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<SEC-DOCUMENT>0000072741-02-000051.txt : 20020415
<SEC-HEADER>0000072741-02-000051.hdr.sgml : 20020415
ACCESSION NUMBER: 0000072741-02-000051
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 36
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020322
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NORTHEAST UTILITIES SYSTEM
CENTRAL INDEX KEY: 0000072741
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911]
IRS NUMBER: 042147929
STATE OF INCORPORATION: MA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-05324
FILM NUMBER: 02582925
BUSINESS ADDRESS:
STREET 1: 174 BRUSH HILL AVE
CITY: WEST SPRINGFIELD
STATE: MA
ZIP: 01090-0010
BUSINESS PHONE: 4137855871
MAIL ADDRESS:
STREET 1: 107 SELDON ST
CITY: BERLIN
STATE: CT
ZIP: 06037-1616
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>form10k2001.txt
<DESCRIPTION>FORM 10-K
<TEXT>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 2001
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
- ----------- ----------------------------------- ------------------
1-5324 NORTHEAST UTILITIES 04-2147929
-------------------
(a Massachusetts voluntary association)
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-2010
Telephone: (413) 785-5871
0-11419 THE CONNECTICUT LIGHT AND POWER COMPANY 06-0303850
---------------------------------------
(a Connecticut corporation)
107 Selden Street
Berlin, Connecticut 06037-1616
Telephone: (860) 665-5000
1-6392 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 02-0181050
---------------------------------------
(a New Hampshire corporation)
1000 Elm Street
Manchester, New Hampshire 03105-0330
Telephone: (603) 669-4000
0-7624 WESTERN MASSACHUSETTS ELECTRIC COMPANY 04-1961130
--------------------------------------
(a Massachusetts corporation)
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-2010
Telephone: (413) 785-5871
333-74636 NORTHEAST GENERATION COMPANY 06-1533879
----------------------------
(a Connecticut corporation)
107 Selden Street
Berlin, Connecticut 06037-1616
Telephone: (860) 655-5154
Securities registered pursuant to Section 12(b) of the Act:
<Table>
<Caption>
Name of Each Exchange
Registrant Title of Each Class on Which Registered
---------- ------------------- ----------------------
<S> <C> <C>
Northeast Utilities Common Shares, $5.00 par value New York Stock Exchange, Inc.
</Table>
Securities registered pursuant to Section 12(g) of the Act:
<Table>
<Caption>
Registrant Title of Each Class
---------- -------------------
<S> <C>
The Connecticut Light and Preferred Stock, par value $50.00 per share, issuable in
Power Company series, of which the following series are outstanding:
$1.90 Series of 1947 4.96% Series of 1958
$2.00 Series of 1947 4.50% Series of 1963
$2.04 Series of 1949 5.28% Series of 1967
$2.20 Series of 1949 $3.24 Series G of 1968
3.90% Series of 1949 6.56% Series of 1968
$2.06 Series E of 1954
$2.09 Series F of 1955
4.50% Series of 1956
</Table>
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Northeast Utilities' Common Shares, $5.00 Par
Value, held by nonaffiliates, was $2,458,357,404 based on a closing sales
price of $18.38 per share for the 133,751,763 common shares outstanding on
February 28, 2002. Northeast Utilities holds all of the 7,584,884 shares,
388 shares, 509,696 shares, and 6 shares of the outstanding common stock of
The Connecticut Light and Power Company, Public Service Company of New
Hampshire, Western Massachusetts Electric Company, and Northeast Generation
Company, respectively.
Documents Incorporated by Reference:
Part of Form 10-K
into Which Document
Description is Incorporated
----------- --------------------
Portions of Annual Reports of the following
companies for the year ended December 31, 2001:
Northeast Utilities Part II
The Connecticut Light and Power Company Part II
Public Service Company of New Hampshire Part II
Western Massachusetts Electric Company Part II
Northeast Generation Company Part II
Portions of the Northeast Utilities Proxy
Statement dated March 25, 2002 Part III
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms
that are found in this report:
COMPANIES
Boulos.......................... E.S. Boulos Company
CL&P............................ The Connecticut Light and Power Company
CL&P LP......................... CL&P Capital LP
Con Edison...................... Consolidated Edison, Inc.
CRC............................. CL&P Receivables Corporation
CYAPC........................... Connecticut Yankee Atomic Power Company
DNCI............................ Dominion Nuclear Connecticut, Inc.
HWP............................. Holyoke Water Power Company
Mode 1.......................... Mode 1 Communications, Inc.
MYAPC........................... Maine Yankee Atomic Power Company
NAEC............................ North Atlantic Energy Corporation
NAESCO.......................... North Atlantic Energy Service Corporation
NEON............................ NEON Communications, Inc.
NGC............................. Northeast Generation Company
NGS............................. Northeast Generation Services Company
NMEM............................ Niagara Mohawk Energy Marketing, Inc.
NNECO........................... Northeast Nuclear Energy Company
NU or the company............... Northeast Utilities
NU system....................... Northeast Utilities System
NUEI............................ NU Enterprises, Inc.
NUSCO........................... Northeast Utilities Service Company
PSNH............................ Public Service Company of New Hampshire
RRR............................. The Rocky River Realty Company
Select Energy................... Select Energy, Inc.
SENY............................ Select Energy New York, Inc.
SEPPI........................... Select Energy Portland Pipeline, Inc.
SES or SESI..................... Select Energy Services, Inc.
VYNPC........................... Vermont Yankee Nuclear Power Corporation
WMECO........................... Western Massachusetts Electric Company
YAEC............................ Yankee Atomic Electric Company
Yankee.......................... Yankee Energy System, Inc.
Yankee Companies................ CYAPC, MYAPC, VYNPC, and YAEC
Yankee Gas...................... Yankee Gas Services Company
GENERATING UNITS
Millstone 1..................... Millstone Unit No. 1, a 660 megawatt
nuclear unit completed in 1970; Millstone 1
is currently in decommissioning status and
was sold to DNCI in March 2001.
Millstone 2..................... Millstone Unit No. 2, an 870 megawatt
nuclear electric generating unit completed in
1975; Millstone 2 was sold to DNCI in March
2001.
Millstone 3..................... Millstone Unit No. 3, a 1,154 megawatt
nuclear electric generating unit completed in
1986; Millstone 3 was sold to DNCI in March
2001.
Seabrook........................ Seabrook Unit No. 1, a 1,148 MW nuclear
electric generating unit completed in 1986.
Seabrook 1 went into service in 1990.
REGULATORS
CDEP............................ Connecticut Department of
Environmental Protection
DOE............................. United States Department of Energy
DPUC............................ Connecticut Department of
Public Utility Control
DTE............................. Massachusetts Department of
Telecommunications and Energy
EPA............................. United States Environmental Protection Agency
FERC............................ Federal Energy Regulatory Commission
NHPUC........................... New Hampshire Public Utilities Commission
NRC............................. Nuclear Regulatory Commission
SEC............................. Securities and Exchange Commission
OTHER
1935 Act........................ Public Utility Holding Company
Act of 1935
BFA............................. Business Finance Authority
CAAA............................ Clean Air Act Amendments of 1990
District Court.................. United States District Court for the
Southern District of New York
EITF............................ Emerging Issues Task Force
Energy Act...................... Energy Policy Act of 1992
EPS............................. Earnings Per Share
ESOP............................ Employee Stock Ownership Plan
ESPP............................ Employee Stock Purchase Plan
Exchange........................ New York Mercantile Exchange
FASB............................ Financial Accounting Standards Board
FPPAC........................... Fuel and Purchased-Power Adjustment Clause
Incentive Plan.................. Northeast Utilities Incentive Plan
ISO............................. Independent System Operator
ITC............................. Independent Transmission Company
kWh............................. Kilowatt-hour
Merger Agreement................ Agreement and Plan of Merger, as
amended and restated as of January 11,
2000, between NU and Con Edison
MIPs............................ Monthly Income Preferred Securities
MW.............................. Megawatts
NDFC............................ Nuclear Decommissioning Financing Committee
NEPOOL.......................... New England Power Pool
NUG&T........................... Northeast Utilities Generation and
Transmission Agreement
O&M............................. Operation and Maintenance
PCRBs........................... Pollution Control Revenue Bonds
Pool............................ Northeast Utilities System Money Pool
RTO............................. Regional Transmission Organization
SERP............................ Supplemental Executive Retirement Plan
Settlement Agreement............ "Agreement to Settle PSNH Restructuring"
SFAS............................ Statement of Financial Accounting Standards
VSP............................. Voluntary Separation Program
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTHEAST GENERATION COMPANY
2001 Form 10-K Annual Report
Table of Contents
PART I
Page
Item 1. Business............................................. 1
The Northeast Utilities System............................ 1
Safe Harbor Statement..................................... 2
Mergers and Acquisitions.................................. 3
Consolidated Edison, Inc. Merger..................... 3
Competitive Business Acquisitions.................... 3
Rates and Electric Industry Restructuring................. 4
General.............................................. 4
Connecticut Rates and Restructuring.................. 5
Massachusetts Rates and Restructuring................ 7
New Hampshire Rates and Restructuring................ 8
Competitive System Businesses............................. 9
Energy-Related Products and Services and
Gas Investments.................................... 10
Electric Generation and Services..................... 13
Energy Management Services........................... 14
Gas Investments...................................... 15
Telecommunications................................... 15
Financing Program......................................... 16
2001 Financings...................................... 16
2002 Financing Requirements.......................... 18
2002 Financing Plans................................. 19
Financing Limitations................................ 19
Construction and Capital Improvement Program.............. 24
Regulated Electric Operations............................. 25
Distribution and Sales............................... 25
Regional and System Coordination..................... 26
Transmission Access and FERC Regulatory Changes...... 27
Regulated Gas Operations.................................. 28
Nuclear Generation........................................ 29
General.............................................. 29
Nuclear Plant Performance............................ 31
Nuclear Insurance.................................... 31
Nuclear Fuel......................................... 32
Decommissioning...................................... 33
Other Regulatory and Environmental Matters................ 37
Environmental Regulation............................. 37
Electric and Magnetic Fields......................... 39
FERC Hydroelectric Project Licensing................. 40
Employees................................................. 41
Item 2. Properties........................................... 42
Item 3. Legal Proceedings.................................... 47
Item 4. Submission of Matters to a Vote of Security Holders.. 52
PART II
Item 5. Market for Registrants' Common Equity and Related
Shareholder Matters.................................. 53
Item 6. Selected Financial Data.............................. 54
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 54
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.......................................... 54
Item 8. Financial Statements and Supplementary Data.......... 55
Item 9. Changes in Disagreements with Accountants on
Accounting and Financial Disclosure.................. 56
PART III
Item 10. Directors and Executive Officers of the Registrants.. 58
Item 11. Executive Compensation............................... 64
Item 12. Security Ownership of Certain Beneficial Owners and
Management........................................... 74
Item 13. Certain Relationships and Related Transactions....... 76
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.................................. 76
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTHEAST GENERATION COMPANY
PART I
ITEM 1. BUSINESS
THE NORTHEAST UTILITIES SYSTEM
Northeast Utilities (NU) is the parent company of the Northeast
Utilities system (the NU system). The NU system furnishes franchised retail
electric service in Connecticut, New Hampshire and western Massachusetts
through three of NU's wholly- owned subsidiaries (The Connecticut Light and
Power Company [CL&P], Public Service Company of New Hampshire [PSNH] and
Western Massachusetts Electric Company [WMECO]).
The NU system also furnishes retail natural gas service in most of
Connecticut through Yankee Gas Services Company (Yankee Gas), a subsidiary of
Yankee Energy System, Inc. (Yankee), the largest natural gas distribution
company in Connecticut. Yankee Gas serves approximately 191,000 residential,
commercial and industrial customers in 69 cities and towns in Connecticut.
NU, through its wholly owned subsidiary, NU Enterprises, Inc. (NUEI),
owns a number of competitive energy and telecommunications related
businesses, including Northeast Generation Company (NGC), Northeast
Generation Services Company (NGS), Select Energy, Inc. (Select Energy),
Select Energy Services, Inc. (SESI; formerly HEC Inc.) and Mode 1
Communications, Inc. (Mode 1). For information regarding the activities of
these subsidiaries, see "Competitive System Businesses."
North Atlantic Energy Corporation (NAEC) is a wholly owned special-
purpose operating subsidiary of NU that owns a 35.98 percent interest in the
Seabrook station nuclear unit (Seabrook) in Seabrook, New Hampshire, and
sells its share of the capacity and output from Seabrook to PSNH under two
life-of-unit, full-cost recovery contracts (Seabrook Power Contracts).
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 (NUSCO) provides centralized accounting,
administrative, information technology, engineering, financial, legal,
operational, planning, purchasing, and other services to the NU system
companies. North Atlantic Energy Service Corporation (NAESCO) has operational
responsibility for Seabrook. Three other subsidiaries construct, acquire or
lease some of the property and facilities used by the NU system companies.
The NU system is regulated in virtually all aspects of its business by
various federal and state agencies, including the Securities and Exchange
Commission (SEC), the Federal Energy Regulatory Commission (FERC), the
Nuclear Regulatory Commission (NRC) and various state and/or local regulatory
authorities with jurisdiction over the industry and the service areas in
which each company operates, including the Connecticut Department of Public
Utility Control (DPUC), the New Hampshire Public Utilities Commission (NHPUC)
and the Massachusetts Department of Telecommunications and Energy (DTE). In
recent years, there has been significant legislative and regulatory activity
changing the nature of regulation of the industry. For more information
regarding these restructuring initiatives, see "Rates and Electric Industry
Restructuring" and "Regulated Electric Operations."
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), NU and its reporting subsidiaries
are hereby filing cautionary statements identifying important factors that
could cause NU or its subsidiaries' actual results to differ materially from
those projected in forward looking statements (as such term is defined in the
Reform Act) made by or on behalf of NU or its subsidiaries in this combined
Form 10-K, in any subsequent filings with the SEC, in presentations, in
response to questions, or otherwise. Any statements that express or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events, or performance (often, but not always, through the use of
words or phrases such as will likely result, are expected to, will continue,
is anticipated, estimated, projection, outlook) are not statements of
historical facts and may be forward looking. Forward looking statements
involve estimates, assumptions and uncertainties that could cause actual
results to differ materially from those expressed in the forward looking
statements. Accordingly, any such statements are qualified in their entirety
by reference to, and are accompanied by, the following important factors that
could cause NU or its subsidiaries' actual results to differ materially from
those contained in forward looking statements of NU or its subsidiaries made
by or on behalf of NU or its subsidiaries.
Any forward looking statement speaks only as of the date on which such
statement is made, and NU and its subsidiaries undertake no obligation to
update any forward looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time
and it is not possible for management to predict all of such factors, nor can
it assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward looking statements.
Some important factors that could cause actual results or outcomes to
differ materially from those discussed in the forward looking statements
include prevailing governmental policies and regulatory actions, including
those of the SEC, the NRC, the FERC, and state regulatory agencies, with
respect to allowed rates of return, industry and rate structure, operation of
nuclear power facilities, acquisition and disposal of assets and facilities,
operation and construction of plant facilities, recovery of purchased-power
costs, stranded costs, decommissioning costs, and present or prospective
wholesale and retail competition (including but not limited to retail
wheeling and transmission costs).
The business and profitability of NU and its subsidiaries are also
influenced by economic and geographic factors including political and
economic risks, changes in environmental and safety laws and policies,
weather conditions (including natural disasters), population growth rates and
demographic patterns, competition for retail and wholesale customers, pricing
and transportation of commodities, market demand for energy from plants or
facilities, changes in tax rates or policies or in rates of inflation,
changes in project costs, unanticipated changes in certain expenses and
capital expenditures, capital market conditions, competition for new energy
development opportunities, and legal and administrative proceedings (whether
civil or criminal) and settlements.
All such factors are difficult to predict, contain uncertainties which
may materially affect actual results and are beyond the control of NU or its
subsidiaries.
MERGERS AND ACQUISITIONS
CONSOLIDATED EDISON, INC. MERGER
Pursuant to an October 13, 1999 Agreement and Plan of Merger, as
restated and amended on January 11, 2000 (the "Merger Agreement"),
Consolidated Edison, Inc. ("Con Edison") and NU agreed to a merger pursuant
to which Con Edison and NU would become wholly owned subsidiaries of a new
entity ("New Con Edison") and NU shareholders would receive cash and New Con
Edison common stock in exchange for their NU shares. On March 5, 2001, Con
Edison advised NU that it was unwilling to close the merger on the terms set
forth in the Merger Agreement, and NU advised Con Edison that it would treat
Con Edison's refusal to proceed with the transaction as a repudiation and
breach of the Merger Agreement. Subsequently, NU and Con Edison each filed
a lawsuit in the United States District Court for the Southern District of
New York, alleging, among other things, breach of the Merger Agreement by the
other. The companies' claims against each other are pending, and NU regards
the proposed merger as effectively terminated. For further information on
the litigation relating to the proposed merger, see "Item 3. Legal
Proceedings."
COMPETITIVE BUSINESS ACQUISITIONS
As of December 31, 2000, NGS acquired substantially all of the assets of
E.S. Boulos Company, and its affiliates E.S. Boulos Electrical Co., Inc. and
E.S.B., Inc. (collectively "Boulos"), construction and maintenance companies
located in Westbrook, Maine, for approximately $10 million, subject to
adjustment. Boulos, the largest electrical contractor in Maine, specializes
in high voltage electrical construction and maintenance in Massachusetts, New
Hampshire and Maine.
On November 30, 2001, Select Energy completed the acquisition of Select
Energy New York, Inc. (formerly Niagara Mohawk Energy Marketing, Inc., or
SENY), the competitive energy marketing and services subsidiary of Niagara
Mohawk Holdings, Inc., for approximately $31.7 million. SENY, based in
Syracuse, New York, is engaged in the wholesale and retail sales of natural
gas and electricity in the Northeastern U.S. and Canada and is now a wholly-
owned subsidiary of Select Energy.
RATES AND ELECTRIC INDUSTRY RESTRUCTURING
GENERAL
NU's electric utility subsidiaries, CL&P, WMECO and PSNH, have undergone
fundamental changes in their business operations as a result of the
restructuring of the electric industry in their respective jurisdictions.
Most notably, CL&P and WMECO have divested their generation assets and will
act solely as transmission and distribution companies in the future, while
divestiture of PSNH's generation has been postponed until 2004. All
customers are now able to choose their energy suppliers, with the electric
utility companies furnishing "standard offer" or "transition" service to
those customers who do not choose a competitive supplier. Critical to this
restructuring is the companies' ability to recover their stranded costs.
Stranded costs are expenditures incurred, or commitments for future
expenditures made, on behalf of customers with the expectation such
expenditures would continue to be recoverable in the future through rates.
As discussed more fully below, CL&P and WMECO have recovered
substantially all of their prudently incurred stranded costs. Under an April
2000 settlement agreement among NU, PSNH and the State of New Hampshire
(Settlement Agreement), PSNH expects to recover all of its remaining stranded
costs.
Electric utility restructuring in Connecticut, New Hampshire and
Massachusetts provides for a transition period of several years following the
opening of each state's electric market to customer choice. During that
interim period, the energy delivery companies, including CL&P, WMECO and
PSNH, are responsible for arranging for the supply of power to customers who
do not select alternative energy suppliers. Management recognizes that in
other states electric companies have been negatively affected by the
inability to recover supply costs on a timely basis. However, the Company
believes that current statutes and regulatory policy in the three states in
which NU subsidiaries operate electric delivery businesses will permit timely
recovery.
CL&P has signed fixed-price contracts with three suppliers who together
will serve all of CL&P's standard offer requirements through 2003. One of
these suppliers is the Company's competitive marketing affiliate, Select
Energy, and the other two suppliers are unaffiliated with CL&P. CL&P is
fully recovering all of the payments it is making to those suppliers and has
financial guarantees from each supplier to shield CL&P from risk in the event
any of the suppliers encounters financial difficulties. See "Connecticut
Rates and Restructuring."
WMECO signed supply agreements with unaffiliated suppliers for standard
offer service in October 2001 for the 2002 calendar year. The DTE approved
the contracts and approved new rates which allow WMECO to recover fully its
standard offer supply costs. In addition, in Massachusetts there is a second
type of WMECO-supplied service called default service. WMECO has signed
supply agreements with unaffiliated suppliers for default service through
June 2002. The DTE approved the contracts and the rules which allow WMECO to
recover fully its default service supply costs.
Retail competition for all PSNH customers began on May 1, 2001. PSNH
provides transition service energy to its retail customers from its owned
generating plant and from purchase power obligations. See "New Hampshire
Rates and Restructuring."
CONNECTICUT RATES AND RESTRUCTURING
Since retail competition began in Connecticut in 2000, an extremely
small number of CL&P customers have opted to choose their retail supplier.
As of December 31, 2001, only 2,400-virtually all of them residential-of more
than 1.2 million CL&P customers were not procuring their electricity through
CL&P's standard offer. Through December 2003, 50 percent of CL&P's standard
offer supply requirements will be purchased from Select Energy, 45 percent
from NRG Energy, and 5 percent from Duke Power Marketing. On November 18,
2001, at the request of NRG Energy, CL&P filed a request with the DPUC to
raise the standard offer rate from an average of $0.0495 per kilowatt-hour to
$0.0595 per kilowatt-hour, which would help promote competition in advance of
the January 1, 2004 termination of the standard offer period. On December 5,
2001, the DPUC rejected CL&P's request, but subsequently opened two new
dockets to examine the provision of default service beginning on January 1,
2004 and the viability of the standard offer supply contracts. In the first
docket, on December 8, 2001 the DPUC conducted a joint hearing with the
Connecticut Office of Consumer Counsel (OCC) to consider issues related to
default service commencing on January 1, 2004. A decision in that docket was
issued on February 15, 2002 that discussed four options for providing default
service, the lack of retail competition and means of spurring competition.
In the second docket, the DPUC commenced hearings on February 19, 2002 to
consider issues related to the viability of the standard offer supply
contracts. A decision in that docket is pending.
In November 2000, the DPUC authorized CL&P to securitize approved
eligible stranded costs through the issuance of up to $1.55 billion of rate
reduction certificates (RRCs). In December 2000, the OCC appealed the DPUC's
decision to the Connecticut Superior Court. On March 2, 2001, CL&P and the
OCC entered into a settlement agreement that resolved all issues raised in
the OCC's appeal. The DPUC approved the settlement on March 12, 2001 and the
OCC withdrew its appeal. Approximately $1.44 billion of the RRCs were issued
at the end of the first quarter of 2001. Included in the securitized amounts
were $1.026 billion in buy down and buy out payments for contracts with 15
independent power producers (IPPs) and one wholesale contract. See
"Financing Program - 2001 Financings."
On March 31, 2001, CL&P, WMECO, PSNH and other selling joint owners
closed on the sale of Millstone 1, Millstone 2 and 94 percent of Millstone 3
to Dominion Nuclear Connecticut, Inc. (DNCI), an affiliate of Dominion
Resources, Inc. (Dominion), for $1.3 billion. See "Nuclear Generation."
On September 27, 2001, CL&P filed its application with the DPUC for
approval of the disposition of the proceeds from the sale of the Millstone
units to DNCI. This application described and requested DPUC approval for
CL&P's treatment of its share of the proceeds from the sale, including CL&P's
retention of approximately $75 million of capital additions at Millstone
during the approximately four years prior to sale. A decision from the DPUC
is expected in the first half of 2002.
On December 3, 2001, JP Morgan, on behalf of the DPUC and the NHPUC,
announced the commencement of an auction that will lead to the sale of the
Seabrook nuclear plant. Under Connecticut and New Hampshire restructuring
laws, each utility commission is charged with the responsibility for
conducting the auctions. Eighty-eight percent of the plant is being offered
for sale in the auction, including 100 percent of CL&P's and NAEC's shares in
Unit 1 and Unit 2. It is expected that a winning bidder will be selected in
the first half of 2002. Management expects that the sale of CL&P's and
NAEC's interests in Seabrook will occur by the end of 2002. The Vermont
Yankee nuclear unit is also being sold; see "Nuclear Generation - General"
for information on that sale.
CL&P was unable to negotiate buy down or buy out arrangements with 15
IPPs that produce approximately 345 MW. CL&P is selling the output from the
projects into the market and will, pursuant to DPUC authority, continue to
collect the difference between the contract prices and the market revenues as
stranded costs. These stranded costs cannot be securitized.
On December 1, 2000, the Attorney General of the State of Connecticut
(AG) and the OCC each filed a petition requesting that the DPUC initiate a
proceeding to consider whether an interim decrease in the rates charged by
CL&P is required. The applicable statute requires the DPUC to commence a
special public hearing on the need for an interim rate decrease when, among
other reasons, a public service company has for six consecutive months earned
a return on equity (ROE) that exceeds the return authorized by the DPUC by at
least one percentage point. The AG and the OCC petitions were filed after
CL&P reported ROEs of 13.12 percent for the second quarter of 2000 and 14.17
percent for the third quarter of 2001.
In June 2001, the DPUC concluded its investigation on potential
overearnings by CL&P and ordered a $21.1 million reduction in CL&P's electric
transmission and distribution rates and an equal increase in CL&P's
generation services charge. The DPUC also implemented an earnings sharing
mechanism under which earnings in excess of a 10.3 percent ROE will be shared
equally by shareholders and ratepayers. On September 28, 2001, the DPUC
ordered a $21.3 million annual reduction in CL&P's System Benefits Charge as
a result of a sharp reduction in decommissioning collections and an equal
increase in the competitive transition assessment, effective March 1, 2002.
Also, on July 26, 2001, the DPUC authorized CL&P to assess a charge of
approximately $0.002 per kilowatt-hour through December 2003 to collect
approximately $98.5 million of deferred fuel costs. The net result of the
decisions noted above will be to reduce CL&P's pretax earnings by $21.1
million beginning June 20, 2001, accelerate CL&P's recovery of stranded costs
in 2002 and 2003.
On December 18, 2001, the AG filed a new petition seeking an
investigation into CL&P's potential overearnings. On February 6, 2002, the
DPUC rejected the petition.
On July 24, 2001, Yankee Gas filed an application to increase customers'
rates by approximately $29.2 million, or an average of 7.64 percent. Yankee
Gas requested the increase to fund system reliability projects and a proposed
expansion of its distribution system. On January 30, 2002, the DPUC issued a
final decision in the case, ordering a $4.0 million reduction in Yankee Gas
rates, effective March 1, 2002. The DPUC authorized an 11 percent return on
equity for Yankee Gas and a sharing formula for earnings above that level
from 2002 through 2005. The DPUC also approved an infrastructure recovery
mechanism which will allow Yankee Gas the opportunity to recover the carrying
costs of its planned distribution system expansion on an annual basis. The
OCC and the AG have requested a reconsideration of the DPUC decision. On
March 5, 2002, the DPUC issued a draft decision reopening the docket to
review the bill credit calculation that is required to implement the rate
reduction and to clarify the rate treatment for system expansion projects
that fail to meet the profitability standards established by the DPUC. It is
now expected that the rate decrease will become effective on April 1, 2002.
On March 14, 2002, the OCC appealed the January 30, 2002 decision.
MASSACHUSETTS RATES AND RESTRUCTURING
Massachusetts enacted comprehensive electric utility industry
restructuring in November 1997. That legislation required each electric
company to submit a restructuring plan and to reduce its rates by 15 percent
adjusted for inflation by September 1999. The 15 percent rate reduction is a
rate cap for standard offer service customers that extends until February
2005, the end of the restructuring transition period. WMECO filed, and in
1999 the DTE approved, WMECO's restructuring plan. The plan allows WMECO's
customers to choose their energy suppliers and allows WMECO to recover
generation-related stranded costs. Two parties have appealed the DTE's
decision on WMECO's restructuring plan to the Massachusetts Supreme Judicial
Court. One appeal has been dismissed without prejudice by the Supreme
Judicial Court because the appellant has failed to prosecute the appeal.
There has been no significant action in the other appeal since it was filed
in December 1999.
In addition, the DTE-approved plan requires WMECO to procure
competitively priced standard offer service and default service. These
services provide power to customers that decline to purchase energy from a
competitive supplier. For 2001, standard offer service was procured at a
composite rate of 7.383 cents per kilowatt-hour (kWh), including congestion
costs. Default service was procured for 2001 at a somewhat higher rate.
WMECO signed a new one-year standard offer supply agreement with unaffiliated
suppliers in October 2001 for the 2002 calendar year at a rate of $0.04829
cents per kilowatt-hour. The DTE approved the contracts and approved new
rates which allow WMECO to fully recover its standard offer supply costs.
On December 29, 2001, the DTE approved a 14 percent reduction in WMECO's
overall bills, primarily reflecting a reduction in WMECO's standard offer
supply costs from 2001 to 2002 to $0.04829 per kilowatt-hour. Additionally,
supply costs for the approximately 30 percent of WMECO customers taking
default service declined to an average rate of $0.0757 per kilowatt-hour in
the first half of 2002 from $0.0853 in the second half of 2001. The
significant reduction in supply costs in 2002 will result in a material
reduction in WMECO revenue and purchased power costs in 2002, but should not
have a meaningful impact on financial performance since electric supply costs
are passed through to customers.
On February 7, 2001, the DTE approved the securitization of $155 million
of stranded costs and issued the required financing order. In March 2001,
WMECO received the approvals of two Massachusetts state agencies directed by
statute to oversee the bond issuance. The stranded costs to be securitized
include the unrecovered plant balances of Millstone 2 and 3 and the buydown
and buyout payments of two IPP contracts. On May 17, 2001, WMECO Funding LLC
(WMECO Funding), a subsidiary of WMECO, sold $155 million of notes to
Massachusetts RRB Special Purpose Trust WMECO-1, a special purpose trust.
The trust in turn sold, through underwriters, $155 million of rate reduction
certificates to the public. The notes were issued in a single class. WMECO
Funding applied the proceeds from the sale of the notes to the purchase of
certain transition property from WMECO. The certificates were issued in a
single class with a maturity and other terms identical to the notes. See
"Financing Program - 2001 Financings."
WMECO is in the process of finalizing its 2001 annual transition cost
reconciliation which is expected to be filed with the DTE on or about March
29, 2002. This filing reconciles the recovery of stranded generation costs
for calendar year 2001. Also included in this filing will be the sales
proceeds from WMECO's portion of Millstone, the impact of securitization and
an approximate $13 million benefit to ratepayers from WMECO's nuclear
performance-based ratemaking process. The inclusion of these items as part
of the reconciliation filing allows WMECO to accelerate the recovery of total
stranded generation assets. Management anticipates a formal hearing in 2002
regarding this filing after a period of discovery by the DTE and other
intervenors.
NEW HAMPSHIRE RATES AND RESTRUCTURING
On May 1, 2001, PSNH became the last of NU's three electric operating
subsidiaries to implement industry restructuring. On that date, the
Settlement Agreement was implemented and all of PSNH's approximately 440,000
retail electric customers were allowed to begin choosing their electric
suppliers. They also received an overall reduction of more than 10 percent
in their bills, in addition to the five percent reduction they received on
October 1, 2000. The implementation of restructuring followed a ruling by
the New Hampshire Supreme Court in January 2001 upholding the NHPUC's final
restructuring order and the sale of $525 million of PSNH rate reduction bonds
on April 25, 2001. In June 2001, the U.S. Supreme Court refused to hear an
appeal of the New Hampshire Supreme Court's decision.
The stranded cost recovery charge (SCRC) varies by customer class.
Under the terms of the Settlement Agreement, the SCRC cannot exceed an
average rate of 3.4 cents per kilowatt-hour. This charge recovers principal
and interest on rate reduction bonds, nuclear decommissioning costs, mandated
payments to small power producers and so-called Part 3 stranded costs. PSNH
had approximately $432.5 million of Part 3 stranded costs as of December 31,
2001, down from $464.8 million when competition began on May 1, 2001. Part 3
stranded costs consist primarily of costs deferred under PSNH's fuel and
purchased power adjustment clause (FPPAC), deferred independent power
producer (IPP) costs, acquisition premium, future contract obligations to the
four regional Yankee nuclear companies, and a portion of the over-market
value of Millstone 3.
On May 22, 2001, the state's 1996 and 2000 electric industry
restructuring laws were modified to forbid PSNH from selling its fossil and
hydro plants until at least 33 months after restructuring takes effect, or
February 1, 2004. The revisions also fixed the charges retail customers will
pay PSNH for electric energy supply, or transition service. If PSNH's costs
to serve its load are not fully collected through rates, costs will be
deferred and recovered, subject to NHPUC prudence review, as Part 3 stranded
costs.
PSNH and NAEC have entered into two contracts under which PSNH is
obligated to purchase NAEC's 35.98 percent ownership of the capacity and
output of Seabrook (Seabrook Power Contracts). The 2001 amended
restructuring bill requires the NHPUC to complete the sale of NAEC's share of
Seabrook in an expeditious manner. The sale is expected to be consummated in
late 2002. NAEC's proceeds will be used to repay all $90 million of NAEC's
outstanding debt and return all of NAEC's equity, which totaled $35 million
as of December 31, 2001, to NU. The sale of NAEC's share of Seabrook will
terminate the Seabrook Power Contracts, and any net proceeds from the sale
will be used to reduce PSNH's stranded costs. See "Connecticut Rates and
Restructuring" for information on the sale of Seabrook.
On April 19, 2000, when the NHPUC approved the Settlement Agreement, it
found the FPPAC treatment proposed in the settlement to be reasonable with
recovery of the outstanding FPPAC deferral to be allowed through Part 3
stranded costs. On July 27, 2001, PSNH filed testimony and exhibits
substantiating its claim to recover all of its FPPAC costs (approximately
$209 million) from August 2, 1999 through April 30, 2001 when the FPPAC was
terminated pursuant to the Settlement Agreement. The extension of the
Seabrook refueling outage and the repairs being made to Newington Station
contributed to an increase in the FPPAC underrecovery. Hearings at the NHPUC
have not been scheduled but are expected to be held during the spring of
2002. PSNH believes it will fully recover these costs.
On May 31, 2000, the New Hampshire Legislature passed Senate Bill 472
which permits the issuance of up to $130 million in rate reduction bonds to
finance the buy down or buy out of certain rate orders with six wood-fired
small power producers and one waste-to-energy plant. Renegotiation of these
NHPUC rate orders would permit PSNH to retain up to 20 percent of the savings
generated. House Bill 489, signed into law on May 22, 2001, provides that
PSNH will be entitled to retain a fixed 20 percent of any savings obtained
from renegotiated power purchase obligations. The bill became effective upon
the Governor's signature on May 22, 2001.
On April 19, 2001, PSNH made filings with the NHPUC concerning
agreements that would reduce the costs of purchases from three of the six
wood-fired plants. The NHPUC approved two of the proffered agreements and
PSNH subsequently closed those transactions. One of the transactions was
financed through the issuance of $50 million in additional rate reduction
bonds on January 30, 2002. The third restructured arrangement will not go
forward as currently structured and PSNH has requested that the related NHPUC
docket be closed.
COMPETITIVE SYSTEM BUSINESSES
NU is engaged in a variety of competitive businesses. They are grouped
essentially into two separate and distinct business activities: the
competitive energy business and the telecommunications business. Select
Energy is the lead competitive energy business within NU. Select Energy is an
integrated energy business that buys, sells, markets and trades electricity,
gas and oil and energy-related products and services. 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. These affiliated competitive energy companies include SESI,
NGC, HWP, NGS, SENY and Select Energy Portland Pipeline, Inc. (SEPPI) and
their subsidiaries. With the exception of SESI, the competitive businesses
operate primarily in the Northeast region of the United States.
Collectively, the competitive businesses generated over $3 billion in revenue
during 2001.
NGC is the competitive generating subsidiary of NU and a major provider
of pumped storage and conventional hydroelectric power in the northeastern
United States. NGC owns and operates a portfolio of approximately 1,289
megawatts of generating assets in New England. The generation facilities
owned by NGC were acquired at auction from CL&P and WMECO. NGC's portfolio
consists of seven hydro facilities along the Housatonic River System (123
MW), the three facilities comprising the Eastern Connecticut System,
including one gas turbine (27 MW), all located in Connecticut, and the
Northfield Mountain pumped storage station (1,080 MW) and the Cabot and
Turners Fall No. 1 hydroelectric stations (59 MW) located in Massachusetts.
NGC sells all its generation output to Select Energy, which in turn markets
it to customers. Select Energy's payments to NGC are guaranteed by NU.
NU's vision is to continue to strengthen its position as one of the
major energy providers in the northeastern United States. The deregulated
energy business is a core focus of NU. NGC performs functions that are
critical to NU's strategy on both the wholesale and retail levels by
providing access to electric generation within the NU system and thus
limiting the exposure of Select Energy to the risk of energy price
fluctuations.
ENERGY-RELATED PRODUCTS AND SERVICES AND GAS INVESTMENTS
Select Energy sells multiple energy products including electricity,
natural gas and oil to 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 is the
largest wholesale and retail electric energy marketer in New England as
measured by MW load. In order to support and complement its growing
wholesale and retail business, Select Energy contracted in December of 1999
with NGC to purchase and market all of NGC's 1,289 MWs for a 6-year period.
In addition, during 2001 Select Energy purchased approximately 190 MW of coal
and hydroelectric generating output from its affiliate, Holyoke Water Power
Company (HWP), and more than 3,500 MW of electrical supply from various New
England generating facilities on a long-term basis. Select Energy also
utilizes generation failure insurance, options and energy futures to hedge
its supply requirements. Moreover, Select Energy markets natural gas and
develops and markets energy-related products and services. It offers energy
management consulting and construction services through its affiliate, SESI,
discussed more fully below. Select Energy and its integrated competitive
energy business affiliates had aggregate revenues of approximately $3 billion
in 2001 as compared to approximately $1.9 billion in 2000 and contributed $5
million to consolidated earnings before extraordinary items in 2001, as
compared to earnings of approximately $13.6 million in 2000.
Select Energy is licensed to provide retail electric supply in
Connecticut, Delaware, Maryland, New Jersey, Maine, Pennsylvania, Virginia,
New York, Massachusetts, Rhode Island, and New Hampshire. Within these
states, Select Energy is currently registered with approximately 36 electric
distribution companies and 55 gas distribution companies to provide retail
services.
Select Energy's goal is to be the regional leader in providing electric
service to those Northeast markets opened to retail competition. In 2001,
Select Energy supplied more than 5,000 MWs of standard offer and default
service load, making it the largest provider of standard offer service in the
Northeast. Revenues from these services comprise in the aggregate
approximately 93 percent of Select Energy's 2001 revenues.
Select Energy's retail business has contracted with approximately 14,000
electric, gas and energy-related products and service customers within the
Northeastern region, most of which are medium and large industrial,
commercial and governmental customers.
On January 1, 2000, Select Energy began serving one half of CL&P's
standard offer load for a four-year period at fixed prices. This equates to
approximately 2,000 MW annually for each of the four contract years.
Approximately 22 percent of Select Energy's 2001 competitive energy revenues
came from CL&P's supply contract. Select Energy has entered into purchase
contracts with other energy providers to supply or hedge essentially all of
the standard offer requirement, including its contracts with NGC, the
purchase of 850 MW of output from the Millstone and Seabrook nuclear units
through 2001 and other resources in the energy marketplace. The nuclear
contracts that expired in 2001 have been replaced with other energy supply
contracts that place Select Energy in a stronger position since they are not
tied to specific generation units. Select Energy's profits from its
wholesale electric sales in 2001 were reduced due to CL&P's supply contract.
During 2000 and 2001, the energy markets were very volatile. This
period was marked by extremely high energy prices beginning by the end of the
first quarter of 2001 and continuing into the latter part of the year. To
reduce risk, Select Energy has already procured almost 100 percent of the
projected on-peak and the vast majority of the off-peak electricity
requirements to serve the CL&P standard offer service load. In addition,
management continues to work with state regulators to increase CL&P's
standard offer service price to make it more competitive with alternative
energy suppliers. If such relief is not granted, this contract may adversely
affect Select Energy's earnings in 2002 and 2003. See "Rates and Electric
Industry Restructuring - Connecticut Rates and Restructuring."
Select Energy has also entered into contracts with various retail
customers to provide energy services at fixed rates. Under these retail
contracts, Select Energy has the option to have the host utility provide
energy services and is obligated to compensate the customer as defined in the
contracts for differences (CFD Payments) to the extent the host utility's
rates exceed the contracted rates. For the 12 months ended December 31,
2001, the CFD Payment obligations for 2001 totaled approximately $30 million.
As the energy market prices decreased from the end of the first quarter of
2001 through the end of 2001, Select Energy re-established and re-enrolled
many of the CFD customers, as provided for under the contracts, and secured
the associated supply at reasonable prices, thereby mitigating the effects of
many of the future CFD Payments. Policies and procedures have been
established to manage these exposures, including the use of risk management
instruments.
In addition, beginning in January 2000, Select Energy assumed
responsibility for serving approximately 500 MW of fixed price market-based
wholesale contracts throughout New England with electric energy supply that
was previously provided by CL&P and WMECO.
In addition to the CFD contracts, as of December 31, 2001, Select Energy
had contracts with high volume retail electric customers in states throughout
the Northeast with primarily one-year terms. These contracts represent
approximately 325 MW of load at about 9,000 service locations and include
predominantly commercial, institutional, industrial and governmental
accounts. This retail load establishes Select Energy among the largest
competitive retail suppliers in New England as measured by MW load. No
single retail customer accounts for more than ten percent of Select Energy's
expected retail revenues.
The energy marketing business is intensely competitive. There are many
large energy companies bidding for business in the increasingly restructured
New England market. In 2000 and early 2001, the sharp increases in the cost
of power supply caused by the extreme increases in oil and gas fuel costs,
among other things, during the early part of the year provided significant
challenges for Select Energy. However, as energy prices began to decrease at
the end of the first quarter of 2001, Select Energy was presented with some
offsetting opportunities. In 2001, Select Energy increased its revenue by
about 55 percent over the 2000 revenue level, reporting $2.8 billion in 2001
as compared with $1.8 billion in 2000 due to the renewal of existing
contracts and the addition of new customers.
Disputes with respect to interpretation and implementation of the New
England Power Pool (NEPOOL) market rules have arisen with respect to various
competitive product markets. In certain cases, Select Energy and the NU
operating companies stand to gain if such disputes can be favorably resolved.
In other cases, Select Energy and the NU operating companies could incur
additional costs as a result of resolution of the disputes. These disputes
are in various stages of resolution through regulatory and judicial review.
It is too early to ascertain the level of potential gain or loss that may
result upon resolution of these issues. For further information on these
disputes, see "Item 3. Legal Proceedings."
During 2001, Select Energy's competitive natural gas business (wholesale
and retail) produced revenues of approximately $200 million, a decrease from
2000 revenues of approximately $221 million. This decrease was due to
changes in gas prices and decreased volume. As of December 31, 2001, Select
Energy had contracts with approximately 5,300 retail gas customers, primarily
located in Connecticut, Massachusetts and Pennsylvania. These contracts
generally have one-year terms and include primarily commercial,
institutional, industrial and governmental accounts. No single retail gas
customer accounts for more than five percent of Select Energy's expected
retail gas revenues. In 2001, Select Energy's retail gas revenues were
approximately $152 million representing approximately a 124 percent increase
compared to 2000.
During 2001, Select Energy increased its energy commodity trading
abilities. In order to better serve and supply the Northeast energy markets,
Select Energy expanded its business lines to include wholesale, retail,
energy products and services and trading. Additional experienced energy
traders were added and a reorganization of reporting, policy and procedure
development and oversight was implemented. While trading of energy
commodities entails significant risk, it is an essential and integral part of
being a major energy provider. The trading segment of the business can buy,
sell, hold or trade any energy futures, options, third party or counter-party
positions for energy commodities. The energy trading business also includes
entering into associated risk management products, including derivatives, as
part of managing the exposure and risk of energy commodity trading.
NU provides credit assurance in the form of guarantees and letters of
credit for the financial performance obligations of certain of its
competitive energy subsidiaries, including Select Energy. NU currently has
authorization from the SEC to provide up to $500 million of guarantees, and
has applied for authority to increase this amount to $750 million. As of
December 31, 2001, NU had provided approximately $268.2 million of such
guarantees and $45 million of letters of credit. In addition, NU's
"aggregate investment" in Select Energy and its other energy service
companies (but not including NGC, HWP or SESI) (which is inclusive of most
such credit assurances) is limited by SEC rule to 15 percent of NU's most
recent quarterly consolidated capitalization. In light of the increasing
size of the energy marketing and trading businesses, NU has applied for
authority to exempt Select Energy and SENY from this limitation.
ELECTRIC GENERATION AND SERVICES
NGC, NU's competitive business affiliate formed in 1999 to acquire
generation facilities, currently sells all of its energy and capacity to its
affiliate, Select Energy. Select Energy's performance under its contract
with NGC is guaranteed by NU. In March 2000, NGC acquired 1,289 MW of
hydroelectric and pumped storage generating assets in Connecticut and
Massachusetts from CL&P and WMECO.
NGC's contract with Select Energy extends through December 2005. About
85 percent of NGC's revenues from this contract (including all of the
revenues from Northfield Mountain) are in the form of predetermined, fixed
monthly payments based on the capacity of specified facilities. The
remaining 15 percent of the revenues are in the form of monthly payments at
predetermined rates per unit of actual energy output. NGC currently derives
approximately 80 percent to 85 percent of its revenues from Northfield
Mountain.
NGC plans to renew the agreement with Select Energy after 2005. If
NGC's agreement with Select Energy were to terminate, however, NGC's plan
would be to aggressively market its power at times of peak usage and maximize
revenues from the quick-start and reserve capabilities of its pumped storage
facilities. NGC plans to pursue growth opportunities in the northeastern
United States through acquisition of existing power plants and the
development of new plants; however, its ability to do so is limited by
capital and regulatory constraints.
HWP is another part of the competitive energy businesses. Select Energy
buys and manages the entire generation output from HWP. This generation
consisted of about 190 MW until December 13, 2001, when HWP sold 43.6 MW of
its hydroelectric generation and its retail electric distribution business to
the City of Holyoke's Gas and Electric Department for approximately $17.5
million. HWP is selling all of its capacity and output to Select Energy
through December 2002, with annual or longer contract renewals available
thereafter.
NGS was formed in 1999 to provide a full range of integrated energy-
related services to owners of generation facilities and the industrial market
in the Northeast. NGS designs, builds, manages, operates, maintains and
supports electric power generating equipment, facilities and associated
transmission and distribution equipment and provides turnkey management and
operation services to owners of electric generation facilities. NGC and HWP
have contracted with NGS to operate and maintain all of their generating
plants.
Through its wholly-owned subsidiary, Boulos, NGS provides electrical
construction and contracting services. These services focus on high and
medium voltage installations and upgrades and substation and switchyard
construction.
