1993, among NJEA, ProGas and 			 TransCanada 	 10.4.15* ProGas NJ Producer Assignment dated as of July 30, 1993, between ProGas and TransCanada 	 10.4.16* Gas Purchase and Sales Agreement dated as of May 4, 1989 (the "PSE&G Agreement"), between 			 NJEA and PSE&G 	 10.5.1* Service Agreement Applicable to the Storage of Natural Gas Under Rate Schedule GSS-II 			 dated as of September 30, 1993, between CNG and NEA 	 10.5.2* Service Agreement Applicable to the Storage of Natural Gas Under Rate Schedule GSS-II 			 dated as of September 30, 1993, between CNG and NJEA 	 10.5.3** Service Agreement Applicable to Transportation of Natural Gas under Rate Schedule FT 			 dated as of February 1, 1996, by and between CNG and NEA 	 10.5.4** Service Agreement Applicable to Transportation of Natural Gas under Rate Schedule FT 			 dated as of February 1, 1996, by and between CNG and NJEA 	 10.6.1* Gas Purchase Contract dated as of May 12, 1988 (the "Bellingham ProGas Agreement"), 			 between ProGas and NEA 	 10.6.2* First Amending Agreement to the Bellingham ProGas Agreement dated as of April 17, 1989, 			 between ProGas and NEA 	 10.6.3* Second Amending Agreement to the Bellingham ProGas Agreement dated as of June 23, 1989, 			 between ProGas and NEA 	 10.6.4* Amending Agreement to the ProGas Agreements (as defined below) dated as of November 1, 			 1991, between ProGas, NEA and NJEA 	 10.6.5* Third Amending Agreement to the Bellingham ProGas Agreement dated as of July 30, 1993, 			 between ProGas and NEA 	 10.6.6* Letter Agreement regarding the Bellingham ProGas Agreement dated as of September 14, 			 1992, between ProGas and NEA 	 10.6.7* Letter Agreement regarding the Bellingham ProGas Agreement dated as of July 30, 1993, 			 between ProGas and NEA 	 10.6.8* Gas Purchase Contract dated as of May 12, 1988 (the "Sayreville ProGas Agreement," and 			 together with the Bellingham ProGas Agreement, the "ProGas Agreements"), between ProGas 			 and NJEA 	 10.6.9* First Amending Agreement to the Sayreville ProGas Agreement dated April 17, 1989, between 			 ProGas and NJEA 	 10.6.10* Second Amending Agreement to the Sayreville ProGas Agreement dated June 23, 1989, between 			 ProGas and NJEA 	 10.6.11* Third Amending Agreement to the Sayreville ProGas Agreement dated July 30, 1993, between 			 ProGas and NJEA 	 10.6.12* Letter Agreement regarding the Sayreville ProGas Agreement dated as of September 14, 			 1992, between ProGas and NJEA, as amended as of April 22, 1994 by Letter Agreement 			 between ProGas and NJEA 	 10.6.13* Letter Agreement regarding the Sayreville ProGas Agreement dated July 30, 1993, between 			 ProGas and NJEA 	 10.7.1* Amended and Restated Steam Sales Agreement dated as of December 21, 1990, between NEA and 			 NECO-Bellingham, Inc., a Massachusetts corporation ("NECO") 	 10.7.2* Industrial Steam Sales Contract dated as of June 5, 1989, between NJEA and Hercules 			 Incorporated, a Delaware corporation ("Hercules") 	 10.8.1* Letter agreement regarding Bellingham Project power transmission arrangements dated 			 June 29, 1989, between NEA and BECO 	 10.8.2* Letter agreement regarding Bellingham Project power transmission arrangements dated 			 June 6, 1989, between NEA and Commonwealth 	 10.8.3* Letter agreement regarding Bellingham Project power transmission arrangements dated 			 June 28, 1989, between NEA and Montaup 	 10.9* Amended and Restated Interconnection Agreement dated as of September 24, 1993, between 			 BECO and NEA 	 10.10.1* Amended and Restated Lease Agreement dated as of December 21, 1990, between NEA and NECO 	 10.10.2* Carbon Dioxide Agreement dated as of December 21, 1990, between NECO and Praxair, Inc., 			 as successor to Liquid Carbonic Carbon Dioxide Corporation ("Praxair") 	 10.10.3* BOC Gases Carbon Dioxide Agreement dated as of December 21, 1990, between NECO and the 			 BOC Gases of the BOC Group, Inc., a Delaware corporation ("BOC Gases") 	 10.10.4* Assignment and Security Agreement dated as of December 1, 1991, between NECO and NEA 	 10.10.5*** Operation and Maintenance Agreement by and between NECO-Bellingham, Inc. as Lessee and 			 Westinghouse as Operator for the Bellingham Project Carbon Dioxide Recovery Facility 			 dated as of May 1, 1995 	 10.10.5.1**** Guaranty of Contract for Operation and Maintenance dated May 12, 1995 by Westinghouse 			 Power 	 10.10.6* Licensing Agreement for the Fluor Daniel Carbon Dioxide Recovery Process dated as of 			 June 28, 1989, between Fluor Daniel Inc., a California corporation ("Fluor Daniel"), and 			 