UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-14768
NSTAR
(Exact name of registrant as specified in its charter)
Massachusetts 04-3466300
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Boylston Street, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(617)424-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that theregistrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 1, 2001
Common Shares, $1 par value 53,032,546 shares
Part I - Financial Information
Item 1. Financial Statements
NSTAR
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands, except (loss) earnings per share)
Three Months Ended March 31,
2001 2000
Operating revenues $ 864,822 $ 658,518
Operating expenses:
Purchased power and cost of gas sold 530,761 340,876
Operations and maintenance 108,296 110,467
Depreciation and amortization 59,073 58,292
Demand side management and renewable
energy programs 19,632 18,165
Property and other taxes 27,112 25,872
Income taxes 30,680 25,445
Total operating expenses 775,554 579,117
Operating income 89,268 79,401
Other (deductions) income
Write-down of RCN investment, net (173,944) -
Other (deductions) income, net (616) 2,595
(174,560) 2,595
Operating and other (deductions) income (85,292) 81,996
Interest charges:
Long term debt 29,621 21,592
Transition property securitization 10,798 11,946
certificates
Other 7,395 12,157
Allowance for borrowed funds used during
construction (850) (798)
Total interest charges 46,964 44,897
Net (loss) income (132,256) 37,099
Preferred stock dividends of subsidiary 1,490 1,490
(Loss) Earnings available for common shareholders $(133,746) $ 35,609
Weighted average common shares outstanding:
Basic 53,033 57,262
Diluted 53,139 57,402
(Loss) Earnings per common share:
Basic and Diluted $ (2.52) $ 0.62
Dividends declared per common share $ .515 $ 0.50
The accompanying notes are an integral part of the condensed
consolidated financial statements.
NSTAR
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)
Three Months Ended March 31,
2001 2000
Net (loss) income $ (132,256) $ 37,099
Other comprehensive income, net:
Unrealized gain on investments 33,140 23,454
Comprehensive (loss) income $ (99,116) $ 60,553
The accompanying notes are an integral part of the condensed
consolidated financial statements.
NSTAR
Condensed Consolidated Statements of Retained Earnings
(Unaudited)
(in thousands)
Three Months Ended March 31,
2001 2000
Balance at the beginning of the period $ 446,587 $ 389,989
Add (Deduct):
Net (loss) income (132,256) 37,099
Subtotal 314,331 427,088
Deduct:
Dividends declared:
Common shares 27,311 28,246
Preferred stock 1,490 1,490
Subtotal 28,801 29,736
Provision for preferred stock redemption
and issuance costs 60 60
Common share repurchase program - 2,385
Balance at the end of the period $ 285,470 $ 394,907
The accompanying notes are an integral part of the condensed consolidated financial
statements.
NSTAR
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
March 31, December 31,
2001 2000
Assets
Utility plant in service, at original cost $3,772,705 $3,724,754
Less: accumulated depreciation 1,278,219 1,249,685
2,494,486 2,475,069
Construction work in progress 45,320 48,524
Net utility plant 2,539,806 2,523,593
Non-utility property, net 99,260 105,827
Goodwill 472,815 475,877
Equity investments 25,818 25,791
Other investments 65,945 170,829
Current assets:
Cash and cash equivalents 21,873 23,198
Restricted cash 20,750 20,827
Accounts receivable, net 495,047 454,499
Regulatory assets 208,319 242,663
Accrued unbilled revenues 69,473 101,732
Fuel, materials and supplies, at
average cost 30,054 44,659
Prepaid pension expense 155,172 149,890
Other 29,868 32,447
Total current assets 1,030,556 1,069,915
Regulatory assets 1,044,989 1,029,341
Other deferred debits 145,111 146,542
Total assets $5,424,300 $5,547,715
The accompanying notes are an integral part of the condensed
consolidated financial statements.
NSTAR
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
March 31, December 31,
2001 2000
Capitalization and Liabilities
Common equity:
Common shares, par value $1 per share
(53,032,546 shares issued and
outstanding) $ 53,033 $ 53,033
Premium on common shares 876,646 876,749
Retained earnings 285,470 446,587
Total common equity 1,215,149 1,376,369
Accumulated other comprehensive loss (1,004) (34,144)
Cumulative nonmandatory redeemable
preferred stock 43,000 43,000
Long-term debt 1,409,445 1,440,431
Transition property securitization
certificates 548,000 584,130
Total long-term debt 1,957,445 2,024,561
Total capitalization 3,214,590 3,409,786
Current liabilities:
Long-term debt and preferred stock
due within one year 88,347 58,695
Transition property securitization
certificates due within one year 57,000 36,443
Notes payable 547,847 468,347
Accounts payable 196,951 275,778
Deferred taxes 112,371 128,788
Accrued interest 14,869 44,220
Dividends payable 28,223 28,305
Other 330,358 301,873
Total current liabilities 1,375,966 1,342,449
Deferred credits:
Accumulated deferred income taxes 567,341 537,756
Accumulated deferred investment tax credits 39,465 39,960
Other 226,938 217,764
Total deferred credits 833,744 795,480
Commitments and contingencies
Total capitalization and liabilities $5,424,300 $5,547,715
The accompanying notes are an integral part of the condensed
consolidated financial statements.
NSTAR
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended March 31,
2001 2000
Operating activities:
Net (loss) income $(132,256) $ 37,099
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 59,073 58,292
Deferred income taxes and investment
tax credits (10,192) 11,563
Loss on write-down of RCN investment 168,376 -
Allowance for borrowed funds used
during construction (850) (798)
Net changes in working capital (59,039) (69,452)
Other, net (17,147) (19,784)
Net cash provided by operating activities 7,965 16,920
Investing activities:
Plant expenditures (excluding AFUDC) (43,404) (26,155)
Other investments (27) (77,350)
Net cash used in investing activities (43,431) (103,505)
Financing activities:
Common share repurchases - (60,610)
Long-term debt redemptions (984) (65,400)
Transition property securitization
certificates redemptions (15,573) (22,154)
Long-term debt issue, net - 298,794
Net change in notes payable 79,500 (194,825)
Dividends paid (28,802) (30,471)
Net cash provided by (used in) financing
activities 34,141 (74,666)
Net decrease in cash and cash equivalents (1,325) (161,251)
Cash and cash equivalents at beginning of year 23,198 316,540
Cash and cash equivalents at end of period $ 21,873 $ 155,289
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 59,028 $ 41,419
Income taxes $ 44,759 $ 750
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Notes to Unaudited Condensed Consolidated Financial Statements
