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, 2001
Northeast Utilities
-----------------------------------
(Name of registered holding company)
107 Selden Street, Berlin, CT 06037
-----------------------------------
(Address of principal executive offices)
Name and telephone number of officer to whom inquiries concerning this report
should be directed:
John J. Roman, Vice President and Controller
Telephone number: 860-665-5000
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 the 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 - ORGANIZATION 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
Housatonic Energy 10/16/87 Connecticut 100% by Invest in (K)
Corporation Yankee Energy energy-related
System, Inc. activities
R.M. Energy 11/22/94 Connecticut 10% by Invest in (L)
Services, Inc. Yankee Energy energy-related
System, Inc. activities
Acumentrics Energy 09/13/00 Massachusetts 5% by Invest in (M)
Corporation NU energy-related
Enterprises, Inc. activities
ERI/HEC Energy 09/30/00 Delaware 50% by Invest in (N)
EFA-Med, LLC Select Energy energy-related
Services, Inc. activities
E.S. Boulos Energy 01/19/01 Connecticut 100% by Invest in (O)
Company Northeast energy-related
Generation activities
Services Company
NGS Mechanical Energy 01/24/01 Connecticut 100% by Provide (P)
Company Northeast mechanical
Generation construction
Services Company and maintenance
services
HEC/CJTS Energy Energy 03/02/01 Delaware 100% by Facilitate (Q)
Center LLC Select Energy construction
Services, Inc. financing
* Sold in June 2001.
(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) provides both wholesale and retail
energy services. Specifically, Select Energy participates in open-access
retail electricity markets in New England, New York and the Mid-Atlantic
regions.
Select Energy markets and sells electricity, natural gas, oil, and energy-
related products and services. Select Energy is a licensed retail
electricity supplier in the states of Connecticut, Delaware, Maine,
Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and
Rhode Island. 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, and Rhode Island.
(C) Select Energy Portland Pipeline, Inc. (SEPPI) acquired a 5% interest in
Portland Natural Gas Transmission System partnership in March 1999.
(D) Effective January 4, 1999, Northeast Generation Services Company (NGS)
was established to provide a full range of energy-related operation and
maintenance services for large 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. 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 was purchased by Select Energy Services,
Inc. in August 1999 as an equipment wholesaler to purchase equipment on
behalf of Select Energy Contracting, Inc.
(G) Effective September 30, 1999, 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) provides a wide range of energy-
related services for its customers. The YESCO controls division provides
comprehensive building automation with engineering, installation and
maintenance of building control systems.
(K) Housatonic Corporation is not a "reporting company" but is included in
this item 1 because it holds, directly or indirectly, voting securities
issued by reporting companies as indicated above.
(L) R. M. Services, Inc. provides consumer collection services for companies
throughout the United States.
(M) 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.
(N) 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.
(O) E.S. Boulos Company (Boulos) is a Connecticut corporation that was formed
by NGS to acquire the assets of electrical construction companies located
in Maine. Boulos is registered to do business initially in Maine,
Massachusetts, New Hampshire, and Vermont. NGS owns 100% of the
corporation.
(P) NGS Mechanical Company (NGSM) is a Connecticut corporation that was formed
by NGS to perform mechanical construction and maintenance services to
customers contracted with to provide such services. NGSM is registered to
do business initially in Massachusetts, New Hampshire, Maine, Vermont,
Rhode Island, and New York. NGS owns 100% of the corporation.
(Q) HEC/CJTS Energy Center LLC (HEC/CJTS) is a Delaware limited liability
company that was formed by Select Energy Services, Inc. to facilitate the
financing of the construction of the Connecticut Juvenile Training School
in Middletown, Connecticut.
HEC/CJTS will not have any employees nor will it conduct any other
activities other than those related to accepting the assignment of the
lease. Select Energy Services, Inc. owns 100% of the LLC.
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
-------------- ------------ ------------- -------- ------- ---------- ---------- ------------- ------------ ------------
Select
Energy, Inc. No transactions this quarter.
Northeast
Generation NU
Services Enterprises,
Company N/A N/A N/A N/A N/A N/A N/A Inc. $7,500,000
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.
Northeast
Utilities
R.M. Service
Services, Inc. N/A N/A N/A N/A N/A N/A N/A Company $4,500,000
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.