NGS's industrial services include maintenance, permitting, environmental
and specialized electrical testing services. NGS also provides consulting
services to these customers, including engineering and design, construction
management, asset development, due diligence reviews and environmental
regulatory compliance and permitting services.
During 2001, NGS's revenues were approximately $112 million and are
forecast to grow by approximately 10 percent in 2002. This anticipated
growth is expected to be driven by NGS's increased geographical scope, an
acquisition and additional contracts with both new and repeat customers.
ENERGY MANAGEMENT SERVICES
As part of the Select Energy portfolio of products and services, SESI
markets energy efficiency and design solutions to customers. In general,
SESI contracts to reduce its customers' energy costs, improve the efficiency
and reliability of their energy-consuming equipment, and conserve energy and
other resources. SESI's engineering, construction management and financing
assistance services have been directed primarily to governmental and
institutional markets and utilities in the eastern United States. SESI's
subsidiary, Select Energy Contracting, Inc. (SECI), provides service
contracts and mechanical and electrical contracting, primarily directed to
energy systems in commercial markets.
In competitive procurements by the U.S. Departments of Defense and
Energy and the General Services Administration, SESI has been selected as an
"Energy Saving Performance Contractor" (ESPC) for all fifty states and
overseas facilities. During 2000 and 2001, SESI became one of the major
providers of design, construction, financing and long-term operation and
maintenance of energy-efficient and environmentally clean systems to replace
older infrastructure. SESI has recently installed the largest fuel cell-
based energy plant in the United States (at a state school in Connecticut)
and is building the new stand-alone energy plant at Bradley International
Airport in Connecticut. These plants provide electricity, heat and cooling.
SESI is under contract to operate and maintain the plants for at least 20
years. In 2001, federal ESPC work constituted ten percent of SESI's
revenues, which were approximately $102 million (an increase of 22 percent
over 2000).
GAS INVESTMENTS
SEPPI was formed in March 1999 to hold a five percent partnership
interest in the Portland Natural Gas Transmission System (PNGTS). Effective
June 28, 2001, SEPPI sold its five percent interest to three of the current
partners of PNGTS for aggregate consideration of $3.27 million.
TELECOMMUNICATIONS
Mode 1 was established in 1996 to participate in a wide range of
telecommunications activities both within and outside New England. Mode 1 is
a licensed competitive local exchange carrier authorized to provide local
phone service within the state of Connecticut. Mode 1 provides
telecommunication network services at the retail and wholesale levels,
primarily dark fiber. It has built high speed fiberoptic connectivity to
secondary and tertiary markets within cities such as Hartford and serves the
City of Hartford's schools and libraries with an optical network.
NU has invested approximately $21 million in Mode 1 since it was
established, which investment was principally used to fund Mode 1's
investment in NEON Communications, Inc., a wholesale telecommunication
infrastructure provider of dark and light fiber-optic services along the
Atlantic seaboard (NEON). Mode 1 is the largest equity investor in NEON and
currently owns approximately 19.3 percent of the common shares of NEON.
On June 15, 2001, NEON and Mode 1 entered into a purchase agreement
pursuant to which Mode 1 purchased from NEON an 18 percent subordinated
convertible note due 2008 in the principal amount of $15 million (Note).
Mode 1 may convert the Note at any time into common stock of NEON at a
conversion price of $6 per share, or 2.5 million shares, subject to certain
anti-dilution provisions. The interest payments under the Note may be paid
in cash, shares of common stock or additional 18 percent subordinated
convertible notes, at the option of NEON. To date, NEON has failed to make
any scheduled interest payments on the Note. NEON has announced that as a
result of its evaluation of strategic alternatives, discussions concerning a
restructuring of its outstanding debt are underway.
NEON is constructing a fiber optic communications network through New
England, New York, Philadelphia and Washington, D.C., utilizing a portion of
the NU system companies' transmission and distribution facilities. An
officer and trustee of NU and an officer of NUSCO are members of the Board of
Directors of NEON. In addition, NU is a party to an agreement with Central
Maine Power Company (CMP), an owner of approximately 19.2 percent of NEON's
common shares, fully diluted, wherein NU and CMP each agree that, as long as
NU owns at least 10 percent of the outstanding common stock of NEON, fully
diluted, and the cumulative holdings of NU and CMP are at least 33 1/3
percent, fully diluted, neither NU nor CMP will take action without the other
which will allow NEON to merge, consolidate, liquidate or sell, lease or
transfer substantially all of its assets or commence or acquiesce to any
action or proceeding under any bankruptcy laws.
In September 2000, Consolidated Edison Communications, Inc. (CECI), a
subsidiary of Con Edison, and another, unaffiliated company, Exelon Ventures
(Exelon), acquired 10.75 and 9.25 percent, respectively, of NEON's common
shares in exchange for contributions to NEON by each company of
telecommunications assets in kind and cash. Mode 1 is party to two
reciprocal agreements which commit it to vote for CMP's, CECI's and Exelon's
nominees for director of NEON and such companies agree to support Mode 1's
nominees. Under these arrangements, Mode 1 can presently designate two
directors and CMP, CECI and Exelon can designate two, one and one
director(s), respectively.
FINANCING PROGRAM
2001 FINANCINGS
On February 28, 2001, NU issued $263 million of floating rate senior
notes, which replaced a $263 million term-loan credit facility which was used
to finance the Yankee acquisition. The senior notes bear an effective
interest cost of 3.48 percent at December 31, 2001 and mature in February
2003.
On March 30, 2001, CL&P completed the sale of $1.44 billion of RRCs
under a November 2000 DPUC ruling approving the securitization of up to $1.55
billion of CL&P's stranded costs (including costs associated with generation
assets, purchase power agreement buy outs/buy downs and nuclear generation
assets). The average cost of the RRCs, which were issued in several series
that vary in maturity from approximately two to ten years, is 5.95 percent.
Proceeds from this issue were used to buy out and buy down purchase power
agreements, retire debt and cover transaction costs.
On April 25, 2001, PSNH completed the sale of $525 million of rate
reduction bonds (RRBs), subsequent to a NHPUC ruling approving the
securitization of up to $670 million of PSNH's stranded costs. The average
cost of the bonds, which were issued in several series that vary in maturity
from approximately two to twelve years, is 5.9 percent. Proceeds from this
issue were used to buy down the Seabrook Power Contracts, retire preferred
stock, return capital to NU and cover fees and interest and other reserves.
On May 17, 2001, WMECO completed the sale of $155 million of RRCs,
subsequent to a DTE ruling approving the securitization of up to $155 million
of WMECO's stranded costs. The cost of the RRCs, which are expected to
mature in twelve years, is 6.53 percent. The proceeds from this issue were
primarily used to reduce WMECO's capitalization and to buy down and buy out
two purchase power contracts.
All RRBs and RRCs are payable solely from collections from customers of
PSNH, CL&P and WMECO, respectively, and are non-recourse to the companies.
On July 11, 2001, CL&P renewed its accounts receivable securitization
credit line and extended its termination date to July 10, 2002. In addition,
the credit line capacity was reduced from $200 million to $100 million to
better reflect CL&P's short-term borrowing requirements.
On October 10, 2001, CL&P entered into a replacement standby bond
purchase agreement supporting the Series 1996A pollution control bonds. The
$62.9 million, 364-day agreement replaces a similar agreement and expires on
October 22, 2002. The original transaction was approved by the DPUC in 1997.
On October 18, 2001, NGC sold $440 million of senior secured bonds and
used the proceeds primarily to repay $346.5 million of bank debt and to
return $75 million of equity to NU. The bonds were issued in two series:
$120 million of Series A amortizing bonds with an average life of 2.4 years,
a coupon of 4.998 percent and a final maturity of October 15, 2005; and $320
million of Series B amortizing bonds with an average life of 18.9 years, a
coupon of 8.812 percent and a final maturity of October 15, 2026.
On November 9, 2001, NAEC entered into an unsecured $90 million, 364-day
credit facility. The new facility provided for a one-time draw at closing of
$90 million, which replaced a $200 million unsecured 364-day facility that
expired on November 9, 2001 (the original facility had an outstanding balance
of $90 million). The new facility has a provision that will require the
company to pay down 100 percent of the remaining balance within two days of
the sale of the Seabrook nuclear power plant. The expiration date for this
facility is November 8, 2002.
On November 16, 2001, CL&P, WMECO, PSNH and Yankee Gas entered into a
new unsecured 364-day revolving credit facility for $350 million, replacing a
$250 million facility for CL&P and WMECO and a $60 million facility for
Yankee Gas. CL&P may draw up to $150 million, and WMECO, PSNH and Yankee Gas
may draw up to $100 million each, subject to the $350 million maximum for the
entire facility. Unless extended, the credit facility will expire on
November 15, 2002.
Also on November 16, 2001, NU entered into a new unsecured 364-day
revolving credit facility for $300 million, replacing a similar $400 million
facility that expired on November 16, 2001. The facility supports the
working capital needs of NU and its unregulated subsidiaries. The new
facility provides a total commitment of $300 million which is available
subject to two over-lapping sub-limits. First, subject to the notional
amount of any letters of credit outstanding, amounts up to $300 million are
available for advances. Second, subject to the advances outstanding, letters
of credit may be issued in notional amounts up to $200 million. The
agreement provides for letters of credit to be issued in the name of NU or
any of its subsidiaries. Unless extended, the credit facility will expire on
November 15, 2002.
On December 19, 2001, PSNH issued $287.5 million of tax-exempt bonds.
The new issuance consists of three series: the 2001 Tax-Exempt Series A and
2001 Tax-Exempt Series B Auction Rate Pollution Control Revenue Bonds (PCRBs)
and the 2001 Tax-Exempt Series C 5.45 percent Fixed Rate PCRBs. The proceeds
of this issuance were used to retire the 1991 Tax Exempt Series A, Series B
and Series C PCRBs, which were used to finance PSNH's share of costs relating
to the construction of certain pollution control, sewage and solid waste
disposal facilities. The variable interest rate for both the Series A and B
bonds was 1.55 percent as of December 31, 2001.
In 2001, NU retired $1.3 billion of debt and preferred stock with the
RRB and RRC issuance proceeds and the proceeds from the sale of the Millstone
power plant.
NU paid common dividends totaling $60.9 million in 2001, compared to
$57.4 million paid in 2000. The increase was a result of NU paying a $0.45
per share quarterly common dividend for 2001, as compared to payment of a
$0.40 per share dividend in 2000.
Total NU system debt, including short-term and capitalized lease
obligations, was $2.7 billion as of December 31, 2001, compared with $3.8
billion as of December 31, 2000. The decrease was primarily due to the
retirement of debt with proceeds from the issuances of RRBs and RRCs as well
as from the sale of the Millstone power plant. For more information
regarding NU system financing, see "Notes to Consolidated Statements of
Capitalization" in NU's financial statements, other footnotes related to long-
term debt, short-term debt and the sale of accounts receivables, as
applicable, in the notes to NU's, CL&P's, PSNH's, WMECO's, and NGC's
financial statements and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
2002 FINANCING REQUIREMENTS
The NU system's aggregate capital requirements for 2002 are
approximately as follows:
CL&P PSNH WMECO NAEC Yankee Other NU
Gas System
(Millions)
Construction $244 $110 $25 $ 5 $103 $106 $593
Nuclear Fuel 0 0 0 8 0 0 8
Maturities 0 0 0 0 0 0 0
Cash Sinking
Funds* 0 0 0 0 1 50 51
---- ---- --- --- ---- ---- ----
Total $244 $110 $25 $13 $104 $156 $652
==== ==== === === ==== ==== ====
*CL&P, WMECO and PSNH have sinking funds associated with RRCs and RRBs that
are not included in the capital requirements subtotal. All interest and
principal payments for these bonds are collected through a non-bypassable
charge assessed to customers and do not represent additional capital
requirements.
For further information on the NU system's 2002 financing requirements,
see "Notes to Consolidated Statements of Capitalization" in NU's financial
statements, "Long-Term Debt" in the notes to CL&P's, PSNH's, WMECO's and
NGC's financial statements and "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations."
2002 FINANCING PLANS
On January 30, 2002, PSNH sold $50 million of RRBs, the proceeds of
which were used to pay the costs associated with the buy out of high-cost
power contracts with wood-fired generating plants. The bonds are scheduled
to mature in 2008.
In April 2002, NU expects to issue $263 million in long-term debt to
replace its $263 million senior two-year note, which matures in 2003. NU has
also filed an application with the SEC seeking authorization to issue up to
$600 million of long-term debt through the period ending June 30, 2005,
including the $263 million proposed issuance of notes.
Yankee Gas is considering a number of capital projects including
construction of a liquefied natural gas storage terminal in Waterbury,
Connecticut that could cost in excess of $50 million. Yankee Gas may issue
up to $100 million of long-term debt in 2002 to finance its capital needs and
may require additional debt issuances in later years, depending on the extent
of its capital program. See "Financing Program - Construction and Capital
Improvement Program."
CL&P has announced plans for the construction of various transmission
facilities. The projects require numerous federal and state regulatory
approvals. If approved, construction of these facilities would require
external financing. See "Financing Program - Construction and Capital
Improvement Program."
FINANCING LIMITATIONS
Many of the NU system companies' charters and borrowing facilities
contain financial limitations that must be satisfied before borrowings can be
made and for outstanding borrowings to remain outstanding.
Under their current revolving credit facility agreement, CL&P, WMECO,
PSNH, and Yankee Gas are allowed to maintain a ratio of debt to total
capitalization (leverage ratio) of no more than 65 percent. At December 31,
2001, CL&P's, WMECO's, PSNH's, and Yankee Gas's leverage ratios were 49
percent, 43 percent, 59 percent and 29 percent, respectively. This agreement
also requires the companies to maintain 12-month earnings before interest and
taxes to interest expense ratio (interest coverage ratio) of at least 2.25 to
1.0. At December 31, 2001, CL&P's, WMECO's, PSNH's and Yankee Gas' interest
coverage ratios were 4.22 to 1, 3.38 to 1, 4.98 to 1 and 3.88 to 1,
respectively. The ratios do not include rate reduction bonds.
NU is allowed, under its revolving short-term credit agreement facility,
to maintain a debt to total capitalization (leverage ratio) of no more than
66 percent. At December 31, 2001, NU's leverage ratio was 58 percent. In
addition, NU is required to maintain a 12-month consolidated interest
coverage ratio of at least 2.25 to 1.0. At December 31, 2001, NU's
consolidated interest coverage ratio was 3.08 to 1.0. The ratios do not
include RRBs and RRCs.
NAEC is party to a 364-day term credit agreement which provides that
outstanding advances on the credit thereunder can be terminated or
accelerated if NAEC does not maintain specified minimum ratios of common
equity to capitalization (as defined in the agreement). For NAEC, the
minimum common equity ratio under its term loan credit agreement is 25
percent; at December 31, 2001, NAEC's common equity ratio was 27.9 percent.
The agreement also requires a 12-month adjusted net income to interest
expense ratio (interest coverage ratio) of not less than 1.50 to 1.00. At
December 31, 2001, the ratio for NAEC was 3.20 to 1.00. The credit agreement
also provides for mandatory prepayment of 100 percent of the aggregate
principal amount of advances outstanding within two days of the sale of the
Seabrook nuclear facility. The 364-day term credit agreement also limits
NAEC's other unsecured debt to $60 million. NAEC had no such debt
outstanding at December 31, 2001.
The amount of short-term debt that may be incurred by NU, CL&P, PSNH,
WMECO, NAEC, Northeast Nuclear Energy Company (NNECO), Yankee and Yankee Gas
is also subject to periodic approval by the SEC under the 1935 Act. PSNH's
and NAEC's short-term debt in excess of 10 percent of net fixed plant is also
regulated by the NHPUC. The following table shows the amount of short-term
borrowings authorized by the SEC or the NHPUC for each company, as the case
may be, as of December 31, 2001, and the amounts of outstanding short-term
debt of those companies at the end of 2001 and as of March 1, 2002:
Maximum Authorized Outstanding
Short-Term Debt Short-Term Debt (1)
December 31, 2001 March 1, 2002
(Millions)
NU $400 $ 40.0 $ 60.0
CL&P 375 0 0
PSNH (2) 225 83.5 11.2
WMECO 250 59.2 62.7
HWP (3) N/A 9.6 9.6
NAEC (4) 260 90.0 90.0
NNECO 75 0 0
Yankee 50 0 0
Yankee Gas 100 52.5 41.1
Select N/A 155.5 157.5
Energy (3)
NGS (3) N/A 12.5 11.7
SESI (3) N/A 14.5 11.7
RRR (3) N/A 25.3 28.5
Other N/A 9.8 8.0
------ ------
Total $552.4 $492.0
====== ======
(1) These columns include borrowings of various NU system companies from NU
and other NU system companies. Total NU system short-term indebtedness to
unaffiliated lenders was $290.5 million at December 31, 2001 and $200 million
at March 1, 2002.
(2) Under applicable NHPUC provisions, PSNH can incur short-term debt up to
$100 million.
(3) The SEC limits, as indicated, the following companies' borrowings from
the NU system money pool (but not borrowings from either parent companies or
non-affiliates): HWP ($5 million); Select Energy ($200 million); NGS ($20
million); SESI ($20 million) and the Rocky River Realty Company (RRR) ($30
million). NU, NGC and Mode 1 are not authorized to participate in the money
pool.
(4) Under applicable NHPUC regulations, NAEC can incur short term debt up to
10 percent of net fixed plant or such other amount as approved by the NHPUC.
NAEC currently has authorization from the NHPUC to issue up to $260 million
of short-term debt.
The supplemental indentures under which NU issued $175 million in
principal amount of 8.58 percent amortizing notes in December 1991 and $75
million in principal amount of 8.38 percent amortizing notes in March 1992
contain restrictions on dispositions of certain NU system companies' stock,
limitations of liens on NU assets and restrictions on distributions on and
acquisitions of NU stock. Under these provisions, NU, CL&P, PSNH and WMECO
may not dispose of voting stock of CL&P, PSNH or WMECO other than to NU or
another NU system company, except that CL&P may sell voting stock for cash to
third persons if so ordered by a regulatory agency so long as the amount sold
is not more than 19 percent of CL&P's voting stock after the sale. The
restrictions also generally prohibit NU from pledging voting stock of CL&P,
PSNH or WMECO or granting liens on its other assets in amounts greater than
five percent of the total common equity of NU. Many of the NU system
companies' credit agreements have similar restrictions. As of December 31,
2001, no NU debt was secured by liens on NU assets. Furthermore, NU may not
declare or make distributions on its capital stock, acquire its capital stock
(or rights thereto), or permit an NU system company to do the same, at times
when there is an event of default existing under the supplemental indentures
under which the amortizing notes were issued.
CL&P's charter contains preferred stock provisions restricting the
amount of additional unsecured debt it may incur. As of December 31, 2001,
the amount of additional unsecured debt it could incur was $535 million.
The indentures securing the outstanding first mortgage bonds of CL&P
provide that additional bonds may not be issued, except for certain refunding
purposes, unless earnings are at least twice the pro forma annual interest
charges on outstanding bonds, and certain prior lien obligations and bonds to
be issued.
The preferred stock provisions of CL&P's charter also prohibit the
issuance of additional preferred stock (except for refinancing purposes)
unless income before interest charges (as defined and after income taxes and
depreciation) is at least 1.5 times the pro forma annual interest charges on
indebtedness and the annual dividend requirements on preferred stock that
will be outstanding after the additional stock is issued. CL&P's earnings
currently permit it to meet those earnings tests.
Certain consolidated subsidiaries have dividend restrictions imposed by
their long-term debt agreements. These restrictions also limit the amount of
retained earnings available for NU common dividends. At December 31, 2001,
retained earnings available for the payment of dividends totaled $267.5
million.
The Federal Power Act limits the payment of dividends by PSNH, NAEC,
CL&P, and WMECO to retained earnings. At December 31, 2001, retained
earnings for these companies were $ 176.4 million, -$1 million, $286.9
million, and $55.4 million, respectively.
New Hampshire statutes also limit the payment of dividends by PSNH and
NAEC to retained earnings.
CL&P's first-mortgage bond indenture limits dividend payments to an
amount equal to (i) retained earnings accumulated after December 31, 1966;
plus (ii) retained earnings accumulated prior to January 1, 1967, not
exceeding $13.5 million; plus (iii) any additional amounts authorized by the
SEC.
Applicable merger accounting rules required that upon acquisition by NU,
Yankee's and its subsidiaries' retained earnings were reclassified as capital
surplus. Also, the merger premium NU paid to acquire Yankee was allocated
among Yankee and its subsidiaries and "pushed down" to their balance sheets.
Under accounting conventions in existence at the time of the merger, the
majority of the merger premium would be amortized over 40 years. In June
2001, the Financial Accounting Standards Board issued a statement that,
effective January 1, 2002, no longer requires companies to amortize goodwill
as an expense to the income statement. Instead goodwill is required to be
evaluated for impairment and any impairments to goodwill would be charged to
expense. A study of the impairment of goodwill is underway. It is expected
that the effect of the new accounting standard, assuming no write-down for
impairment is required, will be an approximately $9 million annual reduction
in goodwill amortization expense.
Under the 1935 Act, subsidiaries of registered holding companies are
only allowed to pay dividends out of retained earnings unless the SEC allows
otherwise. The effect of this rule would be to prevent Yankee from paying
dividends to NU from any source other than post-merger earnings, as reduced
by the merger premium amortization. NU has received permission from the SEC,
through June 2002, for Yankee and Yankee Gas to pay dividends (i) out of
additional paid-in capital up to the amount of their respective retained
earnings just prior to the merger with NU and (ii) out of earnings before the
amortization of the merger goodwill (gross earnings) in the case of Yankee
Gas and out of distributed earnings in the case of Yankee. To assure that
Yankee Gas has sufficient cash to fund operations, Yankee Gas will not pay
dividends in excess of 80 percent of gross earnings on a rolling five-year
average basis. In no case would dividends be paid by Yankee or Yankee Gas if
their common equity to total capitalization ratios were below 35 percent. NU
has also received permission from the SEC, through June 2002, for Yankee and
Yankee Gas to repurchase their common stock such that their common equity to
total capitalization ratios do not fall below 35 percent.
NGC bond covenants prevent NGC from making dividend payments unless (i)
no default or event of default will occur from doing so, (ii) the debt
service reserve account has been sufficiently funded with six months of
principal and interest on the outstanding bonds, and (iii) the debt service
coverage ratio for the previous four fiscal quarters (or, if shorter, since
the bond issuance closing date) and projected debt service coverage ratio for
the next eight fiscal quarters is (a) greater than or equal to 1.35 if
contracted generating capacity is greater than 75 percent or (b) greater than
or equal to 1.70 if contracted generating capacity is less than 75 percent.
At December 31, 2001, NGC's contracted generating capacity was greater than
75 percent. NGC expects to meet its debt service coverage ratio requirements
under this covenant and to pay dividends in 2002.
NU is required under the 1935 Act to maintain its consolidated common
equity at a level equal to at least 30 percent of its consolidated
capitalization. Following the issuance of RRBs and RRCs by its subsidiaries,
NU was temporarily unable to meet this standard because such bonds and
certificates, although nonrecourse to the NU system company issuers, are
considered to be indebtedness of the companies under generally accepted
accounting principles. The SEC had authorized the consolidated common equity
ratio of NU to fall below 30 percent through December 31, 2001. NU's
consolidated common equity ratio was greater than 30 percent as of December
31, 2001 and is expected to remain above this level in the future. The 30
percent test also applies to NU's electric operating subsidiaries. The SEC
had consented to the common equity ratios of CL&P, WMECO and PSNH falling
below 30 percent through December 31, 2004.
NU provides credit assurance in the form of guarantees and letters of
credit for the financial performance obligations of certain of its
unregulated subsidiaries. NU currently has authorization from the SEC to
provide up to $500 million of such guarantees and has applied for authority
to increase this amount to $750 million. As of December 31, 2001, NU had
provided approximately $268.2 million and $45 million, respectively, of such
guarantees and letters of credit. As of February 20, 2002, NU had provided
approximately $320 million and $150 million, respectively, of such guarantees
and letters of credit.
Certain NU system credit financing agreements have trigger events tied
to the credit ratings of certain NU system companies, as discussed below.
RRR is a real estate subsidiary that owns NU's Connecticut headquarters
site. It has approximately $8 million of debt outstanding that could be
affected by a ratings change. If NU, CL&P, PSNH or WMECO ratings fall below
a B1 Moody's rating or a B+ Standard & Poor's rating, bondholders would have
the right to demand mandatory prepayments.
NGC has a debt reserve account related to the $440 million bond issue
that can be funded with cash, an NU guarantee or a letter of credit from an
acceptable counterparty. The account is currently funded with cash and may
be funded with a guarantee from NU only if NU has an investment grade rating
by Standard & Poor's and Moody's.
NU and its subsidiaries have $650 million of revolving credit agreements
with a number of banks. There are no ratings triggers that would result in a
default, but lower ratings would increase fees on future borrowings from the
credit lines.
CONSTRUCTION AND CAPITAL IMPROVEMENT PROGRAM
The NU system's construction program expenditures, including allowance
for funds used during construction, is estimated to total as much as $593
million in 2002. Of such total amount, approximately $244 million is
expected to be expended by CL&P, $110 million by PSNH, $103 million by Yankee
Gas, $25 million by WMECO, $5 million by NAEC, $1 million by NGS and up to
$105 million by other system entities. This construction program data
includes all anticipated costs necessary for committed projects and for those
reasonably expected to become committed projects in 2002, regardless of
whether the need for the project arises from environmental compliance,
reliability requirements, nuclear safety or other causes. The construction
program's main focus is maintaining, upgrading and expanding the existing
transmission and distribution system and natural gas distribution system. The
system expects to evaluate its needs beyond 2002 in light of future
developments, such as restructuring, industry consolidation, performance and
other events.
The $105 million in construction expenditures planned for other system
entities in 2002 includes NU's proposed construction of a new direct current
transmission line from Norwalk, Connecticut to western Long Island. NU has
sought FERC approval to conduct an open season auction and negotiate final
contracts for the scheduling rights on the line. The project's final size
and cost will be determined after an auction process, which NU plans to
complete in 2002. As a result, management cannot determine if all of the
construction expenditures planned for 2002 will actually be expended.
CL&P has announced plans to invest approximately $520 million by the end
of 2006 to construct two new 345,000 volt transmission lines from inland
Connecticut to Norwalk, Connecticut and another $40 million to help rebuild
an existing 138,000 volt transmission line beneath Long Island Sound. The
investment in transmission lines and continued upgrading of the electric
distribution system are expected to increase CL&P's net investment in
electric plant to between $244 million and $353 million in each of the years
2002 through 2005. All of these projects are in the developmental or
governmental approval stage and management cannot yet determine whether the
projects will be built as proposed. If current plans are implemented on
schedule, NU would likely require additional external financing to construct
these projects. If all of the transmission projects are built as proposed,
the NU system's net investment in electric transmission would increase to
nearly $1.4 billion by the end of 2006.
In January 2002, Yankee Gas received approval for a significant
expansion of its natural gas distribution system in Connecticut. See
"Connecticut Rates and Restructuring" for information on Yankee Gas' DPUC
filing and the related decision.
In addition to the projects noted above, NU is considering purchasing
additional electric generating capacity in the Northeast United States to
enhance its competitive energy marketing activities. Management has not
committed to purchase any specific generation and at this time cannot
estimate the capital requirements of such a purchase should an agreement be
reached.
REGULATED ELECTRIC OPERATIONS
DISTRIBUTION AND SALES
CL&P, PSNH and WMECO furnish retail franchise service in 149, 198 and 59
cities and towns in Connecticut, New Hampshire and Massachusetts,
respectively. In December 2001, CL&P furnished retail franchise service to
approximately 1.2 million customers in Connecticut, PSNH provided retail
service to approximately 440,000 customers in New Hampshire and WMECO served
approximately 201,000 retail franchise customers in Massachusetts. HWP
served 32 retail customers in Holyoke, Massachusetts prior to the sale of
certain of its assets in December 2001.
The following table shows the sources of 2001 electric franchise retail
revenues based on categories of customers (exclusive of HWP):
Total NU
CL&P PSNH WMECO System
---- ---- ----- --------
Residential 46% 40% 42% 44%
Commercial 39% 37% 37% 39%
Industrial 13% 22% 20% 16%
Other 2% 1% 1% 1%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
The actual changes in retail kWh sales for the last two years and the
forecasted retail sales growth estimates for the ten-year period 2001 through
2011 for CL&P, PSNH and WMECO are set forth below:
Forecast 2001-
2011 Compound
2000 over 2001 over Rate of
1999 2000 Growth
--------- --------- -------------
NU system 0.9% 2.3% 1.3%
CL&P 0.4% 2.4% 1.3%
PSNH 2.6% 3.9% 1.8%
WMECO -0.1% -0.9% 0.7%
Consolidated NU retail sales rose by 2.3 percent in 2001, compared with
2000, primarily due to higher heating and cooling requirements.
Approximately 0.6 percent of growth in NU total retail sales was due to the
ending of the New Hampshire pilot program in November 2000. During the
program, sales to the pilot participants were excluded from the retail class
totals. When the pilot program ended, sales to these customers were again
included in retail totals. Residential electric sales were up 3.0 percent.
Commercial sales were up by 5.6 percent for the year and industrial sales
decreased by 4.8 percent. Retail sales for CL&P, WMECO and PSNH were up 2.4
percent, down 0.9 percent and up 3.9 percent, respectively.
REGIONAL AND SYSTEM COORDINATION
The NU system companies and most other New England utilities are parties
to an agreement (NEPOOL Agreement), which provides for coordinated planning
and operation of the region's generation and transmission facilities. The
NEPOOL Agreement was restated and revised as of March 1997 to provide for (i)
a pool-wide open access transmission tariff; (ii) the creation of an
Independent System Operator (ISO); and (iii) a broader governance structure
for NEPOOL and a more open, competitive market structure. Under these new
arrangements the ISO, a nonprofit corporation whose board of directors and
staff are not controlled by or affiliated with market participants, ensures
the reliability of the NEPOOL transmission system, administers the NEPOOL
tariff and oversees the efficient and competitive functioning of the regional
power market.
The NEPOOL tariff provides for nondiscriminatory open access to the
regional transmission network at a single rate regardless of transmitting
distance for all transactions. The rate is a formula rate, structured to
ensure that each transmission provider under the NEPOOL tariff recovers its
revenue requirements.
In 1999, the NEPOOL Executive Committee filed a comprehensive settlement
of all issues set for hearing concerning the NEPOOL transmission tariff. The
settlement resolves disputes concerning the calculation of revenue
requirements for transmission over NEPOOL facilities and resolves disputes
over alleged "double charges" under grandfathered transmission contracts
retained by individual transmission providers, including the NU system. The
settlement also includes an ROE component which sets the ROE for each
individual transmission provider owning NEPOOL transmission facilities with
respect to those facilities from March 1, 1997 through at least June 1, 2000,
provided no changes to individual network transmission tariff rates are made
after December 31, 1999. NU's ROE has been set at 11.75 percent. NU has
made no changes to its transmission tariff rates since the settlement was
reached; accordingly, its ROE has remained unchanged.
As part of the settlement, ISO is required to independently audit the
charges in effect for the period June 1997 through May 2000 or direct that
such an audit be conducted under its supervision. In June 2000, ISO engaged
an independent auditing firm to conduct such an audit. The audit remains
ongoing and the results of the audit will be filed at FERC as an
informational filing.
In December 2000, NU was notified by FERC that it, along with several
other companies, would be the subject of a separate FERC industry-wide audit
of the accounting related to formula rate transmission tariffs. FERC
commenced its audit of NU in February 2001 and an exit conference was held on
February 12, 2002.
Two agreements determine the manner in which costs and savings are
allocated among the NU system electric operating companies. Under an
agreement (NUG&T) among CL&P, WMECO and HWP, these companies pool their
electric production costs and the costs of their principal transmission
facilities. The NUG&T was revised in 1999 to eliminate the generation
aspects of the agreement. Final agreement from FERC on this revision was
granted in October 2000. Pursuant to the merger agreement between NU and
PSNH, these companies and PSNH entered into a 10-year sharing agreement
(Sharing Agreement), expiring in June 2002, that provides, among other
things, for the allocation of the capability responsibility savings and
energy expense savings resulting from a single-system dispatch through
NEPOOL.
Under the Settlement Agreement between PSNH and the State of New
Hampshire, NU filed for and received FERC approval to terminate the Sharing
Agreement effective December 31, 2000. Only minor revenue changes are
expected in the future as no energy or capacity transactions have taken place
under the Sharing Agreement since CL&P and WMECO relinquished their
responsibilities to meet customer loads on January 1, 2000. Transmission
revenues will be allocated going forward based upon the respective companies'
cost of service where these revenues had been split equally between PSNH and
the signatories of the NUG&T (CL&P, HWP and WMECO) under the Sharing
Agreement.
TRANSMISSION ACCESS AND FERC REGULATORY CHANGES
Pursuant to FERC Order 888 (issued in April 1996), NU system companies
operate their transmission system under an open access, nondiscriminatory
transmission tariff.
In December 1999, the FERC issued an order calling on all transmission
owners to voluntarily join regional transmission organizations (RTOs) in
order to boost competition in electric markets (Order 2000). In general,
each such organization would be an independent operator over all transmission
facilities, and would perform, among other functions, tariff administration,
construction planning and reliability management for the particular regional
transmission system.
On January 16, 2001, NU along with the ISO and five other New England
transmission owning utilities (National Grid, USA, The United Illuminating
Company, Bangor Hydro-Electric Company, Central Maine Power and Vermont
Electric Company) filed a proposal to establish a New England Regional
Transmission Organization (NERTO) in compliance with FERC's order. As
proposed, NERTO would consist of the ISO and a newly formed for-profit
independent transmission company (Northeast ITC). Pursuant to an RTO
agreement, both entities would share the minimum required functions of an RTO
set forth in the FERC order. ISO would be primarily responsible for short-
term reliability functions and Northeast ITC would operate the transmission
assets of the participating transmission owners, develop and administer a
transmission tariff and engage in transmission planning and expansion
activities.
FERC ruled in July 2001 that the three existing Northeast pools should
merge to form a single RTO. NU has been working with utilities in the three
regions to extend the New England Binary RTO model into the Northeast.
In January 2002, the New England and New York ISOs proposed to FERC that
the two pools combine to form an RTO. The ISOs supported a binary model
similar to the New England model proposed in January 2001 to FERC. The ISOs
intend to file with FERC the structure of such an RTO by the end of June
2002. NU continues to work with transmission owners in New York and New
England to create an independent transmission company within the RTO.
Since NEPOOL established competitive wholesale markets in 1999,
congestion costs (the cost of higher energy prices within the New England
market due to transmission constraints) have grown steadily surpassing $276
million in total by year end 2001. ISO New England made a filing at FERC in
March 2000 to implement a congestion management system (CMS) similar to those
in use in the New York ISO and Pennsylvania - New Jersey - Maryland
Interconnection (PJM). CMS uses locational based pricing to assign costs to
regional loads, or zones, within New England. Individual load zones will
experience higher or lower congestion costs as the CMS replaces the current
practice of distributing and averaging congestion costs across all New
England loads. In March 2001, ISO New England and the PJM Interconnection
announced their intention to create a standard marked design (SMD) for use in
both markets. The SMD will incorporate a congestion management system and
will be heavily based on the existing PJM rules. It is expected that the
system will be operational in 2003.
REGULATED GAS OPERATIONS
In March 2000, NU acquired Yankee and Yankee became a wholly owned
subsidiary of NU. Yankee is the parent of Yankee Gas, the largest natural
gas distribution company in Connecticut. Yankee continues to act as the
holding company of Yankee Gas and its two active nonutility subsidiaries,
NorConn Properties, Inc. (NorConn), which holds the property and facilities
of Yankee and its subsidiaries, and Yankee Energy Financial Services Company,
which provides customers with financing for energy equipment installations.
Yankee Gas operates the largest natural gas distribution system in
Connecticut as measured by number of customers and size of service territory.
Total throughput (sales and transportation) for 2001 was 47.5 billion cubic
feet. In 2001, total gas operating revenues of $378 million were comprised
of the following: 50.3 percent residential; 28.6 percent commercial; 19
percent industrial; and the remaining 2.1 percent other. Yankee Gas provides
firm gas sales service to customers who require a continuous gas supply
throughout the year, such as residential customers who rely on gas for their
heating, hot water and cooking needs. Yankee Gas also provides interruptible
gas sales service to certain commercial and industrial customers that have
the capability to switch from natural gas to an alternative fuel on short
notice. Yankee Gas can interrupt service to these customers during peak
demand periods. Yankee Gas offers firm and interruptible transportation
services to customers who purchase gas from sources other than Yankee Gas.
In addition, Yankee Gas performs gas sales, gas exchanges and capacity
releases to marketers to reduce its overall gas expense. Effective November
1, 2001, Yankee Gas brought back in-house the management of its gas supply
function. This change will allow Yankee Gas to have more control over its
supply/storage portfolio and is expected to create opportunities to reduce
gas costs through off-system sales and capacity release transactions.
Although Yankee Gas is not subject to FERC jurisdiction, the FERC does
regulate the interstate pipelines serving Yankee Gas' service territory.
Yankee Gas, therefore, is directly and substantially affected by the FERC's
policies and actions. Accordingly, Yankee Gas closely follows and, when
appropriate, participates in proceedings before the FERC.
Yankee Gas is subject to regulation by the DPUC, which, among other
things, has jurisdiction over rates, accounting procedures, certain
dispositions of property and plant, mergers and consolidations, issuances of
securities, standards of service, management efficiency and construction and
operation of distribution, production and storage facilities. For
information relating to Yankee Gas DPUC proceedings, see "Rates and Electric
Industry Restructuring - Connecticut Rates and Restructuring."
For information on the proposed expansion of Yankee Gas' natural gas
delivery system in Connecticut, see "Construction and Capital Improvement
Program."
NUCLEAR GENERATION
GENERAL
During 2001, certain NU system companies had ownership interests in four
nuclear units, Millstone 1, 2 and 3 and Seabrook, and equity interests in
four regional nuclear companies (the Yankee Companies) that separately own
the Connecticut Yankee nuclear unit (CY), the Maine Yankee nuclear unit (MY),
the Vermont Yankee nuclear unit (VY) and the Yankee Rowe nuclear unit (Yankee
Rowe). One NU system company operates Seabrook. A different NU system
company operated Millstone 2 and 3 until the sale of the units in on March
2001. Yankee Rowe, CY, MY and Millstone 1 have been permanently removed from
service and are being decontaminated and decommissioned.
On March 31, 2001, CL&P and WMECO consummated the sale of Millstone 1
and 2 to a subsidiary of Dominion, DNCI. CL&P, PSNH, WMECO and certain other
of the joint owners collectively sold 93.47 percent of Millstone 3 to DNCI.
This sale included all of the respective joint ownership interests of CL&P,
PSNH and WMECO in Millstone 3. The NU system received approximately $1.2
billion of cash proceeds from the sale and has or will apply the proceeds to
payment of taxes and reductions of debt and equity of CL&P, PSNH and WMECO.
As part of the sale, DNCI assumed responsibility for decommissioning
Millstone 1 and for the eventual decommissioning of Millstone 2 and 3 when
those units cease operations.
Before Millstone 1 and 2 were sold to DNCI, CL&P and WMECO owned 100
percent of Millstone 1 and 2 as tenants in common. Their respective
ownership interests in each unit were 81 percent and 19 percent.
CL&P, PSNH and WMECO had agreements with other New England utilities
covering their joint ownership as tenants in common of Millstone 3. CL&P's,
PSNH's and WMECO's ownership interests in the unit prior to the sale to
Dominion were 52.93, 2.85 and 12.24 percent, respectively.
In 1996, one of the joint owners of Millstone 3, the Vermont Electric
Generation and Transmission Cooperative, Inc. (VEG&T), filed for bankruptcy.
The subsequent liquidation resulted in the offering of VEG&T's 0.35 percent
share of Millstone 3 for sale to the joint owners of Millstone 3. None of
the non-NU joint owners accepted the offer and CL&P took over responsibility
for the costs of that interest. The VEG&T ownership interest in Millstone 3
was included in the sale of the unit to DNCI as part of CL&P's share.
The NU companies own 40.04 percent of Seabrook: NAEC has a 35.98 percent
ownership interest and CL&P a 4.06 percent ownership interest. For
information on the sale of Seabrook, see "Connecticut Rates and
Restructuring."
CL&P, PSNH, WMECO and other New England electric utilities are the
stockholders of the Yankee Companies. Each Yankee Company owns a single
nuclear generating unit. The stockholder-sponsors of each Yankee Company are
responsible for proportional shares of the operating and decommissioning
costs of the respective Yankee Company. They are also entitled to
proportional shares of the electrical output of VY, which is the only
operating unit of the four Yankee Companies. The relative rights and
obligations with respect to the Yankee Companies are approximately
proportional to the stockholders' percentage stock holdings, but vary
slightly to reflect arrangements under which nonstockholder electric
utilities have contractual rights to some of the output of particular units.
CL&P's, PSNH's and WMECO's stock ownership percentages in the Yankee
Companies are set forth below:
CL&P PSNH WMECO NU system
---- ---- ----- ---------
Connecticut Yankee Atomic
Power Company (CYAPC) ...... 34.5% 5.0% 9.5% 49.0%
Maine Yankee Atomic Power
Company (MYAPC) ............ 12.0% 5.0% 3.0% 20.0%
Vermont Yankee Nuclear
Power Corporation (VYNPC)... 10.1% 4.3% 2.6% 17.0%
Yankee Atomic Electric
Company (YAEC).............. 24.5% 7.0% 7.0% 38.5%
The ownership interests of CL&P, PSNH and WMECO in VYNPC increased
slightly in early 2002 when VYNPC redeemed the stock owned by certain Vermont
municipal electric systems which had previously owned about five percent of
VYNPC's stock.
In March 2001, the board of VYNPC voted to proceed to auction the plant.
J.P. Morgan was selected to conduct the auction. In August 2001, the owners
of VYNPC announced they would sell the VY unit to a subsidiary of Entergy
Corporation for approximately $180 million (approximately $145 million for
the plant, materials and supplies and $35 million for the nuclear fuel). NU
subsidiaries own 17 percent of the VY unit and, under the terms of the sale,
will continue to buy 17 percent of the plant's output through March 2012 at
fixed prices. The sale requires several regulatory approvals and is
scheduled to close during the first half of 2002.
The operators of Seabrook and VY hold full term operating licenses from
the NRC and are subject to the jurisdiction of the NRC. The NRC has broad
jurisdiction over the design, construction and operation of nuclear
generating stations, including matters of public health and safety, financial
qualifications, antitrust considerations and environmental impact. The NRC
issues 40 year initial operating licenses to nuclear units and NRC
regulations permit renewal of licenses for an additional 20 year period. The
NRC also has jurisdiction over the decommissioning activities at Yankee Rowe,
CY and MY.
The NRC also regularly conducts generic reviews of technical and other
issues, a number of which may affect the nuclear plants in which NU system
companies have interests. The cost of complying with any new requirements
that may result from these reviews cannot be estimated at this time, but such
costs could be substantial.
NUCLEAR PLANT PERFORMANCE
MILLSTONE 3
Millstone 3 has a license expiration date of November 25, 2025. In
2001, Millstone 3 operated at a capacity factor of 30.5 percent through the
date of sale of the unit to DNCI (March 31, 2001). Upon the sale to DNCI,
Millstone 3 had a lifetime capacity factor of 62.8 percent.
MILLSTONE 2
Millstone 2 has a license expiration date of July 31, 2015. For the
period from January 1 to April 1, 2001, Millstone 2 operated at a capacity
factor of 99.6 percent. Upon the sale to DNCI, Millstone 2 had a lifetime
capacity factor of 56.2 percent.
SEABROOK
Seabrook has a license expiration date of October 17, 2026. In 2001,
Seabrook operated at a capacity factor of 85.9 percent. After returning from
a scheduled refueling outage on January 28, 2001, Seabrook operated at a
capacity factor of 93.4 percent through the end of the year. Seabrook is
scheduled to undergo a refueling outage in spring 2002 before the expected
sale of 88 percent of the unit. For information on the upcoming auction of
Seabrook, see "Connecticut Rates and Restructuring."
VERMONT YANKEE
VY has a license expiration date of March 21, 2012. In 2001, VY
operated at a capacity factor of 93.4 percent. VY began its 22nd refueling
outage on April 27, 2001 and returned to service on May 20, 2001, the
shortest outage in its history. For information on the sale of VY, see
"Nuclear Generation - General."
NUCLEAR INSURANCE
For information regarding nuclear insurance, see "Commitments and
Contingencies - Nuclear Insurance Contingencies" in the notes to NU's,
CL&P's, PSNH's and WMECO's financial statements.
NUCLEAR FUEL
GENERAL
The supply of nuclear fuel for the NU system's existing unit requires
the procurement of uranium concentrates, followed by the conversion,
enrichment and fabrication of the uranium into fuel assemblies suitable for
use in the NU system's unit. Fuel may also be purchased at a point after any
of the above processes are completed. The NU system expects that uranium
concentrates and related services for the units operated by the NU system and
for the other units in which the NU system companies are participating that
are not covered by existing contracts will be available for the foreseeable
future on reasonable terms and prices.
In 1998, an action was initiated by the owners of Millstone in the U.S.
Court of Federal Claims against the United States Department of Energy (DOE)
regarding the special annual assessment that the DOE imposes on purchasers of
enriched uranium to meet the future costs of decontaminating and
decommissioning (D&D) government owned uranium enrichment facilities.
Similar actions for Seabrook and CY were also filed. The lawsuits challenge
the imposition of the D&D assessment on federal constitutional grounds and
are similar to actions filed by a number of other utilities against DOE.
Proceedings in the Millstone, Seabrook and CY cases are stayed pending the
final resolution of a similar claim brought against the DOE by MYAPC. In
July 1999, the claims court dismissed MYAPC's complaint. In November 2001,
the Federal circuit court affirmed the dismissal of MYAPC's claims. On
February 6, 2002, MYAPC filed a petition for certiorari, asking the United
States Supreme Court to review the decision of the Federal circuit court.
Nuclear fuel costs associated with nuclear plant operations include
amounts for disposal of spent nuclear fuel. The NU system companies include
in their nuclear fuel expense spent fuel disposal costs accepted by the DPUC,
NHPUC and DTE in rate case or fuel adjustment decisions. Spent fuel disposal
costs also are reflected in the FERC-approved wholesale charges.
