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 March 31, 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 01/4/99 Connecticut 100% by Unregulated (A)
Enterprises, Inc. Northeast businesses
Utilities holding
company
Select Energy 09/26/96 Connecticut 100% by Invest in (B)
Energy, Inc. NU energy-related
Enterprises, Inc. activities
Select Energy 03/17/99 Connecticut 100% by Invest in (C)
Energy NU energy-related
Portland Enterprises, Inc. activities
Pipeline, Inc.
Northeast Energy 01/4/99 Connecticut 100% by Invest in (D)
Generation NU energy-related
Services Enterprises, Inc. activities
Company
Select Energy Energy 06/19/90 Massachusetts 100% by Invest in (E)
Services, Inc. NU energy-related
Enterprises, Inc. activities
Reeds Ferry Energy 07/15/64 New 100% by Invest in (F)
Supply Co., Inc. Hampshire Select Energy energy-related
Services, Inc. activities
HEC/Tobyhanna Energy 09/28/99 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 02/15/00 Connecticut 100% by Public (I)
System, Inc. Northeast Utility
Utilities Holding
Company
Yankee Energy Energy 07/2/93 Connecticut 100% by Invest in (J)
Services Company Yankee Energy energy-related
System, Inc. activities
R. M. Services, Energy 11/22/94 Connecticut 10% by Invest in (K)
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
(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 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) Effective January 4, 1999, 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 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) 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 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 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.
(O) 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.
(P) HEC/CJTS Energy Center LLC (HEC/CTJS) 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.
(Q) Select Energy New York (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.
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
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 Select Energy,
New York, Inc. N/A N/A N/A N/A N/A N/A N/A Inc. $6,802,882
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 March 31, 2002
----------------------- ------------------- -------------- ------------------
(Thousands
of Dollars)
Northeast Select
Generation Energy, Inc. Electrical and
Services Mechanical Services $ 11
Company ======
Northeast The
Generation Connecticut
Services Light & Power Electrical and
Company Company Mechanical Services $ 58
======
Northeast Western
Generation Massachusetts Electrical and
Services Electric Company Mechanical Services $ 14
Company ======
Northeast Public Service
Generation Company of Electrical and
Services New Hampshire Mechanical Services $ 446
Company ======
Northeast Holyoke Water
Generation Power Company Electrical and
Services Mechanical Services $2,668
Company ======
Northeast Northeast
Generation Generation Electrical and
Services Company Mechanical Services $8,162
Company ======
Wholesale
Reeds Ferry Select Energy Purchasing
Supply Co., Inc. Contracting, Inc. Services $ 295
======
Northeast North Atlantic
Generation Energy Service Electrical and
Services Corporation Mechanical Services $ -
Company ======
Northeast
Generation Yankee Energy Electrical and
Services Services Company Mechanical Services $ 42
Company ======
Northeast Northeast
Generation Utilities
Services Service Electrical and
Company Company Mechanical Services $ 7
======
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 March 31, 2002
----------------------- ------------------- -------------- ------------------
(Thousands
of Dollars)
Public Service Company Select
of New Hampshire Energy, Inc. Miscellaneous $ 8
======
* '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 03/31/02 $6,873,820 line 1
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 1,031,073 line 2
Greater of $50 million or line 2 $1,031,073 line 3
Total current aggregate investment:
(categorized by major line of
energy-related business):
Select Energy, Inc. $676,868
Northeast Generation Services Company 25,322
Select Energy Contracting, Inc. 39,353
Select Energy New York, Inc. 36,696
Reeds Ferry Supply Co., Inc. 7
HEC/Tobyhanna Energy Project, Inc. -
Yankee Energy Services Company 8,282
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 817,892
-----------
Elimination * 17,536
-----------
Total current aggregate investment 800,356 line 4
-----------
Difference between the greater of $50 million or 15% of
capitalization and the total aggregate investment of the
registered holding company system $230,717 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 March 31, 2002
Income Statement - Three months ended March 31, 2002
Northeast Generation Services Company:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
Select Energy Contracting, Inc.:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
Reeds Ferry Supply Co., Inc.:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
HEC/Tobyhanna Energy Project, Inc.:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
Yankee Energy Services Company:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
ERI/HEC EFA-Med, LLC:
Not available as of March 31, 2002
