UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM U-9C-3
QUARTERLY REPORT PURSUANT TO RULE 58
For the quarterly period ended June 30, 2004
Northeast Utilities
-------------------
(Name of registered holding company)
107 Selden Street, Berlin, CT 06037
-----------------------------------
(Address of Principal Executive Officers)
Name and telephone number of officer to whom inquiries concerning this report
should be directed:
John P. Stack, Vice President-Accounting and Controller
Telephone Number: 860-665-2333
GENERAL INSTRUCTIONS
A. Use of Form
1. A reporting company, as defined herein, shall file a report on this
form within 60 days after the end of each of the first three
quarters, and within 90 days after the end of the fourth quarter,
of the fiscal year of the registered holding company. The period
beginning on the date of effectiveness of rule 58 and ending at the
end of the quarter following the quarter in which the rule becomes
effective shall constitute the initial period for which any report
shall be filed, if applicable.
2. The requirement to provide specific information by means of this
form supersedes any requirement by order of the Commission to
provide identical information by means of periodic certificates
under rule 24; but does not so supersede and replace any
requirement by order to provide information by means of an annual
report on Form U-13-60.
3. Information with respect to reporting companies that is required by
Form U-13-60 shall be provided exclusively on that form.
4. Notwithstanding the specific requirements of this form, this
Commission may informally request such further information as, in
its opinion, may be necessary or appropriate.
B. Statements of Monetary Amounts and Deficits
1. Amounts included in this form and in related financial statements
may be expressed in whole dollars, thousands of dollars or hundred
thousands of dollars.
2. Deficits and other similar entries shall be indicated by either
brackets or parentheses. An explanation should be provided by
footnote.
C. Formal Requirements
This form, including exhibits, shall be filed with Commission
electronically pursuant to Regulation S-T (17 CFR 232.10 et seq.). A
conformed copy of each such report shall be filed with each state
commission having jurisdiction over the retail rates of a public utility
company that is an associate company of a reporting company. Each
report shall provide the name and telephone number of the person to whom
inquiries concerning this report should be directed.
D. Definitions
As used in this form, the word "reporting company" means an energy-
related company or gas-related company, as defined in rule 58(b). All
other words and terms have the same meaning as in the Public Utility
Holding Company Act of 1935, as amended, and the rules and regulations
there under.
ITEM 1 - ORGANIZATIONAL CHART
-------------------------------------------------------------------------------
Instructions
-------------------------------------------------------------------------------
1. Complete Item 1 only for the first three calendar quarters of the fiscal
year of the registered holding company.
2. Under the caption "Name of Reporting Company," list each energy-related
and gas-related company and each system company that directly or
indirectly holds securities thereof. Add the designation "(new)" for
each reporting company of which securities were acquired during the
period, and the designation "(*)" for each inactive company.
3. Under the caption "Percentage of Voting Securities Held," state the
aggregate percentage of the outstanding voting securities of the
reporting company held directly or indirectly by the registered holding
company at the end of the quarter.
4. Provide a narrative description of each reporting company's activities
during the reporting period.
-----------------------------------------------------------------------------------------------------------
Percentage of Activities
Energy or Voting Reported
Name of Gas Date of State of Securities Nature of During the
Reporting Company Related Organization Organization Held Business Period
-----------------------------------------------------------------------------------------------------------
NU Enterprises, Holding 01/04/99 Connecticut 100% by Unregulated (A)
Inc. Northeast businesses
Utilities holding
company
Select Energy, Inc. Energy 09/26/96 Connecticut 100% by NU Energy- (B)
Enterprises, related
Inc. activities
Northeast Energy 01/04/99 Connecticut 100% by NU Energy- (C)
Generation Services Enterprises, related
Company Inc. activities
Select Energy Energy 06/19/90 Massachusetts 100% by NU Energy- (D)
Services, Inc. Enterprises, related
Inc. activities
Reeds Ferry Supply Energy 07/15/64 New Hampshire 100% by Energy- (E)
Co., Inc. Select Energy related
Services, activities
Inc.
HEC/Tobyhanna Energy 09/28/99 Massachusetts 100% by Energy- (F)
Energy Project, Select Energy related
Inc. Services, activities
Inc.
Select Energy Energy 10/12/94 Massachusetts 100% by Energy- (G)
Contracting, Inc. Select Energy related
Services, activities
Inc.
Yankee Energy Holding 02/15/00 Connecticut 100% by Public (H)
System, Inc. Northeast Utility
Utilities Holding
Company
Yankee Energy Energy 07/02/93 Connecticut 100% by Energy- (I)
Services Company Yankee Energy related
System, Inc. activities
R. M. Services, Energy 11/22/94 Connecticut 100% by (J)
Inc. Yankee Energy *
System, Inc.
Acumentrics Energy 09/13/00 Massachusetts 5% by NU Energy- (K)
Corporation Enterprises, related
Inc. activities
ERI/HEC EFA-Med, Energy 09/30/00 Delaware 50% by Select Energy- (L)
LLC Energy related
Services, activities
Inc.
E. S. Boulos Energy 01/10/01 Connecticut 100% by Energy- (M)
Company Northeast related
Generation activities
Services
Company
NGS Mechanical, Energy 01/24/01 Connecticut 100% by Provide (N)
Inc. Northeast mechanical
Generation construction
Services and
Company maintenance
services
HEC/CJTS Energy Energy 03/02/01 Delaware 100% by Facilitate (O)
Center LLC Select Energy construction
Services, financing
Inc.
Select Energy Energy 02/13/96 Delaware 100% by Energy- (P)
New York, Inc. Select related
Energy, Inc. activities
Woods Electrical Energy 07/18/02 Connecticut 100% by Provide (Q)
Co., Inc. Northeast electrical
Generation contracting
Services services
Company
Greenport Power, Energy 02/13/03 Delaware 50% by Energy (R)
LLC Northeast related
Generation construction
Services activities
Company
(A) NU Enterprises, Inc. is not a "reporting company" but is included in
this Item 1 because it holds, directly or indirectly, voting securities
issued by reporting companies as indicated above.
(B) Select Energy, Inc. (Select Energy) is an integrated energy business
that buys, markets and sells electricity, gas, oil and energy-related
products and services to both wholesale and retail customers in the
northeastern United States. Select Energy procures and delivers energy
and capacity required to serve its electric, gas and oil customers.
Select Energy, collectively with its affiliated businesses, provides a
wide range of energy products and energy services.
Select Energy is a licensed retail electricity supplier and is
registered with local electric distribution companies and is a
registered gas marketer with local gas distribution companies in the
states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and
Virginia.
(C) Northeast Generation Services Company (NGS) provides a full range of
asset management and operation and maintenance services for electric power
generation asset owners in the northeast. Services are provided primarily
in support of affiliate-owned assets.
(D) Select Energy Services, Inc. (formerly HEC Inc.) is not a "reporting
company" but is included in this Item 1 because it holds, directly or
indirectly, voting securities issued by reporting companies as indicated
above.
