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, 2003
Northeast Utilities
-------------------
(Name of registered holding company)
107 Selden Street, Berlin, CT 06037
-----------------------------------
(Address of Principal Executive Officers)
Name and telephone number of officer to whom inquiries concerning this report
should be directed:
John P. Stack, Vice President-Accounting and Controller
Telephone Number: 860-665-2333
GENERAL INSTRUCTIONS
A. Use of Form
1. A reporting company, as defined herein, shall file a report on this form
within 60 days after the end of each of the first three quarters, and
within 90 days after the end of the fourth quarter, of the fiscal year
of the registered holding company. The period beginning on the date of
effectiveness of rule 58 and ending at the end of the quarter following
the quarter in which the rule becomes effective shall constitute the
initial period for which any report shall be filed, if applicable.
2. The requirement to provide specific information by means of this form
supersedes any requirement by order of the Commission to provide identical
information by means of periodic certificates under rule 24; but does not
so supersede and replace any requirement by order to provide information
by means of an annual report on Form U-13-60.
3. Information with respect to reporting companies that is required by Form
U-13-60 shall be provided exclusively on that form.
4. Notwithstanding the specific requirements of this form, this Commission
may informally request such further information as, in its opinion, may
be necessary or appropriate.
B. Statements of Monetary Amounts and Deficits
1. Amounts included in this form and in related financial statements
may be expressed in whole dollars, thousands of dollars or hundred
thousands of dollars.
2. Deficits and other similar entries shall be indicated by either
brackets or parentheses. An explanation should be provided by
footnote.
C. Formal Requirements
This form, including exhibits, shall be filed with Commission
electronically pursuant to Regulation S-T (17 CFR 232.10 et seq.). A
conformed copy of each such report shall be filed with each state
commission having jurisdiction over the retail rates of a public utility
company that is an associate company of a reporting company. Each report
shall provide the name and telephone number of the person to whom
inquiries concerning this report should be directed.
D. Definitions
As used in this form, the word "reporting company" means an energy-related
company or gas-related company, as defined in rule 58(b). All other words
and terms have the same meaning as in the Public Utility Holding Company
Act of 1935, as amended, and the rules and regulations thereunder.
ITEM 1 - ORGANIZATIONAL CHART
-------------------------------------------------------------------------------
Instructions
-------------------------------------------------------------------------------
1. Complete Item 1 only for the first three calendar quarters of the fiscal
year of the registered holding company.
2. Under the caption "Name of Reporting Company," list each energy-related
and gas-related company and each system company that directly or
indirectly holds securities thereof. Add the designation "(new)" for each
reporting company of which securities were acquired during the period, and
the designation "(*)" for each inactive company.
3. Under the caption "Percentage of Voting Securities Held," state the
aggregate percentage of the outstanding voting securities of the reporting
company held directly or indirectly by the registered holding company at
the end of the quarter.
4. Provide a narrative description of each reporting company's activities
during the reporting period.
-------------------------------------------------------------------------------
Percentage Activities
Energy or of 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
(B)
Select Energy, Energy 09/26/96 Connecticut 100% by NU Invest in
Inc. Enterprises, energy-
Inc. related
activities
Select Energy Energy 03/17/99 Connecticut 100% by NU Invest in (C)
Portland Enterprises, energy-
Pipeline, Inc.* Inc. related
activities
Northeast Energy 01/04/99 Connecticut 100% by NU Invest in (D)
Generation Enterprises, energy-
Services Company Inc. related
activities
Select Energy Energy 06/19/90 Massachusetts 100% by NU Invest in (E)
Services, Inc. Enterprises, energy-
Inc. related
activities
Reeds Ferry Energy 07/15/64 New Hampshire 100% by Select Invest in (F)
Supply Co., Inc. Energy energy-
Services, Inc. related
activities
HEC/Tobyhanna Energy 09/28/99 Massachusetts 100% by Select Invest in (G)
Energy Project, Energy energy-
Inc. Services, Inc. related
activities
Select Energy Energy 10/12/94 Massachusetts 100% by Select Invest in (H)
Contracting, Inc. Energy energy-
Services, Inc. related
activities
Yankee Energy Holding 02/15/00 Connecticut 100% by Public (I)
System, Inc. Northeast Utility
Utilities Holding
Company
Yankee Energy Energy 07/02/93 Connecticut 100% by Yankee Invest in (J)
Services Company* Energy System, energy-
Inc. related
activities
R. M. Services, Energy 11/22/94 Connecticut 10% by Yankee Invest in (K)
Inc. Energy System, energy-
Inc. related
activities
Acumentrics Energy 09/13/00 Massachusetts 5% by NU Invest in (L)
Corporation Enterprises, energy-
Inc. related
activities
ERI/HEC EFA-Med, Energy 09/30/00 Delaware 50% by Select Invest in (M)
LLC Energy energy-
Services, Inc. related
activities
E. S. Boulos Energy 01/10/01 Connecticut 100% by Invest in (N)
Company Northeast energy-
Generation related
Services activities
Company
NGS Mechanical, Energy 01/24/01 Connecticut 100% by Provide (O)
Inc. Northeast mechanical
Generation construction
Services and
Company maintenance
services
HEC/CJTS Energy Energy 03/02/01 Delaware 100% by Select Facilitate (P)
Center LLC Energy construction
Services, Inc. financing
Select Energy Energy 02/13/96 Delaware 100% by Select Invest in (Q)
New York, Inc. Energy, Inc. energy-
related
activities
Woods Electrical Energy 07/18/02 Connecticut 100% by Provide (R)
Co., Inc. Northeast electrical
Generation contacting
Services services
Company
Greenport Power, Energy 02/13/03 Delaware 50% by Invest in (S)
LLC Northeast energy
Generation related
Services construction
Company activities
(A) NU Enterprises, Inc. is not the "reporting company" but is included in
this Item 1 because it holds, directly or indirectly, voting securities
issued by reporting companies as indicated above.