HIGH-LEVEL RADIOACTIVE WASTE
The Nuclear Waste Policy Act of 1982 (NWPA) provides that the federal
government is responsible for the permanent disposal of spent nuclear reactor
fuel (SNF) and high-level waste. As required by the NWPA, electric utilities
generating SNF and high-level waste are obligated to pay fees into a fund
which would be used to cover the cost of siting, constructing, developing and
operating a permanent disposal facility for this waste. The NU system
companies have been paying for such services for fuel burned on or after
April 7, 1983, on a quarterly basis since July 1983. The DPUC, NHPUC and DTE
permit the fee to be recovered through rates. For nuclear fuel used to
generate electricity prior to April 7, 1983 (prior-period fuel), payment must
be made prior to the first delivery of spent fuel to the DOE. The DOE's
current estimate for an available site is 2010.
In return for payment of the fees prescribed by the NWPA, the federal
government is to take title to and dispose of the utilities' high-level
wastes and SNF. There have been numerous litigation proceedings involving
the DOE's statutory and contractual obligation to accept high-level waste and
SNF. While the courts have declined to order the DOE to begin accepting
spent fuel for disposal on January 31, 1998, the courts left open the
utilities' ability to bring damage claims against the DOE.
In 1998, YAEC, CYAPC and MYAPC filed separate complaints against the DOE
in the U.S. Court of Federal Claims seeking monetary damages resulting from
DOE's failure to accept spent nuclear fuel for disposal. In decisions later
that year, the court found liability on the part of DOE to the companies for
breach of the standard contract, based upon the DOE's failure to begin
disposal of spent nuclear fuel. The damages owed to YAEC, CYAPC and MYAPC as
a result of DOE's failure to begin disposing of spent nuclear fuel is in
litigation.
Until the federal government begins accepting nuclear waste for
disposal, nuclear generating plants will need to retain high-level waste and
spent fuel onsite or make some other provisions for their storage. Seabrook
is expected to have spent fuel storage capacity until at least 2008.
The VY spent fuel pool is expected to be able to accommodate full-core
removal through 2004. In 2003, VYNPC expects to install additional storage
which would provide for full core off-load capability through 2008.
Construction of dry spent fuel storage facilities, to hold the spent
nuclear fuel generated at those facilities until the DOE accepts the fuel, is
in progress at CY, MY and Yankee Rowe.
LOW-LEVEL RADIOACTIVE WASTE
The NU system currently has contracts to dispose of its low-level
radioactive waste (LLRW) at two privately operated facilities in Clive, Utah
and Barnwell, South Carolina. In July 2000, the Northeast Interstate Low
Level Radioactive Waste Management Compact, consisting of Connecticut and New
Jersey, accepted South Carolina as a new member and is now known as the
Atlantic Compact. This arrangement entitles CY access to Barnwell through its
dismantlement. This arrangement may eventually exclude other nuclear plants
from accessing Barnwell. As a contingency, the NU system has plans that will
allow for onsite storage of LLRW for at least 5 years.
DECOMMISSIONING
Based upon the NU system's most recent site-specific update of the
decommissioning costs for Seabrook, the recommended decommissioning method
continues to be immediate and complete dismantlement as soon as practical
after its retirement. The table below sets forth the estimated Seabrook
decommissioning costs for the NU system companies. The estimates are based
on the latest site studies, stated in December 31, 2001 dollars.
CL&P NAEC WMECO NU System
(Millions)
$22.6 $199.9 $0 $222.5
New Hampshire enacted a law in 1981 requiring the creation of a state-
managed fund to finance decommissioning of any nuclear units in that state.
NAEC's costs for decommissioning Seabrook are billed by it to PSNH. PSNH
recovered these costs from customers under the terms of its rate agreement
through April 30, 2001. Effective May 1, 2001 (competition day), PSNH began
to recover decommissioning costs as a stranded cost through the stranded cost
recovery charge. CL&P is recovering its share of decommissioning costs
through its systems benefit charge.
During November 2001, the Nuclear Decommissioning Finance Committee
(NDFC) issued an order in Docket NDFC 2001-1 that decreased decommissioning
funding requirements from those previously approved. The decrease in
funding requirements resulted from revisions in the decommissioning standard
required by state statutes and an increase in the NDFC's estimate of the
energy producing life of Seabrook. The NDFC order also updated the projected
cost of decommissioning Seabrook to $556 million (in 2001 dollars). NAEC's
and CL&P's shares of this cost are $199.9 million and $22.6 million,
respectively. This is a significant reduction from the projected cost of
decommissioning of $612.3 million if the decommissioning standards applied in
an earlier docket were used.
The revised decommissioning standard used by the NFDC to estimate the
cost of decommissioning Seabrook was a commercial/industrial standard that
recognized that the plant site will have nonnuclear commercial, industrial or
other similar value after the cessation of nuclear operations. In addition,
the decommissioning estimate took into account an increase in the operating
life of Seabrook. In Dockets NDFC 98-1 and 2000-1, the operating life of
Seabrook was estimated to be twenty-five years. In Docket NDFC 2001-1, the
NDFC concluded that based on the "significantly improved" economic outlook
for the nuclear generation and the fact that Seabrook has a "good operating
record," Seabrook's operating life could be extended to thirty-six years,
until October 2026, which is the current expiration date of its operating
license. In addition, the funding requirements took into account recent
changes to New Hampshire statutes related to decommissioning funding
requirements when nuclear generation is sold to a nonutility. The schedules
assume that up to 88 percent of Seabrook will be sold to a nonutility by
December 31, 2002.
Pursuant to the PSNH Settlement Agreement, upon a successful sale of
NAEC's share of Seabrook, the existing Seabrook Power Contracts between PSNH
and NAEC will be terminated. However, subsequent to such sale, PSNH may
continue to be responsible for funding NAEC's former ownership share of its
decommissioning liability, calculated on the basis of meeting the minimum
funding required by the NRC by December 31, 2015, as determined by the NDFC.
PSNH may enter into a new contract to provide for the payment of Seabrook
nuclear decommissioning costs, with full recovery of the costs of that
contract to be recoverable from PSNH's customers. Under no circumstances
will PSNH's customers have any responsibility for increases in
decommissioning funding above the amount calculated based upon the payment
schedule as of the sale date.
Pursuant to the Purchase and Sale Agreement (PSA) with Dominion for the
sale of the Millstone units, upon the closing of the sale, the sellers were
obligated to deliver to Dominion decommissioning funds in the amounts of
$268.3 million for Unit 1, $253 million for Unit 2 and $244 million for Unit
3. With respect to Unit 3, the NU system companies delivered $178 million of
the total amount turned over to Dominion. In addition, a "top off" payment
of $52.6 million was made. Upon the closing, Dominion assumed full
responsibility for decommissioning the three Millstone units, and NU
shareholders, the NU system companies and their ratepayers have no further
obligation related to decommissioning. Finally, the PSA required that Unit 1
be turned over to Dominion in "cold and dark" condition. Dominion and NU
agreed that a number of projects required to achieve the "cold and dark"
status had not been fully completed as of the date of the closing. Dominion
and NU further agreed that the cost of the work to be completed was $10.4
million ($8.4 million for CL&P and $2.0 million for WMECO).
As of December 31, 2001, the NU system recorded balances (at market) in
the Seabrook external decommissioning trust funds as follows:
CL&P NAEC WMECO NU System
(Millions)
$6.2 $55.5 $0 $61.7
CYAPC, VYNPC and MYAPC are all collecting revenues for decommissioning
from their power purchasers. The table below sets forth the NU system
companies' estimated share of remaining decommissioning costs (and closure
costs where applicable) of the Yankee Companies' units as of December 31,
2001. The estimates are based on the latest site studies. For information
on the equity ownership of the NU system companies in each of the Yankee
Companies' units and the proposed sale of VY, see "Electric Operations -
Nuclear Generation - General."
CL&P PSNH WMECO NU system
(Millions)
VY $ 44.8 $18.8 $11.8 $ 75.4
CY* 78.3 11.3 21.5 111.1
MY* 63.3 26.4 15.8 105.5
------ ----- ----- ------
Total $186.4 $56.5 $49.1 $292.0
====== ===== ===== ======
* The costs shown include all of the expected future billings associated
with the funding of decommissioning, recovery of remaining assets and other
closure costs associated with the early retirement of Yankee Rowe, CY and MY
as of December 31, 2001, which have been recorded as an obligation on the
books of the NU system companies.
As of December 31, 2001, the NU system's share of the external
decommissioning trust fund balances (at market), which have been recorded on
the books of the Yankee Companies, is as follows:
CL&P PSNH WMECO NU system
(Millions)
VY $ 28.2 $11.9 $ 7.4 $ 47.5
CY* 95.4 13.8 26.3 135.4
Rowe* 30.4 8.7 8.7 47.8
MY* 18.9 7.9 4.7 31.4
------ ----- ----- ------
Total $172.9 $42.3 $47.1 $262.1
====== ===== ===== ======
In July 2000, the FERC issued a letter approving an April 2000
settlement between CYAPC, the DPUC and the OCC on CY decommissioning.
Significant terms of the settlement include (1) decommissioning collections
of $16.7 million per year, fully funding decommissioning and spent fuel
storage costs through 2023; (2) consolidation of the pre-1983 spent fuel
trust into the decommissioning trust and lowering total decommissioning
collections by $56 million over the next seven years; (3) ROE rate of six
percent with no refunds of prior decommissioning or return on equity
collections; and (4) an incentive/penalty mechanism for decommissioning. The
effect of this settlement on CYAPC earnings is approximately $9.0 million, of
which NU's share would be approximately $4.4 million.
Effective in January 1996, YAEC began billing its sponsors, including
CL&P, WMECO and PSNH, amounts based on a revised decommissioning cost
estimate approved by the FERC. The YAEC filing assumes NRC license
termination and completion of decommissioning activities by 2004. Billings to
YAEC sponsor companies were completed in June 2000.
In January 2001, NNECO filed a written notification with the NRC
reporting that during a reconciliation and verification of Millstone spent
nuclear fuel records, personnel concluded that the location of two full-
length irradiated fuel pins could not be determined and were not properly
tracked in the records. NNECO reported that the two fuel rods are from the
same fuel assembly, which was disassembled in 1972 for inspection, and were
displaced from the fuel assembly in 1974. NNECO further reported that
records indicate that in 1979 and 1980 the displaced rods were physically
verified to be stored in a canister in the Millstone 1 spent fuel pool, and
that the rods and canister are no longer in the spent fuel pool location
documented in 1979 and 1980. NNECO's report indicated that records retrieved
to date do not document the relocation or disposition of the two fuel rods.
On October 5, 2001, NU issued a report, following an extensive search,
concerning two missing fuel pins at the retired Millstone 1 nuclear unit
which was sold to DNCI. As of December 31, 2001, costs related to this
search totaled $7.1 million. The report concluded that the pins are
currently located in one of four facilities licensed to store low or high-
level nuclear waste and that they are not a threat to public health and
safety. A follow-up review by the NRC concluded that NU's investigation was
thorough and complete and its conclusions were reasonable and supportable.
The NRC is in agreement with NU that the fuel rods are stored in a licensed
storage facility. It is possible that this proceeding could result in the
issuance of a notice of violation and the imposition of civil penalties.
Management cannot predict the likelihood of any such occurrence at this time.
OTHER REGULATORY AND ENVIRONMENTAL MATTERS
ENVIRONMENTAL REGULATION
GENERAL
The NU system and its subsidiaries are subject to federal, state and
local regulations with respect to water quality, air quality, toxic
substances, hazardous waste and other environmental matters. Additionally,
the NU system's major generation and transmission facilities may not be
constructed or significantly modified without a review by the applicable
state agency of the environmental impact of the proposed construction or
modification. Compliance with environmental laws and regulations,
particularly air and water pollution control requirements, may limit
operations or require substantial investments in new equipment at existing
facilities.
SURFACE WATER QUALITY REQUIREMENTS
The federal Clean Water Act requires every "point source" discharger of
pollutants into navigable waters to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the United States Environmental
Protection Agency (EPA) or state environmental agency specifying the
allowable quantity and characteristics of its effluent. NU system facilities
are in the process of obtaining or renewing all required NPDES permits in
effect. Compliance with NPDES and state water discharge permits has
necessitated substantial expenditures, which are difficult to estimate, and
may require further expenditures because of additional requirements that
could be imposed in the future. For information regarding civil lawsuits
related to alleged violations of certain facilities' NPDES permits, see
"Item 3. Legal Proceedings."
The Federal Oil Pollution Act of 1990 (OPA 90) sets out the requirements
for facility response plans and periodic inspections of spill response
equipment at facilities that can cause substantial harm to the environment by
discharging oil or hazardous substances into the navigable waters of the
United States and onto adjoining shorelines. The NU system companies are
currently in compliance with the requirements of OPA 90. OPA 90 includes
limits on the liability that may be imposed on persons deemed responsible for
release of oil. The limits do not apply to oil spills caused by negligence
or violation of laws or regulations. OPA 90 also does not preempt state laws
regarding liability for oil spills. In general, the laws of the states in
which the NU system owns facilities and through which the NU system
transports oil could be interpreted to impose strict liability for the cost
of remediating releases of oil and for damages caused by releases. The NU
system currently carries general liability insurance in the total amount of
$160 million annual coverage, which includes liability coverage for oil
spills.
AIR QUALITY REQUIREMENTS
The Clean Air Act Amendments of 1990 (CAAA), as well as state laws in
Connecticut, Massachusetts and New Hampshire, impose stringent requirements
on emissions of sulfur dioxide (SO2) and nitrogen oxide (NOX) for the purpose
of controlling acid rain and ground level ozone. In addition, the CAAA
address the control of toxic air pollutants. Installation of continuous
emissions monitors and expanded permitting provisions also are included.
Compliance with CAAA requirements has cumulatively cost the NU system
approximately $66 million as of December 31, 2001: $11 million for CL&P, $50
million for PSNH, $1 million for WMECO, and $4 million for HWP. In addition,
PSNH expects to spend approximately $2.5 million a year for SO2 allowances
and approximately $2.5 million for annual operational costs for NOX controls.
Massachusetts and New Hampshire are both imposing significant emission
reduction requirements on power plants, in addition to the Federal
requirements. The cost for Mount Tom Station to meet its Massachusetts limit
is estimated to be approximately $4 million. The situation in New Hampshire
is complicated by the preliminary nature of the requirements and uncertainty
regarding divestiture of the generating units. The recently estimated
compliance costs to PSNH are approximately $4 million.
HAZARDOUS WASTE REGULATIONS
As many other industrial companies have done in the past, the NU system
companies disposed of residues from operations by depositing or burying such
materials on-site or disposing of them at off-site landfills or facilities.
Typical materials disposed of include coal gasification waste, fuel oils,
gasoline and other hazardous materials that might contain polychlorinated
biphenyls (PCBs). It has since been determined that deposited or buried
wastes, under certain circumstances, could cause groundwater contamination or
create other environmental risks. The NU system has recorded a liability for
what it believes is, based upon currently available information, its
estimated environmental remediation costs for waste disposal sites for which
the NU system companies expect to bear legal liability, and continues to
evaluate the environmental impact of its former disposal practices. Under
federal and state law, government agencies and private parties can attempt to
impose liability on NU system companies for such past disposal. At December
31, 2001, the liability recorded by the NU system for its estimated
environmental remediation costs for known sites needing remediation,
including those sites described below, exclusive of recoveries from insurance
or from third parties, was approximately $46.2 million, representing 47
sites. This total includes liabilities recorded by Yankee Gas of $22.9
million. All cost estimates were made in accordance with generally accepted
accounting principles where remediation costs are probable and reasonably
estimable. These costs could be significantly higher if alternative remedies
become necessary.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly known as Superfund, the EPA has
the authority to clean up or order the clean up of hazardous waste sites and
to impose the clean up costs on parties deemed responsible for the hazardous
waste activities on the sites. Responsible parties include the current owner
of a site, past owners of a site at the time of waste disposal, waste
transporters, and waste generators. The NU system currently is involved in
four Superfund sites: one in New Jersey, one in New York, one in New
Hampshire, and one in Kentucky, which could have a material impact on the NU
system. The NU system has committed in the aggregate approximately $875,000
to its share of the clean up of these sites.
The greatest liabilities currently relate to former manufactured gas
plant (MGP) facilities which represent the largest share of future clean up
costs. These facilities were owned and operated by predecessor companies to
the NU system from the mid-1800's to mid-1900. Byproducts from the
manufacture of gas using coal resulted in fuel oils, hydrocarbons, coal tar,
metals and other waste products that may pose risks to human health and the
environment. The NU system currently has partial or full ownership
responsibilities at 28 former MGP sites. Of the total NU system liabilities,
$41.8 million has been established to address future remediation costs at MGP
sites.
Other sites undergoing comprehensive investigations or remedial actions
under state programs located in Connecticut, Massachusetts, New Hampshire or
New Jersey include four former fuel oil releases, three landfills, three
asbestos hazard abatement projects and five miscellaneous projects. To date,
approximately $3.64 million has been established to address future
remediation costs at these sites.
In the past, the NU system has received other claims from government
agencies and third parties for the cost of remediating sites not currently
owned by the NU system but affected by past NU system disposal activities and
may receive more such claims in the future. The NU system expects that the
costs of resolving claims for remediating sites about which it has been
notified will not be material, but cannot estimate the costs with respect to
sites about which it has not been notified.
ELECTRIC AND MAGNETIC FIELDS
Published reports have discussed the possibility of adverse health
effects from electric and magnetic fields (EMF) associated with electric
transmission and distribution facilities and appliances and wiring in
buildings and homes. Most researchers, as well as numerous scientific review
panels considering all significant EMF epidemiological and laboratory studies
to date, agree that current information remains inconclusive, inconsistent
and insufficient for characterizing EMF as a health risk.
Based on this information, management does not believe that a causal
relationship between EMF exposure and adverse health effects has been
established or that significant capital expenditures are appropriate to
minimize unsubstantiated risks. The NU system companies have closely
monitored research and government policy developments for many years and will
continue to do so.
If further investigation were to demonstrate that the present
electricity delivery system is contributing to increased risk of cancer or
other health problems, the industry could be faced with the difficult problem
of delivering reliable electric service in a cost-effective manner while
managing EMF exposures. To date, no courts have concluded that individuals
have been harmed by EMF from electric utility facilities, but if utilities
were to be found liable for damages, the potential monetary exposure for all
utilities, including the NU system companies, could be enormous. Without
definitive scientific evidence of a causal relationship between EMF and
health effects, and without reliable information about the kinds of changes
in utilities' transmission and distribution systems that might be needed to
address the problem, if one is found, no estimates of the cost impacts of
remedial actions and liability awards are available.
FERC HYDROELECTRIC PROJECT LICENSING
Federal Power Act licenses may be issued for hydroelectric projects for
terms of 30 to 50 years as determined by the FERC. Upon the expiration of a
license, any hydroelectric project so licensed is subject to reissuance by
the FERC to the existing licensee or to others upon payment to the licensee
of the lesser of fair value or the net investment in the project plus
severance damages less certain amounts earned by the licensee in excess of a
reasonable rate of return. FERC has also taken the position that under
appropriate circumstances it may order decommissioning of hydroelectric
projects.
The NU system companies currently hold FERC licenses for 11
hydroelectric projects totaling 16 plants. In addition, the NU system
companies own and operate five unlicensed hydroelectric projects that are
currently deemed non-jurisdictional by FERC. These licensed and unlicensed
hydroelectric projects are located in Connecticut, Massachusetts and New
Hampshire and aggregate approximately 1,367 MW of capacity. CL&P's and
WMECO's five licensed projects and four unlicensed projects with
approximately 1,302 MW of capacity were transferred to NGC in March 2000. As
part of the Settlement Agreement, PSNH has proposed to auction its seven
hydroelectric projects (totaling nine plants) with approximately 65 MW of
capacity upon approval of the agreement. Subsequently, the New Hampshire
legislature deferred the sale of any PSNH fossil or hydroelectric facilities
until at least February 2004.
HWP sold its interests in the Holyoke hydroelectric project and
transferred its FERC operating license to the City of Holyoke's Gas &
Electric Department effective December 14, 2001.
NGC's FERC licenses for operation of the Falls Village and Housatonic
hydroelectric projects expired in August 2001. Annual operating licenses
allow NGC to continue plant operations until new licenses are granted. A
license application, which proposed to combine both projects under one
license, was submitted to the FERC in August 1999. The Connecticut
Department of Environmental Protection (CDEP) has issued its Section 401
water quality certification for the Housatonic River Project. The FERC has
reviewed the application and issued a request for additional information. A
partial response to FERC's additional information request was filed on
February 7, 2002, and additional responses will be filed shortly. FERC is
expected to issue notice that the projects as proposed are ready for
environmental analysis within the next several months, with a draft
environmental impact statement expected in the fall of 2002 and a final
environmental impact statement in the fall of 2003.
PSNH's FERC license for the Merrimack River Hydroelectric Project that
consists of the Amoskeag, Hooksett and Garvins Falls hydroelectric generating
stations expires on December 31, 2005. On December 29, 2000, PSNH filed a
notice of intent with the FERC stating its plan to file an application for a
new license by December 31, 2003. PSNH has begun formal consultations with
federal and state resource agencies, as well as non-governmental
organizations and the public. PSNH held two public meetings on January 16
and 17, 2002 to solicit comments from these parties on the significant
resource issues they believe PSNH should address in its FERC license
application. Limited comments were made at the public meetings and the
parties have until March 18, 2002 to submit their written comments to PSNH.
PSNH plans to file its final license application with the FERC no later than
December 31, 2003. The FERC's review of license applications normally takes
several years. If a new license is not issued by the expiration of the
current license (December 31, 2005), it is expected that FERC will issue
annual licenses under the same terms and conditions as the current license
until a new license is issued.
EMPLOYEES
As of December 31, 2001, the NU system companies had 7,520 employees on
their payrolls, of which 2,170 were employed by CL&P, 1,254 by PSNH, 410 by
WMECO, 451 by Yankee Gas, 318 by NGS, 1,511 by NUSCO, 816 by NAESCO, 161 by
Select and 429 by SESI. NU, NGC, NAEC, Mode 1, NUEI and SEPPI have no
employees.
On December 15, 2000, 498 employees of CL&P, PSNH, WMECO, HWP, NUSCO and
Yankee Gas were offered a voluntary separation program (VSP). There were
346 employees who accepted the VSP. As of December 31, 2001, 298 employees
have retired under the program and the remaining 48 are expected to retire
between January 1, 2002 and March 1, 2002. Costs relating to the VSP for
2001 were approximately $93.3 million.
In November 2001, CL&P announced a reorganization to reflect the
separation of regulated from competitive services and to refocus the
organization on distribution responsibilities. The reorganization began with
the selection of new officers in December 2001, with further selection
processes at subsequent management levels planned for the first quarter of
2002. The majority of the costs associated with the reorganization is
attributable to restructuring in Connecticut and is not expected to impact
earnings.
Approximately 2,487 employees of CL&P, PSNH, WMECO, NAESCO, HWP, NUSCO
and Yankee Gas are covered by 18 union agreements, which expire between
May 31, 2002 and December 1, 2005.
ITEM 2. PROPERTIES
The physical properties of the NU system are owned or leased by
subsidiaries of NU. CL&P's properties are located either on land which is
owned in fee or on land, as to which CL&P owns perpetual occupancy rights
adequate to exclude all parties except possibly state and federal
governments, which has been reclaimed and filled pursuant to permits issued
by the United States Army Corps of Engineers. The principal properties of
PSNH are held by it in fee. In addition, PSNH leases space in an office
building under a 30-year lease expiring in 2002. In March of 2002, PSNH is
expected to move its office space to a refurbished former PSNH generating
station site. A major portion of WMECO's properties are owned in fee. NAEC
owns a 35.98 percent interest in Seabrook and approximately 560 acres of
exclusion area land located around the unit. In addition, CL&P, PSNH and
WMECO have certain data processing equipment, vehicles, and office space that
are leased. Also CL&P and WMECO have certain substation equipment that they
lease. With few exceptions, the NU system companies' lines are located on or
under streets or highways, or on properties either owned or leased, or in
which the Company has appropriate rights, easements or permits from the
owners.
Yankee Gas' property consists primarily of its gas distribution
facilities including distribution lines (mains and services), meter, valves,
pressure regulators and flow controllers. Yankee Gas owns various propane
facilities with a combined storage capacity equivalent to approximately
245,000 Mcf. Yankee Gas also owns service buildings in Meriden, Waterbury,
Norwalk, and Danielson, Connecticut. NorConn Properties, Inc. owns and
leases to Yankee Gas a service building in East Windsor, Connecticut, while
the Ansonia, Danbury and Waterford, Connecticut buildings are rented. Yankee
Gas' customer information center is located in Wethersfield, Connecticut and
its corporate headquarters are located in Berlin, Connecticut.
CL&P, NGC and Yankee Gas's properties are subject to the lien of each
company's respective first mortgage indentures. In addition, CL&P's interest
in transmission assets is subject to second mortgage liens for the benefit of
PCRBs. Various properties are also subject to minor encumbrances which do
not substantially impair the usefulness of the properties to the owning
company.
The NU system companies' properties are well maintained and are in good
operating condition.
TRANSMISSION AND DISTRIBUTION SYSTEM
At December 31, 2001, the NU system companies owned 104 transmission and
356 distribution substations that had an aggregate transformer capacity of
17,106,556 kilovoltamperes (kVa) and 9,087,294 kVa, respectively; 3,075
circuit miles of overhead transmission lines ranging from 69 kilovolt (kV) to
345 kV, and 196 cable miles of underground transmission lines ranging from 69
kV to 138 kV; 33,342 pole miles of overhead and 2,254 conduit bank miles of
underground distribution lines; and 428,564 line transformers in service with
an aggregate capacity of 18,640,000 kVa.
ELECTRIC GENERATING PLANTS
As of December 31, 2001, the electric generating plants of the NU system
companies and the NU system companies' entitlement in the generating plant of
the VYNPC were as follows (See "Item 1. Business - Nuclear Generation" for
information on ownership and operating results for the year):
Claimed
Year Capability*
Owner Plant Name (Location) Type Installed (kilowatts)
- ----- -------------------- ---- --------- -----------
CL&P
Seabrook (Seabrook, NH) Nuclear 1990 47,135
VT Yankee (Vernon, VT) Nuclear 1972 45,189
---------
Total Nuclear-Steam Plants ( 2 units) 92,324
---------
Total CL&P Generating Plants ( 2 units) 92,324
=========
PSNH
VT Yankee (Vernon, VT) Nuclear 1972 18,999
---------
Total Nuclear-Steam Plants ( 1 unit) 18,999
Total Fossil-Steam Plants ( 6 units) 1952-74 1,020,280
Total Hydro-Conventional (20 units) 1917-83 67,930
Total Internal Combustion ( 5 units) 1968-70 103,594
---------
Total PSNH Generating Plants (32 units) 1,210,803
=========
WMECO
VT Yankee (Vernon, VT) Nuclear 1972 11,904
---------
Total Nuclear-Steam Plants ( 1 unit) 11,904
Total Hydro-Conventional ( 3 units) 1930 33,960**
---------
Total WMECO Generating Plants ( 4 units) 45,864
=========
NAEC Seabrook (Seabrook, NH) Nuclear 1990 417,751
=========
HWP Mt. Tom (Holyoke, MA) Fossil-Steam 1960 147,000
=========
NGC Total Hydro-Conventional (36 units) 1903-55 157,930
Total Hydro-Pumped Storage ( 7 units) 1928-73 1,109,000
Tunnel (Preston, CT) ( 1 unit) 1969 20,800
---------
Total NGC Generating Plants (44 units) 1,287,730
=========
NU system
Seabrook (Seabrook, NH) Nuclear 1990 464,886
VT Yankee (Vernon, VT) Nuclear 1972 76,092
---------
Total Nuclear-Steam Plants ( 2 units) 540,978
Total Fossil-Steam Plants ( 7 units) 1952-74 1,167,280
Total Hydro-Conventional (59 units) 1903-83 259,820
Total Hydro-Pumped Storage ( 7 units) 1928-73 1,109,000
Total Internal Combustion ( 6 units) 1968-70 124,394
---------
Total NU system Generating Plants
Including Vermont Yankee (81 units) 3,201,472
=========
Excluding Vermont Yankee (80 units) 3,125,380
=========
* Claimed capability represents winter ratings as of December 31, 2001.
** Total Hydro-Conventional capability includes the Cobble Mtn. plant's
33,960 kilowatts which is leased from the City of Springfield, MA.
FRANCHISES
CL&P. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, CL&P has,
subject to certain exceptions not deemed material, valid franchises free from
burdensome restrictions to provide electric transmission and distribution
services in the respective areas in which it is now supplying such service.
In addition to the right to provide electric transmission and
distribution services as set forth above, the franchises of CL&P include,
among others, limited rights and powers, as set forth in Title 16 of the
Connecticut General Statutes and the special acts of the General Assembly
constituting its charter, to manufacture, generate, purchase and sell
electricity at retail, including to provide standard offer, backup, and
default service, to sell electricity at wholesale to other utility companies
and municipalities and to erect and maintain certain facilities on public
highways and grounds, all subject to such consents and approvals of public
authority and others as may be required by law. The franchises of CL&P
include the power of eminent domain.
PSNH. The NHPUC, pursuant to statutory requirement, has issued orders
granting PSNH exclusive franchises free from burdensome restrictions to
distribute electricity in the respective areas in which it is now supplying
such service.
In addition to the right to distribute electricity as set forth above,
the franchises of PSNH include, among others, rights and powers to
manufacture, generate, purchase, and transmit electricity, to sell
electricity at wholesale to other utility companies and municipalities and to
erect and maintain certain facilities on certain public highways and grounds,
all subject to such consents and approvals of public authority and others as
may be required by law. The franchises of PSNH include the power of eminent
domain.
NNECO. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, NNECO has a
valid franchise free from burdensome restrictions to sell electricity to
utility companies doing an electric business in Connecticut and other states.
In addition to the right to sell electricity as set forth above, the
franchise of NNECO includes, among others, rights and powers to manufacture,
generate and transmit electricity, and to erect and maintain facilities on
certain public highways and grounds, all subject to such consents and
approvals of public authority and others as may be required by law.
WMECO. WMECO is authorized by its charter to conduct its electric
business in the territories served by it, and has locations in the public
highways for transmission and distribution lines. Such locations are granted
pursuant to the laws of Massachusetts by the Department of Public Works of
Massachusetts or local municipal authorities and are of unlimited duration,
but the rights thereby granted are not vested. Such locations are for
specific lines only, and, for extensions of lines in public highways, further
similar locations must be obtained from the Department of Public Works of
Massachusetts or the local municipal authorities. In addition, WMECO has
been granted easements for its lines in the Massachusetts Turnpike by the
Massachusetts Turnpike Authority.
Pursuant to the Massachusetts restructuring legislation, the DTE is
required to define service territories for each distribution company,
including WMECO, based on the service territories actually served on July 1,
1997, and following municipal boundaries to the extent possible. The DTE has
not yet defined service territories. After these service territories are
established by the DTE, until they are terminated by effect of law or
otherwise, the distribution company shall have the exclusive obligation to
provide distribution service to all retail customers within its service
territory, and no other person shall provide distribution service within such
service territory without the written consent of such distribution company.
HWP and Holyoke Power and Electric Company (HP&E). HWP, and its wholly
owned subsidiary HP&E, are authorized by their charters to conduct their
businesses in the territories served by them. HWP's electric business is
subject to the restriction that sales be made by written contract in amounts
of not less than 100 horsepower to purchasers who use the electricity in
their own business in the counties of Hampden or Hampshire, Massachusetts and
cities and towns in these counties, and customers who occupy property in
which HWP has a financial interest, by ownership or purchase money mortgage.
HWP also has certain dam and canal and related rights, all subject to such
consents and approvals of public authorities and others as may be required by
law. The two companies have locations in the public highways for their
transmission and distribution lines. Such locations are granted pursuant to
the laws of Massachusetts by the Department of Public Works of Massachusetts
or local municipal authorities and are of unlimited duration, but the rights
thereby granted are not vested. Such locations are for specific lines only
and, for extensions of lines in public highways, further similar locations
must be obtained from the Department of Public Works of Massachusetts or the
local municipal authorities. HP&E has no retail service territory area and
sells electric power exclusively at wholesale. In connection with the sale
of certain of HWP's and HP&E's assets to the city of Holyoke Gas and Electric
Department (HGEE) effective December 2001, HWP agreed to cause the charters
of HWP HP&E to be amended to eliminate their rights to distribute electricity
at retail in Holyoke and surrounding towns unless other sellers can legally
compete with HG&E, and not to exercise such rights prior to such amendment.
NGC. NGC is an exempt wholesale generator and, as it currently operates
its business, is not regulated by the DPUC or the DTE. FERC's authorization
for exempt wholesale generators to sell electric power at wholesale market-
based rates typically contains an exemption from much of the traditional
public utility company rate regulation. As a wholesaler of power, NGC is a
"public utility" subject to the Federal Power Act. The market-based
authorization that NGC has received from FERC exempts NGC from some, but not
all, of the Federal Power Act regulations, including traditional cost-based
rate regulation. However, because NGC is a wholesale marketer that owns its
own generation facilities, NGC is required to file information concerning
long-term transactions and quarterly transaction summaries with FERC.
ITEM 3. LEGAL PROCEEDINGS
1. Connecticut Superior Court - Connecticut Attorney General Civil Lawsuit
and Appeal
In 1997, the Attorney General for the State of Connecticut (AG) initiated a
civil lawsuit, on behalf of the CDEP, in Connecticut Superior Court against
NNECO and NUSCO for violations of the Millstone water discharge permit and
Connecticut water discharge regulations. In 1998, the Superior Court approved
a settlement between NNECO and the AG. The settlement required NNECO to pay
a $700,000 civil penalty and expend $500,000 to fund three supplemental
environmental projects. Additionally, the settlement requires NNECO to
perform two environmental audits of its water compliance program, have a
third-party review of the first NNECO audit and inform the CDEP of major
changes to its environmental management system. The first audit and the
third party review have been completed. The second required water compliance
audit by NNECO has been completed and the audit report was submitted to the
CDEP for review on January 5, 2001. On June 13, 2001, the CDEP certified
that NNECO and NUSCO had fully complied with all settlement requirements.
2. Con Edison/NU - Merger Appeals and Related Litigation
On March 5, 2001, Consolidated Edison, Inc. (Con Edison) advised NU that it
was unwilling to close its merger with NU on the terms set forth in the
parties' October 13, 1999 Agreement and Plan of Merger, as amended and
restated as of January 11, 2000 (Merger Agreement). That same day, NU
notified Con Edison that it would treat Con Edison's refusal to proceed with
the merger as a repudiation and breach of the Merger Agreement, and would
file suit to obtain the benefits of the transaction for NU shareholders. On
March 6, 2001, Con Edison filed suit in the United States District Court for
the Southern District of New York (District Court) seeking a declaratory
judgment that it has been relieved of its obligation to proceed with the
merger due to, among other things, NU's alleged breach of the Merger
Agreement and the alleged occurrence of a "Material Adverse Change" with
respect to NU as that term is defined in the Merger Agreement. Con Edison
also contends that it is entitled to recover damages from NU equal to the
benefits it would have received if the merger had been consummated (which it
calculates as 82 percent of the approximately $1.57 billion in total synergy
savings that the parties had expected to achieve in the merger) together with
the costs incurred in preparing for and seeking approval of the merger. NU
believes that Con Edison's claim for damages is without merit and, in any
event, that Con Edison's proposed measure of damages is inappropriate. On
March 12, 2001, NU filed suit against Con Edison in the District Court
seeking damages in excess of $1 billion arising from Con Edison's breach of
the Merger Agreement.
On May 11, 2001, in accordance with a stipulation of the parties and order of
the District Court, Con Edison filed an amended complaint in which it added
claims seeking damages for breach of contract, fraudulent inducement and
negligent misrepresentation. On June 1, 2001, NU answered Con Edison's
amended complaint, denying all of its material allegations and asserting
affirmative defenses, and asserted a counterclaim seeking damages in excess
of $1 billion against Con Edison for breach of the Merger Agreement. NU
subsequently dismissed its March 12 complaint as duplicative of the June 1
counterclaim. On June 8, 2001, Con Edison answered NU's counterclaim,
denying its material allegations and asserting affirmative defenses.
The parties substantially completed fact discovery in the litigation on
December 21, 2001, and are currently conducting expert discovery. The case
schedule currently calls for the parties to be prepared for trial on or after
June 21, 2002; however, no trial date has yet been set by the Court.
In addition, separate petitions were filed with the DPUC asking that its
merger approval be rescinded or reversed. The DPUC reopened its docket
approving the merger and asked parties to comment on the question of whether
a date certain should be imposed for consummation of the merger and whether
that date should be January 31, 2002. On January 30, 2002, the DPUC issued a
decision establishing January 31, 2002 as the deadline for merger
consummation.
At this early stage of the litigation, management can predict neither the
outcome of this matter nor its ultimate effect on NU. For related
information, see Part I, Item 1. "Business - Mergers and Acquisitions."
3. Millstone Station - Damage to Fish Population Lawsuits
On April 20, 2000, two fishermen, Aldred Madeira, Jr. and Timothy F.
Madieros, brought a lawsuit against NNECO and NUSCO in New London Superior
Court alleging two counts: common law nuisance and tortious interference
with a business expectancy. Dominion Nuclear Connecticut, Inc. (DNC) has
since been added as an additional defendant. The lawsuit alleges that
Millstone has engaged in various actions, including entrainment of winter
flounder, that has caused the two fishermen to suffer damages. The suit
seeks compensatory and punitive damages as well as temporary and permanent
injunctions to suspend Millstone operations during the winter flounder
spawning season, conversion of Millstone to a closed-cooling system, or in
the alternative, permanent shutdown. On March 11, 2002, all claims for
injunctive relief by the plaintiffs were dismissed. This matter remains
pending before the Complex Litigation Docket in Connecticut Superior Court
with discovery of information between the parties underway.
On August 23, 2001, two additional fishermen, James Engelmann and Michael
Stepski, brought a similar lawsuit to the Madeira and Madieros action against
NNECO, NUSCO and DNC in Superior Court alleging two counts: common law
nuisance and tortious interference with a business expectancy. Like the
earlier suit, this action seeks compensatory and punitive damages as well as
temporary and permanent injunctions to suspend Millstone operations during
the winter flounder spawning season and conversion of the Millstone facility
to a closed cooling system. This matter is also pending before the Complex
Litigation Docket in Connecticut Superior Court and is in the early stages of
litigation. As in the Madeira matter above, all claims for injunctive relief
by the plaintiffs were dismissed on March 11, 2002.
On April 26, 2000, another lawsuit was filed in Connecticut Superior Court
against NUSCO, NNECO and the Commissioner of the CDEP challenging the
validity of previously issued CDEP emergency and temporary authorizations
allowing Millstone to discharge wastewater not expressly authorized by the
facility's NPDES permit. The suit sought a temporary and permanent injunction
against operations at Millstone 1, 2 and 3. On August 30, 2000, NNECO filed
a motion to dismiss, and on October 16, 2000, NNECO's motion was granted.
Plaintiffs have since filed an appeal, which remains pending, with the
Connecticut Appellate Court.
On April 13, 2001, the Connecticut Coalition Against Millstone (CCAM), the
STAR Foundation and Joseph Besade notified NNECO and DNC by letter of their
intent to bring a citizen suit action under the provisions of the Clean Water
Act. Sixty days notice is required before any action can be brought. The
notification letter alleges Clean Water Act violations at Millstone Station
and challenges the validity of Millstone Station's NPDES permit and related
emergency water discharge authorizations and DEP's authority to transfer both
the NPDES permit and emergency authorizations to DNC. As of this date, no
action has been brought by CCAM.
4. Sale of Millstone to Dominion Nuclear Connecticut, Inc.
On February 20, 2001, the CCAM filed in Connecticut Superior Court an appeal
of the DPUC's decision approving the sale of Millstone to DNC. CCAM alleges
that the final decision violates the Connecticut general statutes on multiple
grounds and requests that the decision be reversed and vacated. On March 2,
2001, CCAM filed a motion to stay, which was heard by the court on March 12,
2001. On March 26, 2001, CCAM's appeal was dismissed. On April 16, 2001,
plaintiffs filed an appeal with the Connecticut Appellate Court. On February
21, 2002, the court dismissed CCAM's appeal.
On March 8, 2001, CCAM and other parties also filed a lawsuit in Connecticut
Superior Court against the CDEP, NNECO and DNC challenging (1) the validity
of Millstone's NPDES permit (Permit) and a previously issued CDEP emergency
authorization allowing Millstone to discharge wastewater not expressly
authorized by the facility's Permit, and (2) CDEP's authority to transfer
both Millstone's permit and emergency authorization to DNC. On March 29,
2001, CCAM's request for a temporary restraining order (TRO) enjoining CDEP
from transferring both the Permit and emergency authorization to DNC prior to
a full hearing was denied. Subsequently, on July 19, 2001, the entire matter
was dismissed. CCAM has since filed an appeal, which remains pending, with
the Connecticut Appellate Court.
On March 12, 2001, the Millstone Station Employees Association (MSEA) filed
in Connecticut Superior Court a request for a stay of the DPUC's approval of
the sale of Millstone pending resolution of certain employee pension issues.
The DPUC and CL&P have moved to dismiss the stay request on various grounds.
No hearing date has been established.
For further information on the sale of the Millstone units, see Item I,
"Business - Rates and Electric Industry Restructuring" and "- Nuclear
Generation."
5. Federal Energy Regulatory Commission (FERC) - Installed Capability
(ICAP) Deficiency Charge
Pursuant to a series of FERC decisions, the price for ICAP in New England has
fluctuated since 1998, prior to which the price was $8.75 per kilowatt-month.
In March 2001, FERC reinstituted the $8.75 charge effective April 1, 2001 and
placed a $0.17 charge into effect from August 1, 2001 to April 2, 2001.
In March 2001 opponents of the $8.75 charge filed an appeal in the First
Circuit Court of Appeals (First Circuit). The court issued a stay, thus
keeping the $0.17 charge in effect. In June 2001, the First Circuit issued
its decision supporting the $8.75 charge and lifting its stay. In strong
language, the court generally called the $0.17 charge non-complying and
stated that FERC's original rejection of the $0.17 was well justified. The
court permitted FERC to reinstate the $8.75 charge "at once" or at a "future
date." In the interim, Independent System Operator - New England (ISO-NE)
filed a proposed ICAP charge of $4.87, which FERC accepted as "cost based"
and made effective September 1, 2001. FERC also directed ISO-NE to file by
December 3, 2001 a report on alternatives to the ICAP requirement,
particularly the feasibility of a forward reserves market and using demand
side management to meet reserve capacity needs.
In July 2001, NU filed an appeal of the FERC orders imposing the $0.17 rate
from August 1, 2000 to April 1, 2001. In December 2001, FERC denied
rehearing its order allowing the $0.17 rate during the court stay period,
April through August 2001. NU recently appealed this decision to the First
Circuit and expects consolidation with the prior pending case.
In its December 3, 2001 report on alternatives to the ICAP requirement, ISO-
NE proposed an interim advance ICAP purchase requirement but indicated that
other ICAP improvements would be implemented with the Standard Market Design
(scheduled for late 2002 or early 2003) and that it intended to develop a
forward reserves market thereafter. The ISO's interim advance purchase
requirement proposal was filed with FERC in late December 2001.
Subsequently, ISO-NE published the results of its study on the cost of new
peaking units in New England which suggests that the level of a cost based
ICAP deficiency charge would be $6.15 rather than $4.87.
6. Retirement Plan Litigation
This matter involves four separate but related federal court lawsuits by
nineteen former employees of NUSCO, WMECO and CL&P who retired between 1991
and 1994. The complaints generally allege that the Company breached its
fiduciary duties to the plaintiffs by making affirmative misrepresentations
that caused them to retire prematurely, since as a result of these alleged
misrepresentations they came to believe incorrectly that no particular future
enhancement of employee benefits was being seriously considered at the time
by the Company.
The cases will be tried together in a summary bench trial in the United
States District Court in Hartford, Connecticut. The trial is scheduled to
begin on April 29, 2002 and is expected to conclude in mid-May 2002.
7. Holyoke Power and Electric Company
In July of 1998, Holyoke Power and Electric Company (HP&E) entered into a
contract with Bridgeport Energy, LLC (Bridgeport), a subsidiary of Duke
Energy, to purchase installed capability at a rate of $3.125 per kilowatt per
month through April 30, 2004. This contract was subsequently assigned to
Select Energy, Inc. (Select Energy). The contract contains a clause that
allowed either party to terminate the contract upon 30 days prior notice if
FERC, NEPOOL or ISO-NE (1) eliminates ICAP or (2) makes material changes to
ICAP that materially adversely affect the parties and such changes can't be
resolved through negotiation.
When ISO-NE filed with FERC in May 2000 to eliminate the ICAP product, Select
Energy sought to terminate the contract. Pending the resolution of the ICAP
issues at FERC and in court, the parties entered into a series of agreements
to preserve their rights to argue whether the contract should be terminated,
during which time Bridgeport continued to supply, and Select Energy
continued to pay for, the ICAP. In June 2001, Select discontinued
purchasing the ICAP from Bridgeport. In July 2001, Select Energy filed a
complaint in Connecticut Superior Court, requesting the court to declare that
the contract was terminated as of June 2000, asking for an order that the
contract was effectively terminated in June 2000 and requesting damages for
the above-market portion of its payment. Bridgeport filed a complaint in
Connecticut Superior Court shortly thereafter, alleging that Select Energy is
in default under the contract and owes damages from June of 2000 through the
remainder of the term of the contract. The complaint states that
Bridgeport's actual damages for the period from June 2001 through September
2001 were in excess of $5 million.
The complaints have been transferred to the complex litigation docket of the
court, and the trial judge has set a scheduling order contemplating a trial
in October 2003. Given the uncertainty concerning a decision by the First
Circuit Court of Appeals on the ICAP issues, it is difficult to predict the
outcome of this litigation.
8. NRG Power Marketing, Inc. - Congestion Charges Litigation
On November 28, 2001, CL&P filed a complaint against NRG Power Marketing, Inc.
(NRG) in Connecticut Superior Court alleging breach of contract arising from
the failure of NRG to pay congestion charges due under the Standard Offer
Wholesale Sales Agreement (Agreement) between the parties. CL&P seeks
recovery of $13,882,750, the outstanding congestion charges due through
September 30, 2001, together with all such charges which continue to accrue
under the Agreement. On December 20, 2001, NRG filed a petition for removal
to U.S. District Court for the District of Connecticut. NRG filed its answer
and counterclaim on February 1, 2002. For its counterclaim, NRG seeks
recovery of $1,181,774, which claims to have paid CL&P in error for congestion
charges incurred during January and February, 2000. Discovery is pending and
is currently scheduled to be completed on or before September 30, 2002.