(E) Reed's Ferry Supply Co., Inc. is an equipment wholesaler which purchases
equipment on behalf of Select Energy Contracting, Inc.
(F) HEC/Tobyhanna Energy Project, Inc. was established as a special purpose
entity to manage the assets of an Energy Savings Performance Contract
project at the Tobyhanna Army Depot.
(G) Select Energy Contracting, Inc. designs, manages and directs the
construction of, and/or installation of mechanical, water, and
electrical systems, energy and other resource consuming equipment.
(H) Yankee Energy System, Inc. is not a "reporting company" but is included
in this Item 1 because it holds, directly or indirectly, voting
securities issued by reporting companies as indicated above.
(I) Yankee Energy Services Company has disposed of most of its assets and is
winding down its energy-related business.
(J) R. M. Services, Inc. is inactive as of June 30, 2004.
(K) Acumentrics Corporation develops, manufactures, and distributes advanced
power generation, power quality and power protection devices including a
high-speed flywheel and advanced technology fuel cells.
(L) ERI/HEC EFA-Med, LLC (ERI/HEC) is a Delaware limited liability company
that was formed by Select Energy Services, Inc., and ERI Services, Inc.
to enter into an indefinite delivery/indefinite quantity contract with
the U.S. Navy. Under the contract, the Navy will issue Delivery Orders
for energy services work at U.S. Government facilities located in
Bahrain, Greece, Egypt, Italy, Spain, Turkey, and the United Kingdom.
ERI/HEC will designate either ERI or Select Energy Services, Inc. to
perform each of the Delivery Orders. ERI/HEC will also act as the
conduit for any project-related financing. ERI Services, Inc. and
Select Energy Services, Inc. each own 50% of the LLC.
(M) E. S. Boulos Company (Boulos) is in the electrical contracting business
primarily in Maine, New Hampshire and Massachusetts. Boulos is
registered to do business in Connecticut, Rhode Island, Maine,
Massachusetts, New Hampshire, New York, and Vermont.
(N) NGS Mechanical, Inc. (NGSM) performs power plant operations, maintenance
and capital project support. NGSM is registered to do business in
Connecticut, Massachusetts, New Hampshire, Maine, Vermont, Rhode Island,
and New York.
(O) HEC/CJTS Energy Center LLC (HEC/CTJS) facilitated the construction of an
energy center at the Connecticut Juvenile Training School in Middletown,
Connecticut. HEC/CJTS does not have any employees nor does it conduct
any activities other than those related to the lease related to such
project.
(P) Select Energy New York, Inc. is engaged in the brokering, marketing,
transportation, storage, and sale of energy commodities.
(Q) Woods Electrical Co., Inc. is in the electrical contracting business
mainly in Connecticut. Woods is registered to do business in
Connecticut, New York, Massachusetts, Maine and New Hampshire.
(R) Greenport Power LLC (Greenport) is a Delaware limited liability company
that was formed by NGS and Hawkeye Electric LLC (Hawkeye Electric) to
enter into an Engineering, Procurement and Construction Agreement with
Global Commons LLC for the performance of design, engineering,
procurement, construction and other services in connection with an
electrical facility construction project in Greenport, Long Island, New
York. Hawkeye Electric, which is not an affiliate of NU, and NGS each
own 50% of Greenport.
ITEM 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
-------------------------------------------------------------------------------
Instruction
-----------
With respect to a transaction with an associate company, report
only the type and principal amount of securities involved.
-------------------------------------------------------------------------------
Person
Company Type of Principal to Whom Collateral Consideration Company Amount of
Issuing Security Amount of Issue or Cost of Security Given With Received for Contributing Capital
Security Issued Security Renewal Capital Was Issued Security Each Security Capital Contribution
--------------- -------- ------------ -------- ------- ------------ ---------- ------------- ------------ -------------
Select
Energy, Inc. No transactions this quarter.
Northeast
Generation
Services
Company No transactions this quarter.
Select Energy
Contracting,
Inc. No transactions this quarter.
Reeds Ferry
Supply Co.,
Inc. No transactions this quarter.
HEC/Tobyhanna
Energy
Project, Inc. No transactions this quarter.
Yankee Energy
Services
Company No transactions this quarter.
ERI/HEC
EFA-Med, LLC No transactions this quarter.
E.S. Boulos
Company No transactions this quarter.
NGS Mechanical,
Inc. No transactions this quarter.
HEC/CJTS
Energy
Center LLC No transactions this quarter.
Select Energy
New York, Inc. No transactions this quarter.
Woods Electrical
Co., Inc. No transactions this quarter.
Northeast
Utilities No transactions this quarter.
ITEM 3 - ASSOCIATE TRANSACTIONS
-------------------------------------------------------------------------------
Instructions
------------
1. This item is used to report the performance during the quarter of contracts
among reporting companies and their associate companies, including other
reporting companies, for service, sales and construction. A copy of any
such contract not filed previously should be provided as an exhibit pursuant
to Item 6.B.
2. Parts I and II concern transactions performed by reporting companies on
behalf of associate companies, and transactions performed by associate
companies on behalf of reporting companies, respectively.
-------------------------------------------------------------------------------
Part I - Transactions performed by reporting companies on behalf
of associate companies.
Total Amount
Billed*
Reporting Associate
Company Company Types of Three Months
Rendering Receiving Services Ended
Services Services Rendered June 30, 2004
------------------- --------------------- ------------ ---------------
(Thousands
of Dollars)
Northeast Northeast
Generation Generation
Services Company Company Power Plant $ 7,989
=======
Northeast
Generation Northeast Utilities
Services Company Service Company Miscellaneous $ 31
=======
Northeast The Connecticut
Generation Light and Power
Services Company Company Electrical Services $ 19
=======
Northeast
Generation Holyoke Water
Services Company Power Company Power Plant $ 4,216
=======
Northeast
Generation Select Energy
Services Company Services, Inc. Power Plant $ 838
=======
Northeast Public Service
Generation Company of Electrical and
Services Company New Hampshire Mechanical Services $ 62
=======
Northeast
Generation Woods Network
Services Company Servies, Inc. Miscellaneous $ 4
=======
Reeds Ferry Select Energy Wholesale Pruchasing
Supply Co., Inc. Contracting, Inc. Services $ 408
=======
Northeast
Generation
E.S. Boulos Company Services Company Electrical Services $ 352
=======
Northeast Utilities
Select Energy, Inc. Service Company Miscellaneous $ 457
=======
The Connecticut
Light and Power
Select Energy, Inc. Company Miscellaneous $ 107
=======
* Total Amount Billed is for direct costs only.
Part II - Transactions performed by associate companies on behalf
of reporting companies.