E. S. Boulos Company:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
NGS Mechanical Company:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
HEC/CJTS Energy Center LLC:
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 2002
Northeast Utilities (Parent):
Balance Sheet - As of March 31, 2002
Income Statement - Three months ended March 31, 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.1.1i Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1j 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.1.3 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.1.5 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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Receivables, net $212,004
Accounts receivable from affiliated companies 105,714
Taxes receivable 17,842
Special deposits 24,497
Unrealized gains on mark-to-market transactions 65,352
Prepaid wholesale power purchases 24,657
Prepayments and other 6,414
--------
456,480
--------
Property, Plant and Equipment:
Competitive energy 12,312
Less: Accumulated provision for depreciation
and amortization 4,282
--------
8,030
Construction work in progress 273
--------
8,303
--------
Deferred Debits and Other Assets:
Intangibles, net 19,746
Accumulated deferred income taxes 11,340
Prepaid pensions 2,716
Other 45,137
--------
78,939
--------
Total Assets $543,722
========
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)
March 31,
2002
----------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Notes payable to affiliated companies $187,500
Accounts payable 193,508
Accounts payable to affiliated companies 12,755
Other 32,370
--------
Total current liabilities 426,133
--------
Deferred Credits and Other Liabilities 92,418
--------
Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 199,535
Accumulated deficit (169,178)
Accumulated other comprehensive loss (5,186)
--------
Total stockholder's equity 25,171
--------
Total Liabilities and Stockholder's Equity $543,722
========
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $918,735
--------
Operating Expenses:
Purchased power, net interchange
power and capacity 936,136
Other 28,601
Depreciation 1,732
Taxes other than income taxes 1,738
--------
Total operating expenses 968,207
--------
Operating Loss (49,472)
--------
Other Income, Net 5,729
--------
Interest Expense, Net 1,355
--------
Loss Before Income Tax Benefit (45,098)
--------
Income Tax Benefit 19,945
--------
Net Loss $(25,153)
========
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 76
Receivables, net 4,055
Accounts receivable from affiliated companies 3,247
Unbilled revenues 4,379
Fuel, materials and supplies, at average cost 496
Prepayments and other 1,893
-------
14,146
-------
Property, Plant and Equipment:
Other 1,548
Less: Accumulated provision for depreciation 767
-------
781
Construction work in progress 1,239
-------
2,020
-------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 606
Other 15,334
-------
15,940
-------
Total Assets $32,106
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Notes payable to affiliated companies $12,500
Accounts payable 2,318
Accounts payable to affiliated companies 2,178
Accrued taxes 1,469
Other 284
-------
18,749
-------
Deferred Credits and Other Liabilities 231
-------
Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 10,422
Retained earnings 2,704
-------
Total stockholder's equity 13,126
-------
Total Liabilities and Stockholder's Equity $32,106
=======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $13,584
-------
Operating Expenses:
Operation 10,822
Maintenance 3,427
Depreciation and amortization 2
Taxes other than income taxes 575
-------
Total operating expenses 14,826
-------
Operating Loss (1,242)
-------
Other Income, Net 321
-------
Loss Before Interest Expense and Income Tax
Benefit (921)
-------
Interest Expense, Net 116
-------
Loss Before Income Tax Benefit (1,037)
-------
Income Tax Benefit 571
-------
Net Loss $ (466)
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 267
Accounts receivable 12,997
Other material and supplies 453
Prepayments and other 324
-------
14,041
-------
Deferred Debits and Other Assets:
Other 15,778
-------
15,778
-------
Long-Lived Assets:
Other 5,745
Less: Accumulated provision for depreciation 3,144
-------
2,601
-------
Total Assets $32,420
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 4,284
Accounts payable to affiliated companies 9,322
Accrued taxes 1,268
-------
14,874
-------
Deferred Credits and Other Liabilities:
Deferred taxes 347
Other 1,552
-------
1,899
-------
Stockholders' Equity:
Common stock, $1 par value - 100,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 14,906
Retained earnings 741
-------
15,647
-------
Total Liabilities and Stockholders' Equity $32,420
=======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $13,907
-------
Operating Expenses:
Operation 13,340
Maintenance 105
Depreciation 283
Taxes other than income taxes 112
-------
Total operating expenses 13,840
-------
Operating Income 67
-------
Other Income 2
-------
Interest Expense, Net 64
-------
Income before income taxes 5
-------
Income Tax Expense:
Federal and state income taxes, net 15
-------
Net Loss $ (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.
