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
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
(561) 691-7171
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of March 31, 2001, there were issued and outstanding 10,000 shares of ESI
Tractebel Funding Corp.'s common stock.
As of March 31, 2001, there were issued and outstanding 20 shares of ESI
Tractebel Acquisition Corp.'s common stock.
_________________________
This combined Form 10-Q 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.
SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), ESI Tractebel Funding Corp.
(Funding Corp.), Northeast Energy Associates, A Limited Partnership (NEA)
and North Jersey Energy Associates, A Limited Partnership (NJEA)
(collectively, the Partnerships), ESI Tractebel Acquisition Corp.
(Acquisition Corp.) and Northeast Energy, LP (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) made by or on behalf
of the Registrants in this combined Form 10-Q, 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 Federal Energy Regulatory
Commission and the Public Utility Regulatory Policies Act of 1978, as
amended, 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 - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 75,112 $ 35,360
Accounts receivable .............................................................. 42,871 32,857
Due from related party ........................................................... 1,458 2,762
Spare parts inventories .......................................................... 12,020 11,251
Fuel inventories ................................................................. 642 3,793
Prepaid expenses and other current assets ........................................ 5,034 452
Total current assets ........................................................... 137,137 86,475
Non-current assets:
Deferred debt issuance costs (net of accumulated amortization of $1,968 and
$1,811, respectively) .......................................................... 4,991 5,149
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $70,416 and $64,866, respectively) ............................. 448,580 454,068
Power purchase agreements (net of accumulated amortization of $165,569 and
$152,246, respectively) ........................................................ 723,187 736,510
Other assets ..................................................................... 85 107
Total non-current assets ....................................................... 1,176,843 1,195,834
TOTAL ASSETS ....................................................................... $1,313,980 $1,282,309
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. ............................. $ 20,160 $ 20,160
Accounts payable ................................................................. 28,903 17,457
Accrued interest payable ......................................................... 14,335 -
Due to related parties ........................................................... 3,436 954
Other accrued expenses ........................................................... 16,363 12,811
Total current liabilities ...................................................... 83,197 51,382
Non-current liabilities:
Deferred credit - fuel contracts ................................................. 266,523 271,735
Notes payable - the Funding Corp. ................................................ 398,720 398,720
Note payable - the Acquisition Corp. ............................................. 220,000 220,000
Amounts due utilities for energy bank balances ................................... 161,171 162,756
Lease payable .................................................................... 969 969
Total non-current liabilities .................................................. 1,047,383 1,054,180
COMMITMENTS AND CONTINGENCIES
Partners' equity:
General partners ................................................................. 3,598 3,534
Limited partners ................................................................. 176,333 173,213
Accumulated other comprehensive income ........................................... 3,469 -
Total partners' equity ......................................................... 183,400 176,747
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,313,980 $1,282,309
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements herein and the Notes to Consolidated and
Combined Financial Statements appearing in the combined Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 (2000 Form 10-K)
for NE LP.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2001 2000
REVENUES ............................................................................. $ 92,549 $ 90,102
COSTS AND EXPENSES:
Fuel ............................................................................... 46,342 37,120
Operations and maintenance ......................................................... 3,630 3,516
Depreciation and amortization ...................................................... 18,873 18,573
General and administrative ......................................................... 2,364 2,286
Total costs and expenses ......................................................... 71,209 61,495
OPERATING INCOME ..................................................................... 21,340 28,607
OTHER EXPENSE (INCOME):
Amortization of debt issuance costs ................................................ 157 157
Interest expense ................................................................... 18,616 19,239
Interest income .................................................................... (431) (330)
Change in fair value of derivatives ................................................ 18,081 -
Total other expense - net ........................................................ 36,423 19,066
Income (loss) before cumulative effect of a change in accounting principle ........... (15,083) 9,541
Cumulative effect of adopting FAS 133 - Accounting for Derivative Instruments
and Hedging Activities ............................................................. 18,268 -
NET INCOME............................................................................ $ 3,185 $ 9,541
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements herein and the Notes to Consolidated
and Combined Financial Statements appearing in the 2000 Form 10-K for NE LP.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2001 2000
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ 39,792 $ 34,130
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................................................... (40) -
Net cash used in investing activities ............................................ (40) -
CASH FLOWS FROM FINANCING ACTIVITIES ................................................. - -
Net increase in cash and cash equivalents ............................................ 39,752 34,130
Cash and cash equivalents at beginning of period ..................................... 35,360 33,085
Cash and cash equivalents at end of period ........................................... $ 75,112 $ 67,215
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 2000 Form 10-K for NE LP.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
CONDENSED COMBINED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 74,215 $ 34,471
Accounts receivable .............................................................. 42,871 32,857