Total Amount
Billed*
Reporting Associate
Company Company Types of Three Months
Rendering Receiving Services Ended
Services Services Rendered June 30, 2004
------------------- --------------------- ------------ ---------------
(Thousands
of Dollars)
Northeast Generation Northeast Generation
Company Services Company Miscellaneous $ 128
=======
Public Service
Company of Northeast Generation
New Hampshire Services Company Miscellaneous $ 7
=======
Public Service
Company of
New Hampshire Select Energy, Inc. Miscellaneous $ 7
=======
The Connecticut
Light and Power Northeast Generation
Company Services Company Miscellaneous $ 23
=======
The Connecticut
Light and Power
Company Select Energy, Inc. Miscellaneous $ 4
=======
Holyoke Water Northeast Generation
Power Company Services Company Miscellaneous $ 182
=======
Western
Massachusetts Northeast Generation
Electric Company Services Company Miscellaneous $ 85
=======
Northeast Utilities Select Energy
Service Company New York, Inc. Miscellaneous $ 279
=======
Northeast Utilities Northeast Generation
Service Company Services Company Miscellaneous $ 1,129
=======
Northeast Utilities
Service Company Select Energy, Inc. Miscellaneous $ 4,924
=======
Northeast Utilities Select Energy, Inc. Miscellaneous $ 113
=======
* Total Amount Billed is for direct costs only.
ITEM 4 - SUMMARY OF AGGREGATE INVESTMENT
Investments in energy-related companies:
----------------------------------------
(Thousands of Dollars)
Total consolidated capitalization as of 06/30/04 $6,684,850 line 1
----------
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 1,002,728 line 2
Additional investment allowed through 6/30/07 * 500,000 line 3
---------
Total Allowed $1,502,728 line 4
Total current aggregate investment:
Select Energy, Inc. and Subsidiary 805,837
Northeast Generation Services Company 22,231
Select Energy Contracting, Inc. 15,285
Woods Electrical Co., Inc. 17,320
Reeds Ferry Supply Co., Inc. 7
HEC/Tobyhanna Energy Project, Inc. -
Yankee Energy Services Company 7,882
E.S. Boulos Company 9,435
R.M. Services, Inc. -
NGS Mechanical, Inc. 10
Acumentrics Corporation 3,750
Greenport, LLC 501
ERI/HEC EFA-Med, LLC 9
HEC/CJTS Energy Center LLC 12
---------
Current aggregate investment 882,279
-----------
Elimination ** 12,539
-----------
Total current aggregate investment 869,740 line 5
-----------
Difference between the total allowed and the total
current aggregate investment of the
registered holding company system $ 632,988 line 6
===========
*Per SEC Order dated July 2, 2004 (Rel. No. 35-27868A).
**Elimination is for capital contributions made from a parent company who is a
reporting company to a subsidiary who is also a reporting company.
ITEM 5 - OTHER INVESTMENTS
-------------------------------------------------------------------------------
Instruction
-----------
This item concerns investments in energy-related and gas-related companies that
are excluded from the calculation of aggregate investment under rule 58.
-------------------------------------------------------------------------------
Major Line Other Other
of Energy- Investment Investment
Related in Last in This Reason for Difference
Business U-9C-3 Report U-9C-3 Report in Other Investment
------------- ------------- ------------- ------------------------
NONE
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
-------------------------------------------------------------------------------
Instructions
-------------------------------------------------------------------------------
A. Financial Statements
1. Financial statements are required for reporting companies in which
the registered holding company system has at least 50% equity or
other ownership interest. For all other rule 58 companies, the
registered holding company shall make available to the Commission
such financial statements as are available to it.
2. For each reporting company, provide a balance sheet as of the end
of the quarter and income statements for the three-month and year-
to-date periods ending as of the end of the quarter, together with
any notes thereto. Financial statements shall be for the first
three quarters of the fiscal year of the registered holding
company.
3. If a reporting company and each of its subsidiaries engage
exclusively in single category of energy-related or gas-related
activity, consolidated financial statements may be filed.
4. Separate financial statements need not be filed for inactive
companies or for companies engaged solely in the ownership of
interests in energy-related or gas-related companies.
B. Exhibits
1. Copies of contracts required to be provided by Item 3 shall be
filed as exhibits.
2. A certificate stating that a copy of the report for the previous
quarter has been filed with interested state commissions shall be
filed as an exhibit. The certificate shall provide the names and
addresses of the state commissions.
-------------------------------------------------------------------------------
A. Financial Statements
Select Energy, Inc. Consolidated:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Northeast Generation Services Company:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Select Energy Contracting, Inc.:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Reeds Ferry Supply Co., Inc.:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
HEC/Tobyhanna Energy Project, Inc.:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Yankee Energy Services Company:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
ERI/HEC EFA-Med, LLC:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
E. S. Boulos Company:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
NGS Mechanical, Inc.:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
HEC/CJTS Energy Center LLC:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Woods Electrical Co., Inc.:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Greenport Power, LLC:
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
Acumentrics Corporation:
Not available
R. M. Services, Inc.:
Inactive as of June 30, 2004
Northeast Utilities (Parent):
Balance Sheet - As of June 30, 2004
Income Statement - Three and six months ended June 30, 2004
B. Exhibits
Exhibit No. Description
----------- -----------
6.B.1.1 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.2 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3c Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3d Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3e Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3f Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.4a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.4b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.4c Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.5a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.5b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.6a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.6b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.6c Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.2.1 The company certifies that a conformed copy of Form U-9C-3 for
the previous quarter was filed with the following state
commissions:
Ms. Louise E. Rickard
Acting Executive Secretary
Department of Public Utility Control
10 Franklin Square
New Britain, CT 06051
Ms. Mary L. Cottrell, Secretary
Massachusetts Department of Telecommunications and Energy
100 Cambridge Street
Boston, MA 02202
Mr. Thomas B. Getz
Executive Director and Secretary
State of New Hampshire
Public Utilities Commission
8 Old Suncook Road, Building One
Concord, NH 03301-7319
SELECT ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash $ 7,877
Unrestricted cash from counterparties 104,976
Special deposits 35,420
Receivables, net 363,738
Accounts receivable from affiliated companies 112,811
Unbilled revenues 27,170
Notes receivable from affiliated companies 65,300
Taxes receivable 16,919
Derivative assets 202,982
Prepaid option premiums 23,492
Prepayments and other 26,326
-------------
987,011
-------------
Property, Plant and Equipment:
Competitive energy 20,446
Less: Accumulated depreciation 12,157
-------------
8,289
Construction work in progress 1,354
-------------
9,643
-------------
Deferred Debits and Other Assets:
Goodwill 3,200
Purchased intangible assets, net 12,623
Long-term accounts receivable 5,939
Long-term contracts asset 36,429
Other 130
-------------
58,321
-------------
$ 1,054,975
Total Assets =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 511,769
