UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM U-9C-3
QUARTERLY REPORT PURSUANT TO RULE 58
For the quarterly period ended June 30, 2002
Northeast Utilities
-------------------
(Name of registered holding company)
107 Selden Street, Berlin, CT 06037
-----------------------------------
(Address of Principal Executive Officers)
Name and telephone number of officer to whom inquiries concerning this report
should be directed:
John P. Stack, Vice President-Accounting and Controller
Telephone Number: 860-665-2333
GENERAL INSTRUCTIONS
A. Use of Form
1. A reporting company, as defined herein, shall file a report on this form
within 60 days after the end of each of the first three quarters, and
within 90 days after the end of the fourth quarter, of the fiscal year
of the registered holding company. The period beginning on the date of
effectiveness of rule 58 and ending at the end of the quarter following
the quarter in which the rule becomes effective shall constitute the
initial period for which any report shall be filed, if applicable.
2. The requirement to provide specific information by means of this form
supersedes any requirement by order of the Commission to provide identical
information by means of periodic certificates under rule 24; but does not
so supersede and replace any requirement by order to provide information
by means of an annual report on Form U-13-60.
3. Information with respect to reporting companies that is required by Form
U-13-60 shall be provided exclusively on that form.
4. Notwithstanding the specific requirements of this form, this Commission
may informally request such further information as, in its opinion, may
be necessary or appropriate.
B. Statements of Monetary Amounts and Deficits
1. Amounts included in this form and in related financial statements
may be expressed in whole dollars, thousands of dollars or hundred
thousands of dollars.
2. Deficits and other similar entries shall be indicated by either
brackets or parentheses. An explanation should be provided by
footnote.
C. Formal Requirements
This form, including exhibits, shall be filed with Commission
electronically pursuant to Regulation S-T (17 CFR 232.10 et seq.). A
conformed copy of each such report shall be filed with each state
commission having jurisdiction over the retail rates of a public utility
company that is an associate company of a reporting company. Each report
shall provide the name and telephone number of the person to whom
inquiries concerning this report should be directed.
D. Definitions
As used in this form, the word "reporting company" means an energy-related
company or gas-related company, as defined in rule 58(b). All other words
and terms have the same meaning as in the Public Utility Holding Company
Act of 1935, as amended, and the rules and regulations thereunder.
ITEM 1 - ORGANIZATIONAL CHART
-------------------------------------------------------------------------------
Instructions
-------------------------------------------------------------------------------
1. Complete Item 1 only for the first three calendar quarters of the fiscal
year of the registered holding company.
2. Under the caption "Name of Reporting Company," list each energy-related
and gas-related company and each system company that directly or
indirectly holds securities thereof. Add the designation "(new)" for each
reporting company of which securities were acquired during the period, and
the designation "(*)" for each inactive company.
3. Under the caption "Percentage of Voting Securities Held," state the
aggregate percentage of the outstanding voting securities of the reporting
company held directly or indirectly by the registered holding company at
the end of the quarter.
4. Provide a narrative description of each reporting company's activities
during the reporting period.
-------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Percentage Activities
Energy of Voting reported
Name of or Gas Date of State of Securities Nature of during the
Reporting Co. Related Organization Organization Held Business period
----------------- ------- ------------ ------------- ----------------- -------------- ----------
NU Holding 1/4/99 Connecticut 100% by Unregulated (A)
Enterprises, Inc. Northeast businesses
Utilities holding
company
Select Energy 9/26/96 Connecticut 100% by Invest in (B)
Energy, Inc. NU energy-related
Enterprises, Inc. activities
Select Energy 3/17/99 Connecticut 100% by Invest in (C)
Energy NU energy-related
Portland Enterprises, Inc. activities
Pipeline, Inc.*
Northeast Energy 1/4/99 Connecticut 100% by Invest in (D)
Generation NU energy-related
Services Enterprises, Inc. activities
Company
Select Energy Energy 6/19/90 Massachusetts 100% by Invest in (E)
Services, Inc. NU energy-related
Enterprises, Inc. activities
Reeds Ferry Energy 7/15/64 New 100% by Invest in (F)
Supply Co., Inc. Hampshire Select Energy energy-related
Services, Inc. activities
HEC/Tobyhanna Energy 9/28/99 Massachusetts 100% by Invest in (G)
Energy Project, Select Energy energy-related
Inc. Services, Inc. activities
Select Energy Energy 10/12/94 Massachusetts 100% by Invest in (H)
Contracting, Inc. Select Energy energy-related
Services, Inc. activities
Yankee Energy Holding 2/15/00 Connecticut 100% by Public (I)
System, Inc. Northeast Utility
Utilities Holding
Company
Yankee Energy Energy 7/2/93 Connecticut 100% by Invest in (J)
Services Company* Yankee Energy energy-related
System, Inc. activities
R.M. Energy 11/22/94 Connecticut 10% by Invest in (K)
Services, Inc. Yankee Energy energy-related
System, Inc. activities
Acumentrics Energy 09/13/00 Massachusetts 5% by Invest in (L)
Corporation NU energy-related
Enterprises, Inc. activities
ERI/HEC Energy 09/30/00 Delaware 50% by Invest in (M)
EFA-Med, LLC Select Energy energy-related
Services, Inc. activities
E.S. Boulos Energy 01/19/01 Connecticut 100% by Invest in (N)
Company Northeast energy-related
Generation activities
Services Company
NGS Mechanical Energy 01/24/01 Connecticut 100% by Provide (O)
Company Northeast mechanical
Generation construction
Services Company and maintenance
services
HEC/CJTS Energy Energy 03/02/01 Delaware 100% by Facilitate (P)
Center LLC Select Energy construction
Services, Inc. financing
Select Energy Energy 02/13/96 Delaware 100% by Select Invest in (Q)
New York Energy, Inc. energy-related
activities
(A) NU Enterprises, Inc. is not the "reporting company" but is included in
this Item 1 because it holds, directly or indirectly, voting securities
issued by reporting companies as indicated above.