Due from related party ........................................................... 1,458 2,762
Spare parts inventories .......................................................... 12,020 11,251
Fuel inventories ................................................................. 642 3,793
Prepaid expenses and other current assets ........................................ 5,034 452
Total current assets ........................................................... 136,240 85,586
Non-current assets:
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $70,416 and $64,866, respectively) ............................. 448,580 454,068
Power purchase agreements (net of accumulated amortization of $165,569 and
$152,246, respectively) ........................................................ 723,187 736,510
Other assets ..................................................................... 85 107
Total non-current assets ....................................................... 1,171,852 1,190,685
TOTAL ASSETS ....................................................................... $1,308,092 $1,276,271
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. ............................. $ 20,160 $ 20,160
Accounts payable ................................................................. 28,903 17,457
Accrued interest payable ......................................................... 9,940 -
Due to related parties ........................................................... 3,436 842
Other accrued expenses ........................................................... 16,220 12,784
Total current liabilities ...................................................... 78,659 51,243
Non-current liabilities:
Deferred credit - fuel contracts ................................................. 266,523 271,735
Notes payable - the Funding Corp. ................................................ 398,720 398,720
Amounts due utilities for energy bank balances ................................... 161,171 162,756
Lease payable .................................................................... 969 969
Total non-current liabilities .................................................. 827,383 834,180
COMMITMENTS AND CONTINGENCIES
Partners' equity:
General partner .................................................................. 3,987 3,909
Limited partners ................................................................. 394,594 386,939
Accumulated other comprehensive income ........................................... 3,469 -
Total partners' equity ......................................................... 402,050 390,848
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,308,092 $1,276,271
This report should be read in conjunction with the Notes to Condensed
Combined Financial Statements herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 2000 Form 10-K for NEA
and NJEA.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2001 2000
REVENUES ............................................................................. $ 92,549 $ 90,102
COSTS AND EXPENSES:
Fuel ............................................................................... 46,342 37,120
Operations and maintenance ......................................................... 3,630 3,516
Depreciation and amortization ...................................................... 18,873 18,573
General and administrative ......................................................... 2,364 2,286
Total costs and expenses ......................................................... 71,209 61,495
OPERATING INCOME ..................................................................... 21,340 28,607
OTHER EXPENSE (INCOME):
Interest expense ................................................................... 14,221 14,843
Interest income .................................................................... (427) (323)
Change in fair value of derivatives ................................................ 18,081 -
Total other expense - net ........................................................ 31,875 14,520
Income (loss) before cumulative effect of a change in accounting principle ........... (10,535) 14,087
Cumulative effect of adopting FAS 133 - Accounting for Derivative Instruments
and Hedging Activities ............................................................. 18,268 -
NET INCOME............................................................................ $ 7,733 $ 14,087
This report should be read in conjunction with the Notes to Condensed
Combined Financial Statements herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 2000 Form 10-K for NEA
and NJEA.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2001 2000
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................ $ 39,784 $ 34,089
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................................................... (40) -
Net cash used in investing activities ............................................ (40) -
CASH FLOWS FROM FINANCING ACTIVITIES ................................................. - -
Net increase in cash and cash equivalents ............................................ 39,744 34,089
Cash and cash equivalents at beginning of period ..................................... 34,471 32,144
Cash and cash equivalents at end of period ........................................... $ 74,215 $ 66,233
This report should be read in conjunction with the Notes to Condensed
Combined Financial Statements herein and the Notes to Consolidated and
Combined Financial Statements appearing in the 2000 Form 10-K for NEA
and NJEA.
ESI TRACTEBEL FUNDING CORP.
CONDENSED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2001 2000
ASSETS
Current assets:
Cash ............................................................................. $ 1 $ 1
Interest receivable from the Partnerships ........................................ 9,940 -
Current portion of notes receivable from the Partnerships ........................ 20,160 20,160
Total current assets ........................................................... 30,101 20,161
Notes receivable from the Partnerships ............................................. 398,720 398,720
TOTAL ASSETS ....................................................................... $ 428,821 $ 418,881
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt securities payable ....................................... $ 20,160 $ 20,160
Accrued interest ................................................................. 9,940 -
Total current liabilities ...................................................... 30,100 20,160
Debt securities payable ............................................................ 398,720 398,720
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding ..... 1 1
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................................... $ 428,821 $ 418,881
CONDENSED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2001 2000
Interest income .................................................................... $ 9,940 $ 10,496
Interest expense ................................................................... (9,940) (10,496)
NET INCOME.......................................................................... $ - $ -
These reports should be read in conjunction with the Notes to Condensed
Financial Statements herein and the Notes to Financial Statements appearing
in the 2000 Form 10-K for the Funding Corp.