Accounts payable to affiliated companies 19,848
Derivative liabilities 98,094
Unearned option premiums 11,061
Counterparty deposits 104,976
Other 39,244
-------------
784,992
-------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 46,601
Other 8,918
-------------
55,519
-------------
Capitalization:
Long-Term Debt from NU Parent 150,000
-------------
Common Stockholder's Equity:
Common stock, $1 par value - authorized
20,000 shares; 100 shares outstanding -
Capital surplus, paid in 286,190
Accumulated deficit (267,979)
Accumulated other comprehensive income 46,253
-------------
Common Stockholder's Equity 64,464
-------------
Total Capitalization 214,464
-------------
Total Liabilities and Capitalization $ 1,054,975
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
-------------- -------------
(Thousands of Dollars)
Operating Revenues $ 550,360 $ 1,284,532
-------------- ------------
Operating Expenses:
Operation -
Purchased power, net interchange power
and capacity 531,157 1,223,942
Other 24,536 43,249
Depreciation and amortization 1,934 3,704
Taxes other than income taxes 2,565 5,785
-------------- ------------
Total operating expenses 560,192 1,276,680
-------------- ------------
Operating (Loss)/Income (9,832) 7,852
Interest Expense, Net 2,422 5,210
Other Loss, Net (160) (176)
-------------- ------------
(Loss)/Income Before Income Tax (Benefit)/Expense (12,414) 2,466
Income Tax (Benefit)/Expense (4,712) 1,059
-------------- ------------
Net (Loss)/Income $ (7,702) $ 1,407
============== ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash and cash equivalents $ 667
Receivables, net 2,803
Accounts receivable from affiliated companies 3,687
Notes receivable from affiliated companies 300
Unbilled revenues 813
Materials and supplies 8
Prepayments and other 695
-------------
8,973
-------------
Property, Plant and Equipment:
Competitive energy 3,648
Less: Accumulated depreciation 1,203
-------------
2,445
Construction work in progress 8
-------------
2,453
-------------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 526
Other 21,564
-------------
22,090
-------------
Total Assets $ 33,516
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2004
--------------
(Thousands of
Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 3,022
Accounts payable to affiliated companies 2,730
Accrued taxes 5,542
Accrued pension 268
Other 1,436
--------------
12,998
--------------
Deferred Credits and Other Liabilities 1,844
--------------
Capitalization:
Long-Term Debt from NU Parent 5,000
--------------
Common Stockholder's Equity:
Common stock, $1 par value - 20,000 authorized
and 100 shares outstanding -
Capital surplus, paid in 15,430
Accumulated deficit (1,743)
Accumulated comprehensive loss (13)
--------------
Common Stockholder's Equity 13,674
--------------
Total Capitalization 18,674
--------------
Total Liabilities and Capitalization $ 33,516
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ -----------
(Thousands of Dollars)
Operating Revenues $ 13,356 $ 26,105
------------ -----------
Operating Expenses:
Operation -
Other 8,417 16,632
Maintenance 3,655 7,218
Depreciation and amortization 100 168
Taxes other than income taxes 420 1,032
------------ -----------
Total operating expenses 12,592 25,050
------------ -----------
Operating Income 764 1,055
Interest Expense, Net 120 253
Other Loss, Net (235) (220)
------------ -----------
Income Before Income Tax Expense 409 582
Income Tax Expense 130 181
------------ -----------
Net Income $ 279 $ 401
============ ===========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Receivables, net $ 25,604
Materials and supplies 623
Prepayments and other 300
-------------
26,527
-------------
Property, Plant and Equipment:
Competitive energy 5,867
Less: Accumulated depreciation 3,241
-------------
2,626
-------------
Deferred Debits and Other Assets:
Goodwill, net 17,220
Other 793
-------------
18,013
-------------
Total Assets $ 47,166
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
--------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 5,490
Accounts payable to affiliated companies 15,783
Accrued taxes 585
Other 5,956
--------------
27,814
--------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,578
--------------
Capitalization:
Common Stockholder's Equity:
Common stock, $1 par value - 100,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 15,068
Retained earnings 2,706
--------------
Common Stockholder's Equity 17,774
--------------
Total Capitalization 17,774
--------------
Total Liabilities and Capitalization $ 47,166
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
STATEMENTS OF INCOME
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ -----------
(Thousands of Dollars)
Operating Revenues $ 22,888 $ 39,062
------------ -----------
Operating Expenses:
Operation 22,000 37,882
Maintenance 75 183
Depreciation 286 572
------------ -----------
Total operating expenses 22,361 38,637
------------ -----------
Operating Income 527 425
Interest Expense, Net 34 67
Other Income, Net 30 31
------------- -----------
Loss Before Income Tax Expense 523 389
Income Tax Expense 223 185
------------- -----------
Net Income $ 300 $ 204
============= ===========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
REEDS FERRY SUPPLY CO., INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 5
Receivables, net 56
------------
61
------------
Deferred Debits and Other Assets:
Goodwill, net 247
------------
Total Assets $ 308
============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 55
Accounts payable to affiliated companies 295
------------
350
Capitalization: ------------
Common Stockholder's Equity:
Common stock, no par value - 200 shares
authorized and 100 shares outstanding 4
Capital surplus, paid in 3
Accumulated deficit (49)
------------
Common Stockholder's Equity (42)
------------
Total Capitalization (42)
------------
Total Liabilities and Capitalization $ 308
============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
REEDS FERRY SUPPLY CO., INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ -----------
(Thousands of Dollars)
Operating Revenues $ 408 $ 616
Operating Expenses 408 616
------------ -----------
Net Income $ - $ -
============ ===========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/TOBYHANNA ENERGY PROJECT, INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Special deposits $ 4,974
Receivables, net 768
-------------
5,742
-------------
Deferred Debits and Other Assets:
Contracts receivable 27,002
Unamortized debt expense 559
-------------
27,561
-------------
Total Assets $ 33,303
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Long-term debt - current portion $ 599
Accounts payable to affiliated companies 7,579
Accrued taxes 80
Accrued interest 686
Other 304
-------------
9,248
-------------
Capitalization:
Long-Term Debt 23,067
-------------
Common Stockholder's Equity:
Common stock, $1 par value - 100 shares
authorized and outstanding -
Retained earnings 988
-------------
Total Common Stockholder's Equity 988
-------------
Total Capitalization 24,055
-------------
Total Liabilities and Capitalization $ 33,303
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/TOBYHANNA ENERGY PROJECT, INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------- ------------
(Thousands of Dollars)
Interest Expense, Net $ 459 $ 922
Other Income, Net 537 1,105
------------- ------------
Income Before Income Tax Expense 78 183
Income Tax Expense 22 97
------------- ------------
Net Income $ 56 $ 86
============= ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash $ 320
Notes receivable from affiliated companies 500
Taxes receivable 2
-------------
822
-------------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 1,287
Investments and other 1,496
-------------
2,783
-------------
Total Assets $ 3,605
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
LIABILITIES AND CAPITALIZATION
-------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 371
Other 3
-------------
374
-------------
Deferred Credits and Other Liabilities 5
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $0 par value - 10,000 shares
authorized, 200 shares outstanding 1
Capital surplus, paid in 7,881
Accumulated deficit (4,656)
-------------
Common Stockholder's Equity 3,226
-------------
Total Capitalization 3,226
-------------
Total Liabilities and Capitalization $ 3,605
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