9. Other Legal Proceedings
The following sections of Item 1. "Business" discuss additional legal
proceedings: See "Rates and Electric Industry Restructuring" for information
about various state restructuring proceedings and civil lawsuits related
thereto; "Regulated Electric Operations" and "Regulated Gas Operations" for
information about proceedings relating to power, transmission and pricing
issues; "Regulated Electric Operations - Nuclear Generation" and "Regulated
Electric Operations - Nuclear Plant Performance" for information related to
nuclear plant performance, nuclear fuel enrichment pricing, high-level and
low-level radioactive waste disposal, decommissioning matters, and NRC
regulation; "Other Regulatory and Environmental Matters" for information
about proceedings involving surface water and air quality, toxic substances
and hazardous waste, electric and magnetic fields, licensing of hydroelectric
projects, and other matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No event that would be described in response to this item occurred with
respect to NU, CL&P, PSNH, WMECO, or NGC.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
NU. The common shares of NU are listed on the New York Stock Exchange.
The ticker symbol is "NU," although it is frequently presented as "Noeast
Util" and/or "NE Util" in various financial publications. The high and low
sales prices for the past two years, by quarters, are shown below.
Year Quarter High Low
2001 First $23.5600 $16.8000
Second 20.7500 17.3500
Third 20.7900 18.3000
Fourth 19.2500 16.9500
2000 First $21.5000 $18.0000
Second 23.1250 20.8125
Third 23.9600 21.5000
Fourth 24.5600 18.2500
As of January 31, 2002, there were 76,028 common shareholders of record
of NU. As of the same date, there were a total of 133,983,973 common shares
issued, including 4,389,180 unallocated ESOP shares held in the ESOP trust.
On January 9, 2001, the NU Board of Trustees approved the payment of a
10 cent per share dividend, payable on March 31, 2001, to shareholders of
record as of March 1, 2001.
On April 9, 2001, the NU Board of Trustees approved the payment of a 10
cent per share dividend, payable on June 29, 2001, to shareholders of record
as of June 1, 2001.
On June 28, 2001, the NU Board of Trustees approved the payment of a
12.5 cent per share dividend, payable on September 28, 2001, to shareholders
of record as of September 1, 2001.
On October 9, 2001, the NU Board of Trustees approved the payment of a
12.5 cent per share dividend, payable on December 31, 2001, to shareholders
of record as of December 1, 2001.
On January 11, 2000, the NU Board of Trustees approved the payment of a
10 cent per share dividend, payable on March 31, 2000, to shareholders of
record as of March 1, 2000. The record date for this dividend was changed on
January 31, 2000 to March 6, 2000, to provide Yankee shareholders who
received NU common shares the opportunity to receive the dividend following
the Yankee merger.
On April 11, 2000, the NU Board of Trustees approved the payment of a 10
cent per share dividend, payable on June 30, 2000, to shareholders of record
as of June 1, 2000.
On July 11, 2000, the NU Board of Trustees approved the payment of a 10
cent per share dividend, payable on September 29, 2000, to shareholders of
record as of September 1, 2000.
On October 10, 2000, the NU Board of Trustees approved the payment of a
10 cent per share dividend, payable on December 29, 2000, to shareholders of
record as of December 1, 2000.
Information with respect to dividend restrictions for NU and its
subsidiaries is contained in Item 1. Business under the caption "Financing
Program - Financing Limitations" and in Note (b) to the "Consolidated
Statements of Shareholders' Equity" on page 30 of NU's 2001 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P, PSNH, WMECO, and NGC. The information required by this item is
not applicable because the common stock of CL&P, PSNH, WMECO, and NGC is held
solely by NU.
ITEM 6. SELECTED FINANCIAL DATA
NU. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 51 of NU's 2001 Annual Report
to Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 43 of CL&P's 2001 Annual
Report, which information is incorporated herein by reference.
PSNH. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 38 of PSNH's 2001 Annual
Report, which information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 38 of WMECO's 2001 Annual
Report, which information is incorporated herein by reference.
NGC. Reference is made to information under the heading "Selected
Financial Data" contained on page 23 of NGC's 2001 Annual Report, which
information is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS; AND
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NU. Reference is made to information under the heading "Management's
Discussion and Analysis and Results of Operations" contained on pages 15
through 25 of NU's 2001 Annual Report to Shareholders, which information is
incorporated herein by reference.
CL&P. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 12 of CL&P's 2001 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 10 of PSNH's 2001 Annual Report, which
information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 10 of WMECO's 2001 Annual Report, which
information is incorporated herein by reference.
NGC. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 1 through 5 of NGC's 2001 Annual Report, which information
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NU. Reference is made to information under the headings "Company
Report," "Report of Independent Public Accountants," "Consolidated Statements
of Income," "Consolidated Statements of Comprehensive Income," "Consolidated
Balance Sheets," "Consolidated Statements of Shareholders' Equity,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of
Capitalization," "Consolidated Statements of Income Taxes," "Notes to
Consolidated Financial Statements," and "Consolidated Statements of Quarterly
Financial Data" contained on pages 26 through 50 of NU's 2001 Annual Report
to Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Consolidated Quarterly Financial Data" contained on pages
13 through 43 of CL&P's 2001 Annual Report, which information is incorporated
herein by reference.
PSNH. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Consolidated Quarterly Financial Data" contained on pages
11 through 38 of PSNH's 2001 Annual Report, which information is incorporated
herein by reference.
WMECO. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Consolidated Quarterly Financial Data" contained on pages
11 through 38 of WMECO's 2001 Annual Report, which information is
incorporated herein by reference.
NGC. Reference is made to information under the headings "Report of
Independent Public Accountants," "Statements of Income," "Statements of
Comprehensive Income," "Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," and
"Quarterly Financial Data" contained on pages 6 through 23 of NGC's 2001
Annual Report, which information is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On March 15, 2002, the Company's Board of Trustees, acting on the
recommendation of its Audit Committee decided to no longer engage Arthur
Andersen LLP (Arthur Andersen or AA) as the Company's independent public
accountants. This determination followed the Company's decision to seek
proposals from other independent accountants to audit the Company's
consolidated financial statements for the year ending December 31, 2002.
Arthur Andersen's reports on the Company's consolidated financial statements
for each of the years ended 2001, 2000 and 1999 did not contain an adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.
During the years ended December 31, 2001, 2000 and 1999 and through the date
hereof, there were no disagreements with Arthur Andersen on any matter of
accounting principle or practice, financial statement disclosure, or auditing
scope or procedure which, if not resolved to AA's satisfaction, would have
caused them to make reference to the subject matter in connection with their
report on the Company's consolidated financial statements for such years; and
there were no reportable events as defined in Item 304(a)(1)(v) of Regulation
S-K.
The Company provided Arthur Andersen with a copy of the foregoing
disclosures. Attached as Exhibit 16 is a copy of AA's letter, dated
March 22, 2002, stating its agreement with such statements.
Effective March 15, 2002, the Board of Trustees, based on upon a
recommendation of its Audit Committee, retained Deloitte & Touche as its
independent auditors to audit the Company's consolidated financial statements
for the year ending December 31, 2002. The decision to retain Deloitte &
Touche will be submitted to shareholders for nonbinding ratification at the
Company's 2002 Annual Meeting of Stockholders to be held on May 14, 2002.
During the years ended December 31, 2001 and 2000 and through the date
hereof, the Company did not consult Deloitte & Touche with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or any other matters or
reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation
S-K.
The Declaration of Trust of the Company does not require that its
shareholders ratify the selection of our independent auditors. If the
appointment of Deloitte & Touche is ratified, the Board of Trustees and its
Audit Committee may, in their discretion, change the appointment at any time
during the year if they determine that such change would be in the best
interests of the Company and its shareholders. If the shareholders do not
ratify the appointment, the Board of Trustees and its Audit Committee will
reconsider whether or not to retain Deloitte & Touche but may retain Deloitte
& Touche if they deem it to be in the best interests of the Company and its
shareholders.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
NU.
In addition to the information provided below concerning the executive
officers of NU, incorporated herein by reference is the information contained
in the sections "Proxy Statement," "Election of Trustees," "Board Committees
and Responsibilities," and "Section 16(a) Beneficial Ownership Reporting
Compliance," of the definitive proxy statement for solicitation of proxies by
NU's Board of Trustees, dated March 25, 2002, which will be filed with the
Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934.
Positions
Name Held
- ---------------------- ---------
Gregory B. Butler (*) VP, SEC, GC
John H. Forsgren (*) EVP, CFO, VC, T
Cheryl W. Grise (*) P
Bruce D. Kenyon (*) P
Michael G. Morris (*) CHB, P, CEO, T
Gary D. Simon (*) OTH
Lisa J. Thibdaue (*) OTH
CL&P.
Positions
Name Held
- ---------------------- ---------
David H. Boguslawski VP, D
Gregory B. Butler (*) OTH
John H. Forsgren (*) OTH
Cheryl W. Grise (*) OTH, D
Michael G. Morris (*) OTH
Leon J. Olivier (*) P, COO, D
Lisa J. Thibdaue (*) OTH
PSNH.
Positions
Name Held
- ---------------------- ---------
David H. Boguslawski VP, D
Gregory B. Butler (*) OTH
John C. Collins D
John H. Forsgren (*) OTH, D
Cheryl W. Grise (*) OTH, D
Gerald Letendre D
Gary A. Long (*) P, COO, D
Michael G. Morris (*) CH, CEO, D
Jane E. Newman D
Lisa J. Thibdaue (*) OTH
WMECO.
Positions
Name Held
- ---------------------- ---------
David H. Boguslawski VP, D
Gregory B. Butler (*) OTH
James E. Byrne D
John H. Forsgren (*) OTH, D
Cheryl W. Grise (*) OTH, D
Kerry J. Kuhlman (*) P, COO, D
Paul J. McDonald D
Michael G. Morris (*) CH, CEO, D
Melinda M. Phelps D
Lisa J. Thibdaue (*) OTH
NGC.
Positions
Name Held
- ---------------------- ---------
Gregory B. Butler (*) OTH
John H. Forsgren (*) OTH
Bruce D. Kenyon (*) P, D
Michael G. Morris (*) OTH
William J. Nadeau VP, D
Frank P. Sabatino VP, D
William W. Schivley D
Gary D. Simon (*) OTH
* Executive Officer
Key:
CEO - Chief Executive Officer OTH - Executive Officer of
CFO - Chief Financial Officer Registrant because of policy-
CH - Chairman making function for NU System
CHB - Chairman of the Board P - President
COO - Chief Operating Officer SEC - Secretary
D - Director SVP - Senior Vice President
EVP - Executive Vice President T - Trustee
GC - General Counsel VP - Vice President
VC - Vice Chairman
Name Age Business Experience During Past 5 Years
- ---------------------- --- ---------------------------------------
David H. Boguslawski 47 Vice President - Transmission Business of
CL&P, PSNH and WMECO since May 1, 2001 and a
Director of CL&P, PSNH and WMECO since June 30,
1999; previously Vice President - Energy
Delivery of CL&P, PSNH and WMECO, from
September 1996 to May 2001.
Gregory B. Butler 44 Vice President, Secretary and General
Counsel of NU since May 1, 2001; previously
Vice President-Governmental Affairs of NUSCO
from January 1997 to May 2001; Vice President
of Federal Affairs at New England Electric
System from January 1995 to December 1996; and
senior counsel for Niagara Mohawk Power
Corporation from December 1992 to January 1995.
James E. Byrne 47 Partner, Finneran, Byrne & Dreshsler,
L.L.P., since 1982. Director of WMECO since
September 17, 1999.
John C. Collins (1) 56 Chief Executive Officer, Dartmouth-
Hitchcock Clinic, Dartmouth-Hitchcock Medical
Center since 1977. Director of PSNH since
October 19, 1992.
John H. Forsgren (2) 55 Vice Chairman of NU since May 1, 2001;
Executive Vice President and Chief Financial
Officer of NU since February 1, 1996; Director
of WMECO since June 10, 1996 and of PSNH since
August 5, 1996; Executive Vice President and
Chief Financial Officer of CL&P, PSNH, and
WMECO from February 1996 to June 1999 and of
NGC from January 1999 to June 1999. Director
of CL&P from June 1996 to June 1999 and of NGC
from December 1998 to June 1999.
Cheryl W. Grise 49 President - Utility Group of NU since
May 2001; President of CL&P from May 2001 to
September 2001 and a Director of CL&P since
May 1, 2001, PSNH since May 14, 2001 and WMECO
since June 2001; previously Senior Vice
President, Secretary and General Counsel of NU
from July 1998 to May 2001, Senior Vice
President, Secretary and General Counsel of
CL&P, and PSNH and Senior Vice President,
Secretary, Assistant Clerk and General Counsel
of WMECO from July 1998 to June 1999 and Senior
Vice President, Secretary and General Counsel
of NGC from January 1999 to June 1999;
previously Director of CL&P and WMECO (January
1994 through November 1997) and PSNH (February
1995 through November 1997); Senior Vice
President and Chief Administrative Officer of
CL&P and PSNH, and Senior Vice President of
WMECO from 1995 to 1998.
Bruce D. Kenyon (3) 59 President-Generation Group of NU since
March 1, 1999, President of NGC since January 4,
1999 and a Director of NGC since December 29,
1998; President-Generation Group of CL&P,
PSNH and WMECO from March 1999 to June 1999;
previously President-Nuclear Group of NU, CL&P,
PSNH and WMECO from September 1996 to March
1999, a Director of CL&P and WMECO from
September 1996 to June 1999, and a Director of
PSNH from November 1997 to June 1999.
Kerry J. Kuhlman 51 President and Chief Operating Officer
of WMECO since April 1999; previously Vice
President-Customer Operations of WMECO from
October 1998 to April 1999; Vice President-
Central Region of CL&P from August 1997 to
October 1998; and Vice President-Eastern Region
of CL&P from July 1994 to August 1997.
Gerald Letendre (4) 60 President, Diamond Casting & Machine Co.,
Inc. since 1972. Director of PSNH since
October 19, 1992.
Gary A. Long 50 President and Chief Operating Officer
and a Director of PSNH since July 1, 2000 and a
Director of PSNH; previously Senior Vice
President-PSNH of PSNH from February 2000
through June 2000 and Vice President-Customer
Service and Economic Development of PSNH from
January 1994 to February 2000.
Paul J. McDonald (5) 58 Advisor to the Board of Directors,
Friendly Ice Cream Corporation since January
2000; Director of WMECO since September 17,
1999. Previously Senior Executive Vice
President and Chief Financial Officer, Friendly
Ice Cream Corporation, from 1986 to 1999.
Michael G. Morris (6) 55 Chairman of the Board, President and Chief
Executive Officer and a Trustee of NU and a
Director of PSNH and WMECO since August 19,
1997, Chairman and Chief Executive Officer of
PSNH from August 1997 through March 2000 and
since May 14, 2001 and Chairman of PSNH from
March 1, 2000 to July 2000, Chairman of WMECO
from August 1997 and Chairman and Chief
Executive Officer of WMECO from June 30, 1999;
Chairman and a Director of CL&P from August
1997 to June 1999; Chairman and Chief Executive
Officer of NGC from January 1999 to June 1999
and a Director of NGC from December 1998 to
June 1999; previously President and Chief
Executive Officer of Consumers Power Company
from 1994 to 1997.
William J. Nadeau (7) 51 Vice President - Northeast Generation
Services Company since January 4, 1999; Vice
President and a Director of NGC since June 1,
2000; Vice President-Fossil/Hydro Engineering
and Operations of CL&P, PSNH and WMECO from
July 1998 to March 2001; previously Director-
Fossil and Hydro, Massachusetts region (WMECO,
HWP) from September 1995 to June 1998.
Jane E. Newman (8) 56 Executive Dean, Harvard University's
John F. Kennedy School of Government since July
2000; Director of PSNH since October 19, 1992.
Previously Managing Director, The
CommerceGroup, LLC, a strategic communications
company, from January 1999 to July 2000; and
Dean, Whittemore School of Business and
Economics of the University of New Hampshire
from January 1998 to January 1999; Executive
Vice President and Director of Exeter Trust
Company from 1995 to 1997.
Leon J. Olivier 53 President and Chief Operating Officer
and a Director of CL&P since September 2001;
previously Senior Vice President of Entergy
Nuclear Corp. from April 2001 to September
2001; Senior Vice President and Chief Nuclear
Officer of Northeast Nuclear Energy Company
from October 1998 to May 2001; Senior Vice
President, Nuclear of Boston Edison Company
from 1997 to October 1998.
Melinda M. Phelps 45 Partner, Bulkley, Richardson &
Gelinas, LLP since January 1, 2001; Director of
WMECO since September 17, 1999. Previously of
counsel to Bulkley, Richardson & Gelinas, LLP,
from May 2000 through December 2000 and
partner, Keyes and Donnellan, P.C., from 1992
to 2000.
Frank P. Sabatino 53 Senior Vice President-Power Marketing
of Select Energy, Inc. since April 4, 1999 and
Vice President and a Director of NGC since
June 1, 2000; Senior Vice President-Power
Marketing of NUSCO from April 1999 to June 1999;
previously Vice President-Wholesale Marketing
of CL&P and WMECO from June 1994 to December
1998.
William W. Schivley (9) 55 President of Select Energy, Inc. since
August 1999 and a Director of NGC since March 1,
2000; previously Executive Vice President
and Chief Operating Officer for CMS Marketing
Services and Trading Company from January 1997
to August 1999 and President of CMS Gas and
Electric Marketing from January 1992 to January
1997.
Gary D. Simon (10) 53 Senior Vice President-Enterprise
Development and Analysis of NUSCO since May 6,
2000; Senior Vice President-Strategy and
Development of NUSCO from April 1998 to May
2000. Previously Senior Director, Electric
Power for Cambridge Energy Research Associates
from 1989 to 1998.
Lisa J. Thibdaue (11) 48 Vice President-Rates, Regulatory Affairs
and Compliance of NUSCO since January 1998;
Vice President-Rates, Regulatory Affairs and
Compliance of CL&P, PSNH and WMECO from January
1998 to June 1999; previously Executive
Director, Rates and Regulatory Affairs,
Consumers Power Company from 1996 to 1998.
(1) Mr. Collins is a Director of Blue Cross and Blue Shield of Vermont, The
Vermont Health Plan, and Hamden Assurance Company Limited.
(2) Mr. Forsgren is a Director of NEON Communications, Inc. and The Circle
Trust Company and a member of the Board of Regents of Georgetown
University.
(3) Mr. Kenyon is a Trustee of Columbia College and Director of Connecticut
Yankee Atomic Power Company.
(4) Mr. Letendre is a Director of the National Association of Manufacturers
(Washington, DC).
(5) Mr. McDonald is a Director of CIGNA Investments Inc. and Polytainer's,
LLC (Toronto, Canada).
(6) Mr. Morris is a Director of the Institute of Nuclear Power Operations,
the Nuclear Energy Institute, the Edison Electric Institute, the
Association of Edison Illuminating Companies, Nuclear Electric
Insurance Limited, Connecticut Business & Industry Association, the
Webster Financial Corporation, and the Spinnaker Exploration Co. Mr.
Morris is also a Regent of Eastern Michigan University.
(7) Mr. Nadeau is a Director of Connecticut Yankee Atomic Power Company.
(8) Ms. Newman is a Director of Citizens Advisors.
(9) Mr. Schivley is a Director of Monitor Sugar Company.
(10) Mr. Simon is a Director of NEON Communications, Inc.
(11) Ms. Thibdaue is a Director of Connecticut Water Service Company.
There are no family relationships between any director or executive
officer and any other director or executive officer of NU, CL&P, PSNH, WMECO
or NGC.
ITEM 11. EXECUTIVE COMPENSATION
NU.
Incorporated herein by reference is the information contained in the
sections "Executive Compensation", "Pension Benefits", "Trustee
Compensation", "Employment Contracts and Termination of Employment
Arrangements", "Compensation Committee Report on Executive Compensation" and
"Share Performance Chart" of the definitive proxy statement for solicitation
of proxies by NU's Board of Trustees, dated March 25, 2002, which will be
filed with the Commission pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934.
<Table>
SUMMARY COMPENSATION TABLE
CL&P, PSNH, WMECO, NGC
The following tables present the cash and non-cash compensation received by the Chief Executive
Officer and the next four highest paid executive officers of CL&P, PSNH, WMECO and NGC accordance with
Rules of the Securities and Exchange Commission (SEC):
<Caption>
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------- -----------------------------------------------
Awards Payouts
------------------------- ---------------------
Restricted Securities Long-Term All
Stock Underlying Incentive Other
Other Annual Award(s) Options/Stock Program Compen-
Name and Salary Compensation ($) Appreciation Payouts sation ($)
Principal Position Year ($) Bonus ($) ($) Note 1) (Note 2) Rights (#) ($) (Note 3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael G. Morris 2001 900,000 869,805 - - 220,000 - 27,000
Chairman of the
Board, President 2000 830,770 1,200,000 - - 140,000 - 27,236
and Chief Executive
Officer of NU and 1999 783,173 1,253,300 92,243 348,611 118,352 - 23,210
Chairman and Chief
Executive Officer of
PSNH and WMECO
John H. Forsgren 2001 524,423 200,000 - - 98,000 - 5,100
Vice Chairman,
Executive Vice 2000 444,615 450,000 - - 36,000 - 5,100
Chief Financial
President and 1999 429,904 400,000 - 122,682 32,852 87,003 12,888
Officer of NU
Bruce D. Kenyon 2001 515,000 150,000 - - 34,000 - 15,450
President -
Generation Group 2000 504,616 475,000 - - 20,000 - 16,274
of NU and President
of NGC (in NGC table 1999 500,000 - - 77,690 20,804 462,500 15,000
only)
Cheryl W. Grise 2001 338,654 180,000 - - 76,000 - 10,119
President -
Utility Group of NU 2000 279,616 290,000 - - 23,000 - 8,795
(in CL&P, PSNH and
WMECO tables only) 1999 244,712 250,000 - 73,612 19,712 - 82,247
Gary D. Simon 2001 236,539 70,000 - - 14,000 - 7,096
Senior Vice
President - 2000 231,539 200,000 - - 18,000 - 6,946
Enterprise
Development and 1999 226,635 200,000 - 61,333 16,424 - 4,982
Analysis of NUSCO
(in NGC table only)
Gregory B. Butler 2001 189,269 70,000 - - 7,600 - 5,100
Vice President,
Secretary and 2000 174,462 105,000 - - 9,000 72,995 5,100
General Counsel of
NU and NUSCO 1999 168,635 94,000 - 31,892 8,540 - 4,800
Lisa J. Thibdaue 2001 193,539 60,000 - - 8,500 - 5,100
Vice President -
Rates, Regulatory 2000 187,154 115,000 - - 9,500 - 5,100
Affairs and
Compliance of NUSCO 1999 181,635 112,000 - 30,667 8,212 - 4,800
(in CL&P, PSNH and
WMECO tables only)
</Table>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Individual Grants Grand Date Value
----------------- ----------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees Base Price Expiration Present
Name Granted (#) in Fiscal Year ($/sh) Date Value ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael G. Morris 120,000 14.47 21.03 2/27/2011 1,006,800 (Note 4)
100,000 12.06 20.06 6/28/2011 803,000 (Note 5)
John H. Forsgren 33,000 3.98 21.03 2/27/2011 276,870 (Note 4)
65,000 7.84 20.06 6/28/2011 521,950 (Note 5)
Bruce D. Kenyon 34,000 4.10 21.03 2/27/2011 228,745 (Note 4)
Cheryl W. Grise 26,000 3.14 21.03 2/27/2011 218,140 (Note 4)
50,000 6.03 20.06 6/28/2011 401,500 (Note 5)
Gary D. Simon 14,000 1.69 21.03 2/27/2011 117,460 (Note 4)
Gregory B. Butler 7,600 0.92 21.03 2/27/2011 63,764 (Note 4)
Lisa J. Thibdaue 8,500 1.03 21.03 2/27/2011 71,315 (Note 4)
</TABLE>
<Table>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<Caption>
- -------------------------------------------------------------------------------------------------------
Shares With
Respect to Number of Securities Value of Unexercised
Which Underlying Unexercised In-the-Money
SARs Were Value Options/SARs Options/SARs
Exercised Realized at Fiscal Year End (#) at Fiscal Year End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Morris - - 698,475 344,451 4,256,831 83,783
John H. Forsgren 50,471 326,800 107,085 132,950 155,390 29,483
Bruce D. Kenyon 38,253 260,312 41,772 54,268 65,323 18,670
Cheryl W. Grise 24,490 166,654 33,724 97,904 52,402 17,690
Gary D. Simon - - 73,198 50,226 170,384 61,713
Gregory B. Butler - - 15,868 16,448 24,783 7,666
Lisa J. Thibdaue - - 16,172 17,572 24,665 7,369
Notes to Summary Compensation and Option/SAR Grants Tables:
1. Other annual compensation for Mr. Morris consists of 1999 relocation expense reimbursements.
2. At December 31, 2001, the aggregate restricted stock holdings by the five individuals named in the
table for CL&P, WMECO and PSNH were 13,556 shares with a value of $238,992 and for NGC were 14,332
shares with a value of $252,673. Awards shown for 1999 vested one-third on February 23, 2000,
one-third on February 23, 2001, and one-third on February 23, 2002. No restricted stock was awarded
in 2001. Dividends paid on restricted stock are either paid out or reinvested into additional shares.
3. "All Other Compensation" for 2001 consists of employer matching contributions under the Northeast
Utilities Service Company 401k Plan, generally available to all eligible employees ($5,100 for each
named officer), and matching contributions under the Deferred Compensation Plan for Executives
(Mr. Morris - $21,900, Mrs. Grise - $5,019, Mr. Kenyon - $10,350, Mr. Simon - $1,996).
4. These options were granted on February 27, 2001 under the Incentive Plan. All options granted vest
one-third on February 27, 2002, one-third on February 27, 2003 and one-third on February 27, 2004.
Valued using the Black-Scholes option pricing model, discounted by 5.71% to reflect the risk of
forfeiture, with the following assumptions: Volatility: 25.96 percent (36 months of monthly data);
Risk-free rate: 5.23 percent; Dividend yield: 0.94 percent; Exercise date: February 27, 2011.
5. These options were granted on June 28, 2001 under the Incentive Plan. All options granted vest
one-third on June 28, 2002, one-third on June 28, 2003 and one-third on June 28, 2004. Valued using
the Black-Scholes option pricing model, discounted by 5.71% to reflect the risk of forfeiture, with
the following assumptions: Volatility: 26.38 percent (36 months of monthly data); Risk-free rate:
5.63 percent; Dividend yield: 1.12 percent; Exercise date: June 28, 2011.
</TABLE>
PENSION BENEFITS
The tables on the following pages show the estimated annual retirement
benefits payable to an executive officer of Northeast Utilities upon
retirement, assuming that retirement occurs at age 65 and that the officer is
at that time not only eligible for a pension benefit under the Northeast
Utilities Service Company Retirement Plan (the Retirement Plan) but also
eligible for either the make-whole benefit or the make-whole benefit plus the
target benefit under the Supplemental Executive Retirement Plan for Officers
of Northeast Utilities System Companies (the Supplemental Plan). The
Supplemental Plan is a non-qualified pension plan providing supplemental
retirement income to system officers. The make-whole benefit under the
Supplemental Plan, available to all officers, makes up for benefits lost
through application of certain tax code limitations on the benefits that may
be provided under the Retirement Plan, and includes as "compensation" awards
under the executive incentive plans and deferred compensation (as earned).
The target benefit further supplements these benefits and is available to
officers at the Senior Vice President level and higher who are selected by
the Board of Trustees to participate in the target benefit and who remain in
the employ of Northeast Utilities companies until at least age 60 (unless the
Board of Trustees sets an earlier age).
Mr. Forsgren and Mrs. Grise are currently eligible for a make-whole plus a
target benefit. Messrs. Kenyon, Simon, and Butler and Ms. Thibdaue are
eligible for the make-whole benefit but not the target benefit.
Mr. Kenyon's Employment Agreement provides specially calculated retirement
benefits, based on his previous arrangement with South Carolina Electric and
Gas, which supplement his make-whole benefit under the Supplemental Plan. If
Mr. Kenyon retires with at least three years of service with the Company, he
will be deemed to have two extra years of service for purpose of his special
retirement benefit. If after achieving three years of service he voluntarily
terminates employment following a "substantial change in responsibilities
resulting from a material change in the business of Northeast Utilities," he
will be deemed to have an additional year of service for purpose of his
special retirement benefit, and if he retires with at least three years of
service with the Company, he will receive a lump sum payment of $500,000. Mr.
Kenyon has met these service-related milestones.
Mr. Morris's Employment Agreement provides that upon retirement after
reaching the fifth anniversary of his employment date (or upon disability or
termination without cause or following a change of control, as defined) he
will be entitled to receive a special retirement benefit calculated by
applying the benefit formula of the CMS Energy/Consumers Energy Company (CMS)
Supplemental Executive Retirement Plan to all compensation earned from the
Northeast Utilities system (the Company) and to all service rendered to the
Company and CMS. If Mr. Morris retires after age 60, his special retirement
benefit will be no less than that which he would have received had he been
eligible for a make-whole benefit plus a target benefit under the
Supplemental Plan.
Mr. Forsgren's Employment Agreement provides for supplemental pension
benefits based on crediting up to ten years additional service and providing
payments equal to 25 percent of salary for up to 15 years following
retirement, reduced by four percentage points for each year that his age is
less than 65 years at retirement. In addition, if Mr. Forsgren retires after
age 58, he will be eligible for a make-whole plus a target benefit under the
Supplemental Plan based on crediting three extra years of service, unreduced
for early commencement.
ANNUAL BENEFIT FOR OFFICERS ELIGIBLE FOR MAKE-WHOLE BENEFIT
Final Years of Credited Service
Average
Compensation
15 20 25 30 35
$ 200,000 $ 43,605 $ 58,139 $ 72,674 $ 87,209 $101,744
250,000 54,855 73,139 91,424 109,709 127,994
300,000 66,105 88,139 110,174 132,209 154,244
350,000 77,355 103,139 128,924 154,709 180,494
400,000 88,605 118,139 147,674 177,209 206,744
450,000 99,855 133,139 166,424 199,709 232,994
500,000 111,105 148,139 185,174 222,209 259,244
600,000 133,605 178,139 222,674 267,209 311,744
700,000 156,105 208,139 260,174 312,209 364,244
800,000 178,605 238,139 297,674 357,209 416,744
900,000 201,105 268,139 335,174 402,209 469,244
1,000,000 223,605 298,139 372,674 447,209 521,744
1,100,000 246,105 328,139 410,174 492,209 574,244
1,200,000 268,605 358,139 447,674 537,209 626,744
ANNUAL BENEFIT FOR OFFICERS ELIGIBLE FOR
MAKE-WHOLE PLUS TARGET BENEFIT
Final Years of Credited Service
Average
Compensation
15 20 25 30 35
$ 200,000 $ 72,000 $ 96,000 $120,000 $120,000 $120,000
250,000 90,000 120,000 150,000 150,000 150,000
300,000 108,000 144,000 180,000 180,000 180,000
350,000 126,000 168,000 210,000 210,000 210,000
400,000 144,000 192,000 240,000 240,000 240,000
450,000 162,000 216,000 270,000 270,000 270,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
The benefits presented in the tables above are based on a straight life
annuity beginning at age 65 and do not take into account any reduction for
joint and survivorship annuity payments. Final average compensation for
purposes of calculating the target benefit is the highest average annual
compensation of the participant during any 36 consecutive months compensation
was earned. Final average compensation for purposes of calculating the make-
whole benefit is the highest average annual compensation of the participant
during any 60 consecutive months compensation was earned. Compensation for
these benefits takes into account the annual compensation shown in the
Summary Compensation Table and long term incentive compensation but does not
include employer matching contributions under the 401k Plan. In the event
that an officer's employment terminates because of disability, the retirement
benefits shown above would be offset by the amount of any disability benefits
payable to the recipient that are attributable to contributions made by
Northeast Utilities and its subsidiaries under long term disability plans and
policies.
As of December 31, 2001, the executive officers named in the Summary
Compensation Table had the following years of credited service for purposes
of the Supplemental Plan: Mr. Kenyon - 7, Mr. Forsgren - 5, Mrs. Grise - 21,
Mr. Simon - 3, Mr. Butler - 5, and Ms. Thibdaue - 4. Mr. Morris had 23 years
of service for purposes of his special retirement benefit. In addition, Mr.
Forsgren had 10 years of service for purposes of his supplemental pension
benefit and would have 25 years of service for such purpose if he were to
retire at age 65.
COMPENSATION OF DIRECTORS
During 2001 each non-employee Director of PSNH and WMECO was compensated
at an annual rate of $10,000 cash, and received $500 for each meeting
attended of the Board of Directors or, in the case of PSNH, its committees.
A non-employee Director who participates in a meeting of the Board of
Directors or any of its committees by conference telephone receives $300 per
meeting. Also, committee chairs were compensated at an additional annual
rate of $1,500.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Northeast Utilities has entered into an employment agreement with Mr.
Morris and Northeast Utilities Service Company (NUSCO) has entered into
employment agreements with each of the other named executive officers except
Messrs. Simon and Butler and Ms. Thibdaue, who participate in the Special
Severance Program for Officers of Northeast Utilities Companies. The
agreements and the Special Severance Program are also binding on Northeast
Utilities and on each majority-owned subsidiary of Northeast Utilities.
Each agreement obligates the officer to perform such duties as may be
directed by the NUSCO Board of Directors or the Northeast Utilities Board of
Trustees, protect the Company's confidential information, and refrain, while
employed by the Company and for a period of time thereafter, from competing
with the Company in a specified geographic area. Each agreement provides
that the officer's base salary will not be reduced below certain levels
without the consent of the officer, and that the officer will participate in
specified benefits under the Supplemental Executive Retirement Plan or other
supplemental retirement programs (see Pension Benefits, above) and/or in
certain executive incentive programs at specified incentive opportunity
levels.
Each agreement provides for a specified employment term and for automatic
one-year extensions of the employment term unless at least six months' notice
of non-renewal is given by either party. The employment term may also be
ended by the Company for "cause", as defined, at any time (in which case no
supplemental retirement benefit, if any, shall be due), or by the officer on
thirty days' prior written notice for any reason. Absent "cause", the Company
may remove the officer from his or her position on sixty days' prior written
notice, but in the event the officer is so removed and signs a release of all
claims against the Company, the officer will receive one or two years' base
salary and annual incentive payments, specified employee welfare and pension
benefits, and vesting of stock appreciation rights, options and restricted
stock.
Under the terms of the agreements and the Special Severance Program, upon
any termination of employment following a change of control, as defined,
between (a) the earlier of the date shareholders approve a change of control
transaction or a change of control transaction occurs and (b) the earlier of
the date, if any, on which the Board of Trustees abandons the transaction or
the date two years following the change of control, if the officer signs a
release of all claims against the Company, the officer will be entitled to
certain payments including a multiple (not to exceed three) of annual base
salary, annual incentive payments, specified employee welfare and pension
benefits, and vesting of stock appreciation rights, options and restricted
stock. Certain of the change of control provisions may be modified by the
Board of Trustees prior to a change of control, on at least two years' notice
to the affected officer(s).
Besides the terms described above, the agreements of Messrs. Morris,
Kenyon and Forsgren provide for a specified salary, cash, restricted stock
and/or stock options upon employment, special incentive programs and/or
special retirement benefits. See Pension Benefits, above, for further
description of these provisions. The agreements of Mr. Forsgren and Mrs.
Grise were supplemented during 2001 to provide for special deferred
compensation of $520,000 and $500,000, respectively, vesting in even
installments (adjusted to reflect investment performance) on June 28, 2002,
2003 and 2004, so long as such officer remains in the employ of Northeast
Utilities Service Company, and vesting sooner in the event of a change of
control of the Company or involuntary termination without cause.
Letter agreements reflecting the terms of employment of Messrs. Simon and
Butler and Ms. Thibdaue provide for specified salary, cash, restricted stock
or stock options upon employment.
The descriptions of the various agreements set forth above are for purpose of
disclosure in accordance with the proxy and other disclosure rules of the SEC
and shall not be controlling on any party; the actual terms of the agreements
themselves determine the rights and obligations of the parties.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
NU.
Incorporated herein by reference is the information contained in the
sections "Common Stock Ownership of Certain Beneficial Owners" and "Common
Stock Ownership of Management" of the definitive proxy statement for
solicitation of proxies by NU's Board of Trustees, dated March 25, 2002,
which will be filed with the Commission pursuant to Rule 14a-6 under the
Securities Exchange Act of 1934.
CL&P, PSNH, WMECO and NGC.
NU owns 100% of the outstanding common stock of registrants CL&P, PSNH,
and WMECO. NU owns 100% of the outstanding common stock of NU Enterprises,
Inc., which in turn owns 100% of the outstanding common stock of NGC. As of
February 27, 2002, the Directors and Executive Officers of CL&P, PSNH, WMECO
and NGC beneficially owned the number of shares of each class of equity
securities of NU listed below. No equity securities of CL&P, PSNH, WMECO or
NGC are owned by the Directors and Executive Officers of CL&P, PSNH, WMECO
and NGC. Unless otherwise noted, each Director and Executive Officer of
CL&P, PSNH, WMECO and NGC has sole voting and investment power with respect
to the listed shares.
Title of Amount and Nature of Percent of
Class Name Beneficial Ownership Class
NU Common David H. Boguslawski (1) 30,349 (2)
NU Common Gregory B. Butler (3) 33,969 (2)
NU Common James E. Byrne None (2)
NU Common John C. Collins None (2)
NU Common John H. Forsgren (4) 149,132 (2)
NU Common Cheryl W. Grise (5) 78,813 (2)
NU Common Bruce D. Kenyon (6) 133,710 (2)
NU Common Kerry J. Kuhlman (7) 20,565 (2)
NU Common Gerald Letendre None (2)
NU Common Gary A. Long (8) 18,784 (2)
NU Common Paul J. McDonald 500 (2)
NU Common Michael G. Morris (9) 890,925 (2)
NU Common William J. Nadeau (10) 17,709 (2)
NU Common Jane E. Newman None (2)
NU Common Leon J. Olivier None (2)
NU Common Melinda M. Phelps None (2)
NU Common Frank P. Sabatino (11) 56,734 (2)
NU Common William W. Schivley (12) 44,357 (2)
NU Common Gary D. Simon (13) 114,081 (2)
NU Common Lisa J. Thibdaue (14) 30,713 (2)
Amount beneficially owned by Directors and Executive Officers as a group:
Amount and Nature of Percent of
Company Number of Persons Beneficial Ownership Outstanding
CL&P 7 1,213,910 (2)
PSNH 10 1,232,685 (2)
WMECO 10 1,234,966 (2)
NGC 8 1,440,617 1.08%
(1) Includes 24,016 shares that could be acquired by Mr. Boguslawski
pursuant to currently exercisable options and 462 shares held under the
Northeast Utilities Employee Share Purchase Plan II as to which Mr.
Boguslawski has sole voting but no dispositive power.
(2) As of February 27, 2002, there were 133,748,279 common shares of NU
outstanding. The percentage of such shares beneficially owned by any
Director or Executive Officer of CL&P, PSNH, WMECO or NGC and by all of
the Directors and Executive Officers of each of CL&P, PSNH and WMECO
does not exceed one percent.
(3) Includes 24,249 shares that could be acquired by Mr. Butler pursuant to
currently exercisable options and 796 shares held in an ESOP as to which
Mr. Butler has sole voting power but no dispositive power.
(4) Includes 141,035 shares that could be acquired by Mr. Forsgren pursuant
to currently exercisable options and 5,382 restricted shares as to which
Mr. Forsgren has sole voting and no dispositive power.
(5) Includes 56,626 shares that could be acquired by Mrs. Grise pursuant to
currently exercisable options, 4,844 restricted shares as to which Mrs.
Grise has sole voting and no dispositive power, and 265 shares held by
Mrs. Grise's husband as custodian for her children, with whom she shares
voting and dispositive power.
(6) Includes 66,705 shares that could be acquired by Mr. Kenyon pursuant to
currently exercisable options, 501 shares held under the Northeast
Utilities Employee Share Purchase Plan II as to which Mr. Kenyon has
sole voting but no dispositive power, and 1,212 shares held in an ESOP
as to which Mr. Kenyon has sole voting power but no dispositive power.
(7) Includes 14,331 shares that could be acquired by Ms. Kuhlman pursuant to
currently exercisable options.
(8) Includes 13,183 shares that could be acquired by Mr. Long pursuant to
currently exercisable options.
(9) Includes 816,258 shares that could be acquired by Mr. Morris pursuant to
currently exercisable options, 1,262 shares held under the Northeast
Utilities Employee Share Purchase Plan II as to which Mr. Morris has
sole voting but no dispositive power, 23,407 restricted shares as to
which Mr. Morris has sole voting and no dispositive power, and 922
shares held in an ESOP as to which Mr. Morris has sole voting power but
no dispositive power.
(10) Includes 13,183 shares that could be acquired by Mr. Nadeau pursuant to
currently exercisable options.
(11) Includes 34,280 shares that could be acquired by Mr. Sabatino pursuant
to currently exercisable options and 670 shares held under the Northeast
Utilities Employee Share Purchase Plan II as to which Mr. Sabatino has
sole voting but no dispositive power.
(12) Includes 30,916 shares that could be acquired by Mr. Schivley pursuant
to currently exercisable options, 383 shares held in an ESOP as to which
Mr. Schivley has sole voting power but no dispositive power.
(13) Includes 108,090 shares that could be acquired by Mr. Simon pursuant to
currently exercisable options, and 564 shares held in an ESOP as to
which Mr. Simon has sole voting power but no dispositive power.
(14) Includes 24,909 shares that could be acquired by Ms. Thibdaue pursuant
to currently exercisable options and 575 shares held in an ESOP as to
which Mr. Thibdaue has sole voting power but no dispositive power.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The Report of Independent Public Accountants and financial
statements of CL&P, PSNH, WMECO, and NGC are hereby incorporated by
reference and made a part of this report (see "Item 8. Financial
Statements and Supplementary Data").
Report of Independent Public Accountants
on Schedules S-1
Consent of Independent Public Accountants S-2
2. Schedules:
Financial Statement Schedules for NU (Parent),
NU and Subsidiaries, CL&P and Subsidiaries,
PSNH and Subsidiaries, and WMECO and Subsidiary
are listed in the Index to Financial
Statements Schedules S-3
3. Exhibits Index E-1
(b) Reports on Form 8-K:
NU filed a current report on Form 8-K dated January 23, 2001,
disclosing:
o NU's earnings press release for the fourth quarter and full year 2000.
NU filed a current report on Form 8-K dated February 28, 2001 disclosing:
o NU's news release formally seeking Con Edison's assurance of intent to
close merger.
NU filed a current report on Form 8-K dated March 5, 2001, disclosing:
o NU declares Con Edison in breach of merger agreement. NU to sue Con
Edison to recover value of merger for NU shareholders.
NU filed a current report on Form 8-K dated March 12, 2001, disclosing:
o NU filed suit in the U.S. District Court for the Southern District
seeking for itself and its shareholders in excess of $1 billion in
damages arising from Con Edison's breach of the merger agreement.
NU filed a current report on Form 8-K dated March 22, 2001, disclosing:
o NU's news release announcing revised 2000 earnings and confirming 2001
projected earnings.
NU and CL&P filed current reports on Form 8-K dated March 30, 2001,
disclosing:
o The closing on the sale of $1.44 billion of rate reduction
certificates through CL&P's subsidiary, CL&P Funding LLC.
o The closing on the sale of substantially all of the Millstone units to
DNCI.
WMECO filed a current report on Form 8-K dated March 30, 2001, disclosing:
o The closing on the sale of substantially all of the Millstone units to
DNCI.
CL&P Funding LLC filed a current report on Form 8-K dated March 30, 2001,
disclosing:
o The closing on the sale of $1.44 billion of rate reduction
certificates.
NU, CL&P and WMECO filed current reports on Form 8-K dated April 11,
2001, disclosing:
o NU's news release announcing the retirement of $830 million of public
debt and preferred securities.
NU filed a current report on Form 8-K dated April 24, 2001, disclosing:
o NU's earnings press release for the first quarter of 2001.
NU, PSNH and PSNH Funding LLC filed current reports on Form 8-K dated
April 25, 2001, disclosing:
o The closing on the sale of $525.4 million of rate reduction bonds
through PSNH's subsidiary, PSNH Funding LLC.
NU, WMECO and WMECO Funding LLC filed current reports on Form 8-K dated
May 17, 2001, disclosing:
o The closing on the sale of $155 million of rate reduction certificates
through WMECO's subsidiary, WMECO Funding LLC.
NU filed a current report on Form 8-K dated June 28, 2001, disclosing:
o The declaration of a dividend of $0.125 per share payable on
September 28, 2001, to shareholders of record as of September 1, 2001,
and the announcement of three proposed strategic transmission
projects.
NU filed a current report on Form 8-K dated July 10, 2001, disclosing:
o The authorization by the NU Board of Trustees of the repurchase of up
to 15 million NU common shares by July 1, 2003, and the election of
two new trustees.
NU filed a current report on Form 8-K dated July 24, 2001, disclosing:
o NU's earnings press release for the second quarter and six months
ended June 30, 2001.
NU filed current reports on Form 8-K dated October 11, 2001, disclosing:
o Earnings guidance for 2001 and 2002 and related presentation
information.
CL&P, PSNH and WMECO filed current reports on Form 8-K dated October 11,
2001, disclosing:
o Presentation information related to earnings guidance for 2001 and
2002.
NU filed a current report on Form 8-K dated October 23, 2001, disclosing:
o NU's earnings press release for the third quarter and nine months
ended September 30, 2001.
NU filed a current report on Form 8-K dated October 29, 2001, disclosing:
o Earnings information for the twelve months ended September 30, 2001
for certain major businesses.
NU and CL&P filed current reports on Form 8-K dated November 20, 2001,
disclosing:
o NU's news release announcing the CL&P's seeking of an increase in
generation rates to protect supply contracts and customers.
NU filed a current report on Form 8-K dated January 22, 2002, disclosing:
o NU's earnings press release for the fourth quarter and full year 2001.
NU, PSNH and PSNH Funding LLC 2 filed current reports on Form 8-K dated
January 30, 2002, disclosing:
o The closing on the sale of $50 million of rate reduction bonds through
PSNH's subsidiary, PSNH Funding LLC 2.
NU filed a current report on Form 8-K dated March 15, 2002, disclosing:
o NU's change in its certifying accountant.