NEA 	 10.11.1* Ground Lease Agreement dated as of June 28, 1989, between NJEA and ETURC 	 10.11.2* Agreement of Sublease dated as of June 28, 1989, between ETURC and NJEA 	 10.11.3* Lease of Property dated as of June 1, 1986, between Prestwich Corporation and NE LP 	 10.12.1* Investment Agreement dated as of December 1, 1994, between Sanwa and Sanwa Bank Trust 			 Company of New York under the Pledge, Trust and Intercreditor Agreement 	 10.12.2* Investment Agreement dated as of December 1, 1994, between Sanwa and Sanwa Bank Trust 			 Company of New York under the Pledge, Trust and Intercreditor Agreement 	 10.13* Agreement between the Water and Sewer Commissioners of the Town of Bellingham and NEA 			 dated as of December 13, 1988 and December 30, 1988, respectively 	 10.14* Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated June 29, 1989, 			 by NEA in favor of BECO, Commonwealth and Montaup 	 10.15*** Declaration of Easements, Covenants, and Restrictions dated as of June 28, 1989 by NEA 	 10.16***** Operation and Maintenance Agreement dated as of November 21, 1997 by and between NE LP 			 and FPLE Operating Services 	 10.17***** Operation and Maintenance Agreement dated as of November 21, 1997 by and between NE LP 			 and FPLE Operating Services 	 10.18***** Fuel Management Agreement, dated as of January 20, 1998, by and between NE LP and ESI 			 Northeast Fuel , assigned by NE LP to NEA on January 20, 1998 	 10.19***** Fuel Management Agreement, dated as of January 20, 1998, effective retroactive to 			 January 14, 1998, by and between NE LP and ESI Northeast Fuel 	 10.20***** Administrative Services Agreement dated as of November 21, 1997 between NE LP and ESI GP 	 10.21****** Reimbursement Agreement dated as of November 21, 1997 by and among FPL Group Capital, 			 Tractebel Power and NE LP 	 16******* Change in Certifying Accountant Letter 	 21 Subsidiaries of the Registrants 	 27.1 Financial Data Schedule - ESI Tractebel Funding Corp. 	 27.2 Financial Data Schedule - Northeast Energy Associates, A Limited Partnership 	 27.3 Financial Data Schedule - North Jersey Energy Associates, A Limited Partnership 	 27.4 Financial Data Schedule - ESI Tractebel Acquisition Corp. 	 27.5 Financial Data Schedule - Northeast Energy LP * Incorporated herein by reference from the Registration Statement on Form S-4, file no. 33-87902, filed with 	 the Securities and Exchange Commission by the Funding Corp. on February 9, 1995, as amended. ** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the 	 Partnerships on April 1, 1996. *** Incorporated herein by reference from the Quarterly Report on Form 10-Q filed by the Funding Corp. and the 	 Partnerships on November 14, 1996. **** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the 	 Partnerships on March 31, 1997. ***** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the 	 Partnerships on March 27, 1998. ****** Incorporated herein by reference from the Registration Statement on Form S-4, file no. 333-52397, filed with 	 the Securities and Exchange Commission by the Acquisition Corp. on August 11, 1998, as amended. ******* Incorporated herein by reference from Form 8-K filed by the Funding Corp. and the Partnerships on 	 September 4, 1998. 	 (b) Reports On Form 8-K: 	 None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. ESI TRACTEBEL FUNDING CORP. ESI TRACTEBEL ACQUISITION CORP. 	EDWARD F. TANCER 	Vice President 	(Principal Executive Officer and Director) Date: March 27, 2000 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 registrants and in the capacities and on the date indicated. Signature and Title as of March 27, 2000: DILEK L. SAMIL Treasurer (Principal Financial and Principal Accounting Officer) Directors: ERIC M. HEGGESETH WERNER E. SCHATTNER GLENN E. SMITH SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP (ESI Northeast Energy GP, Inc. as Administrative General Partner) NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP (ESI Northeast Energy GP, Inc. as Administrative General Partner) NORTHEAST ENERGY, LP (ESI Northeast Energy GP, Inc. as Administrative General Partner) 	DILEK L. SAMIL 	Vice President and Treasurer of ESI Northeast Energy GP, Inc. 	(Principal Executive, Principal Financial and Principal Accounting Officer and Director of ESI Northeast Energy GP, Inc.) Date: March 27, 2000 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 registrants and in the capacities and on the date indicated. Signature and Title as of March 27, 2000: Director of ESI Northeast Energy GP, Inc.: GLENN E. SMITH