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, 2001
----------------------- ------------------- -------------- ------------------
(Thousands
of Dollars)
Northeast Select
Generation Energy, Inc. Electrical and
Services Mechanical services $ 19
Company ==================
Northeast The
Generation Connecticut
Services Light & Power Electrical and
Company Company Mechanical services $ 9
==================
Northeast Public Service
Generation Company of Electrical and
Services New Hampshire Mechanical services $ 227
Company ==================
Northeast Holyoke Water
Generation Power Company Electrical and
Services Mechanical services $3,829
Company ==================
Northeast Northeast
Generation Generation Electrical and
Services Company Mechanical services $4,218
Company ==================
Wholesale
Reeds Ferry Select Energy Purchasing
Supply Co., Inc. Contracting, Inc. Services $ 295
==================
Phone Center
R.M. Services, Inc. Yankee Gas Management
Services Company Services $ 519
==================
Northeast North Atlantic
Generation Energy Service Electrical and
Services Corporation Mechanical services $ 30
Company ==================
Northeast
Generation Yankee Energy Electrical and
Services Service Company Mechanical services $ 7
Company ==================
Northeast Northeast
Generation Utilities
Services Service Electrical and
Company Company Mechanical services $ 12
==================
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, 2001
----------------------- ------------------- -------------- ------------------
(Thousands)
Public Service Company Select
of New Hampshire Energy, Inc. Miscellaneous $ 11
==================
Select Energy Select Engineering Services
Services, Inc. Energy, Inc. $ 14
==================
* '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 06/30/01 $6,767,169 line 1
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 1,015,075 line 2
Greater of $50 million or line 2 $1,015,075 line 3
Total current aggregate investment:
(categorized by major line of
energy-related business):
Select Energy, Inc. $699,569
Northeast Generation Services Company 22,010
Select Energy Contracting, Inc. 26,185
Reeds Ferry Supply Co., Inc. 7
HEC/Tobyhanna Energy Project, Inc. -
Yankee Energy Services Company 9,882
R.M. Services, Inc. 13,799
E.S. Boulos Company 7,539
NGS Mechanical Company 10
Acumentrics Corporation 10,000
ERI/HEC EFA-Med, LLC 1
HEC/CJTS Energy Center LLC -
-----------
Total current aggregate investment 789,002 line 4
-----------
Difference between the greater of $50 million or 15% of
capitalization and the total aggregate investment of the
registered holding company system $226,073 line 5
===========
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
a 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, 2001
Income Statement-Three months and six months ended June 30, 2001
Northeast Generation Services Company:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
Select Energy Contracting, Inc.:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
Reeds Ferry Supply Co., Inc.:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
HEC/Tobyhanna Energy Project, Inc.:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
Yankee Energy Services Company:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
ERI/HEC EFA-Med, LLC:
Not Available as of June 30, 2001
E.S. Boulos Company:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
NGS Mechanical Company:
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
HEC/CJTS Energy Center LLC:
Not Available as of June 30, 2001
Northeast Utilities (PARENT):
Balance Sheet - As of June 30, 2001
Income Statement-Three months and six months ended June 30, 2001
B. Exhibits
Exhibit No. Description
----------- -----------
6.B.1.1 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.1.4 Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.5a Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.5b 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.1.6c Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.7a Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.7b Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.8a Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.8b Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.8c Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9a Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9b Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9c Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9d Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9e Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9f Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9g Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9h Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9i Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9j Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9k Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9l Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9m Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9n Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9o Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9p Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9q Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9r Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9s Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9t Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9u Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9v Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9w Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9x Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9y Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9z Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.9aa 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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Accounts receivable, including unbilled