(B) Select Energy, Inc. (Select Energy) is an integrated energy business that
buys, sells, markets and trades electricity, gas and oil and
energy-related products and services to both wholesale and retail
customers in the northeastern United States. Select Energy procures and
delivers energy and capacity required to serve its electric, gas and oil
customers. Under the umbrella of the Select Energy brand, Select Energy,
collectively with its affiliated competitive energy businesses, provides
a wide range of energy products and energy services.
Select Energy is a licensed retail electricity supplier and is registered
with local electric distribution companies in the states of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New
York, Pennsylvania, Rhode Island and Virginia. Select Energy is a
registered gas marketer with local gas distribution companies in the
states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and
Virginia.
(C) Select Energy Portland Pipeline, Inc. (SEPPI) acquired a 5% interest in
Portland Natural Gas Transmission System partnership in March 1999 and
sold this interest in June 2001.
(D) Northeast Generation Services Company (NGS) was established to provide a
full range of energy-related operation and maintenance services for
larger industrial, institutional and power generation customers
throughout the 11-state Northeast area. NGS' current business segments
focus on providing turnkey Manage and Operate Services (MOS) and also a
full range of Industrial Services (IS) and Consulting Services (CS).
MOS is a service that is designed for generation asset owners. NGS has
the ability to offer station management and operation services with a
focus on optimizing the value of that specific asset with the owner.
Within the IS platform, its offerings include mechanical and electrical
construction and maintenance services, as well as environmental
maintenance/compliance services. Within the CS platform, the product
and service offerings include engineering and environmental consulting
services, with an emphasis on power plant system design.
(E) Select Energy Services, Inc. (formerly HEC Inc.) is not the "reporting
company" but is included in this Item 1 because it holds, directly or
indirectly, voting securities issued by reporting companies as indicated
above.
(F) Reed's Ferry Supply Corporation is an equipment wholesaler which
purchases equipment on behalf of Select Energy Contracting, Inc.
(G) HEC/Tobyhanna Energy Project, Inc. was established as a special purpose
entity to manage the assets of an Energy Savings Performance Contract
(ESPC) project at the Tobyhanna Army Depot.
(H) Select Energy Contracting, Inc. designs, manages and directs the
construction of, and/or installing of mechanical, water, and electrical
systems, energy and other resource consuming equipment.
(I) Yankee Energy System, Inc. is not the "reporting company" but is included
in this Item 1 because it holds, directly or indirectly, voting
securities issued by reporting companies as indicated above.
(J) Yankee Energy Services Company (YESCO) is winding down its energy-related
services for its customers. YESCO has disposed of most of its assets and
is in the process of liquidating the remainder of its assets.
(K) R. M. Services, Inc. provides consumer collection services for companies
throughout the United States.
(L) Acumentrics Corporation develops, manufactures, and distributes advanced
power generation, power quality and power protection devices including a
high-speed flywheel and advanced technology fuel cells.
(M) ERI/HEC EFA-Med, LLC is a Delaware limited liability company that was
formed by Select Energy Services, Inc., and ERI Services, Inc. to enter
into an indefinite delivery/indefinite quantity contract with the U.S.
Navy. Under the contract, the Navy will issue Delivery Orders for energy
services work at U.S. Government facilities located in Bahrain, Greece,
Egypt, Italy, Spain, Turkey, and the United Kingdom. The LLC will
designate either ERI or Select Energy Services, Inc. to perform each of
the Delivery Orders. The LLC will also act as the conduit for any
project-related financing. ERI Services, Inc. and Select Energy
Services, Inc. each own 50% of the LLC.
(N) E. S. Boulos Company (Boulos) is in the electrical construction business
in Maine. Boulos is registered to do business in Maine, Massachusetts,
New Hampshire, and Vermont.
(O) NGS Mechanical Company (NGSM) performs mechanical construction and
maintenance services. NGSM is registered to do business in
Massachusetts, New Hampshire, Maine, Vermont, Rhode Island, and New York.
(P) HEC/CJTS Energy Center LLC (HEC/CTJS) facilitated the construction of an
energy center at of the Connecticut Juvenile Training School in
Middletown, Connecticut. HEC/CJTS does not have any employees nor does
it conduct any other activities.
(Q) Select Energy New York, Inc. (SENY) is engaged in the brokering,
marketing, transportation, storage, and sale of energy commodities in
the state of New York.
ITEM 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
-------------------------------------------------------------------------------
Instruction
-----------
With respect to a transaction with an associate company, report only the type
and principal amount of securities involved.
-------------------------------------------------------------------------------
Person
Company Type of Principal to Whom Collateral Consideration Company Amount of
Issuing Security Amount of Issue or Cost of Security Given With Received for Contributing Capital
Security Issued Security Renewal Capital Was Issued Security Each Security Capital Contribution
-------------- ------------ ------------- -------- ------- ---------- ---------- ------------- ------------ ------------
NU
Select Enterprises,
Energy, Inc. N/A N/A N/A N/A N/A N/A N/A Inc. $50,000,000
Northeast
Generation
Services
Company No transactions this quarter.
Select Energy
Contracting,
Inc. No transactions this quarter.
Reeds Ferry
Supply Co.,
Inc. No transactions this quarter.
HEC/Tobyhanna
Energy
Project, Inc. No transactions this quarter.
Yankee Energy
Services
Company No transactions this quarter.
R.M.
Services,
Inc. No transactions this quarter.
Acumentrics
Corporation No transactions this quarter.
ERI/HEC
EFA-Med, LLC No transactions this quarter.