(B) Select Energy, Inc. (Select Energy) is an integrated energy business
that buys, sells, markets and trades electricity, gas and oil and energy-
related products and services to both wholesale and retail customers in
the northeastern United States. Select Energy procures and delivers
energy and capacity required to serve its electric, gas and oil
customers. Under the umbrella of the Select Energy brand, Select
Energy, collectively with its affiliated competitive energy businesses,
provides a wide range of energy products and energy services.
Select Energy is a licensed retail electricity supplier and is
registered with local electric distribution companies in the states of
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island and Virginia. Select
Energy is a registered gas marketer with local gas distribution
companies in the states of Connecticut, Delaware, Maine, Maryland,
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island and Virginia.
(C) Select Energy Portland Pipeline, Inc. (SEPPI) acquired a 5% interest in
Portland Natural Gas Transmission System partnership in March 1999 and
sold this interest in June 2001.
(D) Northeast Generation Services Company (NGS) was established to provide a
full range of energy-related operation and maintenance services for
larger industrial, institutional and power generation customers
throughout the 11-state northeast area. NGS' current business segments
focus on providing turnkey Manage and Operate Services (MOS) a variety
of Specialty Services (SS) and full-scope mechanical, Construction and
Maintenance Services (CMS).
MOS is a service that is designed for generation asset owners. NGS has
the ability to offer station management and operation services with a
focus on optimizing the value of that specific asset with the owner.
Within the SS platform, its offerings include electrical maintenance and
laboratory analysis. Within the CMS platform, the product and service
offerings include mechanical construction and maintenance services and
engineering and environmental consulting services, with an emphasis on
power plant systems.
(E) Select Energy Services, Inc. (formerly HEC Inc.) is not the "reporting
company" but is included in this Item 1 because it holds, directly or
indirectly, voting securities issued by reporting companies as indicated
above.
(F) Reed's Ferry Supply Co., Inc. is as an equipment wholesaler which
purchases equipment on behalf of Select Energy Contracting, Inc.
(G) HEC/Tobyhanna Energy Project, Inc. was established as a special purpose
entity to manage the assets of an Energy Savings Performance Contract
(ESPC) project at the Tobyhanna Army Depot.
(H) Select Energy Contracting, Inc. designs, manages and directs the
construction of, and/or installing of mechanical, water, and electrical
systems, energy and other resource consuming equipment.
(I) Yankee Energy System, Inc. is not the "reporting company" but is
included in this Item 1 because it holds, directly or indirectly, voting
securities issued by reporting companies as indicated above.
(J) Yankee Energy Services Company (YESCO) has disposed of most of its
assets and is winding down its energy-related services for its
customers.
(K) R. M. Services, Inc. provides consumer collection services for companies
throughout the United States.
(L) Acumentrics Corporation develops, manufactures, and distributes advanced
power generation, power quality and power protection devices including a
high-speed flywheel and advanced technology fuel cells.
(M) ERI/HEC EFA-Med, LLC (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.
(N) 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, and Vermont.
(O) NGS Mechanical, Inc. (NGSM) performs mechanical construction and
maintenance services. NGSM is registered to do business in
Massachusetts, New Hampshire, Maine, Vermont, Rhode Island, and New
York.
(P) HEC/CJTS Energy Center LLC (HEC/CTJS) facilitated the construction of an
energy center at the Connecticut Juvenile Training School in Middletown,
Connecticut. HEC/CJTS does not have any employees nor does it conduct
any other activities other than those related to accepting the
assignment of the related lease.
(Q) Select Energy New York, Inc. (SENY) is engaged in the brokering,
marketing, transportation, storage, and sale of energy commodities in
the state of New York.
(R) Woods Electrical Co., Inc. (Woods) is in the electrical contracting
business in Connecticut. Woods is registered to do business in
Connecticut, Massachusetts, Maine and New Hampshire.
(S) 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 Common 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 and NGS each own 50% of the LLC.
ITEM 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
-------------------------------------------------------------------------------
Instruction
-----------
With respect to a transaction with an associate company, report only the type
and principal amount of securities involved.