revenues, net $ 261,270
Accounts receivable from affiliated companies 110,549
Taxes receivable 428
Special deposits 39,095
Unrealized gains on mark-to-market transactions 68,297
Prepaid wholesale power purchases 11,202
Prepayments and other 4,751
--------------
Total current assets 495,592
--------------
Deferred Charges:
Intangibles, net 20,963
Accumulated deferred income taxes 17,971
Prepaid pensions 2,097
Other 7,474
--------------
Total deferred charges 48,505
--------------
Long-Lived Assets:
Software 10,350
Other 1,062
--------------
11,412
Less: Accumulated provision for depreciation 2,784
--------------
8,628
Capital additions in progress 241
--------------
Total long-lived assets 8,869
--------------
Total Assets $ 552,966
==============
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,
2001
--------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 164,700
Accounts payable 309,003
Accounts payable to affiliated companies 17,743
Accrued taxes 18,174
Other 64,721
--------------
Total current liabilities 574,341
--------------
Stockholders' Equity:
Common stock, $1 par value - 100 shares
authorized and outstanding -
Capital surplus, paid in 92,592
Retained deficit (113,967)
--------------
Total stockholders' equity (21,375)
--------------
Total Liabilities and Stockholders' Equity $ 552,966
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 639,739 $ 1,236,483
-------------- --------------
Operating Expenses:
Purchased power, net interchange
power and capacity 628,161 1,226,704
Depreciation 1,236 2,428
Other 9,476 24,095
Taxes other than income taxes 3,117 6,882
-------------- --------------
Total operating expenses 641,990 1,260,109
-------------- --------------
Operating Loss (2,251) (23,626)
-------------- --------------
Other (Loss)/Income (64) 177
-------------- --------------
Interest and financing costs 2,679 5,140
-------------- --------------
Loss before income taxes (4,994) (28,589)
-------------- --------------
Income Tax Benefit:
Federal and state income taxes, net 1,988 11,307
-------------- --------------
Loss before cumulative
effect of accounting change (3,006) (17,282)
-------------- --------------
Cumulative effect of accounting change,
net of tax benefit of $14,611 - (21,985)
-------------- --------------
Net Loss $ (3,006) $ (39,267)
============== ==============
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1,329
Accounts receivable 21,562
Accounts receivable from affiliated companies 1,674
Fuel, materials and supplies, at average cost 434
Prepayments and other 1,672
--------------
Total current assets 26,671
--------------
Other Investments:
Other investments, at cost 16
--------------
Total other investments 16
--------------
Deferred Charges:
Other 6,172
--------------
Total deferred charges 6,172
--------------
Long-Lived Assets:
Other 2,992
--------------
2,992
Less: Accumulated provision for depreciation 1,248
--------------
1,744
Capital additions in progress 1,764
--------------
Total long-lived assets 3,508
--------------
Total Assets $ 36,367
==============
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,
2001
--------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 10,100
Accounts payable 8,890
Accounts payable to affiliated companies 4,185
Accrued taxes 2,076
Other 270
--------------
Total current liabilities 25,521
--------------
Deferred Credits:
Other 1,326
--------------
Total deferred credits 1,326
--------------
Stockholders' Equity:
Common stock, $1 par value - authorized
and outstanding 100 shares -
Capital surplus, paid in 9,510
Retained earnings 10
--------------
Total stockholders' equity 9,520
--------------
Total Liabilities and Stockholders' Equity $ 36,367
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 27,121 $ 52,549
-------------- --------------
Operating Expenses:
Operation 12,549 26,259
Maintenance 13,912 24,375
Depreciation 108 200
Federal and state income taxes 742 741
Taxes other than income taxes 68 330
-------------- --------------
Total operating expenses 27,379 51,905
-------------- --------------
Operating (Loss)/Income (258) 644
-------------- --------------
Other Income 697 1,062
-------------- --------------
Interest and financing costs 172 321
-------------- --------------
Net Income $ 267 $ 1,385
============== ==============
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 437
Accounts receivable 11,653
Other material and supplies 386
Prepayments and other 53
--------------
Total current assets 12,529
--------------
Long-Lived Assets:
Other 23,141
--------------
23,141
Less: Accumulated provision for depreciation 2,578
--------------
Total long-lived assets 20,563
--------------
Total Assets $ 33,092
==============
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,
2001
--------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 6,410
Accounts payable to affiliated companies 9,258
Accrued taxes 831
--------------
Total current liabilities 16,499
--------------
Long-term Liabilities:
Deferred taxes 184
Other 1,000
--------------
Total long-term liabilities 1,184
--------------
Stockholders' Equity:
Common stock, $1 par value - 100 shares
authorized and outstanding -
Capital surplus, paid in 14,910
Retained earnings 499
--------------
Total stockholders' equity 15,409
--------------
Total Liabilities and Stockholders' Equity $ 33,092
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 14,499 $ 27,162
-------------- --------------
Operating Expenses:
Operation 13,042 24,463
Maintenance 61 123
Depreciation 348 849
Taxes other than income taxes 98 295
-------------- --------------
Total operating expenses 13,549 25,730
-------------- --------------
Operating Income 950 1,432