The accompanying Notes should be read in conjunction with Notes
to the Consolidated Financial Statements incorporated in NSTAR's
2000 Annual Report on Form 10-K.
A) About NSTAR
NSTAR is an energy delivery company serving approximately 1.3
million customers in Massachusetts including more than one
million electric customers in 81 communities and 244,000 gas
customers in 51 communities. NSTAR also supplies electricity at
wholesale for resale to municipalities. NSTAR's retail utility
subsidiaries are Boston Edison Company (Boston Edison),
Commonwealth Electric Company (ComElectric), Cambridge Electric
Light Company (Cambridge Electric) and NSTAR Gas Company (NSTAR
Gas) and its wholesale electric subsidiary is Canal Electric
Company (Canal Electric). Effective November 1, 2000, NSTAR's
three retail electric companies began to operate under the brand
name "NSTAR Electric." Reference in this report to "NSTAR
Electric" shall mean each of Boston Edison, ComElectric and
Cambridge Electric. NSTAR's non-utility operations include
telecommunications - NSTAR Communications, Inc. (NSTAR Com),
district heating and cooling operations (Advanced Energy Systems,
Inc. and NSTAR Steam Corporation) and liquefied natural gas
services (Hopkinton LNG Corp.).
B) Basis of Presentation
The financial information presented as of March 31, 2001 and for
the periods ended March 31, 2001 and 2000 have been prepared from
NSTAR's books and records without audit by independent
accountants. Financial information as of December 31, 2000 was
derived from the audited consolidated financial statements of
NSTAR, but does not include all disclosures required by generally
accepted accounting principles (GAAP). In the opinion of NSTAR's
management, all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial
information for the periods indicated have been included.
Certain reclassifications have been made to the prior year data
to conform with the current presentation.
The preparation of financial statements in conformity with GAAP
requires management of NSTAR and its subsidiaries to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures 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 these estimates.
The results of operations for the periods ended March 31, 2001
and 2000 are not indicative of the results that may be expected
for an entire year. Kilowatt-hour sales and revenues are
typically higher in the winter and summer than in the spring and
fall as sales tend to vary with weather conditions. Gas sales
and revenues are typically higher in the winter months than
during other periods of the year. Economic conditions also
impact sales.
C) Goodwill and Costs to Achieve Amortization
Recorded goodwill is associated with the merger of BEC Energy
(BEC) and Commonwealth Energy System (COM/Energy), effective
August 25, 1999. The merger was accounted for by NSTAR as an
acquisition of COM/Energy by BEC under the purchase method of
accounting. An integral part of the merger is the rate plan of
the retail utility subsidiaries of BEC and COM/Energy that was
approved by the Massachusetts Department of Telecommunications
and Energy (MDTE) in July 1999. Significant elements of the rate
plan include a four-year distribution rate freeze, recovery of
the acquisition premium (goodwill) of approximately $490 million
over 40 years resulting in annual amortization of approximately
$12.2 million, and recovery of filed transaction and integration
costs (costs to achieve) of $111 million over 10 years. NSTAR's
retail utility subsidiaries will reconcile the ultimate costs to
achieve with that estimate, and any difference is expected to be
recovered over the remainder of the amortization period. As a
result of the merger, cost savings have been realized due to
reduced staffing levels and operating efficiencies. Future cost
savings are expected to result from the avoidance of costs that
would have otherwise been incurred by BEC and COM/Energy.
D) RCN Joint Venture and Investment Conversion
NSTAR Com is a participant in a telecommunications venture with
RCN Telecom Services, Inc. of Massachusetts, a subsidiary of RCN
Corporation (RCN). NSTAR Com has accounted for its equity
investment in the joint venture using the equity method of
accounting. As part of the Joint Venture Agreement, NSTAR Com
has the option to exchange portions of its joint venture interest
for common shares of RCN at specified periods. To date, NSTAR
Com has received approximately 4.1 million shares of RCN common
shares from prior exchanges of its joint venture interest.
On April 6, 2000, NSTAR Com issued its third and final notice to
exchange substantially all of its remaining interest in the joint
venture into common shares of RCN. Effective with the third
notice, NSTAR Com's profit and loss sharing ratio was reduced to
zero and therefore NSTAR Com no longer recognized any results of
operations from its interest in the joint venture. Through April
6, 2000, NSTAR Com recognized $5.6 million in equity losses from
the joint venture and has not recorded any further joint venture
losses since that date.
On October 18, 2000, NSTAR Com and RCN signed an agreement in
principle to amend the Joint Venture Agreement. Among other
items, this proposal would settle the number of shares to be
received for the third conversion of NSTAR Com's remaining equity
investment at 7.5 million shares. Management anticipates having
a final amended joint venture agreement in place in the near
term.
As previously disclosed, management continues to evaluate the
carrying value of its entire investment in RCN. Consistent with
the performance of the telecommunication sector as a whole, the
market value of RCN's common shares has decreased significantly
over the past several quarters. Management has determined that
this decline in market value is "other-then-temporary" in
accordance with the Statement of Financial Accounting Standards
No, 115, "Accounting for Certain Investments in Debt and Equity
Securities."
In addition, based on the current status of the amendment to the
Joint Venture Agreement during the first quarter of 2001 with RCN
regarding the 7.5 million shares, Management has also determined
that its investment in the joint venture is impaired based on
future market expectations for RCN common shares related to this
investment.
Therefore, NSTAR Com has, as of March 31, 2001, recognized an
impairment of its entire investment in RCN. This write-down
resulted in a one-time, non-cash, after-tax charge of $173.9
million that is reported on the accompanying Condensed
Consolidated Statements of Income as "Write-down of RCN
Investment, net."