ESI TRACTEBEL ACQUISITION CORP.
CONDENSED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
March 31, December 31,
2001 2000
ASSETS
Interest receivable from NE LP ..................................................... $ 4,395 $ -
Non-current assets:
Due from NE LP ................................................................... 152 152
Note receivable from NE LP ....................................................... 220,000 220,000
Total non-current assets ....................................................... 220,152 220,152
TOTAL ASSETS ....................................................................... $ 224,547 $ 220,152
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Income taxes payable ............................................................. $ 15 $ 14
Accrued interest ................................................................. 4,395 -
Total current liabilities ...................................................... 4,410 14
Deferred credit - interest rate hedge .............................................. 108 112
Debt securities payable ............................................................ 220,000 220,000
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, $.10 par value, 100 shares authorized, 20 shares issued
and outstanding ................................................................ - -
Retained earnings ................................................................ 29 26
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................................... $ 224,547 $ 220,152
CONDENSED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2001 2000
Interest income .................................................................... $ 4,395 $ 4,396
Interest expense ................................................................... 4,391 (4,393)
Income before income taxes ......................................................... 4 3
Income tax expense ................................................................. (1) (1)
NET INCOME.......................................................................... $ 3 $ 2
These reports should be read in conjunction with the Notes to Condensed
Financial Statements herein and the Notes to Financial Statements appearing
in the 2000 Form 10-K for the Acquisition Corp.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
ESI TRACTEBEL FUNDING CORP.
ESI TRACTEBEL ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements, condensed
combined financial statements and condensed financial statements should be
read in conjunction with the 2000 Form 10-K for the Registrants. In the
opinion of the Registrants' management, all adjustments (consisting of
normal recurring accruals) considered necessary for fair financial statement
presentation have been made. The Funding Corp. and the Acquisition Corp. had
no cash transactions for the three months ended March 31, 2001 and 2000 and
therefore have not presented a statement of cash flows. The results of
operations for an interim period may not give a true indication of results
for the year.
1. Combined Statement of Partners' Equity
The Combined Statement of Partners' Equity of NEA's and NJEA's general partner
(GP) and limited partner (LP) equity balances are comprised of the following:
NEA NJEA Consolidated
GP LP Total GP LP Total GP LP Total
(Thousands of Dollars)
Balances, December 31, 2000 .. $ 1,447 $ 143,336 $ 144,783 $ 2,462 $ 243,603 $ 246,065 $ 3,909 $ 386,939 $ 390,848
Balances, March 31, 2001 ..... $ 1,517 $ 150,309 $ 151,826 $ 2,503 $ 247,721 $ 250,224 $ 4,020 $ 398,030 $ 402,050
2. Accounting for Derivative Instruments and Hedging Activities
Effective January 1, 2001, NE LP and the Partnerships adopted Statement of
Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by FAS 137 and 138
(collectively, FAS 133). As a result, beginning in January 2001, derivative
instruments are recorded on NE LP's and the Partnerships' balance sheets as
an asset (in prepaid expenses and other current assets), measured at fair
value. NE LP and the Partnerships use derivative instruments (primarily
swaps) to manage the commodity price risk inherent in fuel purchases.
For NE LP and the Partnerships, changes in the derivatives' fair values are
recognized currently in earnings (in change in fair value derivatives) unless
hedge accounting is applied. While substantially all of NE LP's and the
Partnerships' derivative transactions are entered into for the purposes
described above, hedge accounting is only applied where specific criteria are
met and it is practicable to do so. In order to apply hedge accounting, the
transaction must be designated as a hedge, and it must be highly effective.
The hedging instrument's effectiveness is assessed utilizing regression
analysis at the inception of the hedge and on at least a quarterly basis
throughout its life. Hedges are considered highly effective when a correlation
coefficient of .8 or higher is achieved. Substantially all of the transactions
that NE LP and the Partnerships have designated as hedges are cash flow hedges.
The effective portion of the gain or loss on a derivative instrument designated
as a cash flow hedge is reported as a component of other comprehensive
income and is reclassified into earnings in the period(s) during which the
transaction being hedged affects earnings. The ineffective portion of these
hedges flows through earnings in the current period. Settlement gains and
losses are passed through fuel expense.