E.S. Boulos
Company No transactions this quarter.
NGS Mechanical
Company No transactions this quarter.
HEC/CJTS
Energy
Center LLC No transactions this quarter.
Northeast
Utilities No transactions this quarter.
Select
Energy
New York,
Inc. No transactions this quarter.
ITEM 3 - ASSOCIATE TRANSACTIONS
-------------------------------------------------------------------------------
Instructions
------------
1. This item is used to report the performance during the quarter of
contracts among reporting companies and their associate companies,
including other reporting companies, for service, sales and construction.
A copy of any such contract not filed previously should be provided as an
exhibit pursuant to Item 6.B.
2. Parts I and II concern transactions performed by reporting companies on
behalf of associate companies, and transactions performed by associate
companies on behalf of reporting companies, respectively.
-------------------------------------------------------------------------------
Part I - Transactions performed by reporting companies on behalf
of associate companies.
Total Amount
Billed*
Reporting Associate
Company Company Types of Three Months
Rendering Receiving Services Ended
Services Services Rendered June 30, 2002
----------------------- ------------------- -------------- ------------------
(Thousands
of Dollars)
Northeast Select
Generation Energy, Inc. Electrical and
Services Mechanical services $ 18
Company ==================
Northeast The
Generation Connecticut
Services Light & Power Electrical and
Company Company Mechanical services $ 13
==================
Northeast Western
Generation Massachusetts Electrical and
Services Electric Company Mechanical services $ 3
Company ==================
Northeast Public Service
Generation Company of Electrical and
Services New Hampshire Mechanical services $ 209
Company ==================
Northeast Holyoke Water
Generation Power Company Electrical and
Services Mechanical services $ 2,753
Company ==================
Northeast Northeast
Generation Generation Electrical and
Services Company Mechanical services $ 6,696
Company ==================
Wholesale
Reeds Ferry Select Energy Purchasing
Supply Co., Inc. Contracting, Inc. Services $ 251
==================
Northeast North Atlantic
Generation Energy Service Electrical and
Services Corporation Mechanical services $ (29)
Company ==================
Northeast
Generation Yankee Energy Electrical and
Services Services Company Mechanical services $ 23
Company ==================
Northeast Northeast
Generation Utilities
Services Service Electrical and
Company Company Mechanical services $ 94
==================
Part II - Transactions performed by associate companies on behalf
of reporting companies.
Total Amount
Billed*
Associate Reporting
Company Company Types of Three Months
Rendering Receiving Services Ended
Services Services Rendered June 30, 2002
----------------------- ------------------- -------------- ------------------
(Thousands
of Dollars)
Public Service Company Select
of New Hampshire Energy, Inc. Miscellaneous $ 4
==================
* 'Total Amount Billed' is direct costs only.
ITEM 4 - SUMMARY OF AGGREGATE INVESTMENT
Investments in energy-related companies:
---------------------------------------
(Thousands of Dollars)
Total consolidated capitalization as of 06/30/02 $6,877,034 line 1
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 1,031,555 line 2
Greater of $50 million or line 2 $1,031,555 line 3
Total current aggregate investment:
(categorized by major line of
energy-related business):
Select Energy, Inc. $692,342
Northeast Generation Services Company 28,548
Select Energy Contracting, Inc. 33,509
Select Energy New York, Inc. 36,699
Reeds Ferry Supply Co., Inc. 7
HEC/Tobyhanna Energy Project, Inc. -
Yankee Energy Services Company 8,382
E.S. Boulos Company 7,539
R.M. Services, Inc. 13,799
NGS Mechanical Company 10
Acumentrics Corporation 10,000
ERI/HEC EFA-Med, LLC 6
HEC/CJTS Energy Center LLC 10
-----------
Current aggregate investment 830,851
-----------
Elimination * 17,759
-----------
Total current aggregate investment 813,092 line 4
-----------
Difference between the greater of $50 million or 15% of
capitalization and the total aggregate investment of the
registered holding company system $218,463 line 5
===========
*Elimination is for capital contributions made from a parent company who is a
reporting company to a subsidiary who is also a reporting company.
ITEM 5 - OTHER INVESTMENTS
-------------------------------------------------------------------------------
Instruction
-----------
This item concerns investments in energy-related and gas-related companies that
are excluded from the calculation of aggregate investment under rule 58.
-------------------------------------------------------------------------------
Major Line Other Other
of Energy- Investment Investment
Related in Last in This Reason for Difference
Business U-9C-3 Report U-9C-3 Report in Other Investment
------------- ------------- ------------- ------------------------
NONE
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
-------------------------------------------------------------------------------
Instructions
-------------------------------------------------------------------------------
A. Financial Statements
1. Financial statements are required for reporting companies in which
the registered holding company system has at least 50% equity or
other ownership interest. For all other rule 58 companies, the
registered holding company shall make available to the Commission
such financial statements as are available to it.
2. For each reporting company, provide a balance sheet as of the end
of the quarter and income statements for the three-month and
year-to-date periods ending as of the end of the quarter, together
with any notes thereto. Financial statements shall be for the first
three quarters of the fiscal year of the registered holding company.
3. If a reporting company and each of its subsidiaries engage
exclusively in single category of energy-related or gas-related
activity, consolidated financial statements may be filed.
4. Separate financial statements need not be filed for inactive
companies or for companies engaged solely in the ownership of
interests in energy-related or gas-related companies.
B. Exhibits
1. Copies of contracts required to be provided by Item 3 shall be filed
as exhibits.
2. A certificate stating that a copy of the report for the previous quarter
has been filed with interested state commissions shall be filed as an
exhibit. The certificate shall provide the names and addresses of the
state commissions.