The RCN shares received, as well as the remaining interest in the
joint venture related to the pending 7.5 million shares, are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets at their estimated fair value of
approximately $43.5 million at March 31, 2001. This fair value
may increase or decrease, at any time, as a result of changes in
the market price of RCN common shares. The unrealized gain or
loss associated with shares currently held will fluctuate due to
the changes in fair value of these shares during each period and
is reflected, net of associated income taxes, as Comprehensive
(loss) income on the accompanying Condensed Consolidated
Statements of Comprehensive Income. The cumulative increase or
decrease in fair value of these shares as of March 31, 2001 and
December 31, 2000 is reflected as Accumulated other comprehensive
loss on the accompanying Condensed Consolidated Balance Sheets.
Management will continue to evaluate the carrying value of its
investment in RCN.
At March 31, 2001 and December 31, 2000, NSTAR Com had $4.9
million and $47.9 million, respectively, in accounts receivable
due from RCN.
E) Contingencies
1. Environmental Matters
The subsidiaries of NSTAR are involved in approximately 30 state-
regulated properties where oil or other hazardous materials were
previously spilled or released. The companies are required to
clean up these properties in accordance with specific state
regulations. There are uncertainties associated with these costs
due to the complexities of cleanup technology, regulatory
requirements and the particular characteristics of the different
sites. NSTAR subsidiaries also face possible liability as a
potentially responsible party (PRP) in the cleanup of six multi-
party hazardous waste sites in Massachusetts and other states
where it is alleged to have generated, transported or disposed of
hazardous waste at the sites. NSTAR generally expects to have
only a small percentage of the total potential liability for
these sites. Approximately $6.4 million and $7 million is
included as a liability in the accompanying Condensed
Consolidated Balance Sheets at March 31, 2001 and December 31,
2000, respectively, related to the non-recoverable portion of
these cleanup liabilities. Management is unable to fully
determine a range of reasonably possible cleanup costs in excess
of the accrued amount. Based on its assessments of the specific
site circumstances, management does not believe that it is
probable that any such additional costs will have a material
impact on NSTAR's consolidated financial position. However, it
is reasonably possible that additional provisions for cleanup
costs that may result from a change in estimates could have a
material impact on the results of a reporting period in the near
term.
NSTAR Gas is participating in the assessment of a number of
former manufactured gas plant (MGP) sites and alleged MGP waste
disposal locations to determine if and to what extent such sites
have been contaminated and whether NSTAR Gas may be responsible
for remedial action. The MDTE has approved recovery of costs
associated with MGP sites. As of March 31, 2001, NSTAR Gas has
recorded a liability of $2.6 million as an estimate for site
cleanup costs for several MGP sites for which NSTAR Gas was
previously cited as a PRP.
Estimates related to environmental remediation costs are reviewed
and adjusted periodically as further investigation and assignment
of responsibility occurs. NSTAR is unable to estimate its
ultimate liability for future environmental remediation costs.
However, in view of NSTAR's current assessment of its
environmental responsibilities, existing legal requirements and
regulatory policies, management does not believe that these
matters will have a material adverse effect on NSTAR's
consolidated financial position or results of operations for a
reporting period.
2. Industry and Corporate Restructuring Legal Proceedings
The MDTE order approving the Boston Edison electric restructuring
settlement agreement was appealed by certain parties to the
Massachusetts Supreme Judicial Court. One appeal remains
pending. However, there has to date been no briefing, hearing or
other action taken with respect to this proceeding.
However, if an unfavorable outcome were to occur, there could be
a material adverse impact on business operations, the
consolidated financial position, cash flows and the results of
operations for a reporting period.
3. Regulatory Proceedings
In the Boston Edison 1999 reconciliation filing with the MDTE,
the Massachusetts Attorney General contested cost allocations
related to Boston Edison's wholesale customers since 1998.
Management is unable to determine the outcome of the MDTE
proceedings. However, if an unfavorable outcome were to occur,
there could be a material adverse impact on Boston Edison's
consolidated financial position, results of operations and cash
flows in the near term.
In October 1997, the MDTE opened a proceeding to investigate
Boston Edison's compliance with a 1993 order that permitted the
formation of Boston Energy Technology Group and authorized Boston
Edison to invest up to $45 million in non-utility activities.
Hearings were completed during 1999. Management is currently
unable to determine the timing and outcome of this proceeding.
However, if an unfavorable outcome were to occur, there could be
a material adverse impact on business operations, the
consolidated financial position, cash flows and results of
operations for a reporting period.
4. Other Litigation
In the normal course of its business, NSTAR and its subsidiaries
are also involved in certain other legal matters. Management is
unable to fully determine a range of reasonably possible legal
costs in excess of amounts accrued. Based on the information
currently available, it does not believe that it is probable that
any such additional costs will have a material impact on its
consolidated financial position. However, it is reasonably
possible that additional legal costs that may result from a
change in estimates could have a material impact on the results
of a reporting period in the near term.
F) Income Taxes
The following table reconciles the statutory federal income tax
rate to the annual estimated effective income tax rate for 2001
and the actual effective income tax rate for the year ended
December 31, 2000:
2001 2000
Statutory tax rate 35.0% 35.0%
State income tax, net of federal
income tax benefit 11.9 5.1
Investment tax credits (1.4) (0.6)
Write-down of RCN investment 46.5 -
Other 5.3 2.1
Effective tax rate 97.3% 41.6%
Income tax expense is reflected net of $5.6 million in tax
expense related to the write-down of the RCN investment, net as
reflected on the accompanying Condensed Consolidated Statements
of Income. This $5.6 million charge was recognized due to the
fact that NSTAR Com had recorded a deferred tax asset in excess
of what is currently deemed realizable. In addition, NSTAR Com
has anticipated that no tax benefits will ultimately be realized
on the write-down of its remaining joint venture investment.
Therefore, NSTAR Com has recorded a $64.5 million valuation
allowance for the entire tax benefit related to the write-down of
its entire RCN investment. If all or a portion of these tax
benefits are ultimately realized, NSTAR Com will reflect a
corresponding reduction in income tax expense. Excluding the tax
expense and the estimated valuation allowance, the effective tax
rate would have been approximately 42.1%.