-------------- --------------
Other Income 8 27
-------------- --------------
Interest and financing costs 182 393
-------------- --------------
Income before income taxes 776 1,066
-------------- --------------
Income Tax Expense:
Federal and state income taxes, net 303 426
-------------- --------------
Net Income $ 473 $ 640
============== ==============
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 7
Accounts receivable 52
--------------
Total current assets 59
--------------
Long-Lived Assets:
Organization costs, net 258
--------------
Total long-lived assets 258
--------------
Total Assets $ 317
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 53
Accounts payable to affiliated companies 295
--------------
Total current liabilities 348
--------------
Stockholders' Equity:
Common stock, $0 par value - authorized
and outstanding 100 shares 4
Capital surplus, paid in 3
Retained deficit (38)
--------------
Total stockholders' equity (31)
--------------
Total Liabilities and Stockholders' Equity $ 317
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 295 $ 562
-------------- --------------
Operating Expenses:
Other 295 562
Amortization 5 10
-------------- --------------
Total operating expenses 300 572
-------------- --------------
Operating Loss (5) (10)
-------------- --------------
Net Loss $ (5) $ (10)
============== ==============
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 2,420
Accounts receivable 417
--------------
Total current assets 2,837
--------------
Long-Lived Assets:
Other 714
--------------
714
Less: Accumulated provision for depreciation 57
--------------
657
Contracts receivable 27,136
--------------
Total long-lived assets 27,793
--------------
Total Assets $ 30,630
==============
CAPITALIZATION AND LIABILITIES
------------------------------------
Capitalization:
Common stock, $1 par value - authorized
and outstanding 100 shares $ -
Retained earnings 189
--------------
Total common stockholder's equity 189
Long-term debt 26,446
--------------
Total capitalization 26,635
--------------
Current Liabilities:
Accounts payable to affiliated companies 2,880
Accrued interest 756
Accrued taxes 1
--------------
Total current liabilities 3,637
--------------
Long-term Liabilities:
Other 358
--------------
Total long-term liabilities 358
--------------
Total Capitalization and Liabilities $ 30,630
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Other Income $ 514 $ 1,058
-------------- --------------
Interest and Financing Costs 512 1,025
-------------- --------------
Income Tax Expense 22 27
-------------- --------------
Net (Loss)/Income $ (20) $ 6
============== ==============
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Other Property and Investments:
Nonutility property, at cost $ 1,045
Investment in subsidiary company, at equity 2
--------------
Total other property and investments 1,047
--------------
Current Assets:
Cash 299
Accounts receivable 4,801
Accounts receivable from affiliated companies 1,709
Taxes receivable 2,153
--------------
Total current assets 8,962
--------------
Deferred Charges:
Accumulated deferred income taxes 1,562
Goodwill 416
--------------
Total deferred charges 1,978
--------------
Total Assets $ 11,987
==============
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,
2001
--------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 5,033
Accounts payable to affiliated companies 240
Other 158
--------------
Total current liablilities 5,431
--------------
Deferred Credits:
Other 437
--------------
Total deferred credits 437
--------------
Stockholders' Equity:
Common stock, $0 par value - 10,000 shares
authorized and 200 shares outstanding 1
Capital surplus, paid in 7,881
Retained deficit (1,763)
--------------
Total stockholders' equity 6,119
--------------
Total Liabilities and Stockholders' Equity $ 11,987
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 31 $ 149
-------------- --------------
Operating Expenses:
Other 402 603
Depreciation 41 152
Amortization 1 11
Federal and state income taxes (375) (375)
-------------- --------------
Total operating expenses 69 391
-------------- --------------
Operating Loss (38) (242)
-------------- --------------
Interest and financing costs 126 334
-------------- --------------
Net Loss $ (164) $ (576)
============== ==============
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1,073
Accounts receivable 11,679
Materials and supplies, at average cost 107
Prepayments and other 988
--------------
Total current assets 13,847
--------------
Other Investments:
Other investments, at cost 16
--------------
Total other investments 16
--------------
Deferred Charges:
Other 5,614
--------------
Total deferred charges 5,614
--------------
Long-Lived Assets:
Other 425
--------------
425
Less: Accumulated provision for depreciation 35
--------------
Total long-lived assets 390
--------------
Total Assets $ 19,867
==============
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,
2001
--------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 5,307
Accrued taxes 793
Other 3,466
--------------
Total current liabilities 9,566
--------------
Deferred Credits:
Other 1,289
--------------
Total deferred credits 1,289
--------------
Stockholder's Equity:
Common stock, $1 par value - 100 shares
authorized and outstanding -
Capital surplus, paid in 7,539
Retained earnings 1,473
--------------
Total stockholder's equity 9,012
--------------
Total Liabilities and Stockholder's Equity $ 19,867
==============
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 Month
Ended Ended
June 30, June 30,
2001 2001
-------------- -----------
(Thousands (Thousand
of Dollars) of Dollar
Operating Revenues $ 11,782 $ 18,732
-------------- -----------
Operating Expenses:
Operation 10,729 17,332