-------------------------------------------------------------------------------
A. Financial Statements
Select Energy, Inc.:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
Northeast Generation Services Company:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
Select Energy Contracting, Inc.:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
Reeds Ferry Supply Co., Inc.:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
HEC/Tobyhanna Energy Project, Inc.:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
Yankee Energy Services Company:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
ERI/HEC EFA-Med, LLC:
Not available as of June 30, 2002
E. S. Boulos Company:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
NGS Mechanical Company:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
Northeast Utilities (Parent):
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
HEC/CJTS Energy Center LLC:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
Select Energy New York:
Balance Sheet - As of June 30, 2002
Income Statement - Three months and six months ended June 30, 2002
B. Exhibits
Exhibit No. Description
----------- -----------
6.B.1.1a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1c Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1d Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1e Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1f Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1g Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1h Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.2 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3c Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.4a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.4b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.5 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.6a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.6b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.7 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.2.1 The company certifies that a conformed copy of Form U-9C-3 for
the previous quarter was filed with the following state
commissions:
Ms. Louise E. Rickard
Acting Executive Secretary
Department of Public Utility Control
10 Franklin Square
New Britain, CT 06051
Ms. Mary L. Cottrell, Secretary
Massachusetts Department of Telecommunications and Energy
100 Cambridge Street
Boston, MA 02202
Mr. Thomas B. Getz
Executive Director and Secretary
State of New Hampshire
Public Utilities Commission
8 Old Suncook Road, Building One
Concord, NH 03301-7319
SELECT ENERGY, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Receivables, net $ 315,329
Accounts receivable from affiliated companies 102,005
Special deposits 11,756
Unrealized net gains on mark-to-market transactions 85,808
Prepaid wholesale power purchases 39,658
Prepayments and other 5,819
-------------
560,375
-------------
Property, Plant and Equipment:
Competitive energy 12,555
Less: Accumulated provision for depreciation
and amortization 5,329
-------------
7,226
Construction work in progress 1,343
-------------
8,569
-------------
Deferred Debits and Other Assets:
Intangibles, net 19,340
Accumulated deferred income taxes 6,516
Prepaid pensions 2,516
Other 39,280
-------------
67,652
-------------
Total Assets $ 636,596
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
-------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
-------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 103,400
Accounts payable 323,199
Accounts payable to affiliated companies 8,814
Accrued taxes 7,914
Other 34,440
-------------
477,767
-------------
Deferred Credits and Other Liabilities 98,779
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 249,400
Accumulated deficit (188,354)
Accumulated other comprehensive loss (996)
-------------
Common Stockholder's Equity 60,050
-------------
Total Capitalization 60,050
-------------
Total Liabilities and Capitalization $ 636,596
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- -------------
(Thousands of Dollars)
Operating Revenues $ 748,267 $ 1,667,002
------------- -------------
Operating Expenses:
Purchased power, net interchange
power and capacity 756,610 1,692,746
Other 18,249 46,851
Depreciation and amortization 2,233 3,965
Taxes other than income taxes 1,968 3,706
------------- -------------
Total operating expenses 779,060 1,747,268
------------- -------------
Operating Loss (30,793) (80,266)
Other Income, Net 138 5,867
------------- -------------
Loss Before Interest Expense and
Income Tax Benefit (30,655) (74,399)
Interest Expense, Net 1,146 2,501
------------- -------------
Loss Before Income Tax Benefit (31,801) (76,900)
Income Tax Benefit (12,503) (32,448)
------------- -------------
Net Loss $ (19,298) $ (44,452)
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1
Receivables, net 4,091
Accounts receivable from affiliated companies 1,975
Unbilled revenues 6,079
Fuel, materials and supplies, at average cost 496
Prepayments and other 2,251
-------------
14,893
-------------
Property, Plant and Equipment:
Competitive Energy 1,594
Less: Accumulated provision for depreciation 785
-------------
809
Construction work in progress 1,528
-------------
2,337
-------------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 433
Other 16,155
-------------
16,588
-------------
Total Assets $ 33,818
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 15,800
Accounts payable 1,088
Accounts payable to affiliated companies 2,612
Accrued taxes 1,116
Other 69
-------------
20,685
-------------
Deferred Credits and Other Liabilities 406
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 10,348
Retained earnings 2,379
-------------
Common Stockholder's Equity 12,727
-------------
Total Capitalization 12,727
-------------
Total Liabilities and Capitalization $ 33,818
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- -------------
(Thousands of Dollars)
Operating Revenues $ 14,881 $ 28,465
------------- -------------
Operating Expenses:
Operating 528 864
Other 11,896 22,383
Maintenance 3,438 6,865
Depreciation 63 46
Taxes other than income taxes 422 996
------------- -------------
Total operating expenses 16,347 31,154
------------- -------------
Operating Loss (1,466) (2,689)
Other Income, Net 688 990
------------- -------------
Loss Before Interest Expense and Income
Tax Benefit (778) (1,699)
Interest Expense, Net 28 144
------------- -------------
Loss Before Income Tax Benefit (806) (1,843)
Income Tax Benefit (418) (989)
------------- -------------
Net Loss $ (388) $ (854)
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 165
Receivables, net 14,532
Accounts receivable from affiliated companies 11
Materials and supplies, at average cost 322
Prepayments and other 340
-------------
15,370
-------------
Property, Plant and Equipment:
Competitive Energy 5,851
Less: Accumulated provision for depreciation 3,416