G) Earnings Per Common Share
Basic earnings per common share (EPS) is calculated by dividing
net income, after deductions for preferred dividends, by the
weighted average common shares outstanding during the year.
Statement of Financial Accounting Standards No. 128, "Earnings
per Share," requires the disclosure of diluted EPS. Diluted EPS
is similar to the computation of basic EPS except that the
weighted average common shares is increased to include the number
of dilutive potential common shares. Diluted EPS reflects the
impact on shares outstanding of the deferred (nonvested) shares
and stock options granted under the NSTAR Stock Incentive Plan.
The following table summarizes the reconciling amounts between
basic and diluted EPS:
Three Months Ended March 31,
(in thousands, except per share amounts) 2001 2000
Before one-time RCN charge:
Earnings available for common shareholders $ 40,198 $35,609
Basic and Diluted EPS $0.76 $0.62
After one-time RCN charge:
(Loss) earnings available for common
shareholders $(133,746) $35,609
Basic EPS $(2.52) $0.62
Weighted average common shares
outstanding for basic EPS 53,033 57,262
Effect of dilutive shares:
Weighted average dilutive potential
common shares 106 140
Weighted average common shares
outstanding for diluted EPS 53,139 57,402
H) Segment and Related Information
For the purpose of providing segment information, NSTAR's
principal operating segments, or its traditional core businesses,
are the electric and natural gas utilities that provide energy
delivery services in over 100 cities and towns in Massachusetts.
NSTAR subsidiaries also supply electricity at wholesale to
municipalities. The non-utility operating segments engage in
business activities that include telecommunications, district
heating and cooling operations, and liquefied natural gas
services.
Financial data for the operating segments are as follows:
(in thousands) Utility Operations Non-utility Consolidated
Electric Gas Operations Total
Three months ended March 31, 2001
Operating revenues $ 635,797 $ 197,174 $ 31,851 $ 864,822
Segment net income (loss) $ 24,796 $ 16,170 $ (173,222) $ (132,256)
Three months ended March 31, 2000
Operating revenues $ 515,815 $ 126,021 $ 16,682 $ 658,518
Segment net income (loss) $ 22,900 $ 16,091 $ (1,892) $ 37,099
Total assets
March 31, 2001 $4,548,042 $ 535,646 $ 340,612 $5,424,300
December 31, 2000 $4,529,014 $ 534,430 $ 484,271 $5,547,715
Item 2. Management's Discussion and Analysis
NSTAR is an energy delivery company serving approximately 1.3
million customers in Massachusetts including more than one
million electric customers in 81 communities and 244,000 gas
customers in 51 communities. NSTAR's retail utility subsidiaries
are Boston Edison Company (Boston Edison), Commonwealth Electric
Company (ComElectric), Cambridge Electric Light Company
(Cambridge Electric) and NSTAR Gas Company (NSTAR Gas) and its
wholesale electric subsidiary is Canal Electric Company (Canal
Electric). Effective November 1, 2000, NSTAR's three retail
electric companies began to operate under the brand name "NSTAR
Electric." Reference in this report to "NSTAR Electric" shall
mean each of Boston Edison, ComElectric and Cambridge Electric.
NSTAR's non-utility operations include telecommunications - NSTAR
Communications, Inc. (NSTAR Com), district heating and cooling
operations (Advanced Energy Systems, Inc. and NSTAR Steam
Corporation) and liquefied natural gas services (Hopkinton LNG
Corp.).
The electric and natural gas industries have continued to change
in response to legislative, regulatory and marketplace demands
for improved customer service at lower prices. These demands
have resulted in an increasing trend in the industry to seek
competitive advantages and other benefits through business
combinations. NSTAR was created to operate in this new
marketplace by combining the resources of its utility
subsidiaries and concentrating its activities in the transmission
and distribution of energy.
Goodwill and Costs to Achieve Amortization
Recorded goodwill is associated with the merger of BEC Energy
(BEC) and Commonwealth Energy System (COM/Energy), effective
August 25, 1999. The merger was accounted for by NSTAR as an
acquisition of COM/Energy by BEC under the purchase method of
accounting. An integral part of the merger is the rate plan of
the retail utility subsidiaries of BEC and COM/Energy that was
approved by the Massachusetts Department of Telecommunications
and Energy (MDTE) in July 1999. Significant elements of the rate
plan include a four-year distribution rate freeze, recovery of
the acquisition premium (goodwill) of approximately $490 million
over 40 years resulting in annual amortization of approximately
$12.2 million, and recovery of filed transaction and integration
costs (costs to achieve) of $111 million over 10 years. NSTAR's
retail utility subsidiaries will reconcile the ultimate costs to
achieve with that estimate, and any difference is expected to be
recovered over the remainder of the amortization period. As a
result of the merger, cost savings have been realized due to
reduced staffing levels and operating efficiencies. Future cost
savings are expected to result from the avoidance of costs that
would have otherwise been incurred by BEC and COM/Energy.
Generating Assets Divestiture
On October 26, 2000, the MDTE approved the filing made by
Cambridge Electric and ComElectric (together, "the Companies")
for the partial buydown of their contract with Canal Electric for
power from the Seabrook nuclear generating facility (Seabrook
Contract). The buydown transaction was effected by means of an
amendment to the Seabrook Contract. In November 2000, a total of
$141.6 million of funds held by an affiliate, Energy Investment
Services, Inc. (EIS), was transferred to ComElectric and
Cambridge Electric. EIS was established as the vehicle to invest
the net proceeds from the sale of the Companies' generation
assets. The Companies, in turn, reduced their respective future
stranded costs to be recovered from customers. The Federal
Energy Regulatory Commission (FERC) approved Canal's request to
amend the Seabrook Contract on March 6, 2001 to reflect the
buydown effective November 1, 2000. Approval of a November 1,
2000 buydown amount is pending at the MDTE.
The impact of these transactions is reflected on the accompanying
Condensed Consolidated Balance Sheets as a reduction in
Restricted cash and utility plant in service and an increase in
Regulatory assets.