Operating Expenses (1) 1
----------- ---------
Operating Income/(Loss) 1 (1)
Other Loss, Net - (2,484)
----------- ---------
Income/(Loss) Before Income Tax Benefit 1 (2,485)
Income Tax Benefit - (1,020)
----------- ---------
Net Income/(Loss) $ 1 $ (1,465)
=========== =========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Receivables, net $ 12,409
Accounts receivable from affiliated companies 1,053
Unbilled revenues 3,858
Materials and supplies 195
------------
17,515
------------
Property, Plant and Equipment:
Competitive energy 1,280
Less: Accumulated depreciation 505
------------
775
------------
Deferred Debits and Other Assets:
Goodwill 6,963
Purchased intangible assets, net 30
Other 45
------------
7,038
------------
Total Assets $ 25,328
============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Advance from parent, non-interest bearing $ 2,948
Notes payable to banks 807
Accounts payable 5,476
Accounts payable to affiliated companies 630
Accrued taxes 29
Other 473
------------
10,363
------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 504
Other 1,057
------------
1,561
------------
Capitalization:
Common Stockholder's Equity:
Common stock, $0 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 7,539
Retained earnings 5,865
------------
Common Stockholder's Equity 13,404
------------
Total Capitalization 13,404
------------
Total Liabilities and Capitalization $ 25,328
============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ -----------
(Thousands of Dollars)
Operating Revenues $ 12,697 $ 22,346
------------ -----------
Operating Expenses:
Operation -
Other 395 742
Maintenance 12,017 20,871
Depreciation 64 124
------------ -----------
Total operating expenses 12,476 21,737
------------ -----------
Operating Income 221 609
Other (Loss)/Income, Net (9) (8)
------------ -----------
Income Before Income Tax Expense 212 601
Income Tax Expense 74 219
------------ -----------
Net Income $ 138 $ 382
============ ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NGS MECHANICAL, INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash $ 10
-------------
Total Assets $ 10
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 3
-------------
Capitalization:
Common Stockholder's Equity:
Common stock, $0 par value - authorized
20,000 shares; outstanding 100 shares -
Capital surplus, paid in 10
Retained deficit (3)
-------------
Common Stockholder's Equity 7
-------------
Total Capitalization 7
-------------
Total Liabilities and Capitalization $ 10
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NGS MECHANICAL, INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
Operating Expenses - -
------------ ------------
Net Income $ - $ -
============ ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 841
Notes receivable from affiliated companies 161,400
Notes and accounts receivable 1,485
Accounts receivable from affiliated companies 2,446
Taxes receivable 32,239
Prepayments 674
-------------
199,085
-------------
Deferred Debits and Other Assets:
Investments in subsidiary companies, at equity 2,627,028
Other 14,756
-------------
2,641,784
-------------
Total Assets $ 2,840,869
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Long-term debt - current portion $ 25,000
Accounts payable 156
Accounts payable to affiliated companies 5,884
Accrued interest 5,776
Derivative liabilities 10,339
Other 21,612
-------------
68,767
-------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 3,699
Other 1,558
-------------
5,257
-------------
Capitalization:
Long-Term Debt 443,387
-------------
Common Stockholder's Equity:
Common shares, $5 par value - authorized
225,000,000 shares; 150,578,806 shares issued and
128,098,320 shares outstanding 752,894
Capital surplus, paid in 1,110,135
Deferred contribution plan - employee stock
ownership plan (67,274)
Retained earnings 840,082
Accumulated other comprehensive income 46,645
Treasury stock (359,024)
-------------
Common Stockholder's Equity 2,323,458
-------------
Total Capitalization 2,766,845
-------------
Total Liabilities and Capitalization $ 2,840,869
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
resentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ -----------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ -----------
Operating Expenses:
Other 2,363 4,968
------------ -----------
Operating Loss (2,363) (4,968)
------------ -----------
Interest Expense 6,337 11,861
------------ -----------
Other Income, Net:
Equity in earnings of subsidiaries 26,084 95,860
Other 3,603 7,853
------------ -----------
Other income, net 29,687 103,713
------------ -----------
Income Before Income Tax Benefit 20,987 86,884
Income Tax Benefit (1,896) (3,441)
------------ -----------
Net Income $ 22,883 $ 90,325
============ ===========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/CJTS ENERGY CENTER LLC
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Total Assets $ -
==============
LIABILITIES AND CAPITALIZATION
------------------------------
Capitalization:
Common Stockholder's Equity:
Capital surplus, paid in $ 12
Accumulated deficit (12)
-------------
Common Stockholder's Equity -
-------------
Total Capitalization -
-------------
Total Liabilities and Capitalization $ -
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/CJTS ENERGY CENTER LLC
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
-------------- -------------
(Thousands of Dollars)
Operating Revenues $ - $ -
-------------- -------------
Operating Expenses - -
-------------- -------------
Net Income $ - $ -
============== =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
WOODS ELECTRICAL CO., INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
--------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash $ 111
Receivables, net 3,817
Taxes receivable 253
Unbilled revenues 473
Materials and supplies 91
Prepayments and other 2
-------------
4,747
-------------
Property Plant and Equipment:
Competitive energy 258
Less: Accumulated depreciation and amortization 78
-------------
180
-------------
Deferred Debits and Other Assets:
Goodwill 3,218
Purchased intangible assets, net 4,450
-------------
7,668
-------------
Total Assets $ 12,595
=============
Note: In the opinion of the Company, all adjustments necessary for a
fair presentation of financial position for the period shown
have been made.
See accompanying notes to financial statements.
WOODS ELECTRICAL CO., INC.
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
LIABILITIES AND CAPITALIZATION
-------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 1,200
Advance from parent, non-interest bearing 250
Accounts payable 1,369
Accounts payable to affiliated companies 281
Other 59
-------------
3,159
-------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 330
Other 443
-------------
773
-------------
Capitalization:
Long-Term Debt from NU Parent 4,450
-------------
Common Stockholder's Equity:
Common stock, $0 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 5,000
Accumulated deficit (787)
-------------
Common Stockholder's Equity 4,213
-------------
Total Capitalization 8,663
-------------
Total Liabilities and Capitalization $ 12,595
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
WOODS ELECTRICAL CO., INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------- -----------
(Thousands of Dollars)
Operating Revenues $ 2,674 $ 6,406
------------- -----------
Operating Expenses:
Other 428 818
Maintenance 2,368 5,855
Depreciation 12 25
------------- -----------
Total operating expenses 2,808 6,698
------------- -----------
Operating Loss (134) (292)
Interest Expense, Net 84 166
Other Income, Net 1 1
------------- -----------
Loss Before Income Tax Benefit (217) (457)
Income Tax Benefit (89) (187)
------------- -----------
Net Loss $ (128) $ (270)
============= ===========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
Greenport Power, LLC
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash $ 528
-------------
Total Assets $ 528
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 282
Other 200
-------------
482
-------------
Capitalization:
Common Stockholder's Equity:
Members equity 46
-------------
Common Stockholder's Equity 46
-------------
Total Capitalization 46
-------------
Total Liabilities and Capitalization $ 528
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
Northeast Generation Services Company has a 50 percent ownership interest in
Greenport Power, LLC.