In January 2001, NE LP and the Partnerships recorded an $18.3 million gain as
the cumulative effect of adopting FAS 133, representing the effect of those
derivative instruments for which hedge accounting was not applied. For the
three months ended March 31, 2001, NE LP and the Partnerships recorded a net
mark-to-market loss of $18.1 million representing the change in fair value
of derivative instruments. For those contracts where hedge accounting
was applied, the adoption of the new rules resulted in a credit of
approximately $4.3 million to other comprehensive income for NE LP and
the Partnerships.
Comprehensive income of NE LP and the Partnerships, totaling $6.7 million and
$11.2 million, respectively, for the three months ended March 31, 2001,
includes net income and approximately $3.5 million of net unrealized gains on
qualifying cash flow hedges of forecasted fuel purchases through October 2001.
Accumulated other comprehensive income is separately displayed in NE LP's and
the Partnerships' balance sheets. All of the accumulated other comprehensive
income at March 31, 2001 will be reclassified into earnings within the next
twelve months as the hedged fuel is consumed. Comprehensive income of NE LP
and the Partnerships, totaling $9.5 million and $14.1 million, respectively,
for the three months ended March 31, 2000, includes net income.
In April 2001, the Financial Accounting Standards Board (FASB) reached
tentative conclusions on several issues related to the power generation
industry. After considering comments on the tentative conclusions, the FASB
will issue final guidance that would be applied in the quarter following
final resolution of the issues. The ultimate resolution of these issues
could result in a requirement to mark certain of NE LP's and the
Partnerships' power and fuel agreements to their fair values each reporting
period. At this time, management is unable to estimate the effects on the
financial statements of the tentative conclusions or any future decisions of
the FASB.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements, Notes to Condensed Combined Financial
Statements and Notes to Condensed Financial Statements contained herein and
Management's Discussion and Analysis of Financial Condition and Results of
Operations appearing in the 2000 Form 10-K for the Registrants. The results
of operations for an interim period may not give a true indication of
results for the year. In the following discussion, all comparisons are with
the corresponding items in the prior year.
Results of Operations
NE LP and the Partnerships - Net income declined in 2001 primarily due
to increased fuel costs, partly offset by slightly higher revenues and the
adoption of FAS 133. Revenues increased primarily as a result of increased
electricity sales prices. Revenues in 2001 were comprised of $91.3 million
of power sales to utilities and $1.2 million of steam sales. In 2000,
revenues were comprised of $88.8 million of power sales to utilities and
$1.3 million of steam sales. Power sales to utilities reflect changes in
utility energy bank balances of $6.0 million and $6.4 million in 2001 and
2000, respectively. The changes in the energy bank balances, which increased
reported revenues, are determined in accordance with scheduled or specified
rates under certain power purchase agreements. Fuel expense increased
primarily as a result of the increased price of natural gas required to
fuel the facilities. These fuel costs were partly offset in 2001 and 2000
by $5.2 million of deferred credit amortization for fuel contracts.
In January 2001, NE LP and the Partnerships recorded an $18.3 million gain
as the cumulative effect of adopting FAS 133, representing the effect of those
derivative instruments for which hedge accounting was not applied. In addition,
for the three months ended March 31, 2001, NE LP and the Partnerships recorded
a net mark-to-market loss of $18.1 million representing the change in fair
value of derivative instruments. (See Note 2.)
The Funding Corp. and the Acquisition Corp. - Both the Funding Corp. and the
Acquisition Corp. use interest income and/or principal payments received
from the notes receivable from the Partnerships and NE LP, respectively, to
make scheduled interest and/or principal payments on their outstanding debt.
Both are scheduled to make semi-annual debt and/or interest payments on June
30 and December 30, 2001. Interest expense for the Funding Corp. decreased
as a result of decreasing principal balances on the securities payable.
Liquidity and Capital Resources
The Registrants - Cash flow generated by the Partnerships year to date has
been and is expected to remain sufficient for at least the next twelve
months to fund operating expenses of the Registrants as well as fund the
debt service requirements of the Funding Corp. and the Acquisition Corp.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements 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)
ESI TRACTEBEL FUNDING CORP.
ESI TRACTEBEL ACQUISITION CORP.
(Registrants)
Date: May 15, 2001
ROBERT L. MCGRATH
Robert L. McGrath
Vice President and Treasurer of ESI Northeast Energy GP, Inc.
Treasurer of ESI Tractebel Funding Corp.
Treasurer of ESI Tractebel Acquisition Corp.
(Principal Financial and Principal Accounting Officer of the Registrants)