NORTHEAST UTILITIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NORTHEAST UTILITIES
-------------------
(Registrant)
Date: March 22, 2002 By /s/ Michael G. Morris
-------------- ---------------------------
Michael G. Morris
Chairman of the Board,
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 22, 2002 Chairman of the Board, /s/ Michael G. Morris
- -------------- President and --------------------------------
Chief Executive Officer Michael G. Morris
and a Trustee
March 22, 2002 Vice Chairman, /s/ John H. Forsgren
- -------------- Executive Vice ---------------------------------
President and Chief John H. Forsgren
Financial Officer
and a Trustee
March 22, 2002 Vice President - /s/ John P. Stack
- -------------- Accounting and ---------------------------------
Controller John P. Stack
March 22, 2002 Trustee /s/ Richard H. Booth
- -------------- --------------------------------
Richard H. Booth
March 22, 2002 Trustee /s/ Cotton M. Cleveland
- -------------- ---------------------------------
Cotton M. Cleveland
March 22, 2002 Trustee /s/ Sanford Cloud, Jr.
- -------------- ---------------------------------
Sanford Cloud, Jr.
March 22, 2002 Trustee /s/ James F. Cordes
- -------------- ---------------------------------
James F. Cordes
March 22, 2002 Trustee /s/ E. Gail de Planque
- -------------- ---------------------------------
E. Gail de Planque
March 22, 2002 Trustee /s/ Raymond L. Golden
- -------------- ---------------------------------
Raymond L. Golden
March 22, 2002 Trustee /s/ Elizabeth T. Kennan
- -------------- ---------------------------------
Elizabeth T. Kennan
March 22, 2002 Trustee /s/ Robert E. Patricelli
- -------------- ---------------------------------
Robert E. Patricelli
March 22, 2002 Trustee /s/ John F. Swope
- -------------- ---------------------------------
John F. Swope
THE CONNECTICUT LIGHT AND POWER COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
---------------------------------------
(Registrant)
Date: March 22, 2002 By /s/ Leon J. Olivier
-------------- ------------------------
Leon J. Olivier
President and Chief
Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 22, 2002 President and /s/ Leon J. Olivier
- -------------- Chief Operating -------------------------------------
Officer and Leon J. Olivier
a Director
March 22, 2002 Treasurer /s/ Randy A. Shoop
- -------------- -------------------------------------
Randy A. Shoop
March 22, 2002 Vice President - /s/ John P. Stack
- -------------- Accounting and -------------------------------------
Controller John P. Stack
March 22, 2002 Director /s/ David H. Boguslawski
- -------------- -------------------------------------
David H. Boguslawski
March 22, 2002 Director /s/ Cheryl W. Grise
- -------------- -------------------------------------
Cheryl W. Grise
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
---------------------------------------
(Registrant)
Date: March 22, 2002 By /s/ Michael G. Morris
-------------- -----------------------
Michael G. Morris
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 22, 2002 Chairman and Chief /s/ Michael G. Morris
- -------------- Executive Officer --------------------------------------
and a Director Michael G. Morris
March 22, 2002 President and /s/ Gary A. Long
- -------------- Chief Operating --------------------------------------
Officer and Gary A. Long
a Director
March 22, 2002 Vice President /s/ David R. McHale
- -------------- and Treasurer --------------------------------------
David R. McHale
March 22, 2002 Vice President - /s/ John P. Stack
- -------------- Accounting and --------------------------------------
Controller John P. Stack
March 22, 2002 Director /s/ David H. Boguslawski
- -------------- --------------------------------------
David H. Boguslawski
March 22, 2002 Director /s/ John C. Collins
- -------------- --------------------------------------
John C. Collins
March 22, 2002 Director /s/ John H. Forsgren
- -------------- --------------------------------------
John H. Forsgren
March 22, 2002 Director /s/ Cheryl W. Grise
- -------------- --------------------------------------
Cheryl W. Grise
March 22, 2002 Director /s/ Gerald Letendre
- -------------- --------------------------------------
Gerald Letendre
March 22, 2002 Director /s/ Jane E. Newman
- -------------- --------------------------------------
Jane E. Newman
WESTERN MASSACHUSETTS ELECTRIC COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
--------------------------------------
(Registrant)
Date: March 22, 2002 By /s/ Michael G. Morris
-------------- --------------------------
Michael G. Morris
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 22, 2002 Chairman and Chief /s/ Michael G. Morris
- -------------- Executive Officer -------------------------------------
and a Director Michael G. Morris
March 22, 2002 President and /s/ Kerry J. Kuhlman
- -------------- Chief Operating -------------------------------------
Officer and Kerry J. Kuhlman
a Director
March 22, 2002 Vice President /s/ David R. McHale
- -------------- and Treasurer -------------------------------------
David R. McHale
March 22, 2002 Vice President - /s/ John P. Stack
- -------------- Accounting and -------------------------------------
Controller John P. Stack
March 22, 2002 Director /s/ David H. Boguslawski
- -------------- -------------------------------------
David H. Boguslawski
March 22, 2002 Director /s/ James E. Byrne
- -------------- -------------------------------------
James E. Byrne
March 22, 2002 Director /s/ John H. Forsgren
- -------------- -------------------------------------
John H. Forsgren
March 22, 2002 Director /s/ Cheryl W. Grise
- -------------- -------------------------------------
Cheryl W. Grise
March 22, 2002 Director /s/ Paul J. McDonald
- -------------- -------------------------------------
Paul J. McDonald
March 22, 2002 Director /s/ Melinda M. Phelps
- -------------- -------------------------------------
Melinda M. Phelps
NORTHEAST GENERATION COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NORTHEAST GENERATION COMPANY
----------------------------
(Registrant)
Date: March 22, 2002 By /s/ Bruce D. Kenyon
-------------- -------------------
Bruce D. Kenyon
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
- ---- ----- ---------
March 22, 2002 President /s/ Bruce D. Kenyon
- -------------- and a Director --------------------------------
Bruce D. Kenyon
March 22, 2002 Vice President /s/ David R. McHale
- -------------- and Treasurer --------------------------------
of Northeast Utilities David R. McHale
Service Company as
Agent for Northeast
Generation Company
March 22, 2002 Vice President - /s/ John P. Stack
- -------------- Accounting and --------------------------------
Controller John P. Stack
of Northeast Utilities
Service Company as
Agent for Northeast
Generation Company
March 22, 2002 Director /s/ William J. Nadeau
- -------------- --------------------------------
William J. Nadeau
March 22, 2002 Director /s/ Frank P. Sabatino
- -------------- --------------------------------
Frank P. Sabatino
March 22, 2002 Director /s/ William W. Schivley
- -------------- --------------------------------
William W. Schivley
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
-----------------------------------------------------
We have audited in accordance with auditing standards generally accepted in
the United States, the financial statements included in Northeast Utilities'
annual report to shareholders and The Connecticut Light and Power Company's,
Public Service Company of New Hampshire's, Western Massachusetts Electric
Company's and Northeast Generation Company's annual reports, incorporated by
reference in this Form 10-K, and have issued our reports thereon dated
January 22, 2002 for Northeast Utilities, The Connecticut Light and Power
Company, Public Service Company of New Hampshire and Western Massachusetts
Electric Company, and February 5, 2002 for Northeast Generation Company. Our
report on the financial statements of Northeast Utilities includes an
explanatory paragraph with respect to the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended and as discussed in Note 1C to the
consolidated financial statements. Our audits were made for the purpose of
forming an opinion on the financial statements referred to above taken as a
whole. The schedules listed in the accompanying Index to Financial
Statements Schedules are the responsibility of the companies' management, are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not a part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements referred to above and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements referred
to above taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
January 22, 2002 (February 5, 2002
for Northeast Generation Company)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our reports dated January 22, 2002 for
Northeast Utilities, The Connecticut Light and Power Company, Public Service
Company of New Hampshire and Western Massachusetts Electric Company, and
February 5, 2002 for Northeast Generation Company, included in Registration
Statement File No. 33-34622, No. 33-44814, No. 33-63023, No. 33-40156, No.
333-52413, No. 333-52415, No. 333-85613, and No. 333-55142 of Northeast
Utilities. We also consent to the incorporation by reference of our report
dated January 22, 2002 for The Connecticut Light and Power Company included
in Registration Statement No. 33-55279 of The Connecticut Light and Power
Company and No. 33-56537 of CL&P Capital, LP. It should be noted that we
have not audited any financial statements of the companies referred to above
subsequent to December 31, 2001 or performed any audit procedures subsequent
to the date of our report.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
March 20, 2002
INDEX TO FINANCIAL STATEMENTS SCHEDULES
Schedule
I. Financial Information of Registrant:
Northeast Utilities (Parent) Balance
Sheets at December 31, 2001 and 2000 S-4
Northeast Utilities (Parent) Statements
of Income for the Years Ended December 31,
2001, 2000, and 1999 S-5
Northeast Utilities (Parent) Statements
of Cash Flows for the Years Ended December 31,
2001, 2000, and 1999 S-6
II. Valuation and Qualifying Accounts and Reserves
for 2001, 2000, and 1999:
Northeast Utilities and Subsidiaries S-7 - S-9
The Connecticut Light and Power Company
and Subsidiaries S-10 - S-12
Public Service Company of New Hampshire S-13 - S-15
Western Massachusetts Electric Company
and Subsidiary S-16 - S-18
All other schedules of the companies' for which provision is made in the
applicable regulations of the SEC are not required under the related
instructions or are not applicable, and therefore have been omitted.
<Table>
<Caption>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AT DECEMBER 31, 2001 AND 2000
(Thousands of Dollars)
2001 2000
---------- ----------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash................................................ $ 13,183 $ 1,058
Notes receivable from affiliated companies.......... 124,800 94,400
Notes and accounts receivable....................... 555 868
Receivables from affiliated companies............... 21,713 3,908
Prepayments......................................... 1,093 3,744
---------- ----------
161,344 103,978
---------- ----------
Deferred Debits and Other Assets:
Investments in subsidiary companies, at equity...... 2,392,884 2,687,804
Investments in transmission companies, at equity.... 13,596 15,011
Other............................................... 4,260 348
---------- ----------
2,410,740 2,703,163
---------- ----------
Total Assets.......................................... $2,572,084 $2,807,141
========== ==========
LIABILITIES AND CAPITALIZATION
- ------------------------------
Current Liabilities:
Notes payable to banks.............................. $ 40,000 $ 436,000
Long-term debt - current portion.................... 23,000 21,000
Accounts payable.................................... 146 966
Accounts payable to affiliated companies............ 26,626 18
Accrued taxes....................................... 249 1,135
Accrued interest.................................... 2,492 6,961
Other............................................... 19 20
---------- ----------
92,532 466,100
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes................... 4,742 5,026
Other............................................... 170 432
---------- ----------
4,912 5,458
---------- ----------
Capitalization:
Long-Term Debt...................................... 357,000 117,000
---------- ----------
Common Shareholders' Equity:
Common shares, $5 par value - authorized
225,000,000 shares; 148,890,640 shares issued and
130,132,136 shares outstanding in 2001 and
148,781,861 shares issued and
143,820,405 outstanding in 2000................... 744,453 693,345
Capital surplus, paid in............................ 1,107,609 942,144
Temporary equity from stock forward................. - 215,000
Deferred contribution plan - employee stock
stock ownership plan.............................. (101,809) (114,463)
Retained earnings................................... 678,460 495,873
Accumulated other comprehensive (loss)/income....... (32,470) 1,769
Treasury stock...................................... (278,603) (15,085)
---------- ----------
Common Shareholders' Equity......................... 2,117,640 2,218,583
---------- ----------
Total Capitalization.................................. 2,474,640 2,335,583
---------- ----------
Total Liabilities and Capitalization.................. $2,572,084 $2,807,141
========== ==========
</Table>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Thousands of Dollars, Except Share Information)
<Table>
<Caption>
2001 2000 1999
---- ---- ----
<S> <C> <C> <C>
Operating Revenues................................. $ - $ - $ -
----------- ----------- -----------
Operating Expenses:
Other............................................ 11,917 15,335 19,126
----------- ----------- -----------
Operating Loss..................................... (11,917) (15,335) (19,126)
----------- ----------- -----------
Other Income/(Loss):
Equity in earnings of subsidiaries............... 188,783 23,553 56,812
Gain related to Millstone sale................... 147,935 - -
Loss on share repurchase contracts............... (35,394) - -
Other, net....................................... 10,863 11,687 5,236
----------- ----------- -----------
Other Income, Net.................................. 312,187 35,240 62,048
----------- ----------- -----------
Income Before Interest and Income Tax Expense...... 300,270 19,905 42,922
Interest Expense................................... 32,696 47,819 15,612
----------- ----------- -----------
Income/(Loss) Before Income Tax Expense/(Benefit).. 267,574 (27,914) 27,310
Income Tax Expense/(Benefit)....................... 24,064 672 (6,906)
----------- ----------- -----------
Earnings/(Loss) for Common Shares.................. $ 243,510 $ (28,586) $ 34,216
=========== =========== ===========
Basic Earnings/(Loss)
Per Common Share................................. $ 1.80 $ (0.20) $ 0.26
=========== =========== ===========
Fully Diluted Earnings/(Loss)
Per Common Share................................. $ 1.79 $ (0.20) $ 0.26
=========== =========== ===========
Basic Common Shares
Outstanding (average)............................. 135,632,126 141,549,860 131,415,126
=========== =========== ===========
Fully Diluted Common Shares
Outstanding (average)............................. 135,917,423 141,967,216 132,031,573
=========== =========== ===========
</Table>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Thousands of Dollars)
<Table>
<Caption>
2001 2000 1999
---- ---- ----
<S> <C> <C> <C>
Operating Activities:
Net earnings/(loss) for common shares.......................... $ 243,510 $ (28,586) $ 34,216
Adjustments to reconcile to net cash flows
provided by operating activities:
Equity in earnings of subsidiary companies................... (188,783) (23,553) (56,812)
Cash dividends received from subsidiary companies............ 120,072 183,016 66,000
Deferred income taxes........................................ (233) (276) 74
Net other sources of cash.................................... 2,283 3,276 16,655
Changes in working capital:
Receivables and unbilled revenues, net....................... (24,295) 4,200 (7,220)
Accounts payable............................................. 25,788 (7,475) 5,863
Other working capital (excludes cash)........................ (2,705) (1,866) 12,191
--------- --------- ---------
Net cash flows provided by operating activities.................. 175,637 128,736 70,967
--------- --------- ---------
Investing Activities:
Investment in NU system Money Pool............................. (30,400) (49,100) (10,900)
Investment in subsidiaries..................................... 396,257 (117,631) (99,462)
Other investment activities, net............................... 1,415 1,489 1,245
Payment for the purchase of SENY, net of cash acquired ........ (25,823) - -
Payment for the purchase of Yankee, net of cash acquired....... - (260,347) -
--------- --------- ---------
Net cash flows provided by/(used in) investing activities........ 341,449 (425,589) (109,117)
--------- --------- ---------
Financing Activities:
Issuance of common shares...................................... 1,751 4,269 5,318
Repurchase of common shares.................................... (291,789) - -
Issuance of long-term debt..................................... 263,000 - -
Net (decrease)/increase in short-term debt..................... (396,000) 371,000 65,000
Reacquisitions and retirements of long-term debt............... (21,000) (20,000) (19,000)
Cash dividends on common shares................................ (60,923) (57,358) (13,168)
--------- --------- ---------
Net cash flows (used in)/provided by financing activities........ (504,961) 297,911 38,150
--------- --------- ---------
Net increase in cash............................................. 12,125 1,058 -
Cash - beginning of year......................................... 1,058 - -
--------- --------- ---------
Cash - end of year............................................... $ 13,183 $ 1,058 $ -
========= ========= =========
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized........................... $ 35,453 $ 39,099 $ 15,724
========= ========= =========
Income taxes................................................... $ 32,126 $ 1,430 $ 28,982
========= ========= =========
</Table>
<Table>
<Caption>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2001
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $12,500 $15,947 $ - $12,094 (a) $16,353
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $79,281 $25,936 $ - $36,132 (b) $69,085
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2000
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 4,895 $26,740 $ 130(c) $19,265 (a) $12,500
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $44,995 $22,573 $37,680(c) $25,967 (b) $79,281
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
(c) Amounts represent activity related to the acquisition of Yankee on March 1, 2000.
</Table>
<Table>
<Caption>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,417 $ 8,026 $ - $ 5,548 (a) $ 4,895
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $40,438 $18,597 $ - $14,040 (b) $44,995
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2001
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 300 $ 551 $ - $ 326 (a) $ 525
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $13,660 $ 5,735 $ - $ 8,008 (b) $11,387
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2000
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 300 $ 9,270 $ - $ 9,270 (a) $ 300
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $16,069 $ 7,488 $ - $ 9,897 (b) $13,660
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 300 $ 290 $ - $ 290 (a) $ 300
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $16,656 $ 5,422 $ - $ 6,009 (b) $16,069
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2001
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,869 $ 1,787 $ - $ 1,920 (a) $ 1,736
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $11,650 $ 7,393 $ - $ 5,201 (b) $13,842
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2000
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,359 $ 2,220 $ - $ 1,710 (a) $ 1,869
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $11,405 $ 9,855 $ - $ 9,610 (b) $11,650
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,041 $ 1,590 $ - $ 2,272 (a) $ 1,359
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 9,906 $ 7,268 $ - $ 5,769 (b) $11,405
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2001
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,886 $ 2,887 $ - $ 2,745 (a) $ 2,028
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 6,760 $ 3,767 $ - $ 3,021 (b) $ 7,506
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 2000
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,640 $ 2,416 $ - $ 2,170 (a) $ 1,886
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 7,188 $ 1,130 $ - $ 1,558 (b) $ 6,760
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
<Table>
<Caption>
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(Thousands of Dollars)
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
----------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 50 $ 4,564 $ - $ 2,974 (a) $ 1,640
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,960 $ 3,085 $ - $ 1,857 (b) $ 7,188
======= ======= ======= ======= =======
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages,
employee medical expenses, and expenses in connection therewith.
</Table>
EXHIBIT INDEX
Each document described below is incorporated by reference to the files
of the Securities and Exchange Commission, unless the reference to the
document is marked as follows:
* - Filed with the 2001 Annual Report on Form 10-K, File No. 1-5324,
for NU and herein incorporated by reference into the 2001 Annual Reports
on Form 10-K for CL&P, PSNH, WMECO and NGC.
# - Filed with the 2001 Annual Report on Form 10-K, File No. 1-5324,
for NU and herein incorporated by reference into the 2001 Annual Report
on Form 10-K for CL&P.
@ - Filed with the 2001 Annual Report on Form 10-K, File No. 1-5324,
for NU and herein incorporated by reference into the 2001 Annual Report
on Form 10-K for PSNH.
** - Filed with the 2001 Annual Report on Form 10-K, File No. 1-5324,
for NU and herein incorporated by reference into the 2001 Annual Report
on Form 10-K for WMECO.
## - Filed with the 2001 Annual Report on Form 10-K, File No. 1-5324,
for NU and herein incorporated by reference into the 2001 Annual Report
on Form 10-K for NGC.
Exhibit
Number Description
2 Plan of acquisition, reorganization, arrangement, liquidation or
succession
2.1 Amended and Restated Agreement and Plan of Merger (Exhibit 1 to
NU's Current Report on Form 8-K dated October 13, 1999, File No.
1-5324).
3 Articles of Incorporation and By-Laws
3.1 Northeast Utilities
3.1.1 Declaration of Trust of NU, as amended through
May 24, 1988. (Exhibit 3.1.1, 1988 NU Form 10-K, File No.
1-5324)
3.2 The Connecticut Light and Power Company
3.2.1 Certificate of Incorporation of CL&P, restated to
March 22, 1994. (Exhibit 3.2.1, 1993 NU Form 10-K,
File No. 1-5324)
3.2.2 Certificate of Amendment to Certificate of Incorporation
of CL&P, dated December 26, 1996. (Exhibit 3.2.2, 1996 NU
Form 10-K, File No. 1-5324)
3.2.3 Certificate of Amendment to Certificate of Incorporation
of CL&P, dated April 27, 1998. (Exhibit 3.2.3, 1998 NU
Form 10-K, File No. 1-5324)
3.2.4 By-laws of CL&P, as amended to January 1, 1997.
(Exhibit 3.2.3, 1996 NU Form 10-K, File No. 1-5324)
3.3 Public Service Company of New Hampshire
3.3.1 Articles of Incorporation, as amended to May 16, 1991.
(Exhibit 3.3.1, 1993 NU Form 10-K, File No. 1-5324)
3.3.2 By-laws of PSNH, as amended to November 1, 1993.
(Exhibit 3.3.2, 1993 NU Form 10-K, File No. 1-5324)
3.4 Western Massachusetts Electric Company
3.4.1 Articles of Organization of WMECO, restated to
February 23, 1995. (Exhibit 3.4.1, 1994 NU Form 10-K,
File No. 1-5324)
3.4.2 By-laws of WMECO, as amended to April 1, 1999. (Exhibit
3.1, 1999 NU Form 10-Q for the Quarter Ended June 30,
1999, File No. 1-5324)
3.4.3 By-laws of WMECO, as further amended to May 1, 2000.
(Exhibit 3.1, 2000 NU Form 10-Q for the Quarter Ended
June 30, 2000, File No. 1-5324)
3.5 Northeast Generation Company
3.5.1 Certificate of Incorporation of NGC, dated December 28,
1998, (Exhibit B.34.1, 1999 NU Form U5S, File No. 30-246)
3.5.2 By-Laws of NGC, dated January 4, 1999. (Exhibit B.34.2,
1999 NU Form U5S, File No. 30-246)
3.5.3 By-Laws of NGC, as amended to June 1, 2000. (Exhibit
B.34.3, 2000 NU Form U5S, File No. 30-246)
4. Instruments defining the rights of security holders, including
indentures
4.1 Northeast Utilities
4.1.1 Indenture dated as of December 1, 1991 between Northeast
Utilities and IBJ Schroder Bank & Trust Company, with
respect to the issuance of Debt Securities. (Exhibit
4.1.1, 1991 NU Form 10-K, File No. 1-5324)
4.1.1.1 First Supplemental Indenture dated as of December 1,
1991 between Northeast Utilities and IBJ Schroder
Bank & Trust Company, with respect to the issuance
of Series A Notes. (Exhibit 4.1.2, 1991 NU Form
10-K, File No. 1-5324)
4.1.1.2 Second Supplemental Indenture dated as of March 1,
1992 between Northeast Utilities and IBJ Schroder
Bank & Trust Company with respect to the issuance of
8.38% Amortizing Notes. (Exhibit 4.1.3, 1992 NU
Form 10-K, File No. 1-5324)
4.1.2 Indenture between NU and the Bank of New York, as
Trustee, dated as of February 28, 2001, relating to
Senior Notes (Exhibit A-1 to 35-CERT filed March 9, 2001,
File No. 70-9535)
4.1.2.1 First Supplemental Indenture to the Indenture,
dated as of February 28, 2001, between NY and The
Bank of New York, as Trustee, relating to Floating
Rate Notes Due 2003 (Exhibit A-2 to 35-CERT filed
March 9, 2001, File No. 70-9535)
4.1.3 Revolving Credit Agreement among NU and the Banks named
therein, dated November 16, 2001(Exhibit to 35 CERT filed
November 28, 2001, File No. 70-9755)
4.2 The Connecticut Light and Power Company
4.2.1 Indenture of Mortgage and Deed of Trust between CL&P and
Bankers Trust Company, Trustee, dated as of May 1, 1921.
(Composite including all twenty-four amendments to May 1,
1967.) (Exhibit 4.1.1, 1989 NU Form 10-K, File No.
1-5324)
Supplemental Indentures to the Composite May 1, 1921
Indenture of Mortgage and Deed of Trust between CL&P and
Bankers Trust Company, dated as of:
4.2.1.1 June 1, 1994. (Exhibit 4.2.15, 1994 NU Form
10-K, File No. 1-5324)
4.2.1.2 October 1, 1994. (Exhibit 4.2.16, 1994 NU Form
10-K, File No. 1-5324)
4.2.2 Financing Agreement between Industrial Development
Authority of the State of New Hampshire and CL&P
(Pollution Control Bonds, 1986 Series) dated as of
December 1, 1986. (Exhibit C.1.47, 1986 NU Form U5S,
File No. 30-246)
4.2.3 Financing Agreement between Industrial
Development Authority of the State of New Hampshire and
CL&P (Pollution Control Bonds, 1988 Series) dated as of
October 1, 1988. (Exhibit C.1.55, 1988 NU Form U5S, File
No. 30-246)
4.2.4 Loan and Trust Agreement among Business Finance Authority
of the State of New Hampshire, CL&P and the Trustee
(Pollution Control Bonds, 1992 Series A) dated as of
December 1, 1992.(Exhibit C.2.33, 1992 NU Form U5S, File
No. 30-246)
4.2.5 Loan Agreement between Connecticut Development Authority
and CL&P (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit
4.2.21, 1993 NU Form 10-K, File No. 1-5324)
4.2.6 Loan Agreement between Connecticut Development Authority
and CL&P (Pollution Control Bonds - Series B, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit
4.2.22, 1993 NU Form 10-K, File No. 1-5324)
4.2.7 Amended and Restated Loan Agreement between Connecticut
Development Authority and CL&P (Pollution Control Revenue
Bond - 1996A Series) dated as of May 1, 1996 and Amended
and Restated as of January 1, 1997. (Exhibit 4.2.24,
1996 NU Form 10-K, File No. 1-5324)
4.2.7.1 Amended and Restated Indenture of Trust between
Connecticut Development Authority and the
Trustee (CL&P Pollution Control Revenue Bond-
1996A Series), dated as of May 1, 1996 and
Amended and Restated as of January 1, 1997.
(Exhibit 4.2.24.1, 1996 NU Form 10-K, File No.
1-5324)
4.2.7.2 Standby Bond Purchase Agreement among CL&P,
Bank of New York as Purchasing Agent and the
Banks Named therein, dated October 24, 2000
(Exhibit 4.2.24.2 of 2000 NU Form 10-K,
File No. 1-5324)
4.2.7.3 AMBAC Municipal Bond Insurance Policy issued
by the Connecticut Development Authority (CL&P
Pollution Control Revenue Bond-1996A Series),
effective January 23, 1997. (Exhibit 4.2.24.3,
1996 NU Form 10-K, File No. 1-5324)
4.2.8 Revolving Credit Agreement among WMECO, CL&P PSNH and
Yankee and the Banks named therein, dated November 16,
2001 (Exhibit to 35 CERT filed November 28, 2001, File No.
70-9755)
4.2.9 Amended and Restated Receivables Purchase and Sale
Agreement dated as of March 30, 2001 (CL&P and CL&P
Receivables Corporation (CRC)) (Exhibit 10.1, 2001 NU
10-Q for the Quarter Ended September 30, 2001 (File No.
1-5324)
4.2.9.1 Amendment No. 1 to the Purchase and
Contribution Agreement between CL&P and CRC
dated as of March 30, 2001 (Exhibit 10.1.1 2001
NU 10-Q for the Quarter Ended September 30,
2001 (File No. 1-5324)
4.3 Public Service Company of New Hampshire
4.3.1 First Mortgage Indenture dated as of August 15, 1978
between PSNH and First Fidelity Bank, National
Association, New Jersey, now First Union National Bank,
Trustee, (Composite including all amendments to May 16,
1991). (Exhibit 4.4.1, 1992 NU Form 10-K, File No.
1-5324)
4.3.1.1 Tenth Supplemental Indenture dated as of May 1,
1991 between PSNH and First Fidelity Bank,
National Association, now First Union National
Bank. (Exhibit 4.1, PSNH Current Report on
Form 8-K dated February 10, 1992, File No.
1-6392)
@4.3.1.2 Twelfth Supplemental Indenture dated as of
December 1, 2001 between PSNH and First Union
National Bank
4.3.2 Series D (Tax Exempt Refunding) Amended and Restated PCRB
Loan and Trust Agreement dated as of April 1, 1999.
(Exhibit 4.3.6, 1999 NU Form 10-K, File No. 1-5324)
4.3.3 Series E (Tax Exempt Refunding) Amended & Restated
PCRB Loan and Trust Agreement dated as of April 14, 1999.
(Exhibit 4.3.7, 1999 NU Form 10-K, File No. 1-5324)
@4.3.4 Series A Loan and Trust Agreement among Business Finance
Authority of the State of New Hampshire and PSNH and
State Street Bank and Trust Company, as Trustee (Tax
Exempt Pollution Control Bonds) dated as of October 1,
2001.
@4.3.5 Series B Loan and Trust Agreement among Business Finance
Authority of the State of New Hampshire and PSNH and
State Street Bank and Trust Company, as Trustee (Tax
Exempt Pollution Control Bonds) dated as of October 1,
2001.
@4.3.6 Series C Loan and Trust Agreement among Business Finance
Authority of the State of New Hampshire and PSNH and
State Street Bank and Trust Company, as Trustee (Tax
Exempt Pollution Control Bonds) dated as of October 1,
2001.
4.3.7 Revolving Credit Agreement among WMECO, CL&P PSNH and
Yankee and the Banks named therein, dated November 16,
2001 (Exhibit to 35 CERT filed November 28, 2001, File No.
70-9755)
4.4 Western Massachusetts Electric Company
4.4.1 Loan Agreement between Connecticut Development Authority
and WMECO, (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993.
(Exhibit 4.4.13, 1993 NU Form 10-K, File No. 1-5324)
4.4.2 Revolving Credit Agreement among WMECO, CL&P PSNH and
Yankee and the Banks named therein, dated November 16,
2001 (Exhibit to 35 CERT filed November 28, 2001, File No.
70-9755)
4.5 Northeast Generation Company
4.5.1 Indenture Mortgage, dated as of October 18, 2001 between
NGC and The Bank of New York, as trustee (Exhibit 4.1 to
NGC Registration Statement S-4 dated December 6, 2001,
File No. 333-74636)
4.5.1.1 First Supplemental Indenture Mortgage, dated as
of October 18, 2001 between NGC and The Bank of
New York, as trustee (Exhibit 4.2 to NGC
Registration Statement S-4 dated December 6,
2001, File No. 333-74636)
10. Material Contracts
10.1 Stockholder Agreement dated as of July 1, 1964 among the
stockholders of Connecticut Yankee Atomic Power Company (CYAPC).
(Exhibit 10.1, 1994 NU Form 10-K, File No. 1-5324)
10.2 Form of Power Contract dated as of July 1, 1964 between CYAPC and
each of CL&P, HELCO, PSNH and WMECO. (Exhibit 10.2, 1994 NU Form
10-K, File No. 1-5324)
10.2.1 Form of Additional Power Contract dated as of April 30,
1984, between CYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.2.1, 1994 NU Form 10-K, File No. 1-5324)
10.2.2 Form of 1987 Supplementary Power Contract dated as of
April 1, 1987, between CYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.2.6, 1987 NU Form 10-K, File No.
1-5324)
10.3 Capital Funds Agreement dated as of September 1, 1964 between CYAPC
and CL&P, HELCO, PSNH and WMECO. (Exhibit 10.3, 1994 NU Form 10-K,
File No. 1-5324)
10.4 Stockholder Agreement dated December 10, 1958 between Yankee Atomic
Electric Company (YAEC) and CL&P, HELCO, PSNH and WMECO. (Exhibit
10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 Form of Amendment No. 3, dated as of April 1, 1985, to Power
Contract between YAEC and each of CL&P, PSNH and WMECO, including
a composite restatement of original Power Contract dated June 30,
1959 and Amendment No. 1 dated April 1, 1975 and Amendment No. 2
dated October 1, 1980. (Exhibit 10.5, 1988 NU Form 10-K, File No.
1-5324.)
10.5.1 Form of Amendment No. 4 to Power Contract, dated May 6,
1988, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.1, 1989 NU Form 10-K, File No. 1-5324)
10.5.2 Form of Amendment No. 5 to Power Contract, dated June 26,
1989, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.2, 1989 NU Form 10-K, File No. 1-5324)
10.5.3 Form of Amendment No. 6 to Power Contract, dated July 1,
1989, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.3, 1989 NU Form 10-K, File No. 1-5324)
10.5.4 Form of Amendment No. 7 to Power Contract, dated
February 1, 1992, between YAEC and each of CL&P, PSNH
and WMECO. (Exhibit 10.5.4, 1993 NU Form 10-K, File
No. 1-5324)
10.6 Stockholder Agreement dated as of May 20, 1968 among stockholders
of MYAPC. (Exhibit 10.6, 1997 NU Form 10-K, File No. 1-5324)
10.7 Form of Power Contract dated as of May 20, 1968 between MYAPC
and each of CL&P, HELCO, PSNH and WMECO. (Exhibit 10.7, 1997 Form
10-K, File No. 1-5324)
10.7.1 Form of Amendment No. 1 to Power Contract dated as of
March 1, 1983 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.7.1, 1993 NU Form 10-K, File No.
1-5324)
10.7.2 Form of Amendment No. 2 to Power Contract dated as of
January 1, 1984 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.7.2, 1993 NU Form 10-K, File No.
1-5324)
10.7.3 Form of Amendment No. 3 to Power Contract dated as of
October 1, 1984 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.7.3, 1994 NU Form 10-K, File No.
1-5324)
10.7.4 Form of Additional Power Contract dated as of February 1,
1984 between MYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.7.4, 1993 NU Form 10-K, File No. 1-5324)
10.8 Capital Funds Agreement dated as of May 20, 1968 between MYAPC
and CL&P, PSNH, HELCO and WMECO. (Exhibit 10.8, 1997 NU Form 10-K,
File No. 1-5324)
10.8.1 Amendment No. 1 to Capital Funds Agreement, dated as of
August 1, 1985, between MYAPC, CL&P, PSNH and WMECO.
(Exhibit No. 10.8.1, 1994 NU Form 10-K, File No. 1-5324)
10.9 Sponsor Agreement dated as of August 1, 1968 among the
sponsors of Vermont Yankee Nuclear Power Corporation
(VYNPC). (Exhibit 10.9, 1997 NU Form 10-K, File No. 1-5324)
10.10 Form of Power Contract dated as of February 1, 1968 between
VYNPC and each of CL&P, HELCO, PSNH and WMECO. (Exhibit 10.10, 1997
NU Form 10-K, File No. 1-5324)
10.10.1 Form of Amendment to Power Contract dated as of June 1,
1972 between VYNPC and each of CL&P, HELCO, PSNH and
WMECO. (Exhibit 5.22, File No. 2-47038)
10.10.2 Form of Second Amendment to Power Contract dated as of
April 15, 1983 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.2, 1993 NU Form 10-K, File No.
1-5324)
10.10.3 Form of Third Amendment to Power Contract dated as of
April 24, 1985 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.10.3, 1994 NU Form 10-K, File No.
1-5324)
10.10.4 Form of Fourth Amendment to Power Contract dated as of
June 1, 1985 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.10.4, 1996 NU Form 10-K,
File No. 1-5324)
10.10.5 Form of Fifth Amendment to Power Contract dated as of
May 6, 1988 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.5, 1990 NU Form 10-K, File No.
1-5324)
10.10.6 Form of Sixth Amendment to Power Contract dated as of
May 6, 1988 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.6, 1990 NU Form 10-K, File No.
1-5324)
10.10.7 Form of Seventh Amendment to Power Contract dated as of
June 15, 1989 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.7, 1990 NU Form 10-K, File No.
1-5324)
10.10.8 Form of Eighth Amendment to Power Contract dated as of
December 1, 1989 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.8, 1990 NU Form 10-K, File No.
1-5324)
10.10.9 Form of Additional Power Contract dated as of February 1,
1984 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.9, 1993 NU Form 10-K, File No. 1-5324)
10.11 Capital Funds Agreement dated as of February 1, 1968
between VYNPC and CL&P, HELCO, PSNH and WMECO. (Exhibit 10.11,
1997 NU Form 10-K, File No. 1-5324)
10.11.1 Form of First Amendment to Capital Funds Agreement dated
as of March 12, 1968 between VYNPC and CL&P, HELCO, PSNH
and WMECO. (Exhibit 10.11.1, 1997 NU Form 10-K, File
No. 1-5324)
10.11.2 Form of Second Amendment to Capital Funds Agreement
dated as of September 1, 1993 between VYNPC and CL&P,
HELCO, PSNH and WMECO. (Exhibit 10.11.2, 1993 NU Form
10-K, File No. 1-5324)
10.12 Agreement dated July 19, 1990, among NAESCO and Seabrook Joint
owners with respect to operation of Seabrook. (Exhibit 10.53,
1990 NU Form 10-K, File No. 1-5324)
10.13 Sharing Agreement between CL&P, WMECO, HP&E, HWP and PSNH dated
as of June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K, File No.
1-5324)
10.14 Rate Agreement by and between NUSCO, on behalf of NU, and the
Governor of the State of New Hampshire and the New Hampshire
Attorney General dated as of November 22, 1989. (Exhibit 10.44,
1989 NU Form 10-K, File No. 1-5324)
10.14.1 First Amendment to Rate Agreement dated as of
December 5, 1989. (Exhibit 10.16.1, 1995 NU Form 10-K,
File No. 1-5324)
10.14.2 Second Amendment to Rate Agreement dated as of
December 12, 1989. (Exhibit 10.16.2, 1995 NU Form 10-K,
File No. 1-5324)
10.14.3 Third Amendment to Rate Agreement dated as of
December 3, 1993. (Exhibit 10.16.3, 1995 NU Form 10-K,
File No. 1-5324)
10.14.4 Fourth Amendment to Rate Agreement dated as of
September 21, 1994. (Exhibit 10.16.4, 1995 NU Form 10-K,
File No. 1-5324)
10.14.5 Fifth Amendment to Rate Agreement dated as of
September 9, 1994. (Exhibit 10.16.5, 1995 NU Form 10-K,
File No. 1-5324)
10.15 Agreement to Settle PSNH Restructuring (Exhibit 10.2, 1999 NU Form
10-Q for the Quarter Ended June 30, 1999, File No. 1-5324)
@10.15.1 Revised and Conformed Agreement to Settle PSNH
Restructuring, dated August 2, 1999, conformed June 23
and executed on September 22, 2000.
10.16 Merger Settlement Agreement between NU, Con Edison and NHPUC dated
as of December 6, 2000 (Exhibit O.1, to NU's U-1 Application, File
No. 70-9711)
10.17 Form of Seabrook Power Contract between PSNH and NAEC, as amended
and restated. (Exhibit 10.45, 1992 NU Form 10-K, File No. 1-5324)
10.18 Agreement (composite) for joint ownership, construction and
operation of New Hampshire nuclear unit, as amended through the
November 1, 1990 twenty-third amendment. (Exhibit No. 10.17, 1994
NU Form 10-K, File No. 1-5324)
10.18.1 Memorandum of Understanding dated November 7,
1988 between PSNH and Massachusetts Municipal Wholesale
Electric Company (Exhibit 10.17, PSNH 1989 Form 10-K,
File No. 1-6392)
10.18.2 Agreement of Settlement among Joint Owners dated as of
January 13, 1989. (Exhibit 10.13.21, 1988 NU Form 10-K,
File No. 1-5324)
10.18.2.1 Supplement to Settlement Agreement,
dated as of February 7, 1989, between PSNH
and Central Maine Power Company. (Exhibit
10.18.1, PSNH 1989 Form 10-K, File No. 1-6392)
10.19 Amended and Restated Agreement for Seabrook Project Disbursing
Agent dated as of November 1, 1990. (Exhibit 10.4.7, File No.
33-35312)
10.19.1 Form of First Amendment to Exhibit 10.22. (Exhibit
10.4.8, File No. 33-35312)
10.19.2 Form (Composite) of Second Amendment to Exhibit
10.22. (Exhibit 10.18.2, 1993 NU Form 10-K, File No.
1-5324)
10.20 Agreement dated November 1, 1974 for Joint Ownership, Construction
and Operation of William F. Wyman Unit No. 4 among PSNH, Central
Maine Power Company and other utilities. (Exhibit 5.16 , File No.
2-52900)
10.20.1 Amendment to Exhibit 10.23 dated June 30, 1975.
(Exhibit 5.48, File No. 2-55458)
10.20.2 Amendment to Exhibit 10.23 dated as of August 16,
1976. (Exhibit 5.19, File No. 2-58251)
10.20.3 Amendment to Exhibit 10.23 dated as of
December 31, 1978. (Exhibit 5.10.3, File No. 2-64294)
10.21 Form of Service Contract dated as of July 1, 1966 between each of
NU, CL&P and WMECO and Northeast Utilities Service Company
(NUSCO)(Exhibit 10.20, 1993 NU Form 10-K, File No. 1-5324)
10.21.1 Service Contract dated as of June 5, 1992
between PSNH and NUSCO. (Exhibit 10.12.4, 1992 NU Form
10-K, File No. 1-5324)
10.21.2 Service Contract dated as of January 4, 1999
between NUSCO and NGC (Exhibit 10.7 to NGC Registration
Statement S-4 dated December 6, 2001, File No. 333-74636)
10.21.2.1 Form of Service Agreement Renewals, dated
December 31, 1999 and December 31, 2000, of
Service Contract, dated as of January 4, 1999,
between NUSCO and NGC (Exhibit 10.7.1 to NGC
Registration Statement S-4 dated December 6,
2001, File No. 333-74636)
10.21.2.2 Management and Operating Agreement, dated
February 1, 2000, between NGC and NGS
(Exhibit 10.6 to NGC Registration
Statement S-4 dated December 6, 2001, File No.
333-74636)
10.21.2.3 Amendment No. 1, dated March 1, 2000, to
Management and Operating Agreement, dated
February 1, 2000, between NGC and NGS (Exhibit
10.6.1 to NGC Registration Statement S-4 dated
December 6, 2001, File No. 333-74636)
10.21.3 Form of Service Agreement dated as of June 29, 1992
between PSNH and North Atlantic Energy Service
Corporation, and the First Amendment thereto. (Exhibits
B.7 and B.7.1, File No. 70-7787)
10.21.4 Form of Annual Renewal of Service Contract.
(Exhibit 10.20.3, 1993 NU Form 10-K, File No. 1-5324)
10.22 Memorandum of Understanding between CL&P, HELCO, HP&E, HWP and
WMECO dated as of June 1, 1970 with respect to pooling of
generation and transmission. (Exhibit 13.32, File No. 2-38177)
10.22.1 Amendment to Memorandum of Understanding
between CL&P, HELCO, HP&E, HWP and WMECO dated as of
February 2, 1982 with respect to pooling of generation
and transmission. (Exhibit 10.21.1, 1993 NU Form 10-K,
File No. 1-5324)
10.22.2 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of January 1, 1984
with respect to pooling of generation and transmission.
(Exhibit 10.21.2, 1994 NU Form 10-K, File No. 1-5324)
10.22.3 Second Amendment to Memorandum of Understanding between
CL&P, HELCO, HP&E, HWP and WMECO dated as of June 8, 1999
with respect to pooling of generation and transmission.
(Exhibit 10.23.3, 1999 NU Form 10-K, File No. 1-5324)
10.23 Restated NEPOOL Power Pool Agreement (restated by the sixty-ninth
Agreement dated as of December 31, 2000, and includes the Restated
NEPOOL Open Access Transmission Tariff
10.23.1 Form of Interim Independent System Operator
(ISO) Agreement (Attachment to Thirty-third Amendment to
Exhibit 10.26 dated as of December 31, 1996). (Exhibit
10.23.6, 1996 NU Form 10-K, File No. 1-5324)
*10.23.2 Seventieth Agreement Amending NEPOOL Agreement (ISO
Capital Funding Tariff) (FERC Docket ER-01-1460-000)
dated as of February 2, 2001.
*10.23.3 Seventy-First Agreement Amending NEPOOL Agreement (Late
Payment Fees) (FERC Docket ER-01-1460-000) dated as of
February 2, 2001.
*10.23.4 Seventy-Second Agreement Amending NEPOOL Agreement (Net
Commitment Period Compensation "NCPC") (FERC Docket
ER-01-1891-000) dated as of April 6, 2001.
*10.23.5 Seventy-Third Agreement Amending NEPOOL Agreement
(Schedule 2 Changes) (FERC Docket ER-01-2161-000) dated
as of May 9, 2001.
*10.23.6 Seventy-Fourth Agreement Amending NEPOOL Agreement
(Review Bond Amendment) (FERC Docket ER-01-2140-000)
dated as of May 9, 2001.
*10.23.7 Seventy-Sixth Agreement Amending NEPOOL Agreement
(Compliance with June 13, 2001 Orders) (FERC Dockets
EL00-62-004, et al. and ER-98-3853-005) dated as of
June 29, 2001.
*10.23.8 Seventy-Eighth Agreement Amending NEPOOL Agreement
(Revised Sections 18.4 and 18.5) (FERC Docket EL00-62-
036) dated as of September 24, 2001.
*10.23.9 Seventy-Ninth Agreement Amending NEPOOL Agreement (ICA
Compliance Amendment) (FERC Docket EL00-62-036) dated as
of September 24, 2001.
*10.23.10 Eightieth Agreement Amending NEPOOL Agreement (Generation
Information System "GIS" Agreement) dated as of
October 12, 2001.
*10.23.11 Eighty-First Agreement Amending NEPOOL Agreement
(Restatement of Financial Assurance Policies) dated as of
December 7, 2001.
10.24 Agreements among New England Utilities with respect to the Hydro-
Quebec interconnection projects. (See Exhibits 10(u) and 10(v);
10(w), 10(x), and 10(y), 1990 and 1988, respectively, Form 10-K of
New England Electric System, File No. 1-3446.)
10.25 Lease dated as of April 14, 1992 between The Rocky River Realty
Company (RRR) and Northeast Utilities Service Company (NUSCO) with
respect to the Berlin, Connecticut headquarters (office lease).
(Exhibit 10.29, 1992 NU Form 10-K, File No. 1-5324)
10.25.1 Lease dated as of April 14, 1992 between RRR
and NUSCO with respect to the Berlin, Connecticut
headquarters (project lease). (Exhibit 10.29.1, 1992 NU
Form 10-K, File No. 1-5324)
10.26 Lease and Agreement, dated as of December 15, 1988, by and between
WMECO and Bank of New England, N.A., with BNE Realty Leasing
Corporation of North Carolina. (Exhibit 10.63, 1988 NU Form 10-K,
File No. 1-5324.)
10.27 Note Agreement dated April 14, 1992, by and between The Rocky River
Realty Company (RRR) and Purchasers named therein (Connecticut
General Life Insurance Company, Life Insurance Company of North
America, INA Life Insurance Company of New York, Life Insurance
Company of Georgia), with respect to RRR's sale of $15 million of
guaranteed senior secured notes due 2007 and $28 million of
guaranteed senior secured notes due 2017. (Exhibit 10.52, 1992 NU
Form 10-K, File No. 1-5324)
10.27.1 Amendment to Note Agreement, dated September 26,
1997. (Exhibit 10.31.1, 1997 NU Form 10-K, File No.