Greenport Power, LLC
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------- -------------
(Thousands of Dollars)
Operating Revenues $ - $ -
Operating Expenses 100 180
------------- -------------
Net Loss $ (100) $ (180)
============= =============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
Northeast Generation Services Company has a 50 percent ownership interest
in Greenport Power, LLC.
ERI/HEC EFA-Med, LLC
BALANCE SHEET
(Unaudited)
June 30,
2004
-------------
(Thousands of
Dollars)
ASSETS
------
Current Assets:
Cash $ 2
-------------
Total Assets $ 2
=============
LIABILITIES AND CAPITALIZATION
------------------------------
Capitalization:
Common Stockholder's Equity:
Capital surplus, paid in $ 18
Accumulated deficit (16)
-------------
Common Stockholder's Equity 2
-------------
Total Capitalization 2
-------------
Total Liabilities and Capitalization $ 2
=============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
Select Energy Services, Inc. has a 50 percent ownership interest in
ERI/HEC EFA-Med, LLC.
ERI/HEC EFA-Med, LLC
STATEMENTS OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2004 2004
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
Operating Expenses - -
------------ ------------
Net Income $ - $ -
============ ============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
Select Energy Services, Inc. has a 50 percent ownership interest in
ERI/HEC EFA-Med, LLC.
Northeast Utilities (Parent)
Select Energy, Inc.
Select Energy New York, Inc.
Northeast Generation Services Company
E.S. Boulos Company
NGS Mechanical, Inc.
Woods Electrical Co., Inc.
Greenport Power, LLC
Select Energy Contracting, Inc.
Reeds Ferry Supply Co., Inc.
HEC/Tobyhanna Energy Project, Inc.
HEC/CJTS Energy Center LLC
ERI/HEC EFA-Med, LLC
Yankee Energy Services Company
Notes to Financial Statements (Unaudited)
1. About Northeast Utilities (NU)
Northeast Utilities Parent is the parent company of NU's subsidiaries. NU's
regulated utilities furnish franchised retail electric service in
Connecticut, New Hampshire and Massachusetts through three wholly owned
subsidiaries: The Connecticut Light and Power Company, Public Service Company
of New Hampshire and Western Massachusetts Electric Company. Other
subsidiaries include Holyoke Water Power Company, a company engaged in the
production of electric power, and Yankee Energy System, Inc. (Yankee), the
parent company of Yankee Gas Services Company, Connecticut's largest natural
gas distribution system.
Several wholly owned subsidiaries of NU provide support services for NU's
companies. Northeast Utilities Service Company provides centralized
accounting, administrative, engineering, financial, information technology,
legal, operational, planning, purchasing, and other services to NU's
companies. Three other subsidiaries construct, acquire or lease some of the
property and facilities used by NU's companies.
NU Enterprises, Inc. (NU Enterprises) is a wholly owned subsidiary of NU and
acts as the holding company for certain of NU's subsidiaries. Select Energy,
Inc. (Select Energy) and its consolidated subsidiary Select Energy New York,
Inc. (SENY), Northeast Generation Services Company and its subsidiaries
(NGS), Select Energy Services, Inc. and its subsidiaries (SESI), Mode 1
Communications, Inc. and Woods Network Services, Inc., engage in a variety of
energy-related and telecommunications activities, primarily in the
competitive energy retail and wholesale commodity, marketing and services
fields. Northeast Generation Company acquires generation facilities. E.S.
Boulos Company (Boulos), NGS Mechanical, Inc. (NGS Mechanical) and Woods
Electrical Co., Inc. (Woods Electrical) are wholly owned subsidiaries of NGS.
Greenport Power, LLC (Greenport) is a joint venture that is 50 percent owned
by NGS. Select Energy Contracting, Inc. (Select Energy Contracting), Reeds
Ferry Supply Co., Inc. (Reeds Ferry), HEC/Tobyhanna Energy Project, Inc.,
(HEC/Tobyhanna), and HEC/CJTS Energy Center LLC (HEC/CJTS) are wholly owned
subsidiaries of SESI. Another company, ERI/HEC EFA-Med, LLC (ERI/HEC), is 50
percent owned by SESI. Yankee maintains certain wholly owned subsidiaries,
including Yankee Energy Services Company (YESCO).
NU Enterprises is grouped into two business segments: the merchant energy
business segment and the energy services business segment. The merchant
energy business segment is comprised of Select Energy's wholesale and retail
businesses. The energy services business segment consists of the operations
of NGS, SESI and Woods Network.
Select Energy, SENY, NGS, Boulos, NGS Mechanical, Woods Electrical,
Greenport, Select Energy Contracting, Reeds Ferry, HEC/Tobyhanna, HEC/CJTS,
ERI/HEC and YESCO are "energy-related companies" under rule 58. These
footnotes are applicable to the rule 58 companies with financial statements
filed in this report on Form U-9C-3 under Item 6 Section A.
2. About Select Energy
Select Energy's merchant energy business segment includes wholesale marketing
and retail marketing businesses. The wholesale marketing business includes
wholesale origination, portfolio management and the operation of more than
1,400 megawatts of pumped storage, hydroelectric and coal-fired generation
assets. Select Energy is an integrated energy business that buys, markets
and sells electricity, gas, oil and energy-related products and services to
both wholesale and retail customers in the Northeastern United States.
Select Energy procures and delivers energy and capacity required to serve its
electric, gas and oil customers. Select Energy is a licensed retail
electricity supplier and is registered with local electric distribution
companies and is a registered gas marketer with local gas distribution
companies in the states of Connecticut, Delaware, Maine, Maryland,
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, and Virginia.
3. About SENY
SENY is a wholly owned subsidiary of Select Energy and engages in the
brokering, marketing, transportation, storage, and sale of energy commodities
in the state of New York.
4. About NGS
NGS provides management, operation and maintenance services to the electric
generation market, as well as to large industrial customers, in the
Northeastern United States.
5. About Boulos
Boulos is an electrical contracting company which specializes in high-voltage
electrical construction and maintenance in Connecticut, Maine, Massachusetts,
New Hampshire, New York, Rhode Island, and Vermont. Boulos is wholly owned
by NGS.