-------------
2,435
-------------
Deferred Debits and Other Assets:
Goodwill 17,260
Other 54
-------------
17,314
-------------
Total Assets $ 35,119
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 4,361
Accounts payable to affiliated companies 10,382
Accrued taxes 1,328
Other 1,670
-------------
17,741
-------------
Deferred Credits and Other Liabilities:
Deferred taxes 418
Other 907
-------------
1,325
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $1 par value - 100,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 14,910
Retained earnings 1,143
-------------
Common Stockholder's Equity 16,053
-------------
Total Capitalization 16,053
-------------
Total Liabilities and Capitalization $ 35,119
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- -------------
(Thousands of Dollars)
Operating Revenues $ 16,086 $ 29,992
------------- -------------
Operating Expenses:
Operation 14,844 28,184
Maintenance 125 230
Depreciation and amortization 283 566
Taxes other than income taxes 76 189
Loss on disposition of property 15 16
------------- -------------
Total operating expenses 15,343 29,185
------------- -------------
Operating Income 743 807
Other Income, Net 2 5
------------- -------------
Income Before Interest and Income Tax Expense 745 812
Interest Expense, Net 63 127
------------- -------------
Income Before Income Tax Expense 682 685
Income Tax Expense 271 284
------------- -------------
Net Income $ 411 $ 401
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
REEDS FERRY SUPPLY CO., INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 6
Receivables, net 92
-------------
98
-------------
Property, Plant and Equipment:
Organization costs, net 247
-------------
Total Assets $ 345
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 92
Accounts payable to affiliated companies 295
-------------
387
Capitalization: -------------
Common Stockholder's Equity:
Common stock, $0 par value - 200 shares
authorized and 100 shares outstanding 4
Capital surplus, paid in 3
Accumulated deficit (49)
-------------
Common Stockholder's Equity (42)
-------------
Total Capitalization (42)
-------------
Total Liabilities and Capitalization $ 345
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
REEDS FERRY SUPPLY CO., INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- -------------
(Thousands of Dollars)
Operating Revenues $ 251 $ 473
Operating Expenses 251 473
------------- -------------
Net Income $ - $ -
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/TOBYHANNA ENERGY PROJECT, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 2,892
Receivables, net 876
-------------
3,768
-------------
Property, Plant and Equipment:
Contracts receivable 25,782
Other, net 625
-------------
26,407
-------------
Total Assets $ 30,175
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 3,422
Accrued interest 732
Other 378
-------------
Total current liabilities 4,532
-------------
Capitalization:
Long-Term Debt 25,494
-------------
Common Stockholder's Equity:
Common stock, $1 par value - 100 shares
authorized and outstanding -
Retained earnings 149
-------------
Common Stockholder's Equity 149
-------------
Total Capitalization 25,643
-------------
Total Liabilities and Capitalization $ 30,175
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/TOBYHANNA ENERGY PROJECT, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- -------------
(Thousands of Dollars)
Other Income, Net $ 492 $ 993
Interest Expense, Net 494 994
------------- -------------
Loss Before Income Tax Expense (2) (1)
Income Tax Expense 35 75
------------- -------------
Net Loss $ (37) $ (76)
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
-------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 102
Taxes receivable 516
-------------
618
-------------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 1,399
Other 5,549
-------------
6,948
-------------
Total Assets $ 7,566
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 1,362
Accounts payable 100
Accounts payable to affiliated companies 6
-------------
1,468
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $0 par value - 10,000 shares
authorized and 200 shares outstanding 1
Capital surplus, paid in 7,881
Accumulated deficit (1,784)
-------------
Common Stockholder's Equity 6,098
-------------
Total Capitalization 6,098
-------------
Total Liabilities and Capitalization $ 7,566
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
-------------- ------------
(Thousands of Dollars)
Operating Revenues $ (121) $ 546
Operating Expenses (53) 734
------------- ------------
Operating Loss (68) (188)
Interest Expense, Net 5 54
------------- ------------
Loss Before Income Tax Benefit (73) (242)
Income Tax Benefit (42) (109)
------------- ------------
Net Loss $ (31) $ (133)
============= ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Receivables, net $ 10,594
Accounts receivable from affiliated companies 649
Unbilled revenues 2,413
Materials and supplies, at average cost 103
-------------
13,759
-------------
Property, Plant and Equipment:
Competitive Energy 671
Less: Accumulated provision for depreciation 140
-------------
531
-------------
Deferred Debits and Other Assets:
Goodwill 6,963
Other 37
-------------
7,000
-------------
Total Assets $ 21,290
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been
made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Advance from NGS, non-interest bearing $ 2,948
Accounts payable 2,798
Accounts payable to affiliated companies 8
Accrued taxes 1,641
Other 1,024
-------------
8,419
-------------
Deferred Credits and Other Liabilities 711
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 7,539
Retained earnings 4,621
-------------
Common Stockholder's Equity 12,160
-------------
Total Capitalization 12,160
-------------
Total Liabilities and Capitalization $ 21,290
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- ------------
(Thousands of Dollars)
Operating Revenues $ 16,433 $ 30,228
------------- ------------
Operating Expenses:
Operating 374 656
Maintenance 15,018 28,001
Depreciation 31 59
------------- ------------
Total operating expenses 15,423 28,716
------------- ------------
Operating Income 1,010 1,512
Other Income, Net 125 296
------------- ------------
Income Before Income Tax Expense 1,135 1,808
Income Tax Expense 358 593
------------- ------------
Net Income $ 777 $ 1,215
============= ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NGS MECHANICAL COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 10
Taxes Receivable 1
-------------
Total Assets $ 11
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 3
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $0 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 10
Accumulated deficit (2)
-------------
Common Stockholder's Equity 8
-------------
Total Capitalization 8
-------------
Total Liabilities and Capitalization $ 11