1-5324)
10.27.2 Note Guaranty dated April 14, 1992 by Northeast
Utilities pursuant to Note Agreement dated April 14, 1992
between RRR and Note Purchasers, for the benefit of The
Connecticut National Bank as Trustee, the Purchasers and
the owners of the notes. (Exhibit 10.52.1, 1992 NU Form
10-K, File No. 1-5324)
10.27.2.1 Extension of Note Guaranty, dated
September 26, 1997. (Exhibit 10.31.2.1, 1997
NU Form 10-K, File No. 1-5324)
10.27.3 Assignment of Leases, Rents and Profits,
Security Agreement and Negative Pledge, dated as of
April 14, 1992 among RRR, NUSCO and The Connecticut
National Bank as Trustee, securing notes sold by RRR
pursuant to April 14, 1992 Note Agreement. (Exhibit
10.52.2, 1997 NU Form 10-K, File No. 1-5324)
10.27.3.1 Modification of and Confirmation of
Assignment of Leases, Rents and Profits,
Security Agreement and Negative Pledge, dated
as of September 26, 1997. (Exhibit 10.31.3.1,
1997 NU Form 10-K, File No. 1-5324)
10.32.4 Purchase and Sale Agreement, dated July 28, 1997 by and
between RRR and the Sellers and Purchasers named therein.
(Exhibit 10.31.4, 1997 NU Form 10-K, File No. 1-5324)
10.32.5 Purchase and Sale Agreement, dated September 26, 1997
by and between RRR and the Purchaser named therein.
(Exhibit 10.31.5, 1992 NU Form 10-K, File No. 1-5324)
10.33 Rights Agreement dated as of February 23, 1999, between Northeast
Utilities and Northeast Utilities Service Company, as Rights Agent
(Exhibit 1 to NU's Registration Statement on Form 8-A, filed on
April 12, 1999, File No. 001-05324).
10.33.1 Amendment to Rights Agreement (Exhibit 3 to NU's Current
Report on Form 8-K dated October 13, 1999, File No.
1-5324).
10.33.2 Second Amendment to Rights Agreement (Exhibit 3 to NU
Form 8-A-12B-A dated February 1, 2002, File No. 001-05324
and Exhibit B-3 to NU Rule 35 Cert., dated February 1,
2002, File No. 070-09463).
10.34 NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.34.1 NU Incentive Plan, effective as of January 1, 1998.
(Exhibit 10.35.1, 1998 NU Form 10-K, File No. 1-5324)
10.34.1.1 Amendment to Exhibit 10.34.1, effective as
of February 23, 1999. (Exhibit 10.35.1.1,
1998 NU Form 10-K, File No. 1-5324)
10.35 Supplemental Executive Retirement Plan for Officers of NU System
Companies, Amended and Restated effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30, 1992,
File No. 1-5324)
10.35.1 Amendment 1 to Exhibit 10.35, effective as of
August 1, 1993. (Exhibit 10.35.1, 1993 NU Form 10-K,
File No. 1-5324)
10.35.2 Amendment 2 to Exhibit 10.35, effective as of January 1,
1994. (Exhibit 10.35.2, 1993 NU Form 10-K, File No.
1-5324)
10.35.3 Amendment 3 to Exhibit 10.35, effective as of January 1,
1996. (Exhibit 10.36.3, 1995 NU Form 10-K, File No.
1-5324)
*10.35.4 Amendment 4 to Exhibit 10.35, effective as of
February 26, 2002
*10.35.5 Amendment 5 Exhibit 10.35, effective as of November 1,
2001
10.36 Special Severance Program for Officers of NU System Companies, as
adopted on July 15, 1998. (Exhibit 10.37, 1998 NU Form 10-K, File
No. 1-5324)
10.36.1 Amendment to Exhibit 10.36, effective as of February 23,
1999. (Exhibit 10.37.1, 1998 Form 10-K, File No. 1-5324)
10.36.2 Amendment to Exhibit 10.36, effective as of
September 14, 1999. (Exhibit 10.3, 1999 NU Form 10-Q
for the Quarter Ended September 30, 1999, File No.
1-5324)
10.37 Loan Agreement dated as of December 2, 1991, by and between NU and
Mellon Bank, N.A., as Trustee, with respect to NU's loan of $175
million to an ESOP Trust. (Exhibit 10.46, 1991 NU Form 10-K, File
No. 1-5324)
10.37.1 First Amendment to Exhibit 10.37 dated February 7,
1992. (Exhibit 10.36.1, 1993 NU Form 10-K, File No.
1-5324)
10.37.2 Loan Agreement dated as of March 19, 1992 by
and between NU and Mellon Bank, N.A., as Trustee, with
respect to NU's loan of $75 million to the ESOP Trust.
(Exhibit 10.49.1, 1992 NU Form 10-K, File No. 1-5324)
10.37.3 Second Amendment to Exhibit 10.37 dated April 9,
1992. (Exhibit 10.36.3, 1993 NU Form 10-K, File No.
1-5324)
10.38 Employment Agreement with Michael G. Morris. (Exhibit 10.39, 1997
NU Form 10-K, File No. 1-5324)
10.38.1 Amendment to Exhibit 10.38, dated as of February 23,
1999. (Exhibit 10.39.1, 1998 NU Form 10-K, File No.
1-5324)
10.38.2 Amendment to Exhibit 10.38, dated as of June 28, 2001
(Exhibit 10.41.2 to 2001 NU Form 10-Q for the Quarter
Ending September 30, 2001, File No. 1-5324)
10.38.3 Amendment to Exhibit 10.38, dated as of September 11,
2001 (Exhibit 10.41.3 to 2001 NU Form 10-Q for the
Quarter Ending September 30, 2001, File No. 1-5324).
10.39 Transition and Retirement Agreement with Bernard M. Fox. (Exhibit
10.39, 1996 NU Form 10-K, File No. 1-5324)
10.40 Employment Agreement with Bruce M. Kenyon. (Exhibit 10.40, 1996 NU
Form 10-K, File No. 1-5324)
10.40.1 Amendment to Exhibit 10.40, dated as of
January 13, 1998. (Exhibit 10.41.1, 1998 NU Form 10-K,
File No. 1-5324)
10.40.2 Amendment to Exhibit 10.40, dated as of February 23,
1999. (Exhibit 10.41.2, 1998 NU Form 10-K, File No.
1-5324)
10.40.3 Amendment to Exhibit 10.40, dated as of May 14, 1999.
(Exhibit 10.1, 1999 NU Form 10-Q for the Quarter Ended
March 31,1999, File No. 1-5324)
10.40.4 Amendment to Exhibit 10.40, dated as of March 21, 2000.
(Exhibit 10.1, 2000 NU Form 10-Q for the Quarter Ended
March 31, 2000, File No. 1-5324)
10.41 Employment Agreement with John H. Forsgren. (Exhibit 10.41, 1996 NU
Form 10-K, File No. 1-5324)
10.41.1 Amendment to Exhibit 10. 41, dated as of January 13,
1998. (Exhibit 10.42.1, 1998 NU Form 10-K, File No.
1-5324)
10.41.2 Amendment to Exhibit 10.41, dated as of February 23,
1999. (Exhibit 10.42.2, 1998 NU Form 10-K, File No.
1-5324)
10.41.3 Amendment to Exhibit 10.41, dated as of May 10, 1999.
(Exhibit 10.1, 1999 NU Form 10-Q for the Quarter Ended
March 31, 1999, File No. 1-5324)
10.41.4 Amendment to Exhibit 10.41, dated as of
September 14, 1999. (Exhibit 10.4, 1999 NU Form 10-Q
for the Quarter Ended September 30, 1999, File No.
1-5324)
10.41.5 Amendment to Exhibit 10.41, dated as of September 19,
2001 (Exhibit 10.44.7 to 2001 NU Form 10-Q for the
Quarter Ending September 30, 2001, File No. 1-5324).
10.42 Supplemental Retirement Benefit with John H. Forsgren, dated
as of August 8, 2001, (Exhibit 10.44.5, 2001 Form 10-Q for
Quarter Ended September 30, 2001, File No. 1-5324)
10.43 Supplemental Compensation Arrangement with John J. Forsgren,
dated as of September 5, 2001, (Exhibit 10.44.6, 2001 Form
10-Q for Quarter Ended September 30, 2001, File No. 1-5324).
10.44 Employment Agreement with Cheryl W. Grise. (Exhibit 10.44,
1998 NU Form 10-K, File No. 1-5324)
10.44.1 Amendment to Exhibit 10.42, dated as of January 13, 1998,
(Exhibit 10.44.1, 1998 NU Form 10-K, File No. 1-5324)
10.44.2 Amendment to Exhibit 10.42, dated as of
February 23, 1999, (Exhibit 10.44.2, 1998 NU Form 10-K,
File No. 1-5324)
10.44.3 Amendment to Exhibit 10.42, dated as of September 14,
1999, (Exhibit 10.5, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.44.4 Amendment to Exhibit 10.42 dated as of September 19,
2001, (Exhibit 10.46.5 to 2001 NU Form 10-Q for the
Quarter Ending September 30, 2001, File No. 1-5324)
10.44.5 Supplemental Compensation Arrangement with Cheryl W.
Grise, dated as of September 17, 2001, (Exhibit 10.46.4,
2001 NU Form 10-Q for Quarter Ended September 30, 2001,
File No. 1-5324)
*10.45 Agreement with Gary D. Simon dated March 16, 1998
10.46 Northeast Utilities Deferred Compensation Plan for Trustees,
Amended and Restated December 13, 1994. (Exhibit 10.39, 1995 NU
Form 10-K, File No. 1-5324)
*10.46.1 Amendment to Exhibit 10.46, effective November 5, 2001.
10.47 Deferred Compensation Plan for Officers of Northeast Utilities
System Companies adopted September 23, 1986. (Exhibit 10.40, 1995
NU Form 10-K, File No. 1-5324)
10.48 Northeast Utilities Deferred Compensation Plan for Executives,
adopted January 13, 1998. (Exhibit A.5, File No. 70-09185)
10.49 Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC and
NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form 10K,
File No. 1-5324)
10.50 Receivables Purchase and Sale Agreement (CL&P and CL&P Receivables
Corporation), dated as of September 30, 1997. (Exhibit 10.49, 1997
NU Form 10-K, File No. 1-5324)
10.50.1 Amendment to Exhibit 10.50 dated September 29,
1998. (Exhibit 10.49.1, 1998 NU Form 10-K, File No.
1-5324)
10.50.2 Amendment to Exhibit 10.50 dated September 28,
1999. (Exhibit C.10.3, 1999 NU Form U5S, File No. 30-246)
10.50.3 Amendment to Exhibit 10.50 dated September 27,
2000. (Exhibit 10.51.3 2000 NU Form 10-K, File No.
1-5324)
10.50.4 Purchase and Contribution Agreement (CL&P and
CL&P Receivables Corporation), dated as of September 30,
1997. (Exhibit 10.49.1, 1997 NU Form 10-K, File No.
1-5324)
10.51 Credit Agreement dated as of March 9, 2000, among NGC
as Borrower and the Initial Lenders Named Therein as Initial
Lenders and Citibank, N.A. as Administrative and Collateral Agent
and Depository Bank (Exhibit 10.54, 2000 NU form 8-K, File No.
1-5324).
10.51.1 Amendment No. 1 to Exhibit 10.51, dated as of
July 27, 2000 (Exhibit 10.54.1, 2000 NU Form 8-K, File
No. 1-5324).
10.51.2 Amendment No. 2 to Exhibit 10.51, dated as of
November 22, 2000 (Exhibit 10.54.2, 2000 NU Form 8-K,
File No. 1-5324).
10.52 Tranche B Mortgage dated as of March 9, 2000, among NGC and
Citibank, N.A. (Exhibit 10.55, 2000 NU Form 8-K, File No. 1-5324).
10.53 Indenture of Mortgage and Deed of Trust dated July 1, 1989 between
Yankee Gas and the Connecticut National Bank, as Trustee (Exhibit
4.7, 1990 YES Form 10-K, File No. 0-10721)
10.54 Power Purchase and Sales Agreement, dated December 27, 1999 between
NGC and Select Energy, Inc. Mortgage, (Exhibit 10.1 to NGC
Registration Statement S-4 dated December 6, 2001)
10.54.1 Consent and Agreement, dated as of October 18, 2001,
among NU, Select Energy, Inc., The Bank of New
York, as trustee and NGC, dated as of October 18, 2001
between NGC (Exhibit 10.3 to NGC Registration Statement
S-4 dated December 6, 2001)
10.54.2 Security Agreement, dated as of October 18,
2001, between NGC and The Bank of New York, as trustee
(Exhibit 10.4 to NGC Registration Statement S-4 dated
December 6, 2001)
10.54.3 Form of Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing, dated as of
October 18, 2001, by NGC in favor of The Bank of New
York, as Trustee (Exhibit 10.5 to NGC Registration
Statement S-4 dated December 6, 2001)
#10.55 CL&P Transition Property Purchase and Sale Agreement dated as of
March 30, 2001.
#10.56 CL&P Transition Property Servicing Agreement dated as of
March 30, 2001.
@10.57 PSNH Purchase and Sale Agreement with PSNH Funding LLC dated as
of April 25, 2001.
@10.58 PSNH Servicing Agreement with PSNH Funding LLC dated as of
April 25, 2001.
@10.59 PSNH Purchase and Sale Agreement with PSNH Funding LLC2 dated as
of January 30, 2002.
@10.60 PSNH Servicing Agreement with PSNH Funding LLC2 dated as of
January 30, 2002.
**10.61 WMECO Transition Property Purchase and Sale Agreement dated as
of May 17, 2001.
**10.62 WMECO Transition Property Servicing Agreement dated as of
May 17, 2001.
12. Ratio of Earnings to Fixed Charges
13. Annual Report to Security Holders (Each of the Annual Reports is filed
only with the Form 10-K of that respective registrant.)
*13.1 Portions of the Annual Report to Shareholders of NU (pages 15
to 52) that have been incorporated by reference into this
Form 10-K.
13.2 Annual Report of CL&P.
13.3 Annual Report of WMECO.
13.4 Annual Report of PSNH.
13.5 Annual Report of NGC.
16. Arthur Andersen LLP letter to Securities and Exchange Commission, dated
March 22, 2002, (Exhibit 16 to NU Form 8-K, dated March 22, 2002, File
No. 1-5324)
*21. Subsidiaries of the Registrant.
*99. Letter from Northeast Utilities to Securities and Exchange Commission,
dated March 22, 2002, concerning change in auditors.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>4
<FILENAME>exhibit12.txt
<DESCRIPTION>EXHIBIT 12
<TEXT>
<Table>
Exhibit 12
NORTHEAST UTILITIES
Ratio of Earnings to Fixed Charges
(Thousands of Dollars)
<Caption>
Year Year Year Year Year
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings, as defined:
Net income (loss) before extraordinary
item and cumulative effect.................... $(129,962) $(146,753) $ 34,216 $205,295 $220,124
Income taxes................................ 1,948 5,939 98,611 161,725 171,483
Equity in earnings of regional
nuclear generating and transmission
companies................................. (4,653) (1,456) (2,905) 13,667 3,090
Minority interest........................... 9,300 9,300 9,300 9,300 3,100
Fixed charges, as below..................... 291,348 292,622 279,851 311,175 295,141
--------- --------- -------- -------- --------
Total earnings, as defined: $ 167,981 $ 159,652 $419,073 $701,162 $692,938
========= ========= ======== ======== ========
Fixed Charges, as defined:
Interest on long-term debt...................... $ 282,095 $ 273,824 $258,093 $200,696 $147,049
Interest on rate reduction bonds................ - - - - 87,616
Other interest.................................. (10,114) (4,735) 5,558 98,605 44,993
Rental interest factor - capital................ 13,600 18,300 13,700 8,657 13,144
Rental interest factor - 1/3 operating.......... 5,767 5,233 2,500 3,217 2,339
--------- --------- -------- -------- --------
Total fixed charges, as defined................. $ 291,348 $ 292,622 $279,851 $311,175 $295,141
========= ========= ======== ======== ========
Ratio of earnings to fixed charges................ 0.58 0.55 1.50 2.25 2.35
========= ========= ======== ======== ========
</Table>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exhibit99.txt
<DESCRIPTION>EXHIBIT 99
<TEXT>
Exhibit 99
Northeast Utilities
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-2010
LETTER TO COMMISSION PURSUANT TO TEMPORARY NOTE 3T
March 22, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0408
Ladies and Gentlemen:
Pursuant to Temporary Note 3T to Article 3 of Regulation S-X, Northeast
Utilities has obtained a letter of representation from Arthur Andersen LLP
("Andersen") stating that they audited the financial statements of Northeast
Utilities, The Connecticut Light and Power Company, Public Service Company of
New Hampshire, Western Massachusetts Electric Company, and Northeast
Generation Company as of December 31, 2001 and for the year then ended and
have issued their reports thereon dated January 22, 2002 for Northeast
Utilities, The Connecticut Light and Power Company, Public Service Company of
New Hampshire, and Western Massachusetts Electric Company, and February 5,
2002 for Northeast Generation Company.
In addition, the representation letter states that the audits referred to
above were subject to their quality control system for the U.S. accounting
and auditing practice to provide reasonable assurance that the engagement was
conducted in compliance with professional standards, that there was
appropriate continuity of Arthur Andersen personnel working on the audit and
availability of national office consultation. Availability of personnel at
foreign affiliates of Arthur Andersen is not relevant to these audits.
Very truly yours,
Northeast Utilities
/s/ John P. Stack
----------------------------------------------
John P. Stack
Vice President - Accounting and Controller
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3.1.2
<SEQUENCE>6
<FILENAME>y58564a.txt
<TEXT>
<PAGE>
Exhibit 4.3.1.2
PUBLIC SERVICE COMPANY
OF NEW HAMPSHIRE
AND
FIRST UNION NATIONAL BANK
Formerly Known as FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
NEW JERSEY
Successor to BANK OF NEW ENGLAND, NATIONAL ASSOCIATION
(Formerly Known as NEW ENGLAND MERCHANTS NATIONAL BANK)
and to
NEW BANK OF NEW ENGLAND, NATIONAL ASSOCIATION, TRUSTEE
TWELFTH SUPPLEMENTAL INDENTURE
Dated as of December 1, 2001
TO ISSUE SERIES I, J and K
FIRST MORTGAGE BONDS
$89,250,000 First Mortgage Bonds (Series I due 2021)
$89,250,000 First Mortgage Bonds (Series J due 2021)
$108,985,000 5.45% First Mortgage Bonds (Series K due 2021)
THE SERIES I AND J FIRST MORTGAGE BONDS
CREATED BY THIS SUPPLEMENTAL INDENTURE
CONTAIN PROVISIONS FOR CHANGES IN THE INTEREST RATE THEREON
Page 1
<PAGE>
THIS TWELFTH SUPPLEMENTAL INDENTURE dated as of December 1, 2001, between PUBLIC
SERVICE COMPANY OF NEW HAMPSHIRE (hereinafter with its successors and assigns
generally called the Company), a corporation duly organized and existing under
the laws of the State of New Hampshire, having its principal place of business
at 1000 Elm Street in Manchester, New Hampshire 03101, and FIRST UNION NATIONAL
BANK, formerly known as First Fidelity Bank, National Association, New Jersey,
successor in trust to Bank of New England, National Association (formerly known
as New England Merchants National Bank) and to New Bank of New England, National
Association (hereinafter with its successors in trust generally called the
Trustee), a national banking association duly organized and existing under the
laws of the United States of America, having its corporate trust office at 21
South Street, 3rd Floor, Morristown, New Jersey 07960, and duly authorized to
execute the trusts hereof.
WHEREAS, the Company heretofore duly executed and delivered to Bank of New
England, National Association (formerly known as New England Merchants National
Bank), as predecessor trustee, its General and Refunding Mortgage Indenture
(hereinafter, as amended by the Tenth Supplemental Indenture dated as of May 1,
1991, generally referred to as the "Original Indenture" and sometimes referred
to, with each and every prior indenture supplemental thereto and each and every
other instrument, including this Twelfth Supplemental Indenture, which the
Company, pursuant to the provisions thereof, may execute with the Trustee and
which is therein stated to be supplemental to the Original Indenture, as the
"Indenture"), dated as of August 15, 1978, but actually executed on September
20, 1978, and recorded, among other places, in Hillsborough County, New
Hampshire, Registry of Deeds, Book 2640, Page 334, in York County, Maine,
Registry of Deeds, Book 2417, Page 01, in Concord, Vermont, Land Records, Book
44, Page 129A, and in the Office of the Secretary of the State of Connecticut in
Volume 56, Page G of Railroad Mortgages (together with certificates with respect
thereto recorded in the Town Clerk's offices of Waterford and Berlin,
Connecticut), to which this instrument is supplemental, and in modification and
confirmation thereof has executed and delivered (i) to Bank of New England,
National Association (formerly known as New England Merchants National Bank) as
predecessor trustee nine duly recorded indentures supplemental thereto, (ii) to
First Fidelity Bank, National Association, New Jersey, as trustee, a Tenth
Supplemental Indenture dated as of May 1, 1991 (hereinafter generally referred
to as the Tenth Supplemental Indenture) and (iii) to First Union National Bank,
as trustee, an Eleventh Supplemental Indenture dated as of April 1, 1998
(hereinafter generally referred to as the Eleventh Supplemental Indenture)
thereto duly recorded, whereby substantially all the properties of the Company
used by it in its business, whether then owned or thereafter acquired, with
certain reservations, exceptions and exclusions fully set forth in the Original
Indenture were given, granted, bargained, sold, transferred, assigned, pledged,
mortgaged and conveyed to the Trustee, its successors and assigns, in trust upon
the terms and conditions set forth therein to secure its General and Refunding
Mortgage Bonds issued and to be issued thereunder, and for other purposes more
particularly specified therein; and
WHEREAS, on January 6, 1991, Bank of New England, National Association was
declared insolvent, and New Bank of New England, National Association, pursuant
to a purchase and assumption agreement dated as of January 6, 1991 between it
and the Federal Deposit Insurance Corporation as receiver of Bank of New
England, National Association, acquired and succeeded to all of the right,
title, interest, authority and appointment of Bank of New England, National
Association, as Trustee under the Indenture, which succession and appointment
were ratified and confirmed by the Board of Directors of the Company on February
21, 1991, all as more particularly recited in the Agreement as to Resignation of
Trustee and Appointment of Successor Trustee (the "Resignation and Appointment
Agreement"), by and among the Company, New Bank
Page 2
<PAGE>
of New England, National Association, and First Fidelity Bank, National
Association, New Jersey, recorded with the Tenth Supplemental Indenture; and
WHEREAS, pursuant to the Resignation and Appointment Agreement, New Bank of New
England, National Association resigned as successor trustee and First Fidelity
Bank, National Association, New Jersey succeeded to the trusts created by the
Indenture; and
WHEREAS, First Fidelity Bank, National Association, New Jersey changed its name
to First Union National Bank and remains as Trustee under the Indenture; and
WHEREAS, pursuant to The Third Amended Joint Plan of Reorganization (the
"Plan"), dated December 28, 1989 (Case No. 88- 00043), as confirmed by order of
the United States Bankruptcy Court for the District of New Hampshire dated April
20, 1990, all bonds outstanding under the First Mortgage Indenture dated as of
January 1, 1943, as from time to time amended and supplemented, between the
Company and Old Colony Trust Company, as trustee (to which each of The First
National Bank of Boston and Maryland National Bank has been successor trustee)
have been paid in full and said First Mortgage Indenture has been released and
is of no further force or effect, all bonds outstanding under the Third Mortgage
Indenture dated as of February 15, 1986, as from time to time amended and
supplemented, between the Company and First Fidelity Bank, National Association,
New Jersey, as trustee, have been paid in full and said Third Mortgage Indenture
has been released and is of no further force or effect, and all bonds issued
prior to the date of execution of the Tenth Supplemental Indenture and
outstanding under the Indenture have been paid in full; and
WHEREAS, the actions contemplated by the Resignation and Appointment Agreement
and the Tenth Supplemental Indenture have been authorized and directed by Order
of the United States Bankruptcy Court for the District of New Hampshire dated
January 18, 1991 in Case No. 88-00043, which Order authorized certain
transactions and procedures necessary to consummate the Plan and approved
certain modifications of the Plan related thereto; and
WHEREAS, all applicable requirements of the Plan and said Order have been
complied with; and
WHEREAS, pursuant to the Tenth Supplemental Indenture the Company effected the
amendments to the Indenture specified in the Tenth Supplemental Indenture,
including amendments to reflect the release and discharge of the Company's First
Mortgage Indenture dated as of January 1, 1943, as supplemented and amended, and
to reflect that, as a result, the Indenture is now a First Mortgage Indenture,
the bonds issued and to be issued under the Indenture will be First Mortgage
Bonds of the Company, and the Original Indenture as it may heretofore and
hereafter be supplemented and amended shall henceforth be known and referred to
as the
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Company's First Mortgage Indenture dated as of August 15, 1978; and
WHEREAS, the Company by appropriate and sufficient corporate action in
conformity with the terms of the Indenture duly caused to be issued seven new
series of bonds under the Indenture designated First Mortgage Bonds, Series A
through G, said Series A through Series G Bonds being in an aggregate principal
amount of $858,985,000 and consisting of fully registered bonds containing the
terms and provisions duly fixed and determined by the Board of Directors of the
Company and expressed in Schedule B to the Tenth Supplemental Indenture; and
WHEREAS, on May 15, 1996, $172,500,000 aggregate principal amount of the
Company's 8 7/8% First Mortgage Bonds, Series A, matured and were paid and
canceled; and
WHEREAS, as of April 1, 1998 the Company by appropriate and sufficient corporate
action in conformity with the terms of the Indenture duly caused to be issued a
new series of bonds under the Indenture designated First Mortgage Bonds, Series
H, said Series H Bonds being in an aggregate principal amount of $75,000,000 and
containing the terms and provisions duly fixed and determined by the Board of
Directors of the Company and expressed in Schedule A to the Eleventh
Supplemental Indenture; and
WHEREAS, on May 15, 1998, $170,000,000 aggregate principal amount of the
Company's 9.17% First Mortgage Bonds, Series B, matured and were paid and
canceled; and
WHEREAS, on April 22, 1999, the Revolving Credit Agreement dated as of April 23,
1998 (the "Credit Agreement") terminated, the Credit Borrowings thereunder were
indefeasibly paid in full in accordance with the terms thereof and the
obligations of the several Lenders to make Advances to the Company under the
Credit Agreement were terminated; the bonds of Series H were deemed paid and all
obligations of the Company to pay the principal of, premium, if any, and
interest on the bonds of Series H was satisfied and discharged; and the
$75,000,000 aggregate principal amount of the Company's First Mortgage Bonds,
Series H, were canceled; and
WHEREAS, as of March 30, 2001 the Company sold its interest in the Millstone II
Nuclear Generating Station, located in Waterford, Connecticut, and with the sale
of said property, no longer owns any property located in Connecticut which is
subject to the lien of the Indenture, and is no longer subject to the
jurisdiction of the Connecticut Department of Public Utility Control; and
WHEREAS, the Company has purchased, constructed or otherwise acquired certain
additional property not heretofore specifically described in the Indenture but
which is and is intended to be
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subject to the lien thereof, and proposes specifically to subject such
additional property to the lien of the Indenture at this time; and
WHEREAS, pursuant to a Series A Loan and Trust Agreement dated as of October 1,
2001 (herein called the "Series A PCRB Agreement"), by and among the Business
Finance Authority of the State of New Hampshire (herein called the "Authority"),
the Company and State Street Bank and Trust Company, as trustee (herein called
the "Series A PCRB Trustee"), the Authority is, concurrently herewith, issuing
$89,250,000 in principal amount of its Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 2001 Tax-Exempt Series A) (herein
called the "Series A PCR Bonds") and loaning the proceeds from the sale of the
Series A PCR Bonds to the Company. Proceeds of the loan will be used to refund
(i) the Authority's $66,000,000 aggregate principal amount 7.65% Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Tax-Exempt Series A) (the "1991 Series A Bonds"), and (ii) a portion of the
Authority's $112,500,000 aggregate principal amount 7.65% Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991 Tax-Exempt
Series C) (the "1991 Series C Bonds"). The proceeds of the 1991 Series A Bonds
and the 1991 Series C Bonds were used to finance and refinance a portion of the
Company's share of expenditures, including financing costs, relating to the
construction of certain pollution control, sewage and/or solid waste disposal
facilities required for the operation of the Seabrook nuclear-fueled, steam
electric generating plant, Unit 1, located in Seabrook, New Hampshire, in which
the Company owned an undivided 35.6% interest; and
WHEREAS, the Series A PCR Bonds are special obligations of the Authority,
payable solely out of the revenues and other receipts, funds and moneys derived
by the Authority under the Series A PCRB Agreement and from any amounts
otherwise available under the Series A PCRB Agreement for the payment of the
Series A PCR Bonds, and such revenues and other receipts, funds, moneys and
amounts are, pursuant to the Series A PCRB Agreement, assigned and pledged by
the Authority to the Series A PCRB Trustee as security for the Series A PCR
Bonds and include loan payments required to be made by the Company to the Series
A PCRB Trustee for the account of the Authority pursuant to the Series A PCRB
Agreement in amounts equal to the amounts payable with respect to the Series A
PCR Bonds; and
WHEREAS, in consideration of the loan being provided by the Authority under, and
pursuant to the provisions of, the Series A PCRB Agreement, the Company has
agreed to issue $89,250,000 principal amount of its First Mortgage Bonds, Series
I (hereinafter generally referred to as the "Series I Bonds" or the "bonds of
Series I") to evidence and secure the Company's obligation under the Series A
PCRB Agreement to make loan payments as aforesaid and to provide security for
the Series A PCR Bonds; and
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WHEREAS, pursuant to a Series B Loan and Trust Agreement dated as of October 1,
2001 (herein called the "Series B PCRB Agreement"), by and among the Authority,
the Company and State Street Bank and Trust Company, as trustee (herein called
the "Series B PCRB Trustee"), the Authority is, concurrently herewith, issuing
$89,250,000 in principal amount of its Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 2001 Tax-Exempt Series B) (herein
called the "Series B PCR Bonds") and loaning the proceeds from the sale of the
Series B PCR Bonds to the Company. Proceeds of the loan will be used to refund a
portion of the 1991 Series C Bonds. The proceeds of the 1991 Series C Bonds were
used to finance and refinance a portion of the Company's share of expenditures,
including financing costs, relating to the construction of certain pollution
control, sewage and/or solid waste disposal facilities required for the
operation of the Seabrook nuclear-fueled, steam electric generating plant,
located in Seabrook, New Hampshire, in which the Company owned an undivided
35.6% interest; and
WHEREAS, the Series B PCR Bonds are special obligations of the Authority,
payable solely out of the revenues and other receipts, funds and moneys derived
by the Authority under the Series B PCRB Agreement and from any amounts
otherwise available under the Series B PCRB Agreement for the payment of the
Series B PCR Bonds, and such revenues and other receipts, funds, moneys and
amounts are, pursuant to the Series B PCRB Agreement, assigned and pledged by
the Authority to the Series B PCRB Trustee as security for the Series B PCR
Bonds and include loan payments required to be made by the Company to the Series
B PCRB Trustee for the account of the Authority pursuant to the Series B PCRB
Agreement in amounts equal to the amounts payable with respect to the Series B
PCR Bonds; and
WHEREAS, in consideration of the loan being provided by the Authority under, and
pursuant to the provisions of, the Series B PCRB Agreement, the Company has
agreed to issue $89,250,000 principal amount of its First Mortgage Bonds, Series
J (hereinafter generally referred to as the "Series J Bonds" or the "bonds of
Series J") to evidence and secure the Company's obligation under the Series B
PCRB Agreement to make loan payments as aforesaid and to provide security for
the Series B PCR Bonds; and
WHEREAS, pursuant to a Series C Loan and Trust Agreement dated as of October 1,
2001 (herein called the "Series C PCRB Agreement"), by and among the Authority,
the Company and State Street Bank and Trust Company, as trustee (herein called
the "Series C PCRB Trustee"), the Authority is, concurrently herewith, issuing
$108,985,000 in principal amount of its Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 2001 Tax-Exempt Series C) (herein
called the "Series C PCR Bonds") and loaning the proceeds from the sale of the
Series C PCR Bonds to the Company. Proceeds of the loan will be used to refund
the
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Authority's $108,985,000 aggregate principal amount 7.50% Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991 Tax-Exempt
Series B) (the "1991 Series B Bonds"). The proceeds of the 1991 Series B Bonds
were used to finance and refinance a portion of the Company's share of
expenditures, including financing costs, relating to the construction of certain
pollution control, sewage and/or solid waste disposal facilities required for
operation of the Seabrook nuclear-fueled, steam electric generating plant,
located in Seabrook, New Hampshire, in which the Company owned an undivided
35.6% interest; and
WHEREAS, the Series C PCR Bonds are special obligations of the Authority,
payable solely out of the revenues and other receipts, funds and moneys derived
by the Authority under the Series C PCRB Agreement and from any amounts
otherwise available under the Series C PCRB Agreement for the payment of the
Series C PCR Bonds, and such revenues and other receipts, funds, moneys and
amounts are, pursuant to the Series C PCRB Agreement, assigned and pledged by
the Authority to the Series C PCRB Trustee as security for the Series C PCR
Bonds and include loan payments required to be made by the Company to the Series
C PCRB Trustee for the account of the Authority pursuant to the Series C PCRB
Agreement in amounts equal to the amounts payable with respect to the Series C
PCR Bonds; and
WHEREAS, in consideration of the loan being provided by the Authority under, and
pursuant to the provisions of, the Series C PCRB Agreement, the Company has
agreed to issue $108,985,000 principal amount of its First Mortgage Bonds,
Series K (hereinafter generally referred to as the "Series K Bonds" or the
"bonds of Series K") to evidence and secure the Company's obligation under the
Series C PCRB Agreement to make loan payments as aforesaid and to provide
security for the Series C PCR Bonds; and
WHEREAS, the execution and delivery of this Twelfth Supplemental Indenture and
the issue of not exceeding Eighty Nine Million Two Hundred Fifty Thousand
Dollars ($89,250,000) in aggregate principal amount of bonds of Series I, Eighty
Nine Million Two Hundred Fifty Thousand Dollars ($89,250,000) in aggregate
principal amount of bonds of Series J and One Hundred Eight Million Nine Hundred
Eighty Five Thousand Dollars ($108,985,000) in aggregate principal amount of
bonds of Series K, and other necessary actions have been duly authorized by the
Executive Committee of the Board of Directors of the Company;
WHEREAS, the Company proposes to execute and deliver this Twelfth Supplemental
Indenture to provide for the issue of the bonds of Series I, J and K and to
confirm the lien of the Indenture on the property referred to below, all as
permitted by Section 15.1 of the Original Indenture; and
WHEREAS, all acts and things necessary to make the initial issue
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of the Series I, J and K Bonds, when executed by the Company and authenticated
by the Trustee and delivered as in the Original Indenture provided, the legal,
valid and binding obligations of the Company according to their terms and to
make this Twelfth Supplemental Indenture a legal, valid and binding instrument
for the security of the bonds, in accordance with its and their terms, have been
done and performed, and the execution and delivery of this Twelfth Supplemental
Indenture has in all respects been duly authorized;
NOW, THEREFORE, in consideration of the premises, and of the acceptance of said
Series I, J and K First Mortgage Bonds by the holder thereof, and of the sum of
$1.00 duly paid by the Trustee to the Company, and of other good and valuable
considerations, the receipt whereof is hereby acknowledged, and in confirmation
of and supplementing the Original Indenture as previously supplemented by said
eleven preceding supplemental indentures, and in performance of and compliance
with the provisions thereof, said Public Service Company of New Hampshire, by
these presents, does give, grant, bargain, sell, transfer, assign, pledge,
mortgage and convey unto First Union National Bank, as Trustee, as provided in
the Original Indenture, as previously supplemented and amended and as
supplemented by this Twelfth Supplemental Indenture, and its successor or
successors in the trust thereby and hereby created, and its and their assigns,
(a) all and singular the property, and rights and interests in property,
described in the Original Indenture and the eleven preceding supplemental
indentures (said first nine supplemental indentures, as amended by the Tenth
Supplemental Indenture, together with the Tenth Supplemental Indenture and the
Eleventh Supplemental Indenture, hereinafter referred to as the Preceding
Supplemental Indentures), and thereby conveyed, pledged, assigned, transferred
and mortgaged, or intended so to be (said descriptions in said Original
Indenture and the Preceding Supplemental Indentures being hereby made a part
hereof to the same extent as if set forth herein at length), whether then or now
owned or thereafter or hereafter acquired, except such of said properties or
interests therein as may have been released or sold or disposed of in whole or
in part as permitted by the provisions of the Original Indenture, and (b) also,
but without in any way limiting the generality of the foregoing, all the right,
title and interest of the Company, now owned or hereafter acquired, in and to
the rights, titles, interests and properties described or referred to in
Schedule D hereto attached and hereby made a part hereof as fully as if set
forth herein at length, in all cases not specifically reserved, excepted and
excluded; the foregoing property, and rights and interests in property, being
located in the following listed municipalities in New Hampshire and
unincorporated areas in Coos County, New Hampshire, as well as in various
municipalities in the States of Maine, Vermont and elsewhere:
BELKNAP COUNTY - Alton, Barnstead, Belmont, Center Harbor, Gilford, Gilmanton,
Laconia, Meredith, New Hampton, Sanbornton,
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Tilton;
CARROLL COUNTY - Albany, Brookfield, Chatham, Conway, Eaton, Effingham, Freedom,
Madison, Moultonboro, Ossipee, Sandwich, Tamworth, Tuftonboro, Wakefield,
Wolfeboro;
CHESHIRE COUNTY - Alstead, Chesterfield, Dublin, Fitzwilliam, Gilsum,
Harrisville, Hinsdale, Jaffrey, Keene, Marlborough, Marlow, Nelson, Richmond,
Rindge, Roxbury, Stoddard, Sullivan, Surry, Swanzey, Troy, Westmoreland,
Winchester;
COOS COUNTY - Bean's Grant, Berlin, Cambridge, Carroll, Chandler's Purchase,
Clarksville, Colebrook, Columbia, Crawford's Purchase, Dalton, Dummer, Errol,
Gorham, Green's Grant, Jefferson, Lancaster, Martin's Location, Milan,
Millsfield, Northumberland, Pinkham's Grant, Pittsburg, Randolph, Shelburne,
Stark, Stewartstown, Stratford, Success, Thompson & Meserve's Purchase,
Wentworth's Location, Whitefield;
GRAFTON COUNTY - Alexandria, Ashland, Bath, Bethlehem, Bridgewater, Bristol,
Campton, Easton, Enfield, Franconia, Grafton, Hebron, Holderness, Landaff,
Lincoln, Lisbon, Littleton, Lyman, Orange, Plymouth, Rumney, Sugar Hill,
Thornton, Woodstock;
HILLSBOROUGH COUNTY - Amherst, Antrim, Bedford, Bennington, Brookline, Deering,
Francestown, Goffstown, Greenfield, Greenville, Hancock, Hillsborough, Hollis,
Hudson, Litchfield, Lyndeborough, Manchester, Mason, Merrimack, Milford, Mont
Vernon, Nashua, New Boston, New Ipswich, Pelham, Peterborough, Sharon, Temple,
Weare, Wilton, Windsor;
MERRIMACK COUNTY - Allenstown, Andover, Boscawen, Bow, Bradford, Canterbury,
Chichester, Concord, Danbury, Dunbarton, Epsom, Franklin, Henniker, Hill,
Hooksett, Hopkinton, Loudon, Newbury, New London, Northfield, Pembroke,
Pittsfield, Salisbury, Sutton, Warner, Webster, Wilmot;
ROCKINGHAM COUNTY - Auburn, Atkinson, Brentwood, Candia, Chester, Danville,
Deerfield, Derry, East Kingston, Epping, Exeter, Fremont, Greenland, Hampstead,
Hampton, Hampton Falls, Kensington, Kingston, Londonderry, New Castle,
Newfields, Newington, Newmarket, Newton, North Hampton, Northwood, Nottingham,
Portsmouth, Raymond, Rye, Sandown, Seabrook, South Hampton, Stratham, Windham;
STRAFFORD COUNTY - Barrington, Dover, Durham, Farmington, Lee, Madbury,
Middleton, Milton, New Durham, Rochester, Rollinsford, Somersworth, Strafford;
SULLIVAN COUNTY - Claremont, Croydon, Goshen, Grantham, Lempster, Newport,
Springfield, Sunapee, Unity, Washington;
SUBJECT, HOWEVER, as to all of the foregoing, to the specific rights,
privileges, liens, encumbrances, restrictions,
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conditions, limitations, covenants, interests, reservations, exceptions and
otherwise as provided in the Original Indenture and the Preceding Supplemental
Indentures, and in the descriptions in the schedules thereto and hereto and in
the deeds or grants in said schedules referred to;
BUT SPECIFICALLY RESERVING, EXCEPTING AND EXCLUDING (as the same are reserved,
excepted and excluded from the lien of the Original Indenture and the Preceding
Supplemental Indentures) from this instrument and the grant, conveyance,
mortgage, transfer and assignment herein contained, all right, title and
interest of the Company, now owned or hereafter acquired, in and to the
properties and rights specified in subclauses (a) to (m), both inclusive, of the
paragraph beginning "BUT SPECIFICALLY RESERVING, EXCEPTING AND EXCLUDING..."
which paragraph is part of the granting clauses of the Original Indenture;
TO HAVE AND TO HOLD all said plant, premises, property, franchises and rights
hereby conveyed, assigned, pledged or mortgaged, or intended so to be, unto the
Trustee, its successor or successors in trust, and to its and their assigns
forever;
BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal pro rata benefit,
security and protection of the owners of the bonds without any preference,
priority or distinction whatever of any one bond over any other bond by reason
of priority in the issue, sale or negotiation thereof, or otherwise;
PROVIDED, HOWEVER, and these presents are upon the condition, that if the
Company shall pay or cause to be paid or make appropriate provision for the
payment unto the holders of the bonds of the principal, premium, if any, and
interest to become due thereon at the times and in the manner stipulated
therein, and shall keep, perform and observe all and singular the covenants,
agreements and provisions in the Indenture expressed to be kept, performed and
observed by or on the part of the Company, then the Indenture and the estate and
rights thereby and hereby granted shall, pursuant and subject to the provisions
of Article 16 of the Original Indenture, cease, determine and be void, but
otherwise shall be and remain in full force and effect.
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED, upon the trusts and for the
purposes aforesaid, as set forth in the following covenants, agreements,
conditions and provisions, viz.:
ARTICLE 1
SERIES I BONDS
SECTION 1.01. Designation; Amount. The bonds of Series I shall be
designated "First Mortgage Bonds, Series I" and shall not exceed Eighty Nine
Million Two Hundred Fifty Thousand Dollars ($89,250,000) in aggregate principal
amount at any one time outstanding. The Trustee shall authenticate and deliver
up to
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$89,250,000 aggregate principal amount of Series I Bonds at any time upon
application by the Company and compliance with the applicable provisions of the
Original Indenture.
SECTION 1.02. Form of Bonds of 2001 Series I. The bonds of Series I shall
be issued only in fully registered form without coupons in denominations of
$25,000 and multiples thereof. The Bonds of Series I and the certificate of the
Trustee upon said bonds shall be substantially in the forms thereof respectively
set forth in Schedule A appended hereto.
SECTION 1.03. Provisions of Bonds of 2001 Series I; Interest Accrual;
Effect of Payment on Series A PCR Bonds. The bonds of Series I shall mature on
May 1, 2021, and shall bear interest, payable on the interest payment dates
applicable from time to time to the Series A PCR Bonds (each such interest
payment date so applicable to the Series A PCR Bonds being an interest payment
date applicable to the bonds of Series I), until the Company's obligation in
respect of the principal thereof shall be discharged, in amounts equal to the
interest payments due on the Series A PCR Bonds on the interest payment dates
applicable to the bonds of Series I, and shall be payable both as to principal
and interest at the corporate trust office of the Trustee at 21 South Street,
3rd Floor, Morristown, New Jersey, or the corporate trust office of its
successors, in any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and private debts. The
interest on the Series I Bonds, whether in temporary or definitive form, shall
be payable without presentation of such bonds, and only to or upon the written
order of the registered holders thereof of record at the applicable record date.
If pursuant to the Series A PCRB Agreement, all or any portion of the principal
of the Series A PCR Bonds shall become or be declared immediately due and
payable, a like principal amount of the Series I Bonds, together with all
accrued interest thereon, shall, without notice or demand of any kind, become
immediately due and payable. In addition, the Series I Bonds shall be callable
for redemption in whole or in part according to the terms and provisions
provided herein in Section 1.05.
Anything in the Indenture or any Series I Bond to the contrary
notwithstanding, the Series I Bonds shall be deemed paid, and all obligations of
the Company to pay at the times provided herein the principal of and premium, if
any, and interest on the Series I Bonds, or to deposit with the Trustee at the
times provided in the Indenture an amount of money sufficient therefor, shall be
satisfied and discharged, when and to the extent that the principal of and
premium, if any, and interest on the Series A PCR Bonds shall have been paid or
deemed paid as provided in the Series A PCRB Agreement. The Series A PCRB
Trustee shall promptly notify the Trustee by telephone, confirmed in
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writing, of any default in the payment of principal of and premium, if any, and
interest on the Series A PCR Bonds, and shall promptly notify the Trustee by
telephone, confirmed in writing, of any payment of principal of and premium, if
any, and interest (other than payment of regularly scheduled interest) on the
Series A PCR Bonds, or if the Series A PCR Bonds have been paid or deemed paid,
defeased, redeemed, retired, surrendered or canceled. The Trustee shall be
entitled to rely on any such notification received from the Series A PCRB
Trustee.
Each Series I Bond shall be dated the date of authentication thereof by
the Trustee, and shall bear interest on the principal amount thereof from the
interest payment date next preceding the date thereof to which interest has been
paid on the Bonds of said series, or if the date thereof is prior to the record
date (as hereinafter defined) with respect to the first interest payment date
then from the date of original issue of the Series I Bonds, or if the date
thereof be an interest payment date to which interest is being paid or a date
between the record date for any such interest payment date and such interest
payment date, then from such interest payment date.
The person in whose name any bond of Series I is registered at the close
of business on any record date (as hereinafter defined) with respect to any
interest payment date shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such bond upon any
registration of transfer or exchange thereof subsequent to the record date and
prior to such interest payment date, except that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, then such defaulted interest shall be paid to the person in whose
name such bond is registered on a subsequent record date for the payment of
defaulted interest if one shall have been established as hereinafter provided
and otherwise on the date of payment of such defaulted interest. A subsequent
record date may be established by the Company by notice mailed to the owners of
the bonds of Series I not less than ten (10) days preceding such record date,
which record date shall not be more than thirty (30) days prior to the
subsequent interest payment date. The term "record date" as used in this Section
with respect to any regular interest payment date shall mean the day next
preceding such interest payment date, or, if such day shall be a legal holiday
or a day on which banking institutions in Morristown, New Jersey are authorized
by law to close, the next preceding day which shall not be a legal holiday or a
day on which such institutions are so authorized to close.