Retail Electric Rates
The 1997 Massachusetts Electric Restructuring Act (Restructuring
Act) requires electric distribution companies to obtain and
resell power to retail customers that choose not to buy energy
from a competitive energy supplier. This is through either
standard offer service or default service. As a result of the
Restructuring Act, standard offer customers of the retail
electric subsidiaries of NSTAR currently pay rates that are 15%
lower, on an inflation-adjusted basis, than rates in effect prior
to March 1, 1998, the retail access date. All distribution
customers must pay a transition charge as a component of their
rate.
From March 1, 1998, NSTAR Electric's accumulated cost to provide
default and standard offer service was in excess of the revenues
it was allowed to bill. As a result, NSTAR recorded a regulatory
asset of approximately $242.7 million at December 31, 2000 that
is reflected as a component of Current assets on the accompanying
Condensed Consolidated Balance Sheets. As a result of new rates
for standard offer and default service that became effective
January 1, 2001, the regulatory asset has declined to $208.3
million as of March 31, 2001.
Under applicable restructuring plans or settlements approved by
the MDTE, NSTAR Electric must, on an annual basis, file proposed
adjustments to its rates for the upcoming year along with a
proposed reconciliation of prior year revenues and costs for its
standard offer, default service, transmission and transition
charges. NSTAR Electric made such a filing with the MDTE in late
1999. The MDTE subsequently approved proposed rate adjustments
effective January 1, 2000, and conducted further hearings for the
purpose of reconciling prior year's costs and revenues related to
NSTAR Electric's transition and transmission charges and the
charges for standard offer and default service. In each such
proceeding, certain cost allocations and other related issues
have been contested; however, the MDTE has not yet rendered a
final decision. In November 2000, NSTAR Electric made a similar
filing containing proposed rate adjustments for 2001, including a
reconciliation of costs and revenues through 1999. The MDTE has
approved rate adjustments effective January 1, 2001, but it has
not yet ruled on the reconciliation component of NSTAR Electric's
filings. Management is unable to determine the outcome of the
MDTE proceedings. However, if an unfavorable outcome were to
occur, there could be a material adverse impact on NSTAR's
consolidated financial position, results of operations and cash
flows in the near term.
In addition to the annual rate filings referenced above, NSTAR
Electric also made separate filings with the MDTE concerning
charges for standard offer and default service. In December
2000, the MDTE approved an increase of 1.321 cents per kWh in
NSTAR Electric's standard offer service rates for 2001 based on a
fuel adjustment formula contained in its standard offer tariffs
that reflects the prices of natural gas and oil. The MDTE has
ruled that these fuel adjustments are not required to meet the
15% rate reduction requirement under the Restructuring Act. The
MDTE will re-examine these rates in July 2001.
In December 2000, the MDTE approved market-based default service
rates for the period January 1, 2001 through June 30, 2001.
These and future prices for default service are based upon market
solicitations for power supply for default service consistent
with provisions of the Restructuring Act and MDTE orders.
Long-Term Power Purchase Contracts
NSTAR Electric has existing long-term power purchase contracts.
These long-term contracts are expected to supply approximately
90%-95% of its standard offer service obligations. NSTAR
Electric has entered into six-month and shorter-term agreements
to meet the remaining standard offer service obligation and
continues to evaluate further proposals. In November 2000, NSTAR
Electric entered into power purchase agreements to meet its
entire default service supply obligation for the period January
through June of 2001. In addition, in May 2001, NSTAR Electric
entered into purchased power agreements to meet the default
service obligation for the remainder of 2001. NSTAR Electric
expects to continue to make periodic market solicitations for
default service power supply consistent with provisions of the
Restructuring Act and MDTE orders. The cost of providing
standard offer and default service, which includes purchased
power costs, is recovered from customers on a fully reconciling
basis.
Natural Gas Industry Restructuring and Rates
Effective November 1, 2000, the MDTE approved regulations that
provide for full customer choice to LDCs (local distribution
companies) such as NSTAR Gas. NSTAR Gas has modified its
billing, customer and gas supply systems to accommodate full
retail choice. The MDTE previously had approved the compliance
process submitted by NSTAR Gas and other LDCs that implement the
unbundling of retail gas services to all customers. Among the
important provisions are: setting the LDC as the default service
provider, certification of competitive suppliers/marketers,
extension of the MDTE's consumer protection rules to residential
customers taking competitive service, requirement for LDCs to
provide suppliers/marketers with customer usage data, and
requirement for suppliers/marketers to disclose service terms to
potential customers. The MDTE has also ruled on requiring the
mandatory assignment of the LDC's upstream pipeline and storage
capacity and downstream peaking capacity to customers who elect a
competitive gas supply during a three-year transition period.
This eliminates potential stranded cost exposure for the LDCs
until they are relieved from their responsibility as suppliers of
last resort and the establishment of a "workably competitive"
interstate pipeline capacity market. Gas restructuring is not
likely to have a significant financial impact on LDCs.
NSTAR Gas' tariffs include a seasonal Cost of Gas Adjustment
Clause (CGAC) and a Local Distribution Adjustment Clause (LDAC).
The CGAC provides for the recovery of all gas supply costs from
firm sales customers or default service customers. The LDAC
provides for the recovery of certain costs applicable to both
sales and transportation customers. The CGAC is filed semi-
annually for approval by the MDTE. The LDAC is filed annually
for approval.
NSTAR Gas' sales are positively impacted by colder weather
because a substantial portion of its customer base uses natural
gas for space heating purposes.
In December 2000 and in a revised filing in January 2001, NSTAR
Gas filed for interim increases to its CGAC for the period
February through April 2001 in order to recover significant
increases in the costs to buy natural gas supplies. These
filings were made to ensure that prices to customers are set at
levels that recover all incurred costs in order to avoid the
accumulation of significant under-recoveries that would impair
NSTAR Gas' ability to serve its customers. On January 31, 2001,
the MDTE approved an adjustment to increase the CGAC factor to
$1.1123 per therm from the prior factor of $0.7608 per therm.