Depreciation 88 160
Federal and state income taxes 793 793
-------------- -----------
Total operating expenses 11,610 18,285
-------------- -----------
Operating Income 172 447
-------------- -----------
Other Income 757 1,026
-------------- -----------
Income before income taxes 929 1,473
-------------- -----------
Income Tax Expense:
Federal and state income taxes, net - -
-------------- -----------
Net Income $ 929 $ 1,473
============== ===========
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Accounts receivable $ 10
--------------
Total current assets 10
--------------
Total Assets $ 10
==============
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 1
--------------
Total current liabilities 1
--------------
Stockholder's Equity:
Common stock, $0 par value - authorized
and outstanding 100 shares -
Capital surplus, paid in 10
Retained deficit (1)
--------------
Total stockholder's equity 9
--------------
Total Liabilities and Stockholder's Equity $ 10
==============
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,
2001 2001
-------------- -------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ - $ -
-------------- -------------
Operating Expenses:
Other - 1
-------------- -------------
Total operating expenses - 1
-------------- -------------
Operating Loss Before Income Taxes - (1)
-------------- -------------
Income Tax Expense:
Federal and state income taxes, net - -
-------------- -------------
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,
2001
--------------
(Thousands
of Dollars)
ASSETS
------
Other Property and Investments:
Investments in subsidiary companies, at equity........ $ 2,323,712
Investments in transmission companies, at equity...... 15,026
Other, at cost........................................ 14
--------------
2,338,752
--------------
Current Assets:
Cash.................................................. 18,973
Notes receivable from affiliated companies............ 204,800
Notes and accounts receivable......................... 591
Accounts receivable from affiliated companies......... 2,060
Taxes receivable...................................... 20,062
Prepayments........................................... 983
--------------
247,469
--------------
Deferred Charges:
Unamortized debt expense.............................. 815
Other................................................. 591
--------------
1,406
--------------
Total Assets...................................... $ 2,587,627
==============
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,
2001
--------------
(Thousands
of Dollars)
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common shares, $5.00 par value - Authorized
225,000,000 shares; 148,888,790 shares issued and
133,864,193 shares outstanding...................... $ 744,444
Capital surplus, paid in............................. 902,562
Deferred contribution plan - employee stock
ownership plan...................................... (108,122)
Retained earnings.................................... 610,248
Accumulated other comprehensive income............... (26,470)
--------------
Total common shareholders' equity.................. 2,122,662
Long-term debt....................................... 374,000
--------------
Total capitalization.......................... 2,496,662
--------------
Current Liabilities:
Accounts payable to affiliated companies............. 18
Long-term debt - current portion..................... 21,000
Accrued taxes........................................ 44,996
Accrued interest..................................... 2,769
Other................................................ 17,326
--------------
86,109
--------------
Accumulated deferred income taxes...................... 4,856
--------------
4,856
--------------
Total Capitalization and Liabilities............. $ 2,587,627
==============
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,
2001 2001
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues.................................. $ - $ -
-------------- --------------
Operating Expenses:
Operation expense................................. 1,588 3,280
Federal and state income taxes.................... 101 (7,823)
Taxes other than income taxes..................... 13 35
-------------- --------------
Total operating expenses..................... 1,702 (4,508)
-------------- --------------
Operating (Loss)/Income............................. (1,702) 4,508
-------------- --------------
Other Income/(Loss):
Equity in earnings of subsidiaries................ 37,065 101,922
Equity in earnings of transmission companies...... 615 1,211
Gain related to Millstone sale.................... - 146,844
Loss on share repurchase contracts................ 8,049 (35,394)
Other, net........................................ 2,416 4,162
Income taxes...................................... 7,203 (45,304)
-------------- --------------
Other income, net............................ 55,348 173,441
-------------- --------------
Income before interest charges............... 53,646 177,949
-------------- --------------
Interest Charges:
Interest on long-term debt........................ 7,241 11,735
Other interest.................................... (327) 7,319
-------------- --------------
Interest charges............................ 6,914 19,054
-------------- --------------
Net Income for Common Shares........................ $ 46,732 $ 158,895
============== ==============
Basic and Diluted Earnings per Common Share......... $ 0.35 $ 1.14
============== ==============
Basic Common Shares Outstanding (average)........... 133,908,739 138,910,719
============== ==============
Diluted Common Shares Outstanding (average)......... 134,149,873 139,256,968
============== ==============
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.