REEDS FERRY SUPPLY CO., INC.
BALANCE SHEET
(Unaudited)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 6
Accounts receivable 89
------
95
------
Long-Lived Assets:
Organization costs, net 247
------
247
------
Total Assets $ 342
======
REEDS FERRY SUPPLY CO., INC.
BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 89
Accounts payable to affiliated companies 295
------
384
------
Stockholders' Equity:
Common stock, $0 par value - 100 shares
authorized and outstanding 4
Capital surplus, paid in 3
Retained deficit (49)
------
(42)
------
Total Liabilities and Stockholders' Equity $ 342
======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $ -
--------
Operating Expenses:
Other -
Amortization -
--------
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.
HEC/TOBYHANNA ENERGY PROJECT, INC.
BALANCE SHEET
(Unaudited)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1,973
Receivables, net 1,299
-------
3,272
-------
Long-Lived Assets:
Other, net 633
-------
Contracts receivable 25,881
-------
26,514
-------
Total Assets $29,786
=======
HEC/TOBYHANNA ENERGY PROJECT, INC.
BALANCE SHEET
(Unaudited)
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, $1 par value - 100 shares
authorized and outstanding $ -
Retained earnings 186
-------
Total common stockholder's equity 186
Long-term debt 25,494
-------
Total capitalization 25,680
-------
Current Liabilities:
Accounts payable to affiliated companies 3,513
Accrued interest 247
Other 1
-------
Total current liabilities 3,761
-------
Long-Term Liabilities:
Other 345
-------
Total long-term liabilities 345
-------
Total Capitalization and Liabilities $29,786
=======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Other Income, Net $ 461
------
Interest Expense, Net 500
------
Net Loss $ (39)
======
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 194
Receivables, net 4,700
Taxes receivable 292
------
5,186
------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 1,399
Goodwill 405
Other 444
------
2,248
------
Total Assets $7,434
======
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)
March 31,
2002
------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 1,259
Accounts payable to affiliated companies 46
-------
1,305
-------
Stockholders' Equity:
Common stock, $0 par value - 10,000 shares
authorized and 200 shares outstanding 1
Capital surplus, paid in 7,881
Accumulated deficit (1,753)
-------
Total stockholders' equity 6,129
-------
Total Liabilities and Stockholders' Equity $ 7,434
=======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $ 666
-------
Operating Expenses:
Other 787
-------
Total operating expenses 787
-------
Operating Loss (121)
-------
Interest Expense, Net 48
-------
Loss Before Income Tax Benefit (169)
-------
Income Tax Benefit 67
-------
Net Loss $ (102)
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 597
Receivables, net 9,754
Accounts receivable from affiliated companies 322
Unbilled revenues 1,890
Materials and supplies, at average cost 103
-------
12,666
-------
Property, Plant and Equipment
Other 580
Less: Accumulated provision for depreciation 109
-------
471
-------
Deferred Debits and Other Assets:
Goodwill 6,963
Accumulated deferred income taxes 7
Other 37
-------
7,007
-------
Total Assets $20,144
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Advance from parent, non-interest bearing $ 2,948
Accounts payable 3,181
Accounts payable to affiliated companies 1
Accrued taxes 1,290
Other 521
-------
7,941
-------
Deferred Credits and Other Liabilities:
Other 820
-------
Stockholder's Equity:
Common stock, $1 par value - 20,000 shares -
authorized and 100 shares outstanding
Capital surplus, paid in 7,539
Retained earnings 3,844
-------
Total stockholder's equity 11,383
-------
Total Liabilities and Stockholder's Equity $20,144
=======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $13,794
-------
Operating Expenses:
Operation 282
Maintenance 12,983
Depreciation 27
-------
Total operating expenses 13,292
-------
Operating Income 502
-------
Other Income, Net 171
-------
Income Before Income Tax Expense 673
-------
Income Tax Expense 235
-------
Net Income $ 438
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 10
------
Total current assets 10
------
Total Assets $ 10
======
NGS MECHANICAL COMPANY
BALANCE SHEET
(Unaudited)
March 31,
2002
----------
(Thousands
of Dollars)
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 - 20,000 shares
authorized and 100 shares outstanding -
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $ -
---------
Operating Expenses:
Other -
---------
Total operating expenses -
---------
Net Loss $ -
=========
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Other Property and Investments:
Investments in subsidiary companies, at equity $2,388,368
Investments in transmission companies, at equity 13,804