6. About NGS Mechanical
NGS Mechanical provides power plant operations, maintenance and capital
project support services in certain New England states and New York. NGS
Mechanical is wholly owned by NGS.
7. About Woods Electrical
Woods Electrical is in the electrical contracting business in Connecticut and
is a wholly owned subsidiary of NGS. Woods Electrical is also registered in
the electrical contracting business in Maine, Massachusetts, New Hampshire
and New York.
8. About Greenport
Greenport is a limited liability company that was established to enter into
an engineering, procurement and construction agreement with Global Common LLC
for the performance of design, engineering, procurement, construction, and
other services in connection with an electrical generation facility
construction project in Greenport, Long Island, New York. Greenport is 50
percent owned by NGS.
9. About Select Energy Contracting
Select Energy Contracting designs, manages and directs the construction of,
and/or installation of mechanical, water and electrical systems and other
resource consuming equipment.
10. About Reeds Ferry
Reeds Ferry is an equipment wholesaler which purchases equipment on behalf of
Select Energy Contracting.
11. About HEC/Tobyhanna
HEC/Tobyhanna is a special purpose entity established to manage the assets of
an Energy Savings Performance Contract at the Tobyhanna Army Depot.
12. About HEC/CJTS
HEC/CJTS is a special purpose entity formed to facilitate the financing of
SESI's construction of an energy center at the Connecticut Juvenile Training
School in Middletown, Connecticut.
13. About ERI/HEC
ERI/HEC was established on September 30, 2000, by SESI and ERI Services, Inc.
to enter into an indefinite delivery/indefinite quantity contract with the
United States Navy. ERI/HEC is 50 percent owned by SESI.
14. About YESCO
YESCO has disposed of most of its assets and has wound down its energy-
related services for its customers.
15. Public Utility Regulation
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935 (1935
Act), and is subject to the provisions of the 1935 Act. Arrangements among
NU's companies, outside agencies and other utilities covering
interconnections, interchange of electric power and sales of utility property
are subject to regulation by the Federal Energy Regulatory Commission (FERC)
and/or the SEC. NU's operating subsidiaries are subject to further
regulation for rates, accounting and other matters by the FERC and/or
applicable state regulatory commissions.
16. Presentation
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
17. Derivative Instruments, Market Risk and Risk Management
A. Derivative Instruments
Derivatives that are utilized for trading purposes are recorded at fair value
with changes in fair value included in earnings. Other contracts that are
derivatives but do not meet the definition of a cash flow or fair value hedge
and cannot be designated as normal purchases or normal sales are also
recorded at fair value with changes in fair value included in earnings. For
those contracts that meet the definition of a derivative and meet the cash
flow hedge requirements, the changes in the fair value of the effective
portion of those contracts are generally recognized in accumulated other
comprehensive income until the underlying transactions occur. For contracts
that meet the definition of a derivative but do not meet the hedging
requirements, and for the ineffective portion of contracts that meet the cash
flow hedge requirements, the changes in fair value of those contracts are
recognized currently in earnings. Derivative contracts designated as fair
value hedges and the item they are hedging are both recorded at fair value on
the balance sheet. Derivative contracts that are entered into as a normal
purchase or sale and are probable of resulting in physical delivery, and are
documented as such, are recorded under accrual accounting.
The tables below summarize Select Energy's derivative assets and liabilities
at June 30, 2004. The business activities of NU Enterprises that result in
the recognition of derivative assets include concentrations of credit risk to
energy marketing and trading counterparties. At June 30, 2004, the maximum
amount of loss on trading, non-trading, and hedging contracts due to credit
risk and assuming complete performance failure and no value for the
collateral maintained is the total of NU Enterprises' derivative assets of
$203 million. However, a significant portion of these assets is contracted
with investment grade rated counterparties or collateralized with cash. The
amounts below do not include option premiums paid, which are recorded as
prepayments and amounted to $6.8 million related to energy trading activities
and $16.7 million related to marketing activities at June 30, 2004. These
amounts also do not include option premiums received, which are recorded as
other current liabilities and amounted to $9.2 million related to energy
trading activities and $1.9 million related to marketing activities at
June 30, 2004.
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(Millions of Dollars) Assets Liabilities Total
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Trading $ 111.2 $ (82.9) $ 28.3
Non-trading 0.2 (0.1) 0.1
Hedging 91.6 (15.2) 76.4
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Total $ 203.0 $ (98.2) $ 104.8
===============================================================================
Trading: To gather market intelligence and utilize this information in risk
management activities for the wholesale marketing activities, Select Energy
conducts limited energy trading activities in electricity, natural gas, and
oil, and therefore, experiences net open positions. Select Energy manages
these open positions with strict policies that limit its exposure to market
risk and require daily reporting to management of potential financial
exposures.
Derivatives used in trading activities are recorded at fair value and
included in the balance sheet as derivative assets or liabilities. Changes
in fair value are recognized in operating revenues in the statement of income
in the period of change. The net fair value positions of the trading
portfolio at June 30, 2004 were assets of $28.3 million.
Select Energy's trading portfolio includes New York Mercantile Exchange
(NYMEX) futures and options, the fair value of which is based on closing
exchange prices; over-the-counter forwards and options, the fair value of
which is based on the mid-point of bid and ask market prices; and bilateral
contracts for the purchase or sale of electricity or natural gas, the fair
value of which is determined using available information from external
sources. Select Energy's trading portfolio also includes transmission
congestion contracts (TCCs). The fair value of the TCCs included in the
trading portfolio is based on published market data.
Non-trading: Non-trading derivative contracts are used for delivery of energy
related to Select Energy's wholesale and retail marketing activities. These
contracts are subject to fair value accounting because these contracts are
derivatives that cannot be designated as normal purchases or sales, as
defined. These contracts cannot be designated as normal purchases or sales
either because they are included in the New York energy market that settles
financially or because management did not elect the normal purchases and
sales designation. Changes in fair value of a negative $0.7 million of non-
trading derivative contracts were recorded in revenues in the first six
months of 2004.
Market information for the TCCs classified as non-trading is not available,
and those contracts cannot be reliably valued. Management believes the
amounts paid for these contracts, which total $8.2 million at June 30, 2004,
are included in premiums paid, are equal to their fair value.
Hedging: Select Energy utilizes derivative financial and commodity
instruments, including futures and forward contracts, to reduce market risk
associated with fluctuations in the price of electricity and natural gas
purchased to meet firm sales commitments to certain customers. Select Energy
also utilizes derivatives, including price swap agreements, call and put
option contracts, and futures and forward contracts to manage the market risk
associated with a portion of its anticipated supply and delivery
requirements. These derivatives have been designated as cash flow hedging
instruments and are used to reduce the market risk associated with
fluctuations in the price of electricity, natural gas or oil. A derivative
that hedges exposure to the variable cash flows of a forecasted transaction
(a cash flow hedge) is initially recorded at fair value with changes in fair
value recorded in accumulated other comprehensive income. Cash flow hedges
impact net income when the forecasted transaction being hedged occurs, when
hedge ineffectiveness is measured and recorded, when the forecasted
transaction being hedged is no longer probable of occurring, or when there is
accumulated other comprehensive loss and the hedge and the forecasted
transaction being hedged are in a loss position on a combined basis.