Northeast Utilities
Select Energy, Inc.
Northeast Generation Services Company and Subsidiaries
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
Acumentrics Corporation
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 (CL&P), Public Service Company of New Hampshire (PSNH) and Western
Massachusetts Electric Company (WMECO). 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 and
distribution of electric power.
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 (NGC) was formed to acquire and manage generation
facilities. Select Energy, Inc. (Select Energy), Northeast Generation Services
Company and its subsidiaries (NGS), Select Energy Services, Inc., (formerly HEC
Inc.) and its subsidiaries (Select Energy Services), 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
Select Energy Services. Another company, ERI/HEC EFA-Med, LLC (ERI/HEC), is
50 percent owned by Select Energy Services.
Yankee Energy System, Inc. maintains certain wholly owned subsidiaries
including Yankee Energy Services Company (YESCO).
On September 26, 2000, NUEI invested $10 million in Acumentrics Corporation
(Acumentrics) in return for a 5 percent ownership share of that company.
Select Energy, NGS, Boulos, NGS Mechanical, Select Energy Contracting, Reeds
Ferry, HEC/Tobyhanna, HEC/CJTS, ERI/HEC, YESCO, and Acumentrics are "energy-
related companies" under Rule 58.
2. About Select Energy
Select Energy provides both wholesale and retail energy services.
Specifically, Select Energy participates in open-access retail electricity
markets in New England, New York and the Mid-Atlantic regions. Select Energy
markets and sells electricity, natural gas, oil and energy-related products and
services. Select Energy is a licensed retail electricity supplier in the
states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey,
New York, Pennsylvania, and Rhode Island. 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, and Rhode Island.
Beginning in January 2000, Select Energy's contract with NGC, to purchase 1,289
megawatts (MW) of capacity and energy significantly reduced the load-following
risk and allowed Select Energy to better manage its portfolio profitability.
On January 1, 2000, Select Energy began serving one-half of CL&P's standard
offer requirement for a 4-year period. Select Energy's obligation to service
this load requirement was approximately 2,000 MW beginning in July 2000, when
100 percent of CL&P's customers were able to choose their electric supplier.
In addition, beginning in January 2000, Select Energy assumed responsibility
for serving 30 market based wholesale contracts, totaling approximately 500 MW,
throughout New England with electric energy supply that was previously provided
by CL&P and WMECO.
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
Northeast. NGS also provides consulting services which include engineering
services, construction management, permitting, and compliance management.
4. About Boulos
On January 19, 2001, NGS completed the acquisition of Boulos, an electrical
construction company which specializes in high voltage electrical construction
and maintenance in Maine, Massachusetts and New Hampshire. Boulos is wholly
owned by NGS.
5. About NGS Mechanical
In January 2001, NGS formed a new subsidiary, NGS Mechanical, to provide
mechanical services initially in the New England states. NGS Mechanical is
wholly owned by NGS.
6. About Select Energy Contracting
Select Energy Contracting, formerly known as HEC International Corporation,
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 was acquired by Select Energy Services in August 1999 as an
equipment wholesaler to purchase equipment on behalf of Select Energy
Contracting.