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NGS MECHANICAL COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
-------------- ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
Operating Expenses 1 1
------------- -------------
Operating Loss (1) (1)
Income Tax Benefit (1) -
------------- -------------
Net Loss $ - $ (1)
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1,102
Notes receivable from affiliated companies 222,100
Receivables, net 532
Accounts receivable from affiliated companies 2,324
Prepayments and other 1,070
-------------
227,128
-------------
Other Property and Investment:
Investments in subsidiary companies, at equity 2,386,552
Investments in transmission companies, at equity 11,779
Other 14
-------------
2,398,345
-------------
Deferred Debits and Other Assets 6,081
-------------
Total Assets $ 2,631,554
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
(Unaudited)
June 30,
2002
-------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Notes payable to bank $ 80,000
Long-term debt - current portion 23,000
Accounts payable to affiliated companies 1,507
Accrued taxes 1,966
Accrued interest 5,889
Other 18,773
-------------
131,135
-------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 5,533
Other 167
-------------
5,700
-------------
Capitalization:
Long-Term Debt 351,000
-------------
Common Stockholder's Equity:
Common shares, $5 par value - authorized
225,000,000 shares; 149,271,168 shares issued and
129,773,079 shares outstanding 746,356
Capital surplus, paid in 1,109,741
Deferred contribution plan - employee stock
ownership plan (95,501)
Retained earnings 678,593
Accumulated other comprehensive income 1,383
Treasury stock (296,853)
-------------
Common Stockholder's Equity 2,143,719
-------------
Total Capitalization 2,494,719
-------------
Total Liabilities and Capitalization $ 2,631,554
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
STATEMENT OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------ -----------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------- -------------
Operating Expenses:
Operation expense 3,557 9,156
Taxes other than income taxes 7 26
------------- -------------
Total operating expenses 3,564 9,182
------------- -------------
Operating Loss (3,564) (9,182)
------------- -------------
Other Income:
Equity in earnings of subsidiaries 34,448 56,974
Equity in earnings of transmission companies 486 1,220
Other, net 2,703 5,121
------------- -------------
Other Income, Net 37,637 63,315
------------- -------------
Income Before Interest and Income Tax Benefit 34,073 54,133
------------- -------------
Interest Expense:
Interest on long-term debt 8,892 13,900
Other interest 858 1,107
------------- -------------
Interest expense, net 9,750 15,007
------------- -------------
Income Before Income Tax Benefit 24,323 39,126
Income Tax Benefit (4,534) (8,373)
------------- -------------
Net Income for Common Shares $ 28,857 $ 47,499
============= =============
Basic and Fully Diluted Earnings Per Common Share $ 0.22 $ 0.37
============= =============
Basic Common Shares Outstanding (average) 129,504,005 129,590,899
============= =============
Fully Diluted Common Shares Outstanding (average) 129,754,946 129,871,495
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of the results of operations for the period shown have
been made.
See accompanying notes to financial statements.
SELECT ENERGY NEW YORK, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
-------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 19,411
Receivables, net 36,267
Accounts receivable from affiliated companies 377
Special deposits 2,363
Unrealized net gains on mark-to-market transactions 2,629
Prepayments and other 13,995
-------------
75,042
-------------
Property Plant and Equipment:
Competitive energy 2,255
Less: Accumulated provision for depreciation
and amortization 2,104
-------------
151
-------------
Deferred Debits and Other Assets 3,515
-------------
Total Assets $ 78,708
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY NEW YORK, INC.
BALANCE SHEET
(Unaudited)
June 30,
2002
--------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
-------------------------------
Current Liabilities:
Accounts payable $ 26,957
Accounts payable to affiliated companies 486
Accrued taxes 2,122
Other 2,976
-------------
32,541
-------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 600
Other 14
-------------
614
-------------
Capitalization:
Long-Term Debt 26,699
-------------
Common Stockholder's Equity:
Common stock, $1 par value - authorized
and outstanding 10,000 shares 10
Capital surplus, paid in 10,210
Retained earnings 8,634
-------------
Common Stockholder's Equity 18,854
-------------
Total Capitalization 45,553
-------------
Total Liabilities and Capitalization $ 78,708
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY NEW YORK, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
-------------- -------------
(Thousands of Dollars)
Operating Revenues $ 64,844 $ 135,127
------------- -------------
Operating Expenses:
Purchased power, net interchange
power and capacity 62,398 120,180
Other 2,030 4,388
------------- -------------
Total operating expenses 64,428 124,568
------------- -------------
Operating Income 416 10,559
Other Income, Net 86 81
------------- -------------
Income Before Interest and Income Tax Expense 502 10,640
Interest Expense, Net 191 388
------------- -------------
Income Before Income Tax Expense 311 10,252
Income Tax Expense 125 4,312
------------- -------------
Net Income $ 186 $ 5,940
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/CJTS ENERGY CENTER LLC
BALANCE SHEET
(Unaudited)
June 30,
2002
-------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1
-------------
1
-------------
Total Assets $ 1
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Capitalization:
Common Stockholder's Equity:
Capital surplus, paid in $ 10
Accumulated deficit (9)
-------------
Common Stockholder's Equity 1
-------------
Total Capitalization 1
-------------
Total Liabilities and Capitalization $ 1
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/CJTS ENERGY CENTER LLC
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2002 2002
------------- ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ ------------
Operating Expenses:
Other - -
------------ ------------
Total operating expenses - -
------------ ------------
Net Income $ - $ -
============ ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
Northeast Utilities
Select Energy, Inc.
Northeast Generation Services Company
E.S. Boulos Company
NGS Mechanical, Inc.
Select Energy Contracting, Inc.
Reeds Ferry Supply Co., Inc.
HEC/Tobyhanna Energy Project, Inc.
HEC/CJTS Energy Center, LLC
ERI/HEC EFA-Med, LLC
Yankee Energy Services Company
R.M. Services, Inc.
Acumentrics Corporation
Select Energy New York, Inc.