Subsequently, on February 28, 2001, as a result of a decline in
wholesale natural gas prices, NSTAR Gas received approval from
the MDTE to reduce the factor per therm to $0.94 effective March
1, 2001. Furthermore, in conjunction with its semi-annual filing
made on March 15, 2001, NSTAR Gas proposed a CGAC factor of
$0.7754 per therm for the period commencing May 1, 2001 through
October 31, 2001. This factor, approved by the MDTE, includes
the collection in the summer period of a portion of next winter's
gas costs in order to reduce cost deferrals projected for the end
of October 2001.
Results of Operations - Three Months Ended March 31, 2001 vs.
Three Months Ended March 31, 2000
Earnings per common share were as follows:
Earnings (Loss) per Basic and
Diluted Common Share Three Months Ended March 31,
2001 2000 % Change
Before one-time RCN charge $ 0.76 $0.62 22.6
After one-time RCN charge $(2.52) $0.62 (506.5)
Earnings before the one-time RCN charge were $40.2 million, or
$0.76 per basic and diluted common share, for the first quarter
of 2001 before a one-time, non-cash, after-tax charge of $173.9
million, or $3.28 per basic share, related to NSTAR's total
investment in RCN Corporation (RCN). Factors that contributed to
the 13% improvement in earnings before the one-time charge
include an increase in firm gas and transportation sales of 7%,
an increase in retail electric sales of 1.2% and lower operations
and maintenance expenses. These factors were offset somewhat by
higher interest costs that reflect the issuance of approximately
$500 million in long-term debt during 2000.
As previously disclosed and further discussed in this report,
NSTAR is in the process of converting its joint venture
investment in RCN Boston into shares of RCN common stock.
NSTAR's investment in RCN includes 4.1 million common shares that
it currently holds and 7.5 million common shares that it expects
to receive for its remaining interest in the joint venture.
Consistent with the performance of the telecommunications sector
as a whole, the market value of RCN's common shares has decreased
significantly over the past several months. As a result, NSTAR
recognized an impairment of its entire investment in RCN. This
adjustment is required under current accounting standards. NSTAR
determined that this decline in market value is "other-than-
temporary" as defined by Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." Including the impact of this adjustment,
which resulted in a one-time, non-cash, after-tax charge of
$173.9 million, NSTAR reported a loss of $133.7 million, or $2.52
per share, for the three months ended March 31, 2001, compared to
earnings of $35.6 million, or $0.62 per share, for the same
period in 2000.
Earnings per common share reflect a lower level of common shares
outstanding resulting from the repurchase of 4.2 million shares
during 2000 that had a positive impact of approximately six cents
per share. The results of operations for the quarter are not
indicative of the results that may be expected for the entire
year due to the seasonality of electric and gas sales and
revenues. Refer to Note B to the Unaudited Condensed
Consolidated Financial Statements.
Operating revenues
Operating revenues increased 30% during the first quarter of 2001
as follows:
(in thousands)
Retail electric revenues $ 108,493
Wholesale electric revenues 5,349
Other revenues 18,912
Gas revenues 73,550
Increase in operating revenues $ 206,304
Retail electric revenues were $584.6 million in the first quarter
of 2001 compared to $476.1 million in the same period of 2000, an
increase of $108.5 million, or 23%. The change in retail
revenues includes higher rates implemented in January 2001 for
standard offer and default services ($99.2 million), a 1.2%
increase in retail kilowatt-hour (kWh) sales, higher transmission
revenues ($9.2 million), the absence in the current quarter of a
$26.3 million refund to customers in the first quarter last year
and the recognition of incentive revenue entitlements for
successfully lowering certain transition charges ($5.5 million).
These increases in revenue were partially offset by a $19.7
million decline in transition cost recovery. The increase in
NSTAR's retail revenues related to standard offer and default
services are fully reconciled to the costs incurred and have no
impact on net income. The 1.2% increase in retail kWh sales
primarily reflects an 8% increase in heating degree days as
compared to the first quarter last year and includes a 3.4% and
1.2% increase in the residential and commercial sectors,
respectively, resulting primarily from energy needed for heating.
NSTAR's sales to retail residential and commercial customers were
approximately 33% and 57%, respectively, of its total retail
sales mix for the current quarter.
Wholesale electric revenues were $25.8 million in the first
quarter of 2001 compared to $20.4 million in the same period of
2000, an increase of $5.4 million, or 26%. This increase in
wholesale revenues primarily reflects increased kWh sales of 7.7%
and the recovery of higher purchased power costs.
Other revenues were $54.9 million in the first quarter of 2001
compared to $36 million in the same period of 2000, an increase
of $18.9 million, or 52%. This increase primarily reflects
higher district heating and cooling operations revenues ($3.5
million) as a result of higher fuel costs.
Gas revenues were $199.6 million in the first quarter of 2001
compared to $126 million in the same period of 2000 an increase
of $73.6 million, or 58%. The increase in revenues is primarily
attributable to a 7% increase in firm sales and transportation
service due to an 8% increase in heating degree days combined
with a significant increase in the cost of gas from suppliers.
NSTAR's sales to firm residential and commercial customers were
approximately 52% and 35%, respectively, of its total firm sales
and transportation for the current quarter.
Operating expenses
Purchased power costs were $398.2 million in the first quarter of
2001 compared to $276.7 million in the same period of 2000, an
increase of $121.5 million, or 44%. The increase in expense
reflects higher purchased power requirements due to a 1.6%
increase in retail and wholesale sales and higher purchased power
costs that reflect the prices of natural gas and oil. NSTAR
adjusts its electric rates to collect the costs related to energy
supply from customers on a fully reconciling basis. Due to the
rate adjustment mechanisms, changes in the amount of energy
supply expense have no impact on earnings. The cost of gas sold,
representing NSTAR Gas' supply expense, was $132.5 million for
the first quarter of 2001 compared to $64.2 million in the same
period of 2000, an increase of $68.3 million or 106% due to a 7%
increase in firm gas sales and transportation coupled with
substantially higher costs from gas suppliers. These expenses
are also fully reconciled to the current level of revenues
collected.
Operations and maintenance expense was $108.3 million in the
first quarter of 2001 compared to $110.5 million in the same
period of 2000, a decrease of $2.2 million, or 2%. This decrease
reflects lower expenses primarily resulting from merger-related
operating efficiencies, offset somewhat by the impact of storm-
related expenses incurred in the current period.