SECTION 1.04. Transfer and Exchange of Bonds of Series I; Series A PCRB
Trustee as Registered Holder; Restriction on Transfer of Bonds of Series I. The
bonds of Series I may be surrendered for registration or transfer as provided in
Section 2.8 of the Original Indenture, but subject to the restriction set forth
in the immediately succeeding paragraph, at the corporate trust office of the
Trustee at 21 South Street, 3rd Floor, Morristown, NJ or the corporate trust
office of its successors, and may be surrendered at said office for exchange for
a like
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aggregate principal amount of bonds of Series I of other authorized
denominations and upon surrender for exchange of one or more bonds of Series I,
the Company shall execute and the Trustee shall authenticate and there shall be
delivered in exchange therefor a like aggregate principal amount of bonds of
Series I of other authorized denominations. Notwithstanding the provisions of
Section 2.7 of the Original Indenture, no charge, except for taxes or other
governmental charges, shall be made by the Company for any registration or
transfer of bonds of Series I or for the exchange of any bonds of Series I for
such bonds of other authorized denominations.
The bonds of Series I shall be issued to and registered in the name of the
Series A PCRB Trustee and, anything in this Twelfth Supplemental Indenture or
any Series I Bond to the contrary notwithstanding, the bonds of Series I shall
not be sold, assigned, pledged or transferred, except to effect the transfer to
any successor trustee under the Series A PCRB Agreement.
SECTION 1.05. Redemption of the Series I Bonds. If the Series A PCR Bonds
are to be redeemed as a whole or in part on any date as provided in the Series A
PCRB Agreement, a like principal amount of the Series I Bonds shall be redeemed
on such date, at a redemption price equal to the redemption price at which the
Series A PCR Bonds are to be so redeemed, as set forth in the Series A PCRB
Agreement, stated as a percentage of principal amount of the Series I Bonds to
be so redeemed, together in every case with accrued and unpaid interest thereon
to the date fixed for redemption. The Series I Bonds shall be redeemed as
aforesaid in accordance with the provisions hereof and upon not more than
forty-five (45) nor less than thirty (30) days' prior notice given by mail as
provided in Article 6 of the Original Indenture; provided that the Company shall
be deemed to have satisfied such notice requirement if it shall have delivered
to the Series A PCRB Trustee, or received from the Series A PCRB Trustee, as
appropriate, at the time and in the manner specified in the Series A PCRB
Agreement, the notice required pursuant to the Series A PCRB Agreement to be
delivered in connection with the redemption of the Series A PCR Bonds. The
Company shall deliver a copy of such notice to the Trustee at the time of such
delivery to or receipt from the Series A PCRB Trustee.
Redemption of Series I Bonds pursuant to the foregoing provisions of this
Section 1.05 may be made with moneys deposited with or received by the Trustee
pursuant to Section 6.4 of the Original Indenture, or otherwise pursuant to the
Indenture.
Except as provided in this Section 1.05, the Series I Bonds are not
subject to redemption under any provisions of the Indenture.
SECTION 1.06. Payment Date Not a Business Day. If any redemption or
maturity date for principal, premium or interest
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with respect to the Series I Bonds shall be (i) a Sunday or a legal holiday, or
(ii) a day on which banking institutions are authorized pursuant to law to close
and on which the corporate trust office of the Trustee in Morristown, New Jersey
or the Series A PCRB Trustee is not open for business, then the payment thereof
may be made on the next succeeding day not a day specified in (i) or (ii) with
the same force and effect as if made on the specified payment date and no
interest shall accrue for the period after the specified payment date.
ARTICLE 2
SERIES J BONDS
SECTION 2.01. Designation; Amount. The bonds of Series J shall be
designated "First Mortgage Bonds, Series J" and shall not exceed Eighty Nine
Million Two Hundred Fifty Thousand Dollars ($89,250,000) in aggregate principal
amount at any one time outstanding. The Trustee shall authenticate and deliver
up to $89,250,000 aggregate principal amount of Series J Bonds at any time upon
application by the Company and compliance with the applicable provisions of the
Original Indenture.
SECTION 2.02. Form of Bonds of 2001 Series J. The bonds of Series J shall
be issued only in fully registered form without coupons in denominations of
$25,000 and multiples thereof. The bonds of Series J and the certificate of the
Trustee upon said bonds shall be substantially in the forms thereof respectively
set forth in Schedule B appended hereto.
SECTION 2.03. Provisions of Bonds of 2001 Series J; Interest Accrual;
Effect of Payment on Series B PCR Bonds. The bonds of Series J shall mature on
May 1, 2021, and shall bear interest, payable on the interest payment dates
applicable from time to time to the Series B PCR Bonds (each such interest
payment date so applicable to the Series B PCR Bonds being an interest payment
date applicable to the bonds of Series J), until the Company's obligation in
respect of the principal thereof shall be discharged, in amounts equal to the
interest payments due on the Series B PCR Bonds on the interest payment dates
applicable to the bonds of Series J, and shall be payable both as to principal
and interest at the corporate trust office of the Trustee at 21 South Street,
3rd Floor, Morristown, New Jersey, or the corporate trust office of its
successors, in any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and private debts. The
interest on the Series J Bonds, whether in temporary or definitive form, shall
be payable without presentation of such bonds, and only to or upon the written
order of the registered holders thereof of record at the applicable record date.
If pursuant to the Series B PCRB Agreement, all or any portion of the principal
of the Series B PCR Bonds shall become or be declared immediately due and
payable, a like principal amount of the Series J Bonds, together with all
accrued interest thereon,
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shall, without notice or demand of any kind, become immediately due and payable.
In addition, the Series J Bonds shall be callable for redemption in whole or in
part according to the terms and provisions provided herein in Section 2.05.
Anything in the Indenture or any Series J Bond to the contrary
notwithstanding, the Series J Bonds shall be deemed paid, and all obligations of
the Company to pay at the times provided herein the principal of and premium, if
any, and interest on the Series J Bonds, or to deposit with the Trustee at the
times provided in the Indenture an amount of money sufficient therefor, shall be
satisfied and discharged, when and to the extent that the principal of and
premium, if any, and interest on the Series B PCR Bonds shall have been paid or
deemed paid as provided in the Series B PCRB Agreement. The Series B PCRB
Trustee shall promptly notify the Trustee by telephone, confirmed in writing, of
any default in the payment of principal of and premium, if any, and interest on
the Series B PCR Bonds, and shall promptly notify the Trustee by telephone,
confirmed in writing, of any payment of principal of and premium, if any, and
interest (other than payment of regularly scheduled interest) on the Series B
PCR Bonds, or if the Series B PCR Bonds have been paid or deemed paid, defeased,
redeemed, retired, surrendered or canceled. The Trustee shall be entitled to
rely on any such notification received from the Series B PCRB Trustee.
Each Series J Bond shall be dated the date of authentication thereof by
the Trustee, and shall bear interest on the principal amount thereof from the
interest payment date next preceding the date thereof to which interest has been
paid on the Bonds of said series, or if the date thereof is prior to the record
date (as hereinafter defined) with respect to the first interest payment date
then from the date of original issue of the Series J Bonds, or if the date
thereof be an interest payment date to which interest is being paid or a date
between the record date for any such interest payment date and such interest
payment date, then from such interest payment date.
The person in whose name any bond of Series J is registered at the close
of business on any record date (as hereinafter defined) with respect to any
interest payment date shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such bond upon any
registration of transfer or exchange thereof subsequent to the record date and
prior to such interest payment date, except that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, then such defaulted interest shall be paid to the person in whose
name such bond is registered on a subsequent record date for the payment of
defaulted interest if one shall have been established as hereinafter provided
and otherwise on the date of payment of such defaulted interest. A subsequent
record date may be established by the Company by notice mailed to the owners of
the bonds of Series J not less than ten (10) days preceding such record date,
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which record date shall not be more than thirty (30) days prior to the
subsequent interest payment date. The term "record date" as used in this Section
with respect to any regular interest payment date shall mean the day next
preceding such interest payment date, or, if such day shall be a legal holiday
or a day on which banking institutions in Morristown, New Jersey are authorized
by law to close, the next preceding day which shall not be a legal holiday or a
day on which such institutions are so authorized to close.
SECTION 2.04. Transfer and Exchange of Bonds of Series J; Series B PCRB
Trustee as Registered Holder; Restriction on Transfer of Bonds of Series J. The
bonds of Series J may be surrendered for registration or transfer as provided in
Section 2.8 of the Original Indenture, but subject to the restriction set forth
in the immediately succeeding paragraph, at the corporate trust office of the
Trustee at 21 South Street, 3rd Floor, Morristown, New Jersey, or the corporate
trust office of its successors, and may be surrendered at said office for
exchange for a like aggregate principal amount of bonds of Series J of other
authorized denominations and upon surrender for exchange of one or more bonds of
Series J, the Company shall execute and the Trustee shall authenticate and there
shall be delivered in exchange therefor a like aggregate principal amount of
bonds of Series J of other authorized denominations. Notwithstanding the
provisions of Section 2.7 of the Original Indenture, no charge, except for taxes
or other governmental charges, shall be made by the Company for any registration
or transfer of bonds of Series J or for the exchange of any bonds of Series J
for such bonds of other authorized denominations.
The bonds of Series J shall be issued to and registered in the name of the
Series B PCRB Trustee and, anything in this Twelfth Supplemental Indenture or
any Series J Bond to the contrary notwithstanding, the bonds of Series J shall
not be sold, assigned, pledged or transferred, except to effect the transfer to
any successor trustee under the Series B PCRB Agreement.
SECTION 2.05. Redemption of the Series J Bonds. If the Series B PCR Bonds
are to be redeemed as a whole or in part on any date as provided in the Series B
PCRB Agreement, a like principal amount of the Series J Bonds shall be redeemed
on such date, at a redemption price equal to the redemption price at which the
Series B PCR Bonds are to be so redeemed, as set forth in the Series B PCRB
Agreement, stated as a percentage of principal amount of the Series B Bonds to
be so redeemed, together in every case with accrued and unpaid interest thereon
to the date fixed for redemption. The Series J Bonds shall be redeemed as
aforesaid in accordance with the provisions hereof and upon not more than
forty-five (45) nor less than thirty (30) days' prior notice given by mail as
provided in Article 6 of the Original Indenture; provided that the Company shall
be deemed to have satisfied such notice requirement if it shall have delivered
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to the Series B PCRB Trustee, or received from the Series B PCRB Trustee, as
appropriate, at the time and in the manner specified in the Series B PCRB
Agreement, the notice required pursuant to the Series B PCRB Agreement to be
delivered in connection with the redemption of the Series B PCR Bonds. The
Company shall deliver a copy of such notice to the Trustee at the time of such
delivery to or receipt from the Series B PCRB Trustee.
Redemption of Series J Bonds pursuant to the foregoing provisions of this
Section 2.05 may be made with moneys deposited with or received by the Trustee
pursuant to Section 6.4 of the Original Indenture, or otherwise pursuant to the
Indenture.
Except as provided in this Section 2.05, the Series J Bonds are not
subject to redemption under any provisions of the Indenture.
SECTION 2.06. Payment Date Not a Business Day. If any redemption or
maturity date for principal, premium or interest with respect to the Series J
Bonds shall be (i) a Sunday or a legal holiday, or (ii) a day on which banking
institutions are authorized pursuant to law to close and on which the corporate
trust office of the Trustee in Morristown, New Jersey or the Series B PCRB
Trustee is not open for business, then the payment thereof may be made on the
next succeeding day not a day specified in (i) or (ii) with the same force and
effect as if made on the specified payment date and no interest shall accrue for
the period after the specified payment date.
ARTICLE 3
SERIES K BONDS
SECTION 3.01. Designation; Amount. The Series K Bonds shall be designated
"5.45% First Mortgage Bonds, Series K" and shall not exceed One Hundred Eight
Million Nine Hundred Eighty Five Thousand Dollars ($108,985,000) aggregate
principal amount at any one time outstanding. The Trustee shall authenticate and
deliver up to $108,985,000 aggregate principal amount of Series K Bonds at any
time upon application of the Company.
SECTION 3.02. Form of Bonds of 2001 Series K. The bonds of Series K shall
be issued in denominations of $5,000 and multiples thereof. The Series K Bonds
and the certificate of the Trustee upon said bonds shall be substantially in the
forms thereof respectively set forth in Schedule C appended hereto.
SECTION 3.03. Provisions of Bonds of 2001 Series K; Interest Accrual;
Effect of Payment on Series C PCR Bonds. The Series K Bonds shall mature on May
1, 2021, and shall bear interest (computed on the basis of a 360-day year
consisting of twelve 30-day months), payable semiannually on the first day of
May and November of each year, at the rate specified in their title, until the
Company's obligation in respect of the principal
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thereof shall be discharged and shall be payable as to principal, premium, if
any, and interest at the corporate trust office of the Trustee at 21 South
Street, 3rd Floor, Morristown, New Jersey or the corporate trust office of its
successors, in any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and private debts. The
interest on the Series K Bonds, whether in temporary or definitive form, shall
be payable without presentation of such Bonds, and only to or upon the written
order of the registered holders thereof of record at the applicable record date.
If, pursuant to the Series C PCRB Agreement, the principal of the Series C PCR
Bonds shall become or be declared immediately due and payable, the principal of
the Series K Bonds, together with all accrued interest thereon, shall, without
notice or demand of any kind, become immediately due and payable. In addition,
the Series K Bonds shall be callable for redemption in whole or in part
according to the terms and provisions provided herein in Section 3.05.
Anything in the Indenture or any Series K Bond to the contrary
notwithstanding, the Series K Bonds shall be deemed paid, and all obligations of
the Company to pay at the times provided herein the principal of and premium, if
any, and interest on the Series K Bonds, or to deposit with the Trustee at the
times provided in the Indenture an amount of money sufficient therefor, shall be
satisfied and discharged, when and to the extent that the principal of and
premium, if any, and interest on the Series C PCR Bonds shall have been paid or
deemed paid as provided in the Series C PCRB Agreement. The Series C PCRB
Trustee shall promptly notify the Trustee by telephone, confirmed in writing, of
any default in the payment of principal of and premium, if any, and interest on
the Series C PCR Bonds, and shall promptly notify the Trustee by telephone,
confirmed in writing, of any payment of principal of and premium, if any, and
interest (other than payment of regularly scheduled interest) on the Series C
PCR Bonds, or if the Series C PCR Bonds have been paid or deemed paid, defeased,
redeemed, retired, surrendered or canceled. The Trustee shall be entitled to
rely on any such notification received from the Series C PCRB Trustee.
Each Series K Bond shall be dated as of the date of authentication thereof
by the Trustee and shall bear interest on the principal amount thereof from the
interest payment date next preceding the date of authentication thereof by the
Trustee to which interest has been paid on the Bonds of said series, or if the
date of authentication thereof is prior to the record date (as hereinafter
defined) with respect to the first interest payment date then from December 1,
2001, or if the date of authentication thereof be an interest payment date to
which interest is being paid or a date between the record date for any such
interest payment date and such interest payment date, then from such interest
payment date.
The person in whose name any bond of Series K is registered
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at the close of business on any record date (as hereinafter defined) with
respect to any interest payment date shall be entitled to receive the interest
payable on such interest payment date notwithstanding the cancellation of such
bond upon any transfer or exchange thereof subsequent to the record date and
prior to such interest payment date, except that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, then such defaulted interest shall be paid to the person in whose
name such bond is registered on a subsequent record date for the payment of
defaulted interest if one shall have been established as hereinafter provided
and otherwise on the date of payment of such defaulted interest. A subsequent
record date may be established by the Company by notice mailed to the owners of
the bonds of Series K not less than ten (10) days preceding such record date,
which record date shall be not more than thirty (30) days prior to the
subsequent interest payment date. The term "record date" as used in this section
3.03 with respect to any regular interest payment date (i.e. May 1 or November
1) shall mean the day next preceding such interest payment date, or, if such day
shall be a legal holiday or a day on which banking institutions in Morristown,
New Jersey are authorized by law to close, the next preceding day which shall
not be a legal holiday or a day on which such institutions are so authorized to
close.
SECTION 3.04. Transfer and Exchange of Bonds of Series K; Series C PCRB
Trustee as Registered Holder; Restriction on Transfer of Bonds of Series K. The
bonds of Series K may be surrendered for registration or transfer as provided in
Section 2.8 of the Original Indenture, but subject to the restriction set forth
in the immediately succeeding paragraph, at the corporate trust office of the
Trustee at 21 South Street, 3rd Floor, Morristown, New Jersey, or the corporate
trust office of its successors, and may be surrendered at said office for
exchange for a like aggregate principal amount of bonds of Series K of other
authorized denominations and, upon surrender for exchange of one or more bonds
of Series K, the Company shall execute and the Trustee shall authenticate and
there shall be delivered in exchange therefor a like aggregate principal amount
of bonds of Series K of other authorized denominations. Notwithstanding the
provisions of Section 2.7 of the Original Indenture, no charge, except for taxes
or other governmental charges, shall be made by the Company for any registration
or transfer of bonds of Series K or for the exchange of any bonds of Series K
for such bonds of other authorized denominations.
The bonds of Series K shall be issued to and registered in the name of the
Series C PCRB Trustee and, anything in the Indenture or any bond of Series K to
the contrary notwithstanding, the bonds of Series K shall not be sold, assigned,
pledged or transferred, except to effect the transfer to any successor trustee
under the Series C PCRB Agreement.
SECTION 3.05. Redemption of the Series K Bonds. If the
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Series C PCR Bonds are to be redeemed as a whole or in part on any date as
provided in the Series C PCRB Agreement, a like principal amount of the Series K
Bonds shall be redeemed on such date, at a redemption price equal to the
redemption price at which the Series C PCR Bonds are to be so redeemed, as set
forth in the Series C PCRB Agreement, stated as a percentage of the principal
amount of the Series K Bonds to be so redeemed, together in every case with
accrued and unpaid interest thereon to the date fixed for redemption. The Series
K Bonds shall be redeemed as aforesaid in accordance with the provisions hereof
and upon not more than forty-five (45) nor less than thirty (30) days' prior
notice given by mail as provided in Article 6 of the Original Indenture;
provided that the Company shall be deemed to have satisfied such notice
requirement if it shall have delivered to the Series C PCRB Trustee, or received
from the Series C PCRB Trustee, as appropriate, at the time and in the manner
specified in the Series C PCRB Agreement, the notice required pursuant to the
Series C PCRB Agreement to be delivered in connection with the redemption of the
Series C PCR Bonds. The Company shall deliver a copy of such notice to the
Trustee at the time of such delivery to or receipt from the Series C PCRB
Trustee.
Redemption of Series K Bonds pursuant to the foregoing provisions of this
Section 3.05 may be made with moneys deposited with or received by the Trustee
pursuant to Section 6.4 of the Original Indenture, or otherwise pursuant to the
Indenture.
Except as provided in this Section 3.05, the Series K Bonds are not
subject to redemption under any provisions of the Indenture.
SECTION 3.06. Payment Date Not a Business Day. If any redemption or
maturity date for principal, premium or interest with respect to the Series K
Bonds shall be (i) a Sunday or a legal holiday, or (ii) a day on which banking
institutions are authorized pursuant to law to close and on which the corporate
trust office of the Trustee in Morristown, New Jersey or the Series C PCRB
Trustee is not open for business, then the payment thereof may be made on the
next succeeding day not a day specified in (i) or (ii) with the same force and
effect as if made on the specified payment date and no interest shall accrue for
the period after the specified payment date.
ARTICLE 4
MISCELLANEOUS PROVISIONS
SECTION 4.01. Recitals. The recitals in this Twelfth Supplemental
Indenture shall be taken as recitals by the Company alone, and shall not be
considered as made by or as imposing any obligation or liability upon the
Trustee, nor shall the Trustee be held responsible for the legality or validity
of this Twelfth Supplemental Indenture, and the Trustee makes no covenants or
representations, and shall not be responsible, as to or for the effect,
authorization, execution, delivery or recording of this
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Twelfth Supplemental Indenture, except as expressly set forth in the Original
Indenture. The Trustee shall not be taken impliedly to waive by this Twelfth
Supplemental Indenture any right it would otherwise have.
SECTION 4.02. Benefits of Supplemental Indenture. Nothing in this Twelfth
Supplemental Indenture, expressed or implied, is intended or shall be construed
to confer upon, or give to, any person, firm or corporation, other than the
parties hereto and the holders of the bonds, any right, remedy or claim under or
by reason of the Indenture or any covenant, condition or stipulation thereof;
and the covenants, stipulations and agreements in the Indenture contained are
and shall be for the sole and exclusive benefit of the parties hereto, their
successors and assigns, and holders of the bonds.
SECTION 4.03. Effect of Supplemental Indenture. This Twelfth Supplemental
Indenture is executed, shall be construed as and is expressly stated to be an
indenture supplemental to the Original Indenture and shall form a part of the
Indenture; and the Original Indenture, as supplemented and amended by this
Twelfth Supplemental Indenture, is hereby confirmed and adopted by the Company
as its obligation. All terms used in this Twelfth Supplemental Indenture shall
be taken to have the meaning specified in the Original Indenture, except in
cases where the context clearly indicates otherwise.
SECTION 4.04. Termination. This Twelfth Supplemental Indenture shall
become void when the Indenture shall be void.
SECTION 4.05. Trust Indenture Act. If and to the extent that any provision
of this Twelfth Supplemental Indenture limits, qualifies or conflicts with any
of the applicable provisions of Sections 310 to 317, inclusive, of the Trust
Indenture Act of 1939, as amended, such required provision shall control.
SECTION 4.06. Counterparts. This Twelfth Supplemental Indenture may be
simultaneously executed in any number of counterparts, each of which shall be
deemed an original; and all said counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument, which shall for all
purposes be sufficiently evidenced by any such original counterpart.
SECTION 4.07. Notices. Any notice to the Trustee under any provision of
this Twelfth Supplemental Indenture shall be sufficiently given if served
personally upon a responsible officer of the Trustee or mailed by registered or
certified mail, postage prepaid, addressed to the Trustee at its corporate trust
office, which is 21 South Street, 3rd Floor, Morristown, New Jersey 07960 as of
the date hereof. The Trustee shall notify the Company from time to time of any
change in the address of its corporate trust office.
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IN WITNESS WHEREOF, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE has caused
this instrument to be executed and its corporate seal to be hereto affixed, by
its officers, thereunto duly authorized, and FIRST UNION NATIONAL BANK has
caused this instrument to be executed and its corporate seal to be hereto
affixed by its officers thereunto duly authorized, all as of the day and year
first above written but actually executed on December ____, 2001.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
[CORPORATE SEAL] By /s/ David R. McHale
Name: David R. McHale
Title: Vice President and Treasurer
Attest: /s/ O. Kay Comendul
Name: O. Kay Comendul
Title: Secretary
Signed, sealed and delivered by
Public Service Company of New
Hampshire in the presence of us:
Witnesses
FIRST UNION NATIONAL BANK
as Trustee as aforesaid
By /s/ Stephanie Roche
Name: Stephanie Roche
Title: Vice President
[CORPORATE SEAL]
Attest:
Name: _______________
Title: _______________
Signed, sealed and delivered by
First Union National Bank in
the presence of us:
________________ ________________
Witnesses
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SCHEDULE A
(FORM OF BONDS OF SERIES I)
THIS BOND IS TRANSFERABLE ONLY AS PROVIDED HEREIN
No.
$89,250,000
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
Incorporated under the Laws of the State of New Hampshire
FIRST MORTGAGE BOND, SERIES I
PRINCIPAL DUE MAY 1, 2021
FOR VALUE RECEIVED, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, a corporation
organized and existing under the laws of the State of New Hampshire (hereinafter
called the Company), hereby promises to pay to State Street Bank and Trust
Company, as Trustee under the Series A PCRB Agreement (as defined on the reverse
hereof), or registered assigns, subject to the conditions set forth in this
Bond, the principal sum of Eighty Nine Million Two Hundred Fifty Thousand
Dollars ($89,250,000), on the first day of May, 2021, and to pay interest on
said sum, on the interest payment dates applicable from time to time to the
Series A PCR Bonds (as defined on the reverse hereof) (each such interest
payment date so applicable to such Series A PCR Bonds being an interest payment
date applicable to this Bond), until the Company's obligation with respect to
said principal sum shall be discharged, in amounts equal to the interest
payments due on such Series A PCR Bonds on such interest payment dates
applicable to this Bond. This Bond shall bear interest as aforesaid from the
interest payment date next preceding the date hereof to which such interest has
been paid on the Bonds of this series, or if the date hereof is prior to the
record date with respect to the first interest payment date then from the date
of original issue of the Bonds of this series, or if the date hereof is an
interest
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payment date to which interest is being paid or date between the record date for
any such interest payment date and such interest payment date, then from such
interest payment date. Principal, premium, if any, and interest shall be payable
at the corporate trust office of First Union National Bank (herein, with its
successors, generally called the "Trustee") at 21 South Street, 3rd Floor,
Morristown, New Jersey, or the corporate trust office of its successor, in such
coin or currency of the United State of America as at the time of payment is
legal tender for the payment of public and private debts.
Each installment of interest hereon (other than overdue interest) due on
any interest payment date shall be payable to the person who shall be the
registered owner of this bond at the close of business on the record date, which
shall be the day next preceding such interest payment date, or, if such day
shall be a legal holiday or a day on which banking institutions in Morristown,
New Jersey are authorized by law to close, the next preceding day which shall
not be a legal holiday or a day on which such institutions are so authorized to
close.
Reference is hereby made to the further provisions of this Bond set forth
on the reverse hereof, including without limitation provisions in regard to the
call and redemption and the registration of transfer and exchangeability of this
bond, and such further provisions shall for all purposes have the same effect as
though fully set forth in this place.
This bond shall not become or be valid or obligatory until the certificate
of authentication hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, Public Service Company of New Hampshire has caused
this bond to be executed in its corporate name and on its behalf by its Vice
President and Treasurer by his signature or a facsimile thereof, and its
corporate seal to be affixed or imprinted hereon and attested by the manual or
facsimile signature of its Secretary.
Dated as of December 19, 2001.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
By /s/ David R. McHale
Name: David R. McHale
Title: Vice President and Treasurer
Attest:
by /s/ O. Kay Comendul
Name: O. Kay Comendul
Title: Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
First Union National Bank hereby certifies that this bond is one of the
bonds described in the within mentioned Indenture.
FIRST UNION NATIONAL BANK, TRUSTEE
By _______________________________
Name:
Title: Authorized Officer
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[FORM OF BOND]
[REVERSE]
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
First Mortgage Bond, Series I
This Bond is one of a series of Bonds in fully registered form known as
the "First Mortgage Bonds, Series I" of the Company, limited to Eighty Nine
Million Two Hundred Fifty Thousand Dollars ($89,250,000) in aggregate principal
amount, and issued under and pursuant to a First Mortgage Indenture between the
Company and New England Merchants National Bank (later known as Bank of New
England, National Association), as Trustee, dated as of August 15, 1978, as
amended, and pursuant to which First Union National Bank is now Successor
Trustee (said First Mortgage Indenture (i) as amended by the Tenth Supplemental
Indenture thereto, being hereinafter generally called the "Original Indenture,"
and (ii) together with the Eleventh and Twelfth Supplemental Indentures, and all
other indentures expressly stated to be supplemental thereto, being hereinafter
generally called the "Indenture"), and together with all bonds of all series now
outstanding or hereafter issued under the Indenture being equally and ratably
secured (except as any sinking or other analogous fund, established in
accordance with the provisions of the Indenture, may afford additional security
for the bonds of any particular series) by the Indenture, to which Indenture
(executed counterparts of which are on file at the corporate trust office of the
Trustee in Morristown, New Jersey) reference is hereby made for a description of
the nature and extent of the security, the rights thereunder of the holders of
bonds issued and to be issued thereunder, the rights, duties and immunities
thereunder of the Trustee, the rights and obligations thereunder
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<PAGE>
of the Company, and the terms and conditions upon which Bonds of this series,
and bonds of other series, are issued and are to be issued; but neither the
foregoing reference to the Indenture nor any provision of this Bond or of the
Indenture shall affect or impair the obligation of the Company, which is
absolute, unconditional and unalterable, to pay at the maturities herein
provided the principal of and interest on this Bond as herein provided.
This bond, together with all other bonds of this series, if any, is issued
to evidence and secure the Company's obligation under a Series A Loan and Trust
Agreement dated as of October 1, 2001 (herein called the "Series A PCRB
Agreement"), by and among the Business Finance Authority of the State of New
Hampshire (herein called the "Authority"), the Company and State Street Bank and
Trust Company, as trustee (herein called the "Series A PCRB Trustee"), to make
loan payments as described below and to provide security for the Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 2001
Tax-Exempt Series A) (herein called the "Series A PCR Bonds") issued by the
Authority in a principal amount of $89,250,000 pursuant to the Series A PCRB
Agreement. Pursuant to the Series A PCRB Agreement, the Authority, on the date
of original issue, loaned the proceeds from the sale of the Series A PCR Bonds
to the Company to finance and refinance a portion of the Company's share of
expenditures, including financing costs, relating to the construction of certain
pollution control, sewage and/or solid waste disposal facilities required for
the operation of the Seabrook nuclear-fueled, steam electric generating plant,
Unit 1, located in Seabrook, New Hampshire, in which the Company owned an
undivided 35.6% interest. The Series A PCR Bonds are special obligations of the
Authority, payable solely out of the revenues and other receipts, funds and
moneys derived by the Authority under the Series A PCRB Agreement and from any
amounts otherwise available under the Series A PCRB Agreement for the payment of
the Series A PCR Bonds. Such revenues and other receipts, funds, moneys and
amounts have been, pursuant to the Series A PCRB Agreement, assigned and pledged
by the Authority to the Series A PCRB Trustee as security for the Series A PCR
Bonds and include loan payments required to be made by the Company to the Series
A PCRB Trustee for the account of the Authority pursuant to the Series A PCRB
Agreement in amounts equal to the amounts payable with respect to the Series A
PCR Bonds. This Bond, together with all other Bonds of this series, if any, has
been issued to and registered in the name of the Series A PCRB Trustee and,
anything in the Indenture or any Bond of this series to the contrary
notwithstanding, the Bonds of this series shall not be sold, assigned, pledged
or transferred, except to effect the transfer to any successor trustee under the
Series A PCRB Agreement.
Anything in the Indenture or any Bond of this series to the contrary
notwithstanding, the Bonds of this series shall be deemed paid, and all
obligations of the Company to pay at the times provided herein the principal of
and premium, if any, and
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interest on the Bonds of this series, or to deposit with the Trustee at the
times provided in the Indenture an amount of money sufficient therefor, shall be
satisfied and discharged, when and to the extent that the principal of and
premium, if any, and interest on the Series A PCR Bonds shall have been paid or
deemed paid as provided in the Series A PCRB Agreement.
The bonds of this Series I in permanent form are issuable in denominations
of twenty five thousand dollars ($25,000) and multiples thereof.
Subject to the restriction on transfer set forth above, this Bond is
transferable by the registered owner hereof upon surrender hereof at the
corporate trust office of the Trustee, together with a written instrument of
transfer in approved form, signed by the owner or his duly authorized attorney,
and a new Bond or Bonds of this series for a like principal amount will be
issued in exchange, all as provided in the Indenture. Prior to due presentment
for registration of transfer of this Bond, the Company and the Trustee may deem
and treat the registered owner hereof as the absolute owner hereof, whether or
not this Bond be overdue, for the purpose of receiving payment and for all other
purposes, and neither the Company nor the Trustee shall be affected by any
notice to the contrary.
This bond is exchangeable at the option of the registered holder hereof
upon surrender hereof, at the corporate trust office of the Trustee at 21 South
Street, 3rd Floor, Morristown, New Jersey, or the corporate trust office of its
successors, for an equal principal amount of bonds of this series of other
authorized denominations, in the manner and on the terms provided in the
Indenture.
If, pursuant to the Series A PCRB Agreement, all or a portion of the
principal of the Series A PCR Bonds shall become or be declared immediately due
and payable, a like principal amount of the Bonds of this series, together with
all accrued interest thereon, shall without notice or demand of any kind, become
immediately due and payable. The Series A PCR Bonds are subject to such
acceleration upon the occurrence and continuance of any of the "Events of
Default" specified in the Series A PCRB Agreement.
If the Series A PCR Bonds are to be redeemed as a whole or in part on any
date as provided in the Series A PCRB Agreement, a like principal amount of the
Series I Bonds shall be redeemed on such date, at a redemption price equal to
the redemption price at which the Series A PCR Bonds are to be so redeemed, as
set forth in the Series A PCRB Agreement, stated as a percentage of principal
amount of the Series I Bonds to be so redeemed, together in every case with
accrued and unpaid interest thereon to the date fixed for redemption. The Series
I Bonds shall be redeemed as aforesaid in accordance with the provisions of the
Indenture and upon not more than forty-five (45) nor less than
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thirty (30) days' prior notice given by mail as provided in Indenture; provided
that the Company shall be deemed to have satisfied such notice requirement if it
shall have delivered to the Series A PCRB Trustee, or received from the Series A
PCRB Trustee, as appropriate, at the time and in the manner specified in the
Series A PCRB Agreement, the notice required pursuant to the Series A PCRB
Agreement to be delivered in connection with the redemption of the Series A PCR
Bonds. The Company shall deliver a copy of such notice to the Trustee at the
time of such delivery to or receipt from the Series A PCRB Trustee.
Except as provided in the immediately preceding paragraph, the Bonds of
this series are not subject to redemption under any provisions of the Indenture.
If this Bond is called in whole or in part, and if moneys have been duly
deposited or otherwise made available to the Trustee for redemption hereof, or
of the part hereof so called, as required in the Indenture, this Bond, or such
called part hereof, shall be due and payable on the date fixed for redemption
and thereafter this Bond, or such called part hereof, shall cease to bear
interest on the date fixed for redemption and shall cease to be entitled to the
lien of the Indenture, and, as respects the Company's liability hereon, this
Bond, or such called part hereof, shall be deemed to have been paid; but, if
less than the whole principal amount hereof shall be so called, the registered
owner hereof shall be entitled, in addition to the sums payable on account of
the part called, to receive, without expense to such owner, upon surrender
hereof, one or more Bonds of this series for an aggregate principal amount equal
to that part of the principal amount hereof not then called and paid.
The Indenture contains provisions permitting the Company and the Trustee
to effect, by supplemental indenture, certain modifications of the Indenture
without any consent of the holders of the bonds, and to effect certain other
modifications of the Indenture, and of the rights of the holders of the bonds,
with the consent of the holders of not less than a majority in aggregate
principal amount of all bonds issued under the Indenture at the time
outstanding, or in case one or more, but less than all, of the series of said
bonds then outstanding are affected, with the consent of the holders of not less
than a majority in aggregate principal amount of said outstanding bonds of each
series affected.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest on this Bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture, to or against any incorporator or against
any stockholder, director or officer, past, present or future, as such, of the
Company or any affiliate of the Company, or of any predecessor or successor
company, either directly or through the Company, or such predecessor or
successor company or any trustee, receiver or assignee or otherwise, under any
constitution, or statute or rule of law, or by the enforcement of any assessment
or penalty, or otherwise, all such liability of incorporators, stockholders,
directors or officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this Bond and as part of the consideration for
the issuance hereof and being likewise waived and released by the terms of the
Indenture.
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SCHEDULE B
(FORM OF BONDS OF SERIES J)
THIS BOND IS TRANSFERABLE ONLY AS PROVIDED HEREIN
No.
$89,250,000
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
Incorporated under the Laws of the State of New Hampshire
FIRST MORTGAGE BOND, SERIES J
PRINCIPAL DUE MAY 1, 2021
FOR VALUE RECEIVED, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, a corporation
organized and existing under the laws of the State of New Hampshire (hereinafter
called the Company), hereby promises to pay to State Street Bank and Trust
Company, as Trustee under the Series B PCRB Agreement (as defined on the reverse
hereof), or registered assigns, subject to the conditions set forth in this
Bond, the principal sum of Eighty Nine Million Two Hundred Fifty Thousand
Dollars ($89,250,000), on the first day of May, 2021, and to pay interest on
said sum, on the interest payment dates applicable from time to time to the
Series B PCR Bonds (as defined on the reverse hereof) (each such interest
payment date so applicable to such Series B PCR Bonds being an interest payment
date applicable to this Bond), until the Company's obligation with respect to
said principal sum shall be discharged, in amounts equal to the interest
payments due on such Series B PCR Bonds on such interest payment dates
applicable to this Bond. This Bond shall bear interest as aforesaid from the
interest payment date next preceding the date hereof to which such interest has
been paid on the Bonds of this series, or if the date hereof is prior to the
record date with respect to the first interest payment date then from the date
of original issue of the Bonds of this series, or if the date hereof is an
interest payment date to which interest is being paid or date between the record
date for any such interest payment date and such interest payment date, then
from such interest payment date. Principal, premium, if any, and interest shall
be payable at the corporate trust office of First Union National Bank (herein,
with its successors, generally called the "Trustee") at 21 South Street,
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3rd Floor, Morristown, New Jersey, or the corporate trust office of its
successor, in such coin or currency of the United State of America as at the
time of payment is legal tender for the payment of public and private debts.
Each installment of interest hereon (other than overdue interest) due on
any interest payment date shall be payable to the person who shall be the
registered owner of this bond at the close of business on the record date, which
shall be the day next preceding such interest payment date, or, if such day
shall be a legal holiday or a day on which banking institutions in Morristown,
New Jersey are authorized by law to close, the next preceding day which shall
not be a legal holiday or a day on which such institutions are so authorized to
close.
Reference is hereby made to the further provisions of this Bond set forth
on the reverse hereof, including without limitation provisions in regard to the
call and redemption and the registration of transfer and exchangeability of this
bond, and such further provisions shall for all purposes have the same effect as
though fully set forth in this place.
This bond shall not become or be valid or obligatory until the certificate
of authentication hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, Public Service Company of New Hampshire has caused
this bond to be executed in its corporate name and on its behalf by its Vice
President and Treasurer by his signature or a facsimile thereof, and its
corporate seal to be affixed or imprinted hereon and attested by the manual or
facsimile signature of its Secretary.
Dated as of December 19, 2001.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
By /s/ David R. McHale
Name: David R. McHale
Title: Vice President and Treasurer
Attest:
By /s/ O. Kay Comendul
Name: O. Kay Comendul
Title: Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
First Union National Bank hereby certifies that this bond is one of the
bonds described in the within mentioned Indenture.
FIRST UNION NATIONAL BANK, TRUSTEE
By _______________________________
Name:
Title: Authorized Officer
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[FORM OF BOND]
[REVERSE]
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
First Mortgage Bond, Series J
This Bond is one of a series of Bonds in fully registered form known as
the "First Mortgage Bonds, Series J" of the Company, limited to Eighty Nine
Million Two Hundred Fifty Thousand Dollars ($89,250,000) in aggregate principal
amount, and issued under and pursuant to a First Mortgage Indenture between the
Company and New England Merchants National Bank (later known as Bank of New
England, National Association), as Trustee, dated as of August 15, 1978, as
amended, and pursuant to which First Union National Bank is now Successor
Trustee (said First Mortgage Indenture (i) as amended by the Tenth Supplemental
Indenture thereto, being hereinafter generally called the "Original Indenture,"
and (ii) together with the Eleventh and Twelfth Supplemental Indentures and all
other indentures expressly stated to be supplemental thereto, being hereinafter
generally called the "Indenture"), and together with all bonds of all series now
outstanding or hereafter issued under the Indenture being equally and ratably
secured (except as any sinking or other analogous fund, established in
accordance with the provisions of the Indenture, may afford additional security
for the bonds of any particular series) by the Indenture, to which Indenture
(executed counterparts of which are on file at the corporate trust office of the
Trustee in Morristown, New Jersey) reference is hereby made for a description of
the nature and extent of the security, the rights thereunder of the holders of
bonds issued and to be issued thereunder, the rights, duties and immunities
thereunder of the Trustee, the rights and obligations thereunder of the Company,
and the terms and conditions upon which Bonds of this series, and bonds of other
series, are issued and are to be issued; but neither the foregoing reference to
the Indenture nor any provision of this Bond or of the Indenture shall affect or
impair the obligation of the Company, which is absolute, unconditional and
unalterable, to pay at the maturities herein provided the principal of and
interest on this Bond as herein provided.
This bond, together with all other bonds of this series, if any, is issued
to evidence and secure the Company's obligation under a Series B Loan and Trust
Agreement dated as of October 1, 2001 (herein called the "Series B PCRB
Agreement"), by and among the Business Finance Authority of the State of New
Hampshire (herein called the "Authority"), the Company and State Street
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Bank and Trust Company, as trustee (herein called the "Series B PCRB Trustee"),
to make loan payments as described below and to provide security for the
Pollution Control Revenue Bonds (Public Service Company of New Hampshire Project
- - 2001 Tax-Exempt Series B) (herein called the "Series B PCR Bonds") issued by
the Authority in a principal amount of $89,250,000 pursuant to the Series B PCRB
Agreement. Pursuant to the Series B PCRB Agreement, the Authority, on the date
of original issue, loaned the proceeds from the sale of the Series B PCR Bonds
to the Company to finance and refinance a portion of the Company's share of
expenditures, including financing costs, relating to the construction of certain
pollution control, sewage and/or solid waste disposal facilities required for
the operation of the Seabrook nuclear-fueled, steam electric generating plant,
Unit 1, located in Seabrook, New Hampshire, in which the Company owned an
undivided 35.6% interest. The Series B PCR Bonds are special obligations of the
Authority, payable solely out of the revenues and other receipts, funds and
moneys derived by the Authority under the Series B PCRB Agreement and from any
amounts otherwise available under the Series B PCRB Agreement for the payment of
the Series B PCR Bonds. Such revenues and other receipts, funds, moneys and
amounts have been, pursuant to the Series B PCRB Agreement, assigned and pledged
by the Authority to the Series B PCRB Trustee as security for the Series B PCR
Bonds and include loan payments required to be made by the Company to the Series
B PCRB Trustee for the account of the Authority pursuant to the Series B PCRB
Agreement in amounts equal to the amounts payable with respect to the Series B
PCR Bonds. This Bond, together with all other Bonds of this series, if any, has
been issued to and registered in the name of the Series B PCRB Trustee and,
anything in the Indenture or any Bond of this series to the contrary
notwithstanding, the Bonds of this series shall not be sold, assigned, pledged
or transferred, except to effect the transfer to any successor trustee under the
Series B PCRB Agreement.
Anything in the Indenture or any Bond of this series to the contrary
notwithstanding, the Bonds of this series shall be deemed paid, and all
obligations of the Company to pay at the times provided herein the principal of
and premium, if any, and interest on the Bonds of this series, or to deposit
with the Trustee at the times provided in the Indenture an amount of money
sufficient therefor, shall be satisfied and discharged, when and to the extent
that the principal of and premium, if any, and interest on the Series B PCR
Bonds shall have been paid or deemed paid as provided in the Series B PCRB
Agreement.
The bonds of this Series J in permanent form are issuable in denominations
of twenty five thousand dollars ($25,000) and multiples thereof.
Subject to the restriction on transfer set forth above, this Bond is
transferable by the registered owner hereof upon surrender hereof at the
corporate trust office of the Trustee, together with a written instrument of
transfer in approved form,
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<PAGE>
signed by the owner or his duly authorized attorney, and a new Bond or Bonds of
this series for a like principal amount will be issued in exchange, all as
provided in the Indenture. Prior to due presentment for registration of transfer
of this Bond, the Company and the Trustee may deem and treat the registered
owner hereof as the absolute owner hereof, whether or not this Bond be overdue,
for the purpose of receiving payment and for all other purposes, and neither the
Company nor the Trustee shall be affected by any notice to the contrary.
This bond is exchangeable at the option of the registered holder hereof
upon surrender hereof, at the corporate trust office of the Trustee at 21 South
Street, 3rd Floor, Morristown, New Jersey, or the corporate trust office of its
successors, for an equal principal amount of bonds of this series of other
authorized denominations, in the manner and on the terms provided in the
Indenture.
If, pursuant to the Series B PCRB Agreement, all or a portion of the
principal of the Series B PCR Bonds shall become or be declared immediately due
and payable, a like principal amount of the Bonds of this series, together with
all accrued interest thereon, shall without notice or demand of any kind, become
immediately due and payable. The Series B PCR Bonds are subject to such
acceleration upon the occurrence and continuance of any of the "Events of
Default" specified in the Series B PCRB Agreement.
If the Series B PCR Bonds are to be redeemed as a whole or in part on any
date as provided in the Series B PCRB Agreement, a like principal amount of the
Series J Bonds shall be redeemed on such date, at a redemption price equal to
the redemption price at which the Series B PCR Bonds are to be so redeemed, as
set forth in the Series B PCRB Agreement, stated as a percentage of principal
amount of the Series J Bonds to be so redeemed, together in every case with
accrued and unpaid interest thereon to the date fixed for redemption. The Series
J Bonds shall be redeemed as aforesaid in accordance with the provisions of the
Indenture and upon not more than forty-five (45) nor less than thirty (30) days'
prior notice given by mail as provided in Indenture; provided that the Company
shall be deemed to have satisfied such notice requirement if it shall have
delivered to the Series B PCRB Trustee, or received from the Series B PCRB
Trustee, as appropriate, at the time and in the manner specified in the Series B
PCRB Agreement, the notice required pursuant to the Series B PCRB Agreement to
be delivered in connection with the redemption of the Series B PCR Bonds. The
Company shall deliver a copy of such notice to the Trustee at the time of such
delivery to or receipt from the Series B PCRB Trustee.
Except as provided in the immediately preceding paragraph, the Bonds of
this series are not subject to redemption under any provisions of the Indenture.
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<PAGE>
If this Bond is called in whole or in part, and if moneys have been duly
deposited or otherwise made available to the Trustee for redemption hereof, or
of the part hereof so called, as required in the Indenture, this Bond, or such
called part hereof, shall be due and payable on the date fixed for redemption
and thereafter this Bond, or such called part hereof, shall cease to bear
interest on the date fixed for redemption and shall cease to be entitled to the
lien of the Indenture, and, as respects the Company's liability hereon, this
Bond, or such called part hereof, shall be deemed to have been paid; but, if
less than the whole principal amount hereof shall be so called, the registered
owner hereof shall be entitled, in addition to the sums payable on account of
the part called, to receive, without expense to such owner, upon surrender
hereof, one or more Bonds of this series for an aggregate principal amount equal
to that part of the principal amount hereof not then called and paid.