Select Energy maintains natural gas service agreements with certain customers
to supply gas at fixed prices for terms extending through 2006. Select
Energy has hedged its gas supply risk under these agreements through NYMEX
futures contracts. Under these contracts, which also extend through 2006,
the purchase price of a specified quantity of gas is effectively fixed over
the term of the gas service agreements. At June 30, 2004 the NYMEX futures
contracts had notional values of $65.2 million and were recorded at fair
value as derivative assets of $11.9 million.
Select Energy also maintains various physical and financial instruments to
hedge its electric and gas purchases and sales through 2006. These
instruments include forwards, futures, options, financial collars, swaps and
financial transmission rights. These hedging contracts, which are valued at
the mid-point of bid and ask market prices, were recorded as derivative
assets of $79.7 million and derivative liabilities of $14.7 million at
June 30, 2004.
In the second quarter of 2004, Select Energy hedged natural gas inventory
with gas futures, accounted for as fair value hedges. The changes in fair
value of the futures, options and swaps were recorded as derivative
liabilities of $0.5 million, and the changes in fair value of the hedged
inventory of $0.9 million were recorded on the balance sheet.
B. Market Risk Information
Select Energy utilizes the sensitivity analysis methodology to disclose
quantitative information for its commodity price risks. Sensitivity analysis
provides a presentation of the potential loss of future earnings, fair values
or cash flows from market risk-sensitive instruments over a selected time
period due to one or more hypothetical changes in commodity prices, or other
similar price changes. Under sensitivity analysis, the fair value of the
portfolio is a function of the underlying commodity, contract prices and
market prices represented by each derivative commodity contract. For swaps,
forward contracts and options, fair value reflects management's best
estimates considering over-the-counter quotations, time value and volatility
factors of the underlying commitments. Exchange-traded futures and options
are recorded at fair value based on closing exchange prices.
Wholesale and Retail Marketing Portfolio: When conducting sensitivity
analyses of the change in the fair value of Select Energy's electricity,
natural gas and oil on the wholesale and retail marketing portfolio, which
would result from a hypothetical change in the future market price of
electricity, natural gas and oil, the fair values of the contracts are
determined from models that take into consideration estimated future market
prices of electricity, natural gas and oil, the volatility of the market
prices in each period, as well as the time value factors of the underlying
commitments. In most instances, market prices and volatility are determined
from quoted prices on the futures exchange.
Select Energy has determined a hypothetical change in the fair value for its
wholesale and retail marketing portfolio, which includes cash flow hedges and
electricity, natural gas and oil contracts, assuming a 10 percent change in
forward market prices. At June 30, 2004, a 10 percent change in market price
would have resulted in an increase in fair value of $24.6 million or a
decrease in fair value of $22.7 million.
The impact of a change in electricity, natural gas and oil prices on Select
Energy's wholesale and retail marketing portfolio at June 30, 2004, is not
necessarily representative of the results that will be realized when these
contracts are physically delivered.
Trading Contracts: At June 30, 2004, Select Energy has calculated the market
price resulting from a 10 percent change in forward market prices. That 10
percent change would result in approximately a $0.7 million increase or
decrease in the fair value of the Select Energy trading portfolio. In the
normal course of business, Select Energy also faces risks that are either non-
financial or non-quantifiable. These risks principally include credit risk,
which is not reflected in this sensitivity analysis.
C. Other Risk Management Activities
Credit Risk Management: Credit risk relates to the risk of loss that NU would
incur as a result of non-performance by counterparties pursuant to the terms
of their contractual obligations. NU serves a wide variety of customers and
suppliers that include IPPs, industrial companies, gas and electric
utilities, oil and gas producers, financial institutions, and other energy
marketers. Margin accounts exist within this diverse group, and NU realizes
interest receipts and payments related to balances outstanding in these
margin accounts. This wide customer and supplier mix generates a need for a
variety of contractual structures, products and terms which, in turn,
requires NU to manage the portfolio of market risk inherent in those
transactions in a manner consistent with the parameters established by NU's
risk management process.
Credit risks and market risks at NU Enterprises are monitored regularly by a
Risk Oversight Council operating outside of the business lines that create or
actively manage these risk exposures to ensure compliance with NU's stated
risk management policies.
NU tracks and re-balances the risk in its portfolio in accordance with fair
value and other risk management methodologies that utilize forward price
curves in the energy markets to estimate the size and probability of future
potential exposure.
NYMEX traded futures and option contracts cleared off the NYMEX exchange are
ultimately guaranteed by NYMEX to Select Energy. Select Energy has
established written credit policies with regard to its counterparties to
minimize overall credit risk on all types of transactions. These policies
require an evaluation of potential counterparties' financial condition
(including credit ratings), collateral requirements under certain
circumstances (including cash in advance, letters of credit, and parent
guarantees), and the use of standardized agreements, which allow for the
netting of positive and negative exposures associated with a single
counterparty. This evaluation results in establishing credit limits prior to
Select Energy entering into energy contracts. The appropriateness of these
limits is subject to continuing review. Concentrations among these
counterparties may impact Select Energy's overall exposure to credit risk,
either positively or negatively, in that the counterparties may be similarly
affected by changes to economic, regulatory or other conditions.
At June 30, 2004, Select Energy maintained collateral balances from
counterparties of $105 million. These amounts are included in both
unrestricted cash from counterparties and other current liabilities on the
accompanying balance sheet.
18. Unrestricted Cash from Counterparties
Unrestricted cash on deposit from counterparties represents balances
collected from counterparties resulting from Select Energy's credit
management activities. An offsetting liability has been recorded in other
current liabilities for the amounts collected. To the extent Select Energy
requires collateral from counterparties, cash is held as a part of the total
collateral required. The right to hold such cash collateral in an
unrestricted manner is determined by the terms of Select Energy's agreements.
Key factors affecting the unrestricted status of a portion of this cash
collateral include the financial standing of Select Energy and its credit
support provider.
19. Special Deposits
Special deposits represents amounts Select Energy has on deposit with
unaffiliated counterparties and brokerage firms in the amount of $2.6
million.
QUARTERLY REPORT OF NORTHEAST UTILITIES
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935 and the rules and regulations of the Securities and Exchange Commission
issued there under, the undersigned company has duly caused this report to be
signed on its behalf by the undersigned officer thereunto duly authorized.
NORTHEAST UTILITIES
-------------------
(Registered Holding Company)
By: /s/ John P. Stack
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(Signature of Signing Officer)
John P. Stack
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Vice President-Accounting and Controller
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Date: August 25, 2004
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