Other 14
----------
2,402,186
----------
Current Assets:
Cash 3,876
Notes receivable from affiliated companies 164,500
Receivables, net 525
Accounts receivable from affiliated companies 2,165
Taxes receivable 3,987
Prepayments 6,141
----------
181,194
----------
Deferred Charges:
Other 2,804
----------
2,804
----------
Total Assets $2,586,184
==========
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)
March 31,
2002
----------
(Thousands
of Dollars)
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common shares, $5.00 par value - Authorized
225,000,000 shares; 149,116,706 shares issued
and 129,477,227 shares outstanding $ 745,584
Capital surplus, paid in 1,111,440
Deferred contribution plan - employee stock
ownership plan (98,802)
Retained earnings 680,934
Accumulated other comprehensive loss (3,458)
Treasury stock (296,853)
-----------
Common shareholders' equity 2,138,845
Long-term debt 88,000
-----------
Total capitalization 2,226,845
-----------
Current Liabilities:
Notes payable to bank 60,000
Accounts payable 202
Accounts payable to affiliated companies 1,351
Long-term debt - current portion 286,000
Accrued interest 3,784
Other 121
-----------
351,458
-----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 7,766
Other 115
-----------
7,881
-----------
Total Capitalization and Liabilities $ 2,586,184
===========
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $ -
-----------
Operating Expenses:
Operation expense 5,599
Taxes other than income taxes 19
-----------
Total operating expenses 5,618
-----------
Operating Loss (5,618)
------------
Other Income:
Equity in earnings of subsidiaries 22,526
Equity in earnings of transmission companies 734
Other, net 2,418
------------
Other Income, Net 25,678
------------
Income Before Interest and Income Tax Benefit 20,060
------------
Interest Expense:
Interest on long-term debt 5,008
Other interest 249
------------
Interest expense, net 5,257
------------
Income Before Income Tax Benefit 14,803
------------
Income Tax Benefit 3,839
------------
Net Income for Common Shares $ 18,642
============
Basic and Diluted Earnings per Common Share $ 0.14
============
Basic Common Shares Outstanding (average) 129,504,005
============
Diluted Common Shares Outstanding (average) 129,754,946
============
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 17,373
Receivables, net 37,320
Special deposits 2,075
Unrealized gains on mark-to-market transactions 7,324
Prepayments and other 12,243
--------
76,335
--------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 86
--------
Property Plant and Equipment:
Competitive energy 2,233
Less: Accumulated provision for depreciation 2,061
--------
Total long-lived assets 172
--------
Total Assets $ 76,593
========
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)
March 31,
2002
----------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Accounts payable $23,655
Accounts payable to affiliated companies 236
Accrued taxes 4,436
Other 3,097
-------
31,424
-------
Deferred Credits and Other Liabilities:
Other 24
-------
Advance from Northeast Utilities Parent Company 26,699
-------
Stockholder's Equity:
Common stock, $1 par value - 10,000 shares
authorized and outstanding 10
Capital surplus, paid in 9,987
Retained earnings 8,449
-------
Total stockholder's equity 18,446
-------
Total Liabilities and Stockholder's Equity $76,593
=======
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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $70,283
-------
Operating Expenses:
Purchased power, net interchange
power and capacity 58,034
Maintenance 2,357
Taxes other than income taxes (252)
-------
Total operating expenses 60,139
-------
Operating Income 10,144
-------
Other Loss, Net (5)
-------
Interest Expense, Net 198
-------
Income Before Income Tax Expense 9,941
-------
Income Tax Expense 4,187
-------
Net Income $ 5,754
=======
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)
March 31,
2002
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1
------
Total current assets 1
------
Total Assets $ 1
======
HEC/CJTS ENERGY CENTER LLC
BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Stockholder's Equity:
Capital surplus, paid in 10
Retained deficit (9)
------
Total stockholder's equity 1
------
Total Liabilities and Stockholder's Equity $ 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
Ended
March 31,
2002
------------
(Thousands
of Dollars)
Operating Revenues $ -
--------
Operating Expenses:
Other -
--------
Total operating expenses -
--------
Net Loss $ -
========
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 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
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 (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-ofunit, full cost recovery contracts (Seabrook Power Contracts).