The Indenture contains provisions permitting the Company and the Trustee
to effect, by supplemental indenture, certain modifications of the Indenture
without any consent of the holders of the bonds, and to effect certain other
modifications of the Indenture, and of the rights of the holders of the bonds,
with the consent of the holders of not less than a majority in aggregate
principal amount of all bonds issued under the Indenture at the time
outstanding, or in case one or more, but less than all, of the series of said
bonds then outstanding are affected, with the consent of the holders of not less
than a majority in aggregate principal amount of said outstanding bonds of each
series affected.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest on this Bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture, to or against any incorporator or against
any stockholder, director or officer, past, present or future, as such, of the
Company or any affiliate of the Company, or of any predecessor or successor
company, either directly or through the Company, or such predecessor or
successor company or any trustee, receiver or assignee or otherwise, under any
constitution, or statute or rule of law, or by the enforcement of any assessment
or penalty, or otherwise, all such liability of incorporators, stockholders,
directors or officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this Bond and as part of the consideration for
the issuance hereof and being likewise waived and released by the terms of the
Indenture.
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<PAGE>
SCHEDULE C
(FORM OF BONDS OF SERIES K)
THIS BOND IS TRANSFERABLE ONLY AS PROVIDED HEREIN
No.
$108,985,000
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
Incorporated under the Laws of the State of New Hampshire
5.45% FIRST MORTGAGE BOND, SERIES K
PRINCIPAL DUE MAY 1, 2021
FOR VALUE RECEIVED, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, a corporation
organized and existing under the laws of the State of New Hampshire (hereinafter
called the Company), hereby promises to pay to State Street Bank and Trust
Company, as Trustee under the Series C PCRB Agreement (as defined on the reverse
hereof), or registered assigns, subject to the conditions set forth in this
Bond, the principal sum of One Hundred Eight Million Nine Hundred Eight Five
Thousand Dollars ($108,985,000), on the first day of May, 2021, and to pay
interest on said sum (computed on the basis of a 360-day year consisting of
twelve 30 day months), semiannually on the first day of May and November, until
the Company's obligation with respect to said principal sum shall be discharged,
at the rate per annum specified in the title of this Bond from the interest
payment date next preceding the date of authentication hereof to which interest
has been paid on the Bonds of this series, or if the date of authentication
hereof is prior to the record date with respect to the first interest payment
with respect to the first interest payment date, then from December 1, 2001, or
if the date of authentication hereof is an interest payment date to which
interest is being paid or a date between the record date for such interest
payment and such interest payment date, then from such interest payment date.
Principal, premium, if any, and interest shall be payable at the corporate trust
office of First Union National Bank (herein, with its successors, generally
called the "Trustee") at 21 South Street, 3rd Floor, Morristown, New Jersey, or
the corporate trust office of its successor, in such coin or currency of the
United State of America as at the time of payment is legal tender for the
payment of public and private debts.
Each installment of interest hereon (other than overdue interest) due on
any interest payment date shall be payable to the person who shall be the
registered owner of this bond at the close of business on the record date, which
shall be the day next preceding such interest payment date, or, if such day
shall be a legal holiday or a day on which banking institutions in Morristown,
New Jersey are authorized by law to close, the next preceding day which shall
not be a legal holiday or a day on which such institutions are so authorized to
close.
Reference is hereby made to the further provisions of this Bond set forth
on the reverse hereof, including without limitation provisions in regard to the
call and redemption and
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<PAGE>
the registration of transfer and exchangeability of this bond, and such further
provisions shall for all purposes have the same effect as though fully set forth
in this place.
This bond shall not become or be valid or obligatory until the certificate
of authentication hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, Public Service Company of New Hampshire has caused
this bond to be executed in its corporate name and on its behalf by its Vice
President and Treasurer by his signature or a facsimile thereof, and its
corporate seal to be affixed or imprinted hereon and attested by the manual or
facsimile signature of its Secretary.
Dated as of December 1, 2001.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
By /s/ David R. McHale
Name: David R. McHale
Title: Vice President and Treasurer
Attest:
By: O. Kay Comendul
Name: O. Kay Comendul
Title: Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
First Union National Bank hereby certifies that this bond is one of the
bonds described in the within mentioned Indenture.
FIRST UNION NATIONAL BANK, TRUSTEE
By _______________________________
Name:
Title: Authorized Officer
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<PAGE>
[FORM OF BOND]
[REVERSE]
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
5.45% First Mortgage Bond, Series K
This Bond is one of a series of Bonds in fully registered form known as
the "5.45% First Mortgage Bonds, Series K" of the Company, limited to One
Hundred Eight Nine Hundred Eighty Five Thousand Dollars ($108,985,000) in
aggregate principal amount, and issued under and pursuant to a First Mortgage
Indenture between the Company and New England Merchants National Bank (later
known as Bank of New England, National Association), as Trustee, dated as of
August 15, 1978, as amended, and pursuant to which First Union National Bank is
now Successor Trustee (said First Mortgage Indenture (i) as amended by the Tenth
Supplemental Indenture thereto, being hereinafter generally called the "Original
Indenture," and (ii) together with the Eleventh and Twelfth Supplemental
Indentures and all other indentures expressly stated to be supplemental thereto,
being hereinafter generally called the "Indenture"), and together with all bonds
of all series now outstanding or hereafter issued under the Indenture being
equally and ratably secured (except as any sinking or other analogous fund,
established in accordance with the provisions of the Indenture, may afford
additional security for the bonds of any particular series) by the Indenture, to
which Indenture (executed counterparts of which are on file at the corporate
trust office of the Trustee in Morristown, New Jersey) reference is hereby made
for a description of the nature and extent of the security, the rights
thereunder of the holders of bonds issued and to be issued thereunder, the
rights, duties and immunities thereunder of the Trustee, the rights and
obligations thereunder of the Company, and the terms and conditions upon which
Bonds of this series, and bonds of other series, are issued and are to be
issued; but neither the foregoing reference to the Indenture nor any provision
of this Bond or of the Indenture shall affect or impair the obligation of the
Company, which is absolute, unconditional and unalterable, to pay at the
maturities herein provided the principal of and interest on this Bond as herein
provided.
This bond, together with all other bonds of this series, if any, is issued
to evidence and secure the Company's obligation under a Series C Loan and Trust
Agreement dated as of October 1, 2001 (herein called the "Series C PCRB
Agreement"), by and among the Business Finance Authority of the State of New
Hampshire (herein called the "Authority"), the Company and State Street Bank and
Trust Company, as trustee (herein called the "Series C PCRB Trustee"), to make
loan payments as described below and to provide security for the Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 2001
Tax-Exempt Series C) (herein called the "Series C PCR Bonds") issued by the
Authority in a principal amount of $108,985,000 pursuant to the Series C PCRB
Agreement. Pursuant to the Series C PCRB Agreement, the Authority, on the date
of original issue, loaned the proceeds from the sale of the Series C PCR Bonds
to the Company to finance and refinance a portion of the Company's share of
expenditures, including financing costs, relating to the construction of certain
pollution control, sewage and/or solid waste disposal facilities required for
the operation of the Seabrook nuclear-fueled, steam electric generating plant,
Unit 1, located in Seabrook, New Hampshire, in which the Company owned an
undivided 35.6% interest. The Series C PCR Bonds are special obligations of the
Authority, payable solely out of the revenues and other receipts, funds and
moneys derived by the Authority under the Series C PCRB Agreement and from any
amounts otherwise
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<PAGE>
available under the Series C PCRB Agreement for the payment of the Series C PCR
Bonds. Such revenues and other receipts, funds, moneys and amounts have been,
pursuant to the Series C PCRB Agreement, assigned and pledged by the Authority
to the Series C PCRB Trustee as security for the Series C PCR Bonds and include
loan payments required to be made by the Company to the Series C PCRB Trustee
for the account of the Authority pursuant to the Series C PCRB Agreement in
amounts equal to the amounts payable with respect to the Series C PCR Bonds.
This Bond, together with all other Bonds of this series, if any, has been issued
to and registered in the name of the Series C PCRB Trustee and, anything in the
Indenture or any Bond of this series to the contrary notwithstanding, the Bonds
of this series shall not be sold, assigned, pledged or transferred, except to
effect the transfer to any successor trustee under the Series C PCRB Agreement.
Anything in the Indenture or any Bond of this series to the contrary
notwithstanding, the Bonds of this series shall be deemed paid, and all
obligations of the Company to pay at the times provided herein the principal of
and premium, if any, and interest on the Bonds of this series, or to deposit
with the Trustee at the times provided in the Indenture an amount of money
sufficient therefor, shall be satisfied and discharged, when and to the extent
that the principal of and premium, if any, and interest on the Series C PCR
Bonds shall have been paid or deemed paid as provided in the Series C PCRB
Agreement.
The bonds of this Series K in permanent form are issuable in denominations
of five thousand dollars ($5,000) and multiples thereof.
Subject to the restriction on transfer set forth above, this Bond is
transferable by the registered owner hereof upon surrender hereof at the
corporate trust office of the Trustee, together with a written instrument of
transfer in approved form, signed by the owner or his duly authorized attorney,
and a new Bond or Bonds of this series for a like principal amount will be
issued in exchange, all as provided in the Indenture. Prior to due presentment
for registration of transfer of this Bond, the Company and the Trustee may deem
and treat the registered owner hereof as the absolute owner hereof, whether or
not this Bond be overdue, for the purpose of receiving payment and for all other
purposes, and neither the Company nor the Trustee shall be affected by any
notice to the contrary.
This bond is exchangeable at the option of the registered holder hereof
upon surrender hereof, at the corporate trust office of the Trustee at 21 South
Street, 3rd Floor, Morristown, New Jersey, or the corporate trust office of its
successors, for an equal principal amount of bonds of this series of other
authorized denominations, in the manner and on the terms provided in the
Indenture.
If, pursuant to the Series C PCRB Agreement, all or a
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portion of the principal of the Series C PCR Bonds shall become or be declared
immediately due and payable, a like principal amount of the Bonds of this
series, together with all accrued interest thereon, shall without notice or
demand of any kind, become immediately due and payable. The Series C PCR Bonds
are subject to such acceleration upon the occurrence and continuance of any of
the "Events of Default" specified in the Series C PCRB Agreement.
If the Series C PCR Bonds are to be redeemed as a whole or in part on any
date as provided in the Series C PCRB Agreement, a like principal amount of the
Series K Bonds shall be redeemed on such date, at a redemption price equal to
the redemption price at which the Series C PCR Bonds are to be so redeemed, as
set forth in the Series C PCRB Agreement, stated as a percentage of principal
amount of the Series K Bonds to be so redeemed, together in every case with
accrued and unpaid interest thereon to the date fixed for redemption. The Series
K Bonds shall be redeemed as aforesaid in accordance with the provisions of the
Indenture and upon not more than forty-five (45) nor less than thirty (30) days'
prior notice given by mail as provided in Indenture; provided that the Company
shall be deemed to have satisfied such notice requirement if it shall have
delivered to the Series C PCRB Trustee, or received from the Series C PCRB
Trustee, as appropriate, at the time and in the manner specified in the Series C
PCRB Agreement, the notice required pursuant to the Series C PCRB Agreement to
be delivered in connection with the redemption of the Series C PCR Bonds. The
Company shall deliver a copy of such notice to the Trustee at the time of such
delivery to or receipt from the Series C PCRB Trustee.
Except as provided in the immediately preceding paragraph, the Bonds of
this series are not subject to redemption under any provisions of the Indenture.
If this Bond is called in whole or in part, and if moneys have been duly
deposited or otherwise made available to the Trustee for redemption hereof, or
of the part hereof so called, as required in the Indenture, this Bond, or such
called part hereof, shall be due and payable on the date fixed for redemption
and thereafter this Bond, or such called part hereof, shall cease to bear
interest on the date fixed for redemption and shall cease to be entitled to the
lien of the Indenture, and, as respects the Company's liability hereon, this
Bond, or such called part hereof, shall be deemed to have been paid; but, if
less than the whole principal amount hereof shall be so called, the registered
owner hereof shall be entitled, in addition to the sums payable on account of
the part called, to receive, without expense to such owner, upon surrender
hereof, one or more Bonds of this series for an aggregate principal amount equal
to that part of the principal amount hereof not then called and paid.
The Indenture contains provisions permitting the Company and the Trustee
to effect, by supplemental indenture, certain
Page 39
<PAGE>
modifications of the Indenture without any consent of the holders of the bonds,
and to effect certain other modifications of the Indenture, and of the rights of
the holders of the bonds, with the consent of the holders of not less than a
majority in aggregate principal amount of all bonds issued under the Indenture
at the time outstanding, or in case one or more, but less than all, of the
series of said bonds then outstanding are affected, with the consent of the
holders of not less than a majority in aggregate principal amount of said
outstanding bonds of each series affected.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest on this Bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture, to or against any incorporator or against
any stockholder, director or officer, past, present or future, as such, of the
Company or any affiliate of the Company, or of any predecessor or successor
company, either directly or through the Company, or such predecessor or
successor company or any trustee, receiver or assignee or otherwise, under any
constitution, or statute or rule of law, or by the enforcement of any assessment
or penalty, or otherwise, all such liability of incorporators, stockholders,
directors or officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this Bond and as part of the consideration for
the issuance hereof and being likewise waived and released by the terms of the
Indenture.
Page 40
<PAGE>
SCHEDULE D
Description of Certain Properties
Acquired
Since April 1, 1998
The following deeds and conveyances, recorded in the Registries of Deeds
in the Counties in New Hampshire indicated, contain descriptions of certain
properties acquired in fee simple by the Company since April 1, 1998.
<TABLE>
<CAPTION>
Grantor Date Book/Page County/Town
<S> <C> <C> <C>
Wayne W. Wheeler 2/08/2000 2193/1302 Merrimack/Bow
& Katherine B. Wheeler
Bellemore Business 03/09/2000 6216/1230 Hillsborough/Bedford
Park, LLC
</TABLE>
Page 41
<PAGE>
THE STATE OF CONNECTICUT )
COUNTY OF HARTFORD ) ss. Berlin
Then personally appeared before me David R. McHale, Vice President and
Treasurer, and O. Kay Comendul, Secretary, of Public Service Company of New
Hampshire, a New Hampshire corporation, and severally acknowledged the foregoing
instrument to be their free act and deed in their said capacities and the free
act and deed of said corporation.
Witness my hand and notarial seal this ___th day of December, 2001, at
Berlin, Connecticut.
Name:
Notary Public in and for the State
of Connecticut
My Commission Expires:
(Notarial Seal)
THE STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss. Morristown
Then personally appeared before me Stephanie Roche, Vice President, and
____________, ______________, of First Union National Bank, a national banking
association, and acknowledged the foregoing instrument to be their free act and
deed in their said capacities and the free act and deed of said corporation.
Witness my hand and notarial seal this __th day of December, 2001, at
Morristown, New Jersey.
Name:
Notary Public in and for the State
of New Jersey
My Commission Expires:
(Notarial Seal)
Page 42
<PAGE>
ENDORSEMENT
First Union National Bank, Trustee, being the mortgagee in the foregoing
Supplemental Indenture, hereby consents to the cutting of any timber standing
upon any of the lands covered by said Supplemental Indenture and to the sale of
any such timber so cut and of any personal property covered by said Supplemental
Indenture to the extent, but only to the extent, that such sale is permitted
under the provisions of the Original Indenture as referred to in, and as amended
by, the Tenth Supplemental Indenture thereto dated as of May 1, 1991, the
Eleventh Supplemental Indenture thereto dated as of April 1, 1998, and the
Twelfth Supplemental Indenture, dated as of December 1, 2001.
FIRST UNION NATIONAL BANK,
as Trustee as aforesaid
By /s/ Stephanie Roche
Name: Stephanie Roche
Title: Vice President
Signed, sealed and acknowledged
on behalf of First Union National Bank
in the presence of us:
_________________
_________________
Witnesses
CORPORATE SEAL
Page 43
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3.5
<SEQUENCE>7
<FILENAME>y58564b.txt
<TEXT>
<PAGE>
EXHIBIT 4.3.5
EXECUTION COPY
SERIES A LOAN AND TRUST AGREEMENT
among
BUSINESS FINANCE AUTHORITY OF
THE STATE OF NEW HAMPSHIRE
and
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
Dated as of October 1, 2001
Providing for the Issue of:
$89,250,000 Business Finance Authority
of the State of New Hampshire
Pollution Control Revenue Bonds
(Public Service Company of New Hampshire Project - 2001 Tax-Exempt Series A)
Auction Rate Securities Dated the Date of Delivery
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. INTRODUCTION AND DEFINITIONS 1
Section 101. Description of the Agreement and the Parties 1
Section 102. Definitions 2
(a) Words 2
(b) Number and Gender 6
(c) Use of Examples 6
ARTICLE II. LOAN OF BOND PROCEEDS; THE ASSIGNMENT AND PLEDGE 6
Section 201. Loan of Bond Proceeds; Issue of First Mortgage Bonds 6
Section 202. Assignment and Pledge of the Authority 7
Section 203. Further Assurance 7
Section 204. Defeasance 7
ARTICLE III. THE BORROWING 8
Section 301. The Bonds 8
(a) Details of the Bonds 8
(b) Form of Bonds 9
(c) Replacement of Bonds 18
(d) Registration of Bonds in the Book-Entry Only System 18
(e) Interest on Overdue Principal 20
(f) Cancellation and Destruction of Bonds 20
Section 302. Application of Bond Proceeds 21
Section 303. Bond Fund 21
Section 304. Application of Moneys 22
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 305. Payments by the Company 22
(a) Debt Service 22
(b) Additional Payments 22
(c) Unclaimed Moneys 22
(d) Rebate 23
(e) Purchase Price 23
Section 306. Unconditional Obligation 23
Section 307. Redemption of the Bonds 24
(a) Optional Redemption 24
(b) Reserved 24
(c) Mandatory Taxability Redemption 24
(d) Notice to the Trustee 25
(e) Payment of Redemption Price and Accrued Interest 25
(f) Notice of Redemption 25
Section 308. Investments 25
Section 309. Tax Status of Bonds 27
Section 310. Paying Agent 28
Section 311. Payment Procedure Pursuant to Bond Insurance Policy 30
Section 312. The Bond Insurer 32
ARTICLE IV. SPECIAL PROVISIONS RELATING TO AUCTION RATE SECURITIES 32
Section 401. Definitions 32
Section 402. Orders by Existing Owners and Potential Owners 38
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 403. Submission of Orders by Broker-Dealers to Auction Agent 40
Section 404. Determination of Auction Rate 42
Section 405. Allocation of Bonds 43
Section 406. Notice of Auction Rate 45
Section 407. Auction Index 46
Section 408. Miscellaneous Provisions Regarding Auctions 47
Section 409. Changes in Auction Period or Auction Date. 48
Section 410. Auction Agent 49
Section 411. Qualifications of Auction Agent; Resignation; Removal 49
Section 412. Conversion 49
Section 413. Credit Ratings 51
Section 414. Mandatory Tender 51
(a) Agreement to Tender 51
(b) Purchase of Tendered Bonds 51
ARTICLE V. SPECIAL PROVISIONS RELATING TO VARIABLE RATE AND FIXED RATE
MODES 52
Section 501. Definitions 52
Section 502. Medium, Method and Place of Payment and Dating of Bonds 59
Section 503. Payment of Principal and Interest of Bonds; Acceptance of
Terms and Conditions 59
Section 504. Calculation and Payment of Interest; Change in Mode; Maximum
Rate 60
Section 505. Determination of Flexible Rates and Interest Periods During
Flexible Mode 61
Section 506. Determination of Interest Rates During the Daily Mode and
the Weekly Mode 61
Section 507. Determination of Term Rates and Fixed Rates 61
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
(a) Term Rates 62
(b) Fixed Rates 62
Section 508. Alternate Rates 62
Section 509. Changes in Mode 63
(a) Changes to Modes Other Than Fixed Rate Mode 63
(b) Change to Fixed Rate Mode 65
(c) Failure to Satisfy Conditions Precedent to a Mode Change 66
(d) Recission of Election 66
Section 510. Optional Redemption of Flexible Rate Bonds 67
Section 511. Optional Redemption of Bonds in the Daily Mode or the Weekly
Mode 67
Section 512. Optional Redemption of Bonds in the Term Rate or the Fixed
Rate Mode 67
Section 513. Optional Tenders of Bonds in the Daily Mode or the Weekly
Mode 68
Section 514. Mandatory Purchase on Mandatory Purchase Date 69
Section 515. Remarketing of Bonds; Notices 69
(a) Remarketing of Bonds 69
(b) Notice of Remarketing; Registration Instructions; New Bonds 69
(c) Draw on Liquidity Facility 70
Section 516. Source of Funds for Purchase of Bonds 70
Section 517. Delivery of Bonds 70
Section 518. Book-Entry Tenders 70
Section 519. No Book-Entry System 71
Section 520. No Purchases or Sales After Credit Provider or Liquidity
Provider Failure 72
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
Section 521. Credit Enhancement and Liquidity Facility 73
Section 522. Purchase Fund 73
(a) Remarketing Proceeds Account 74
(b) Liquidity Facility Purchase Account 74
(c) Company Purchase Account 74
(d) Investment 74
Section 523. Inadequate Funds for Tenders 74
Section 524. Appointment of Remarketing Agent 74
ARTICLE VI. THE PROJECT 75
Section 601. Company not to Impair Tax Status; Use of Project Facilities 75
Section 602. Qualification of Project Facilities 75
Section 603. Reserved 75
Section 604. Reserved 75
Section 605. Disposition and Use of Project Facilities 76
ARTICLE VII. ADDITIONAL COVENANTS OF THE COMPANY 76
Section 701. Existence and Good Standing; Merger; Consolidation 76
Section 702. Indemnification by the Company 76
Section 703. Continuing Disclosure 77
ARTICLE VIII. DEFAULT AND REMEDIES 77
Section 801. Default 77
Section 802. Remedies for Events of Default 78
(a) Acceleration 78
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
(b) Rights as a Secured Party 78
Section 803. Court Proceedings 79
Section 804. Revenues after Default 79
Section 805. Rights of Bondowners 79
Section 806. Performance of Company's Obligations 80
Section 807. Remedies Cumulative; No Waiver 80
Section 808. Rights of Bond Insurer 80
ARTICLE IX. THE TRUSTEE 80
Section 901. Corporate Organization, Authorization and Capacity 80
Section 902. Rights and Duties of the Trustee 80
(a) Moneys to be Held in Trust 80
(b) Accounts 81
(c) Performance of the Authority's Obligations 81
(d) Responsibility 81
(e) Limitations on Actions 81
(f) Financial Obligations 82
(g) Registration Books 82
(h) Ownership of Bonds 82
(i) No Surety Bond 82
(j) Requests by the Company 82
(k) Trustee as Holder of Series I First Mortgage Bonds 83
Section 903. Fees and Expenses of the Trustee 83
</TABLE>
-vi-
<PAGE>
<TABLE>
<S> <C>
Section 904. Resignation or Removal of Trustee 83
Section 905. Successor Trustee 83
ARTICLE X. THE AUTHORITY 84
Section 1001. Limited Obligation 84
Section 1002. Rights and Duties of the Authority 84
(a) Remedies of the Authority 84
(b) Limitations on Actions 85
(c) Responsibility 85
Section 1003. Expenses of the Authority 86
Section 1004. Matters to be Considered by Authority 86
Section 1005. Actions by Authority 86
ARTICLE XI. THE BONDOWNERS 86
Section 1101. Action by Bondowners 86
ARTICLE XII. AMENDMENTS AND MISCELLANEOUS 88
Section 1201. Amendments 88
(a) Without Bondowners' Consent 88
(b) With Bondowners' Consent 88
Section 1202. Notices 89
Section 1203. Agreement Not for the Benefit of Other Parties 90
Section 1204. Severability 90
Section 1205. Counterparts 90
Section 1206. Captions 90
</TABLE>
-vii-
<PAGE>
<TABLE>
<S> <C>
Section 1207. Governing Law 90
Section 1208. Payment Date Not a Business Day 90
EXHIBIT A THE PROJECT FACILITIES A-1
EXHIBIT B SERIES A SEABROOK POLLUTION CONTROL FACILITIES AGREEMENT B-1
</TABLE>
-viii-
<PAGE>
ARTICLE I. INTRODUCTION AND DEFINITIONS
Section 101. Description of the Agreement and the Parties. This SERIES A
LOAN AND TRUST AGREEMENT (the "Agreement") is entered into as of October 1, 2001
by the Business Finance Authority of the State of New Hampshire (with its
successors, the "Authority" and formerly The Industrial Development Authority of
the State of New Hampshire), a body corporate and politic created under New
Hampshire RSA 162-A:3; Public Service Company of New Hampshire (with its
successors, the "Company"), a New Hampshire corporation; and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee (with its
successors, the "Trustee"). This Agreement is a financing document combined with
a security document as one instrument in accordance with New Hampshire RSA
Chapter 162-I (the "Act") and relates to industrial facilities as defined in
Paragraphs 2, VII(d) and (e) of the Act and located in the Town of Seabrook,
Rockingham County, New Hampshire.
This Agreement provides for the following transactions:
(a) the Authority's issue of the Bonds;
(b) the Authority's loan of the proceeds of the Bonds to the Company to
refund the outstanding balance of the Authority's $66,000,000 7.65% Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Tax-Exempt Series A) (the "1991 Series A Bonds") and a portion of the
outstanding balance of the Authority's $112,500,000 7.65% Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991 Tax-Exempt
Series C) (the "1991 Series C Bonds") which 1991 Series A Bonds and 1991 Series
C Bonds were originally issued for the purpose of financing the acquisition,
construction and installation of the Project Facilities;
(c) the Company's repayment of the loan of Bond proceeds from the
Authority through payment to the Trustee of all amounts necessary to pay the
Bonds issued by the Authority;
(d) the Company's agreement to evidence and secure its repayment
obligations hereunder by the issuance of the Series I First Mortgage Bonds; and
(e) the Authority's assignment to the Trustee in trust for the benefit and
security of the Bondowners and the Bond Insurer of the Authority's rights in
respect of the loan to the Company hereunder, including repayment of the loan to
be received from the Company.
In consideration of the mutual promises contained in this Agreement, the
rights conferred and the obligations assumed hereby, and other good and valuable
consideration, the receipt of which is hereby acknowledged, each of the Company,
the Authority and the Trustee agree, assign, covenant, grant, pledge, promise,
represent and warrant as set forth herein for their own benefit and for the
benefit of the Bondowners and the Bond Insurer.
1
<PAGE>
Section 102. Definitions.
(a) Words. In addition to terms defined elsewhere herein, the following
terms have the following meanings in this Agreement, unless the context
otherwise requires:
(i) "Act" has the meaning set forth in Section 101.
(ii) "Auction Rate Mode" means the mode during which the Bonds bear
interest at an Auction Rate.
(iii) "Authority's Service Charge" means payment to the Authority
for its own use of .375% of the principal amount of the Bonds payable on
the date of the issue of the Bonds and an additional .375% of the then
Outstanding principal balance of the Bonds payable on the date which is
three years from the date of the issue of the Bonds.
(iv) "Bond Counsel" means Palmer & Dodge LLP or such other
nationally recognized bond counsel selected by the Company and reasonably
satisfactory to the Trustee and the Bond Insurer.
(v) "Bond Fund" means the fund established under Section 303.
(vi) "Bond Insurance Agreement" means the Reimbursement and
Indemnity Agreement dated as of December 19, 2001, between the Company and
the Bond Insurer.
(vii) "Bond Insurance Policy" means the financial guaranty insurance
policy issued by the Bond Insurer insuring the payment when due of the
principal of and interest on the Bonds as provided therein.
(viii) "Bond Insurer" means MBIA Insurance Corporation, a New York
stock insurance company.
(ix) "Bond Insurer Default" has the meaning defined in Section
808(b).
(x) "Bond Insurer Event of Insolvency" means the institution of a
proceeding in a court having jurisdiction in the premises seeking an order
for relief, rehabilitation, reorganization, conservation, liquidation or
dissolution in respect of the Bond Insurer and the continuance of such
proceeding for a period of sixty (60) consecutive days or such court
enters an order granting the relief sought in such proceeding and such
order is not reversed or action thereunder stayed within sixty (60) days
of such entry.
(xi) "Bondowners", "owners" or words of similar import means the
registered owners of the Bonds from time to time as shown in the books
kept by the Trustee as bond registrar, except that wherever appropriate
the term "owners" shall mean the owners of the Bonds for federal income
tax purposes.
2
<PAGE>
(xii) "Bonds" means the $89,250,000 principal amount of the Business
Finance Authority of the State of New Hampshire Pollution Control Revenue
Bonds (Public Service Company of New Hampshire Project - 2001 Tax-Exempt
Series A) dated the date of delivery and substantially in the form set
forth in Subsection 301(a) and any bond or bonds duly issued in exchange
or replacement therefor.
(xiii) "Book-Entry Only System" means the system of registration of
the Bonds described in Subsection 301(d).
(xiv) "Business Day" means a day other than a Saturday or Sunday and
on which banks in each of the cities in which the principal offices of the
Trustee, the First Mortgage Bond Trustee, the Remarketing Agent, if any,
and the Paying Agent and the office of the Liquidity Provider at which
draws on a Liquidity Facility, if any, are made are located are not
required or authorized to remain closed and on which the New York Stock
Exchange or the payment system of the Federal Reserve System is not
closed.
(xv) "Company Bonds" shall have the meaning set forth in Section
305(e).
(xvi) "Company Representative" means the person or persons at the
time designated to act on behalf of the Company in a written certificate
(or any alternate or alternates at the time so designated) furnished to
the Trustee, containing the specimen signature of such person or persons
and signed on behalf of the Company by its Chairman, Vice Chairman,
President, Chief Financial Officer, Treasurer, any Assistant Treasurer, or
any Vice President.
(xvii) "Continuing Disclosure Agreement" means the Continuing
Disclosure Agreement between the Company and the Trustee dated the date of
issuance and delivery of the Bonds as originally executed and as it may be
amended from time to time in accordance with its terms.
(xviii) "Debt Service" means all money payable to the Bondowners in
accordance with the terms hereof and of the Bonds including (i) principal,
(ii) interest and (iii) any premium.
(xix) "Default" has the meaning given such term in Section 801.
(xx) "Event of Default" has the meaning given such term in Section
801.
(xxi) "Facilities Agreement" has the meaning given to it in Section
605.
(xxii) "Federal Tax Statement" means the Statement as to Tax Exempt
Status of Bonds executed by the Company in connection with the original
issuance of the Bonds and delivered to the Trustee.
(xxiii) "First Mortgage Bond Indenture" means the First Mortgage
Indenture
3
<PAGE>
dated as of August 15, 1978, as amended, and the Twelfth Supplemental
Indenture thereto dated as of December 1, 2001 between the Company and
First Union National Bank, successor to First Fidelity Bank, National
Association, New Jersey, as Trustee, as amended and supplemented from time
to time.
(xxiv) "First Mortgage Bond Trustee" means the trustee under the
First Mortgage Bond Indenture.
(xxv) "IRC" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
(xxvi) "Loan" has the meaning given such term in Section 201.
(xxvii) "Maximum Rate" means the lesser of fourteen percent (14%)
per annum (or such separate rates for Bonds and Liquidity Provider Bonds
as may be provided for by amendment to this Agreement) and the maximum
rate of interest permitted by applicable law.
(xxviii) "MBIA" means MBIA Insurance Corporation, the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed
company, as Bond Insurer.
(xxix) "Moody's" means Moody's Investors Service, a corporation duly
organized and existing under and by virtue of the laws of the State of
Delaware, and its successors and assigns, except that if such corporation
shall be dissolved or liquidated or shall no longer perform the functions
of a securities rating agency, then the term "Moody's" shall be deemed to
refer to any other nationally recognized securities rating agency selected
by the Company after consultation with the Remarketing Agent.
(xxx) "NAEC" means North Atlantic Energy Corporation, a New
Hampshire corporation and an affiliate of the Company.
(xxxi) "1954 Code" means the Internal Revenue Code of 1954, as
amended, as applicable to the Bonds and the Project Facilities.
(xxxii) "Outstanding", when used to modify Bonds, refers to Bonds
issued, authenticated, and delivered under this Agreement, excluding: (i)
Bonds which have been exchanged or replaced; (ii) Bonds which have been
paid; (iii) Bonds which have become due and for the payment of which
moneys have been duly provided; and (iv) Bonds with respect to which this
Agreement has been defeased pursuant to Section 204.
(xxxiii) "Paying Agent" means State Street Bank and Trust Company,
as Paying Agent under this Agreement and its successors in such capacity.
4
<PAGE>
(xxxiv) "Permitted Investments" has the meaning given such term in
Section 308.
(xxxv) The word "person" means any individual or entity so
recognized by law.
(xxxvi) "Project Costs" means the Company's cost of acquisition or
construction and installation of the Project Facilities which are "project
costs" within the meaning of Paragraph 2, IX of the Act, including, but
not limited to, the cost of issuing the Bonds, obtaining professional and
advisory services, and certain interest on the Bonds, which may be paid
from Bond proceeds pursuant to the Act.
(xxxvii) "Project Facilities" means the Company's former ownership
share of the sewage or solid waste disposal and air or water pollution
control facilities at the Station as of the date of issuance of the Bonds
described generally in the attached Exhibit A.
(xxxviii) "Refunding Trust Agreements" means the Refunding Trust
Agreements, each among the Authority, the Company and State Street Bank
and Trust Company, as trustee for the 1991 Series A Bonds and the 1991
Series C Bonds, respectively, each dated as of October 1, 2001.
(xxxix) "S&P" means Standard & Poor's Ratings Services, a division
of McGraw-Hill, duly organized and existing under and by virtue of the
laws of the State of New York, and its successors and assigns, except that
if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, then the term "S&P"
shall be deemed to refer to any other nationally recognized securities
rating agency selected by the Company after consultation with the
Remarketing Agent.
(xl) "Seabrook Transfer" means each of the transfer by the Company
of its interest in the Station (including the Project Facilities) to NAEC,
as of June 5, 1992, the proposed transfer by NAEC of such interest to an
unaffilated party pursuant to an order of the New Hampshire Public
Utilities Commission and any subsequent transfer of such interest.
(xli) "Seabrook Transferee" means each of NAEC, any subsequent owner
or owners of the Project Facilities pursuant to a Seabrook Transfer, and
its or their successors.
(xlii) "Securities Depository" means The Depository Trust Company
and its successors and assigns or any other securities depository selected
by the Company which agrees to follow the procedures required to be
followed by such securities depository in connection with the Bonds.
(xliii) "Series I First Mortgage Bonds" means the $89,250,000 in
aggregate principal amount First Mortgage Bonds, Series I issued by the
Company and delivered to
5
<PAGE>
the Trustee pursuant to Section 201 of this Agreement and the First
Mortgage Bond Indenture to evidence and secure the Company's obligation to
repay the Loan.
(xliv) "Station" means Unit No. 1 of the nuclear electric generating
plant located in Seabrook, New Hampshire, of which the Company is a joint
owner.
(xlv) "Trustee" means the State Street Bank and Trust Company, as
trustee under this Agreement and its successors in such capacity.
(xlvi) "UCC" means the New Hampshire Uniform Commercial Code (New
Hampshire Revised Statutes Annotated Chapter 382-A).
(xlvii) "Variable Rate Mode" means the Daily Mode, Weekly Mode,
Flexible Mode or Term Rate Mode (all as defined in Section 501).
Except in the Bonds, "here" in such words as "hereby," "herein," "hereof"
or "hereunder" means this Agreement as a whole rather than the particular
section, subsection, paragraph, subparagraph, clause or subclause in which the
word appears; and in the Bonds it refers thereto.
(b) Number and Gender. Wherever appropriate (1) the singular and plural
forms of words and (2) words of different gender shall, within those respective
classifications, be deemed interchangeable.
(c) Use of Examples. When a condition, class, category, circumstance or
other concept is described in general terms herein and a list of possible
examples or components of what has been described generally is associated with
that description, and regardless of whether the words "include" or "including"
or the like are also used, the listing shall be deemed illustrative only and
shall not be construed as excluding other possible examples or components or as
otherwise limiting the generality of the description in any way.
6
<PAGE>
ARTICLE II. LOAN OF BOND PROCEEDS; THE ASSIGNMENT AND PLEDGE
Section 201. Loan of Bond Proceeds; Issue of First Mortgage Bonds. The
Authority shall issue the Bonds pursuant to the Act in the amount, in the form,
and with the terms provided herein, and shall loan to the Company such amount
(the "Loan") to refinance Project Costs as hereinafter provided. The Company
agrees to repay the Loan of the aggregate principal amount of the Bonds in the
amounts and at the times necessary to pay principal of, premium, if any, and
interest on the Bonds by making the payments required under Section 305, and to
evidence and secure the Company's obligation to do so, the Company shall issue
and deliver to the Trustee a like aggregate principal amount of its Series I
First Mortgage Bonds in the form set forth in the First Mortgage Bond Indenture.
Upon payment of the principal of and premium, if any, on any of the Bonds and
payment of all accrued interest in connection therewith, whether at maturity or
prior to maturity by redemption or otherwise, or upon provision for the payment
thereof having been made in accordance with Section 204, Series I First Mortgage
Bonds in an aggregate principal amount equal to the aggregate principal amount
of the Bonds so paid, or for the payment of which such provision has been made,
shall be deemed fully paid and the obligations of the Company thereunder
terminated as provided in the First Mortgage Indenture and shall be surrendered
by the Trustee to the First Mortgage Bond Trustee for cancellation. The Trustee
shall promptly notify the First Mortgage Bond Trustee by telephone, confirmed in
writing, of any default in the payment of principal of, and premium, if any, and
interest on the Bonds, and shall promptly notify the First Mortgage Bond Trustee
by telephone, confirmed in writing of any payment of principal of and premium,
if any, and interest (other than payment of regularly scheduled interest) on the
Bonds, or if the Bonds have been paid or deemed paid, defeased, redeemed,
retired, surrendered or canceled. In accordance with the terms thereof, the
Series I First Mortgage Bonds shall be issued to and registered in the name of
the Trustee and shall not be sold, assigned, pledged or transferred, except to
effect transfer to any successor Trustee hereunder. The Series I First Mortgage
Bonds shall have a principal amount, an interest rate, a maturity date and
redemption provisions corresponding to the Bonds. Payments of principal of and
premium, if any, and interest on the Series I First Mortgage Bonds shall upon
receipt by the Trustee be deemed to constitute payments of corresponding amounts
by the Company in respect of the Bonds pursuant to Subsection 305(a).
Section 202. Assignment and Pledge of the Authority. The Authority, for
consideration paid as hereinabove acknowledged, hereby irrevocably assigns and
pledges to the Trustee in trust for the security of the Bondowners upon the
terms hereof all of the Authority's right, title and interest in (i) respect of
the Loan and all payments thereon, (ii) all moneys and securities held by the
Trustee for deposit in, or deposited in, the Bond Fund and investment earnings
thereon, (iii) the Series I First Mortgage Bonds, all bonds issued in
replacement thereof or in exchange or substitution therefor and all payments on,
and proceeds of, the foregoing, and (iv) any collateral security for, and all
proceeds of, any of the foregoing. The Trustee shall hold (a) all the rights,
title and interest received under this section and (b) all payments (exclusive
of funds to which the Trustee is entitled in its own right as fees,
reimbursement, indemnity or otherwise) received from the Company or derived from
the exercise of the Authority's powers hereunder (which shall include all
payments under Subsection 305(a)) and in respect of the Series I First Mortgage
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Bonds in trust for the security of the Bondowners in accordance with the
provisions hereof.
Section 203. Further Assurance. The Company and the Authority shall from
time to time execute, deliver and record and file such instruments as may be
necessary to perfect or to maintain or continue the perfection of, or as the
Trustee may reasonably require to confirm, perfect or maintain the security
created hereby and the assignment and pledge of rights hereunder.
Section 204. Defeasance. When there are in the Bond Fund sufficient funds,
or non-callable and non-prepayable obligations issued by, or the full and timely
payment of which are guaranteed by, the United States of America, in such
principal amount, bearing interest at such rates and with such maturities as
will provide, without reinvestment, sufficient amounts to pay principal or
Purchase Price of, premium, if any, and interest on the Bonds as and when such
amounts become due and, prior to the Fixed Rate Conversion Date or change to the
Fixed Rate, as applicable, to pay the Purchase Price thereof whenever the same
may be payable, as determined through a verification report or computation,
which may be prepared by the Company, and when all the rights hereunder of the
Authority and the Trustee have been provided for (1) the Bondowners will cease
to be entitled to any right, benefit or security under this Agreement except the
right to receive payment of the funds deposited and held for payment and other
rights set forth below or which by their nature cannot be satisfied prior to or
simultaneously with termination of the lien hereof, (2) the security interests
created by this Agreement (except in such funds and investments) shall
terminate, and (3) the Authority and the Trustee shall execute and deliver such
instruments as may be necessary to discharge the lien and security interests
created hereunder; provided, however, that, if within ninety (90) days of such
deposit, the Bonds are not to be redeemed in full prior to maturity or paid in
full at maturity, the Trustee and the Bond Insurer shall have received on the
date of the deposit an opinion of Bond Counsel to the effect that such deposit
and the investment thereof will not affect the exclusion of interest on the
Bonds from gross income of the owners thereof for federal income tax purposes;
and provided further that if any Bonds are to be redeemed prior to the maturity
thereof, such Bonds shall have been duly called for redemption or irrevocable
instructions for such a call shall have been given to the Trustee. Upon such
defeasance, the funds and investments required to pay or redeem the Bonds in
full shall be irrevocably set aside for such purpose. The Trustee shall cause to
be mailed to all Bondowners within fifteen (15) days of the conditions of this
section being met in the manner herein specified for redemption of Bonds a
notice stating that such conditions have been met and that the lien of this
Agreement has been discharged, and, if the Bonds are to be redeemed prior to
maturity, specifying the date of redemption and the redemption price. Any funds
or property held by the Trustee for payment of the Bonds under this section and
not required for such payment shall (unless there is an Event of Default
hereunder, in which case they shall be applied as provided in Section 604),
after satisfaction of all the rights of the Authority and the Trustee, and
payment of the rebate, if any, due to the United States of America under IRC
ss.148(f), and upon such indemnification, if any, as the Authority or the
Trustee may reasonably require, be distributed to the Company. If Bonds are not
presented for final payment when due and moneys are available in the hands of
the Trustee therefor, the Trustee shall, without liability for interest thereon,
continue to hold the moneys held for that purpose subject to
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Subsection 305(c), and interest shall cease to accrue on the principal amount
represented thereby.
When there are in the Bond Fund funds or securities as described in the
preceding paragraph as are sufficient to pay principal or Purchase Price of,
premium, if any, and interest on, some but not all of the Bonds in full as and
when such amounts become due and all of the other conditions in the preceding
paragraph have been met with respect to such Bonds, the particular Bonds (or
portions thereof) for which such provision for payment shall have been
considered made shall be selected by lot by the Trustee (or, if the Bonds are
then registered to CEDE & CO. and the Book-Entry Only System is then in effect,
by The Depository Trust Company) and thereupon the Trustee and the Authority
shall take similar action to release the security interests created by this
Agreement in respect of such Bonds (except in such funds or securities and
investments thereon), subject however to compliance with the applicable
conditions set forth in the provisos above.
Notwithstanding the foregoing, those provisions relating to the maturity
of Bonds, interest payments and dates thereof and the Trustee's remedies with
respect thereto, and provisions relating to exchange, transfer and registration
of Bonds, replacement and cancellation of Bonds, the holding of moneys in trust
and the duties of the Trustee in connection with all of the foregoing and the
fees, expenses and indemnities of the Trustee and the Authority, shall remain in
full force and effect and shall be binding upon the Trustee, the Authority, the
Company and the Bondowners notwithstanding the release and discharge of this
Agreement and the lien on the Series I First Mortgage Bonds until the Bonds have
been actually paid in full.
Notwithstanding anything herein to the contrary, if moneys or governmental
obligations have been deposited or set aside with the Trustee pursuant to the
provisions of this Section 204 and the principal of, premium, if any, and
interest on the Bonds shall not, in fact, have been actually paid in full, no
amendment to the provisions of this Section 204 will be made without the consent
of the owner of each of the Bonds affected thereby.
Subject to Section 808(b), any defeasance of the Bonds shall require the
prior written consent, which consent shall not be unreasonably withheld, of the
Bond Insurer.
Notwithstanding anything herein to the contrary, in the event that the
principal and/or interest due on the Bonds shall be paid by the Bond Insurer
pursuant to the Bond Insurance Policy, the Bonds shall remain Outstanding for
all purposes, not be defeased or otherwise satisfied and not be considered paid
by the Company, and the assignment and pledge hereunder and all covenants,
agreements and other obligations of the Company to the registered owners of the
Bonds shall continue to exist and shall run to the benefit of the Bond Insurer,
and the Bond Insurer shall be subrogated to the rights of such Bondowners.
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ARTICLE III. THE BORROWING
Section 301. The Bonds.
(a) Details of the Bonds. The Bonds shall be issued in fully registered
form and shall be numbered from 1 upwards in the order of their issuance or in
any other manner deemed appropriate by the Paying Agent and the Authority. The
Bonds shall be initially in the denomination of $25,000 or any integral multiple
thereof prior to the Conversion Date and thereafter in Authorized Denominations
as defined in Section 501. The Bonds shall be dated the date of original
delivery thereof, and interest shall accrue from that date. The interest on
Bonds until they come due shall be payable on the interest payment dates
applicable to the Mode the Bonds are in from time to time; provided, however,
that Liquidity Provider Bonds shall bear interest as described in Section 503.
The Bonds shall be initially in the Auction Rate Mode. Bonds shall be signed on
behalf of the Authority by the manual or facsimile signature of any two of the
Chairman, Vice Chairman, Treasurer, and Executive Director and the corporate
seal of the Authority or a facsimile thereof shall be engraved or otherwise
reproduced thereon. The Certificate of Authentication of the Trustee shall be
manually signed on behalf of the Trustee. No bonds shall be issued under this
Agreement other than the Bonds. In case any officer of the Authority whose
manual or facsimile signature shall appear on any Bonds shall cease to be such
officer before the delivery thereof, such manual or facsimile signature shall
nevertheless be valid and sufficient for all purposes as if he or she had
remained in office until after such delivery.
The Bonds shall mature on May 1, 2021 and shall bear interest as provided
in this Agreement for the Mode they are in from time to time. The Bonds are
subject to redemption and optional and mandatory tender for purchase all as
described in Articles IV and V of this Agreement and the form of Bonds.
(b) Form of Bonds. (i) The Bonds initially shall be issued in
substantially the following form:
Unless this bond is presented by an authorized representative of The
Depository Trust Company, a New York Company ("DTC"), to the Authority (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
Registered No. R $___________
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UNITED STATES OF AMERICA