Depreciation and amortization expense was $59.1 million in the
first quarter of 2001 compared to $58.3 million in the same
period of 2000, an increase of $0.8 million, or 1%. The increase
reflects a slightly higher level of depreciable plant in service.
Demand side management (DSM) and renewable energy programs
expense was $19.6 million in the first quarter of 2001 compared
to $18.2 million in the same period of 2000, an increase of $1.4
million, or 8% primarily due to increased spending levels for
programs. These costs are collected from customers on a fully
reconciling basis. Therefore, the increase has no impact on
earnings.
Property and other taxes were $27.1 million in the first quarter
of 2001 compared to $25.9 million in the same period of 2000, an
increase of $1.2 million, or 5%. The increase is due to the
inclusion of Plymouth property taxes of $2.4 million that, in
prior periods, was included in purchased power expense (related
to the previously-owned Pilgrim generating unit), pursuant to an
agreement with the purchaser that provides NSTAR Electric with
purchased power from the Pilgrim unit. This increase was
partially offset by lower property taxes paid to the City of
Boston of $1.4 million.
Income taxes from operations were $30.7 million in the first
quarter of 2001 compared to $25.4 million in the same period of
2000, an increase of $5.3 million, or 21%, reflecting higher pre-
tax operating income.
Other (deductions) income
Other deductions was $174.6 million in the first quarter of 2001
compared to income of $2.6 million in the same period of 2000, a
net decrease in income of $177.2 million directly attributable to
the aforementioned one-time, non-cash, after-tax charge related
to the carrying value the RCN investment that is discussed more
fully below. Other deductions also reflects the absence in the
current period of RCN joint venture equity losses, offset by a
decline in interest on investments held by EIS.
Interest charges
Interest on long-term debt and transition property securitization
certificates was $40.4 million in the first quarter of 2001
compared to $33.5 million in the same period of 2000, an increase
of $6.9 million, or 21%. The increase reflects the issuance of
$300 million and $200 million of 8% NSTAR bonds in February and
October of 2000, respectively, offset somewhat by the retirement
of $199 million in Boston Edison debt throughout 2000. The
current period reflects a reduction of securitization
certificates interest of $1.1 million due to the partial
retirement of this debt. Other interest expense declined $4.8
million, or 39%, due to lower short-term borrowings and interest
on transition costs.
RCN Joint Venture and Investment Conversion
NSTAR Com is a participant in a telecommunications venture with
RCN Telecom Services, Inc. of Massachusetts, a subsidiary of RCN
Corporation (RCN). NSTAR Com has accounted for its equity
investment in the joint venture using the equity method of
accounting. As part of the Joint Venture Agreement, NSTAR Com
has the option to exchange portions of its joint venture interest
for common shares of RCN at specified periods. To date, NSTAR
Com has received approximately 4.1 million shares of RCN common
shares from prior exchanges of its joint venture interest.
On April 6, 2000, NSTAR Com issued its third and final notice to
exchange substantially all of its remaining interest in the joint
venture into common shares of RCN. Effective with the third
notice, NSTAR Com's profit and loss sharing ratio was reduced to
zero and therefore NSTAR Com no longer recognized any results of
operations from its interest in the joint venture. Through April
6, 2000, NSTAR Com recognized $5.6 million in equity losses from
the joint venture and has not recorded any further joint venture
losses since that date.
On October 18, 2000, NSTAR Com and RCN signed an agreement in
principle to amend the Joint Venture Agreement. Among other
items, this proposal would settle the number of shares to be
received for the third conversion of NSTAR Com's remaining equity
investment at 7.5 million shares. Management anticipates having
a final amended joint venture agreement in place in the near
term.
As previously disclosed, management continues to evaluate the
carrying value of its entire investment in RCN. Consistent with
the performance of the telecommunication sector as a whole, the
market value of RCN's common shares has decreased significantly
over the past several quarters. Management has determined that
this decline in market value is "other-then-temporary" in
accordance with the Statement of Financial Accounting Standards
No, 115, "Accounting for Certain Investments in Debt and Equity
Securities."
In addition, based on the current status of the amendment to the
Joint Venture Agreement during the first quarter of 2001 with RCN
regarding the 7.5 million shares, Management has also determined
that its investment in the joint venture is impaired based on
future market expectations for RCN common shares related to this
investment.
Therefore, NSTAR Com has, as of March 31, 2001, recognized an
impairment of its entire investment in RCN. This write-down
resulted in a one-time, non-cash, after-tax charge of $173.9
million that is reported on the accompanying Condensed
Consolidated Statements of Income as "Write-down of RCN
Investment, net."
The RCN shares received, as well as the remaining interest in the
joint venture related to the pending 7.5 million shares, are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets at their estimated fair value of
approximately $43.5 million at March 31, 2001. This fair value
may increase or decrease, at any time, as a result of changes in
the market price of RCN common shares. The unrealized gain or
loss associated with shares currently held will fluctuate due to
the changes in fair value of these shares during each period and
is reflected, net of associated income taxes, as Comprehensive
(loss) income on the accompanying Condensed Consolidated
Statements of Comprehensive Income. The cumulative increase or
decrease in fair value of these shares as of March 31, 2001 and
December 31, 2000 is reflected as Accumulated other comprehensive
loss on the accompanying Condensed Consolidated Balance Sheets.
Management will continue to evaluate the carrying value of its
investment in RCN.
At March 31, 2001 and December 31, 2000, NSTAR Com had $4.9
million and $47.9 million, respectively, in accounts receivable
due from RCN.
Liquidity
NSTAR and its subsidiaries supplement internally generated funds
as needed, primarily through the issuance of short-term
commercial paper and bank borrowings.
In February and October 2000, NSTAR issued $300 million and $200
million, respectively, 8% notes, due February 2010, of long-term
debt related to a $500 million shelf registration. Proceeds from
these issues were used to reduce short-term borrowings. These
increases in long-term debt were partially offset in 2000 by $199
million in long-term debt retirements, consisting of Boston
Edison debenture redemptions of $65 million (6.8% Series) in
February, $34 million (9.875% Series) in June and $100 million
(6.05% Series) in August.