A fifth wholly owned subsidiary, Holyoke Water Power Company (HWP), also is
engaged in the production of electric power. A sixth wholly owned subsidiary,
Yankee Energy System, Inc. (Yankee), the parent company of Yankee Gas Services
Company, is 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 (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., 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. During the first quarter of
2002, NU recorded an impairment charge of $2.5 million as a result of the
decline in the fair value of NUEI's investment in Acumentrics. On November 30,
2001, Select Energy acquired Niagara Mohawk Energy Marketing, Inc. (NMEM) for
$31.7 million. This business was subsequently renamed Select Energy New York,
Inc. (SENY).
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, NGS, Boulos, NGS Mechanical, Select Energy Contracting, Reeds
Ferry, HEC/Tobyhanna, HEC/CJTS, ERI/HEC, YESCO, R.M. Services, Acumentrics,
and SENY 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 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 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, New Hampshire, and Vermont. 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 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 was acquired by SESI 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 SESI's construction of the Connecticut Juvenile Training
School in Middletown, Connecticut. HEC/CJTS is wholly owned by SESI.
10. About ERI/HEC
ERI/HEC was established on September 30, 2000, by SESI 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 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.
13. 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. During the first quarter of 2002, NU
recorded an impairment charge of $2.5 million as a result of the decline in
the fair value of NUEI's investment in Acumentrics.
14. About SENY
On November 30, 2001, Select Energy acquired NMEM for $31.7 million. This
business was renamed 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. 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 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 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
Northeast 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. Under Emerging
Issues Task Force Issue No. 98-10, "Accounting for Energy Trading and Risk
Management Activities," these instruments are adjusted to market value, and the
unrealized gains and losses are recognized in income in the current period in
the statements of income as fuel, purchased and net interchange power and in
the balance sheets as prepayments and other. The mark-to-market position at
March 31, 2002, had an asset value of $57.5 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 March 31, 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 $15.5 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 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 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 March 31, 2002, an
unfavorable 10 percent change in forward market price would have resulted in
a decline in fair value of approximately $35.3 million.
The impact of a change in electricity, natural gas and oil prices on Select
Energy's nontrading contracts on March 31, 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 extend through 2004. As of March 31,
2002, the NYMEX contracts had a notional value of $60.9 million and a mark-
to-market asset value of $1.2 million.
Derivative Cash Flow Hedge Accounting: During the first quarter of 2002,
$13.7 million in income, net of tax, was reclassified from other comprehensive
income upon the conclusion of derivative cash flow hedge transactions and
recognized in earnings. An additional $0.6 million of income, net of tax,
was recognized in earnings for those derivatives that were determined to be
ineffective. Currently, the cash flow hedge transactions entered into hedge
cash flows through 2004. As a result of these new transactions and market
value changes since January 1, 2002, other comprehensive income increased
by $19.8 million, net of tax. Accumulated other comprehensive loss at
March 31, 2002, was $3.4 million, net of tax (reduction to equity), relating
to hedged transactions and it is estimated that $1 million, net of tax, will
be reclassified as a charge to earnings within the next twelve months. Cash
flows from the hedge contracts are reported in the same category as cash flows
from the hedged activities.
18. 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
-------------------
(Registered Holding Company)
By: /s/ John P. Stack
------------------------------
(Signature of Signing Officer)
John P. Stack
-------------
Vice President-Accounting and Controller
----------------------------------------
Date: May 29, 2002
-------------------