Notes to Financial Statements (Unaudited)
1. About Northeast Utilities
Northeast Utilities (NU) is the parent company of the Northeast Utilities
system (NU system). The NU system's regulated utilities furnish franchised
retail electric service in Connecticut, New Hampshire and western
Massachusetts through three wholly owned subsidiaries: The Connecticut Light
and Power Company, Public Service Company of New Hampshire (PSNH) and Western
Massachusetts Electric Company. Another wholly owned subsidiary, North
Atlantic Energy Corporation, sells all of its entitlement to the capacity and
output of the Seabrook Station nuclear unit (Seabrook) to PSNH under the
terms of two life-of-unit, full cost recovery contracts. A fifth wholly owned
subsidiary, Holyoke Water Power Company, also is engaged in the production of
electric power. A sixth wholly owned subsidiary, Yankee Energy System, Inc.
(Yankee) is the parent company of Yankee Gas Services Company, Connecticut's
largest natural gas distribution system.
Several wholly owned subsidiaries of NU provide support services for the NU
system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company provides centralized accounting,
administrative, engineering, financial, information resources, legal,
operational, planning, purchasing, and other services to the NU system
companies. North Atlantic Energy Service Corporation has operational
responsibility for Seabrook. Three other subsidiaries construct, acquire or
lease some of the property and facilities used by the NU system companies.
NU Enterprises, Inc. (NUEI) is a wholly owned subsidiary of NU and acts as
the holding company for certain of NU's competitive energy subsidiaries.
Northeast Generation Company was formed to acquire and manage generation
facilities. Select Energy, Inc. (Select Energy), and its subsidiary Select
Energy New York, (SENY), Northeast Generation Services Company and its
subsidiaries (NGS), Select Energy Services, Inc., and its subsidiaries (SESI),
and Mode 1 Communications, Inc., engage in a variety of energy-related and
telecommunications activities, as applicable, primarily in the competitive
energy retail and wholesale commodity, marketing and services fields. E.S.
Boulos Company (Boulos) and NGS Mechanical, Inc. (NGS Mechanical) are wholly
owned subsidiaries of NGS. Select Energy Contracting, Inc. (Select Energy
Contracting), Reeds Ferry Supply Co., Inc. (Reeds Ferry), HEC/Tobyhanna
Energy Project, Inc., (HEC/Tobyhanna), and HEC/CJTS Energy Center, LLC
(HEC/CJTS) are wholly owned subsidiaries of SESI. Another company, ERI/HEC
EFA-Med, LLC (ERI/HEC), is 50 percent owned by SESI. On September 26,
2000, NUEI invested $10 million in Acumentrics Corporation (Acumentrics)
in return for a 5 percent ownership share of that company.
Yankee maintains certain wholly owned subsidiaries including Yankee Energy
Services Company (YESCO) and owns 10 percent of the voting securities of
R.M. Services, Inc. (R.M. Services).
Select Energy, SENY, NGS, Boulos, NGS Mechanical, Select Energy Contracting,
Reeds Ferry, HEC/Tobyhanna, HEC/CJTS, ERI/HEC, YESCO, R.M. Services and
Acumentrics, are "energy-related companies" under Rule 58.
2. About Select Energy
Select Energy is an integrated energy business that buys, markets, sells, and
trades electricity, gas, oil and energy-related products and services to both
wholesale and retail customers in the Northeastern United States. Select
Energy procures and delivers energy and capacity required to serve its
electric, gas and oil customers. Select Energy, collectively with its
affiliated competitive energy businesses, provides a wide range of energy
products and energy services.
Select Energy is a licensed retail electricity supplier and is registered
with local electric distribution companies in the states of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island, and Virginia. Select Energy is a registered gas
marketer with local gas distribution companies in the states of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island, and Virginia.
3. About NGS
NGS was formed to provide management, operation and maintenance services to
the electric generation market, as well as to large industrial customers, in
the Northeastern United States. NGS also provides consulting services which
include engineering services, construction management, permitting, and
compliance management.
4. About Boulos
Boulos is an electrical construction company which specializes in high voltage
electrical construction and maintenance in Maine, Massachusetts, New Hampshire,
and Vermont. Boulos is wholly owned by NGS.
5. About NGS Mechanical
NGS Mechanical was formed to provide mechanical services initially in certain
New England states and New York. NGS Mechanical is wholly owned by NGS.
6. About Select Energy Contracting
Select Energy Contracting designs, manages, and directs the construction of,
and/or installation of mechanical, water and electrical systems, energy and
other resource consuming equipment.
7. About Reeds Ferry
Reeds Ferry is an equipment wholesaler which purchases equipment on
behalf of Select Energy Contracting.
8. About HEC/Tobyhanna
HEC/Tobyhanna was established as a special purpose entity to manage the assets
of an Energy Savings Performance Contract at the Tobyhanna Army Depot.
9. About HEC/CJTS
HEC/CJTS is a special purpose entity formed to facilitate the financing of
SESI's construction of an energy center at the Connecticut Juvenile Training
School in Middletown, Connecticut. HEC/CJTS is wholly owned by SESI.
10. About ERI/HEC
ERI/HEC has an indefinite delivery/indefinite quantity contract with the United
States Navy. ERI/HEC is 50 percent owned by SESI.
11. About YESCO
YESCO is winding down its energy-related services for its customers. YESCO
has disposed of most of its assets and is in the process of liquidating the
remainder of its assets.
12. About R.M. Services
R.M. Services provides consumer collection services for companies throughout
the United States. Yankee owns 10 percent of the voting securities of R.M.
Services.
13. About Acumentrics
NUEI owns 5 percent of the voting securities of Acumentrics. Acumentrics is a
privately owned producer of advanced power generation and power protection
technologies applicable to homes, telecommunications, commercial businesses,
industrial facilities, and the auto industry.
14. About SENY
SENY is a wholly owned subsidiary of Select Energy and engages in the
brokering, marketing, transportation, storage, and sale of energy commodities
in the state of New York.