NSTAR has a $450 million revolving credit agreement with a group
of banks effective through November 2002. At March 31, 2001 and
December 31, 2000, there were no amounts outstanding under this
revolving credit agreement. Also, NSTAR has a $450 million
commercial paper program. At March 31, 2001 and December 31,
2000, NSTAR had $241.5 million and $252 million outstanding,
respectively, under its commercial paper program.
Boston Edison has approval from the FERC to issue up to $350
million of short-term debt. Boston Edison has a $200 million
revolving credit agreement with a group of banks effective
through December 2001. In addition, it also has a $100 million
line of credit. Both of these arrangements serve as back-up to
Boston Edison's $300 million commercial paper program. As of
March 31, 2001 and December 31, 2000, there were no amounts
outstanding under this revolving credit agreement. As of March
31, 2001 and December 31, 2000, there was $185 million and $97
million outstanding under its commercial paper program.
In addition, ComElectric, Cambridge Electric and NSTAR Gas,
collectively, have $195 million available under several lines of
credit. Approximately $121.3 million and $120 million was
outstanding under these lines of credit as of March 31, 2001 and
December 31, 2000, respectively.
Boston Edison has approval from the MDTE to issue from time to
time up to $500 million of debt securities through 2002.
Proceeds from such issuances covered under this approved
financing will be used for repayment or refinancing of certain
outstanding equity securities, long-term indebtedness, and for
other corporate purposes. On February 20, 2001, Boston Edison
filed a registration statement on Form S-3 with the Securities
and Exchange Commission (SEC), using a shelf registration
process, to issue up to $500 million in debt securities. The
registration statement was declared effective by the SEC on
February 28, 2001. When issued, Boston Edison will use the
proceeds to pay at maturity long-term debt and equity securities,
refinance short-term debt and for other corporate purposes.
NSTAR's goal is to maintain a capital structure that preserves an
appropriate balance between debt and equity. Management believes
its liquidity and capital resources are sufficient to meet its
current and projected requirements.
New Accounting Principles
As of January 1, 2001, NSTAR adopted the Financial Accounting
Standards Board Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), as amended by Statements of Financial
Accounting Standards No. 137 and 138, and collectively referred
to as SFAS 133. SFAS 133 established accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in contracts possibly
including fixed-price fuel supply and power contracts) be
recorded on the Consolidated Balance Sheets as either an asset or
liability measured at its fair value.
The impact of this adoption has been assessed by the management
of NSTAR. As part of this assessment, NSTAR formed an
implementation team in 2000 consisting of key individuals from
various operational and financial areas of the organization. The
primary role of this team was to inventory and determine the
impact of potential contractual arrangements for SFAS 133
application. The implementation team has performed extensive
reviews of critical operating areas of NSTAR and has documented
its procedures in applying the requirements of SFAS 133 to
NSTAR's contractual arrangements in effect on January 1, 2001.
Based on NSTAR's assessment to date, the adoption of SFAS 133 has
not had a material adverse effect on its results of operations,
cash flows, or financial position.
Safe harbor cautionary statement
NSTAR occasionally makes forward-looking statements such as
forecasts and projections of expected future performance or
statements of its plans and objectives. These forward-looking
statements may be contained in filings with the SEC, press
releases and oral statements. Actual results could potentially
differ materially from these statements. Therefore, no
assurances can be given that the outcomes stated in such forward-
looking statements and estimates will be achieved.
The preceding sections include certain forward-looking statements
about operating results, environmental and legal issues.
The impacts of continued cost control procedures on operating
results could differ from current expectations. The effects of
changes in economic conditions, tax rates, interest rates,
technology and the prices and availability of operating supplies
could materially affect the projected operating results.
The impacts of various environmental, legal issues, and
regulatory matters could differ from current expectations. New
regulations or changes to existing regulations could impose
additional operating requirements or liabilities other than
expected. The effects of changes in specific hazardous waste
site conditions and cleanup technology could affect estimated
cleanup liabilities. The impacts of changes in available
information and circumstances regarding legal issues could affect
estimated litigation costs.
Part II - Other Information
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
There have been no material changes since year-end.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of shareholders of NSTAR was held on April 26,
2001. The holders of NSTAR's Common Shares were entitled to
elect four Class II trustees to serve until the Annual Meeting to
be held in the year 2004 and until the election and qualification
of their respective successors. Proxies for 44,373,565 shares of
the 53,032,546 entitled to vote were received.
The following table sets forth the names of the four persons
elected at the Annual Meeting to serve as trustees until 2004 and
the number of votes cast for or withheld with respect to each
person.
Class II Trustee For Withheld
Sheldon A. Buckler 43,786,906 586,659
Gary L. Countryman 43,806,285 567,280
Martina S. Horner 43,805,991 567,574
Thomas J. May 39,154,639 5,218,926
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits filed herewith and incorporated by reference:
Exhibit 4 - Instruments defining the rights of security
holders, including indentures
Management agrees to furnish to the Securities
and Exchange Commission, upon request, a copy
of any agreements or instruments defining the
rights of holders of any long-term debt whose
authorization does not exceed 10% of total
assets.
Exhibit 15 - Letter re unaudited interim financial information
15.1 - Report of Independent Accountants
Exhibit 99 - Additional exhibits
99.1 - Letter of Independent Accountants
Form S-4 Registration Statement filed by NSTAR
on May 12, 1999 (Filed No. 333-78285); Post-
effective Amendment to Form S-4 on form S-3
filed by NSTAR on August 19, 1999 (File No.
333-78285); Post-effective Amendment to form S-
4 on Form S-8 filed by NSTAR on August 19,
1999 (Filed No. 333-78285); Form S-8
Registration Statement filed by NSTAR on
August 19, 1999 (File No. 333-85559).
b) No Form 8-K was filed with the Securities and Exchange
Commission during the first quarter of 2001. However, a Form
8-K was filed on April 27, 2001 that reported on NSTAR's
recognition of an impairment of its entire investment in RCN
Corporation.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NSTAR
(Registrant)
Date: May 14, 2001 /s/ R. J. WEAFER, JR.
Robert J. Weafer, Jr.
Vice President, Controller
and Chief Accounting
Officer