8. About HEC/Tobyhanna
Effective September 30, 1999, 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 was formed on March 2, 2001, as a special purpose entity to facilitate
the financing of Select Energy Services' construction of the Connecticut
Juvenile Training School in Middletown, Connecticut. HEC/CJTS is wholly owned
by Select Energy Services.
10. About ERI/HEC
ERI/HEC was established on September 30, 2000, by Select Energy Services and
ERI Services, Inc. to enter into an indefinite delivery/indefinite quantity
contract with the United States Navy. ERI/HEC is 50 percent owned by Select
Energy Services.
11. About YESCO
YESCO provides a wide range of energy-related services for its customers.
The YESCO controls division provides comprehensive building automation with
engineering, installation and maintenance of building control systems.
12. About Acumentrics
On September 26, 2000, NUEI invested $10 million in Acumentrics in return for a
5 percent ownership share of that company. 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.
13. 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.
14. 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.
15. Market Risk And Risk Management Instruments
Select Energy provides both firm requirement energy services to its customers
and performs energy trading and marketing activities. Select Energy manages
its exposure to risk from existing 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 the 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
Northeast area of the United States, Select Energy conducts commodity-trading
activities in electricity and its related products, natural gas and oil and
therefore experiences net open positions. Select Energy manages these open
positions with strict policies which limit its exposure to market risk and
require daily reporting to management of potential financial exposure.
Commodity derivatives utilized for trading purposes are accounted for using
the mark-to-market method, under Emerging Issues Task Force Issue No. 98-10,
"Accounting for Energy Trading and Risk Management Activities." Under this
methodology, these instruments are adjusted to market value, and the unrealized
gains and losses are recognized in income in the current period. The mark-to-
market position at June 30, 2001, was a positive $68 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, 2001, 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 $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
sensitivity analysis above.
Commodity Price Risk - Nontrading 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, natural gas and oil 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 analysis of the change in the fair value of Select
Energy's electricity, natural gas and oil nontrading portfolio, which would
result from a hypothetical change in the future market price of electricity,
natural gas and oil, the fair value 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 electricity, natural gas and oil contracts, assuming a 10 percent
unfavorable change in forward market prices. As of June 30, 2001, an
unfavorable 10 percent change in forward market price would have resulted in a
decrease in fair value of approximately $17 million.
The impact of a change in electricity, natural gas and oil prices on Select
Energy's nontrading contracts on June 30, 2001, 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 2003.
Select Energy has hedged its gas supply risk under these agreements through
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 extend through 2003. As of June 30, 2001, the NYMEX
contracts had a notional value of $75.2 million and a negative mark-to-market
position of $17.2 million.
Derivative Cash Flow Hedge Accounting: Derivative instruments recorded which
were effective cash flow hedges resulted in an increase in other comprehensive
income of $14.1 million upon the adoption of Statement of Financial Accounting
Standards No. 133, "Accounting For Derivative Instruments and Hedging
Activities," as amended. During the first six months of 2001, $13.4 million
was reclassified from other comprehensive income upon the conclusion of these
hedged transactions and recognized in earnings. An additional $1 million was
recognized in earnings for those derivatives that were determined to be
ineffective. Also, during the second quarter of 2001, new cash flow hedge
transactions were entered into which hedge cash flows through 2005. As a result
of these new transactions and market value changes since January 1, 2001, other
comprehensive income decreased by $28.6 million. Accumulated other
comprehensive income at June 30, 2001 was a negative $27 million (decrease to
equity) relating to hedged transactions and it is estimated that $19.8 million
will be reclassified as a charge to earnings within the next twelve months.
Cash flows from the hedge contracts are reported in the same category1 as cash
flows from the hedged assets.
These estimates do not include certain long-term energy and option-type
contracts which management believes represent "normal purchases and sales."
The accounting for these types of contracts has been cleared by the Financial
Accounting Standards Board (FASB) in the second quarter of 2001 and will be
implemented in the third quarter of 2001. Management does not believe that the
recording of these transactions in accordance with the aforementioned FASB
guidelines will have a material effect on the financial statements.
16. Special Deposits
Special deposits include cash collateral posted in connection with various
power purchase and sales agreements.
QUARTERLY REPORT OF SELECT ENERGY, INC.
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 J. Roman
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(Signature of Signing Officer)
John J. Roman
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Vice President and Controller
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Date: August 24, 2001
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