15. Public Utility Regulation
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935 (1935
Act), and the NU system is subject to the provisions of the 1935 Act.
Arrangements among the NU system companies, outside agencies and other
utilities covering interconnections, interchange of electric power and sales
of utility property are subject to regulation by the Federal Energy
Regulatory Commission (FERC) and/or the SEC. The operating subsidiaries are
subject to further regulation for rates, accounting and other matters by the
FERC and/or applicable state regulatory commissions.
16. Presentation
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent 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.
17. New Accounting Standard
In June 2002, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy
Trading and Risk Management Activities," requiring energy trading companies to
classify revenues and expenses associated with certain energy trading contracts
on a net basis within revenues, rather than recording the gross revenues and
expenses. The application of this consensus will be retroactive to all periods
presented but will have no effect on net income. NU will adopt EITF Issue No.
02-3 in the third quarter of 2002. As a result, NU now estimates that Select
Energy's and SENY's revenues and expenses will be reduced significantly from the
amounts reflected in the accompanying Select Energy and SENY income statements.
18. Market Risk and Risk Management Instruments
Select Energy provides both firm requirement energy services to its customers
and engages in energy trading and marketing activities. Select Energy manages
its exposure to risk from its contractual commitments and provides risk
management services to its customers through forward contracts, futures, over-
the-counter swap agreements, and options (commodity derivatives).
Select Energy has utilized the sensitivity analysis methodology to disclose
the quantitative information for its commodity price risks. Sensitivity
analysis provides a presentation of the potential loss of future earnings,
fair values or cash flows from market risk-sensitive instruments over a
selected time period due to one or more hypothetical changes in commodity
prices, or other similar price changes.
Commodity Price Risk - Trading Activities: As a market participant in the
Northeastern United States, Select Energy and SENY conduct commodity-trading
activities in electricity and its related products, natural gas and oil, and
therefore, experiences net open positions. Select Energy and SENY manage these
open positions with strict policies which limit their exposure to market risk
and require daily reporting to management of potential financial exposure.
Under Emerging Issues Task Force Issue No. 98-10, these instruments are
adjusted to market value, and the unrealized gains and losses are recognized
in income in the current period in the consolidated income statements as
purchased power, net interchange power and capacity and in the consolidated
balance sheet as unrealized net gains on mark-to-market transactions. The net
mark-to-market position at June 30, 2002 had asset values of $85.8 million for
Select Energy and $2.6 million for SENY. These amounts include intercompany
transactions of $12.9 million.
Under sensitivity analysis, the fair value of the portfolio is a function of
the underlying commodity, contract prices and market prices represented by
each derivative commodity contract. For swaps, forward contracts and options,
market value reflects management's best estimates considering over-the-
counter quotations, time value and volatility factors of the underlying
commitments. Exchange-traded futures and options are recorded at market based
on closing exchange prices.
As of June 30, 2002, Select Energy has calculated the market price resulting
from a 10 percent unfavorable change in forward market prices. That 10
percent change would result in approximately a $2.4 million decline in the
fair value of the Select Energy trading portfolio. In the normal course of
business, Select Energy also faces risks that are either nonfinancial or
nonquantifiable. Such risks principally include credit risk, which is not
reflected in the aforementioned sensitivity analysis.
Commodity Price Risk - Nontrading Derivative Activities: Select Energy
utilizes derivative financial and commodity instruments (derivatives),
including futures and forward contracts, to reduce market risk associated
with fluctuations in the price of electricity and natural gas sold under firm
commitments with certain customers. Select Energy also utilizes derivatives,
including price swap agreements, call and put option contracts, and futures
and forward contracts, to manage the market risk associated with a portion of
its anticipated supply requirements. These derivative instruments have been
designated as cash flow hedging instruments.
When conducting sensitivity analyses of the change in the fair value of
Select Energy's electricity, natural gas and oil nontrading derivatives
portfolio, which would result from a hypothetical change in the future market
price of electricity, natural gas and oil, the fair values of the contracts
are determined from models which take into account estimated future market
prices of electricity, natural gas and oil, the volatility of the market
prices in each period, as well as the time value factors of the underlying
commitments. In most instances, market prices and volatility are determined
from quoted prices on the futures exchange.
Select Energy has determined a hypothetical change in the fair value for its
nontrading derivatives and electricity, natural gas and oil contracts,
assuming a 10 percent unfavorable change in forward market prices. As of
June 30, 2002, an unfavorable 10 percent change in market price would have
resulted in a decline in fair value of approximately $18 million.
The impact of a change in electricity, natural gas and oil prices on Select
Energy's nontrading derivatives contracts on June 30, 2002, is not
necessarily representative of the results that will be realized when these
contracts are physically delivered.
Select Energy also maintains natural gas service agreements with certain
customers to supply gas at fixed prices for terms extending through 2004.
Select Energy has hedged its gas supply risk under these agreements through
New York Mercantile Exchange (NYMEX) contracts. Under these contracts, the
purchase price of a specified quantity of gas is effectively fixed over the
term of the gas service agreements, which also extend through 2004. As of
June 30, 2002, the NYMEX contracts had a notional value of $58.2 million and
a mark-to-market asset value of $1.4 million.
19. Special Deposits
Special deposits include cash collateral posted in connection with various
power purchase and sales agreements.
QUARTERLY REPORT OF NORTHEAST UTILITIES
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of 1935
and the rules and regulations of the Securities and Exchange Commission issued
thereunder, the undersigned company has duly caused this report to be signed
on its behalf by the undersigned officer thereunto duly authorized.
NORTHEAST UTILITIES
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(Registered Holding Company)
By: /s/ John P. Stack
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(Signature of Signing Officer)
John P. Stack
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Vice President-Accounting and Controller
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Date: August 27, 2002
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