------------------------------------------------------------------------------
Person
Company Type of Principal to Whom Collateral Consideration Company Amount of
Issuing Security Amount of Issue or Cost of Security Given With Received for Contributing Capital
Security Issued Security Renewal Capital Was Issued Security Each Security Capital Contribution
-------- -------- --------- -------- ------- ---------- ---------- ------------- ------------ ------------
Select
Energy, Inc. No transactions this quarter.
Northeast
Generation
Services
Company No transactions this quarter.
Select Energy
Contracting,
Inc. No transactions this quarter.
Reeds Ferry
Supply Co.,
Inc. No transactions this quarter.
HEC/Tobyhanna
Energy
Project, Inc. No transactions this quarter.
Yankee Energy
Services
Company No transactions this quarter.
R. M.
Services, Inc. No transactions this quarter.
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.
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, 2003
----------------------- ------------------------ -------------- -------------------
(Thousands
of Dollars)
Northeast Northeast
Generation Generation Electrical and
Services Company Company Mechanical services $ 10,172
========
Northeast
Generation Electrical and
Services Company E. S. Boulos Company Mechanical services $ 1
========
Northeast The Connecticut
Generation Light and Power Electrical and
Services Company Company Mechanical services $ 11
========
Northeast
Generation Holyoke Water Electrical and
Services Company Power Company Mechanical services $ 2,850
========
Northeast
Generation Select Energy Electrical and
Services Company Services, Inc. Mechanical services $ 533
========
Northeast Public Service
Generation Company of Electrical and
Services Company New Hampshire Mechanical services $ 1,303
========
Northeast
Generation Yankee Energy Electrical and
Services Company Services Company Mechanical services $ 3
========
Reeds Ferry Select Energy Wholesale Purchasing
Supply Co., Inc. Contracting, Inc. Services $ 420
========
Select Energy Wholesale Purchasing
Select Energy, Inc. New York, Inc. Services $ 11,357
========
Select Energy, Inc. NU Enterprises, Inc. Miscellaneous $ 8
========
Northeast Utilities
Select Energy, Inc. Service Company Miscellaneous $ 1
========
Select Energy Select Energy,
New York, Inc. Inc. Miscellaneous $ 84
========
* Total Amount Billed is for direct costs only.
Part II - Transactions performed by associate companies on behalf
of reporting companies.
Total Amount
Billed*
Associate Reporting
Company Company Types of Three Months
Rendering Receiving Services Ended
Services Services Rendered June 30, 2003
----------------------- ------------------------ -------------- -------------------
(Thousands
of Dollars)
Northeast Generation Northeast Generation
Company Services Company Miscellaneous $ 392
========
Public Service
Company of Northeast Generation
New Hampshire Services Company Miscellaneous $ 1
========
Public Service
Company of Select Energy,
New Hampshire Inc. Miscellaneous $ 9
========
The Connecticut
Light and Power Northeast Generation
Company Services Company Miscellaneous $ 17
========
The Connecticut
Light and Power Select Energy,
Company Inc. Miscellaneous $ 2
========
Holyoke Water Northeast Generation
Power Company Services Company Miscellaneous $ 581
========
Western
Massachusetts Northeast Generation
Electric Company Services Company Miscellaneous $ 40
========
Northeast Utilities Select Energy
Service Company New York, Inc. Miscellaneous $ 74
========
Northeast Utilities Northeast Generation
Service Company Services Company Miscellaneous $ 1,116
========
Northeast Utilities Select Energy,
Service Company Inc. Miscellaneous $ 4,115
========
Northeast Utilities Yankee Energy
Service Company Services Company Miscellaneous $ 5
========
* 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 06/30/03 $6,734,520 line 1
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 1,010,178 line 2
Greater of $50 million or line 2 $1,010,178 line 3
Total current aggregate investment:
(categorized by major line of
energy-related business):
Select Energy, Inc. 704,370
Northeast Generation Services Company 38,922
Select Energy Contracting, Inc. 23,520
Select Energy New York, Inc. 30,671
Woods Electrical Co., Inc. 9,631
Reeds Ferry Supply Co., Inc. 7
HEC/Tobyhanna Energy Project, Inc. -
Yankee Energy Services Company 7,882
E.S. Boulos Company 11,980
R.M. Services, Inc. 14,287
NGS Mechanical, Inc. 10
Acumentrics Corporation 7,500
Greenport, LLC 2,001
ERI/HEC EFA-Med, LLC 9
HEC/CJTS Energy Center LLC 12
------------
Current aggregate investment 850,802
------------
Elimination * 22,511
------------
Total current aggregate investment 828,291 line 4
------------
Difference between the greater of $50 million or 15% of
capitalization and the total aggregate investment of the
registered holding company system $181,887 line 5
============
*Elimination is for capital contributions made from a parent company who is a
reporting company to a subsidiary who is also a reporting company.
ITEM 5 - OTHER INVESTMENTS
-------------------------------------------------------------------------------
Instruction
-----------
This item concerns investments in energy-related and gas-related companies that
are excluded from the calculation of aggregate investment under rule 58.
-------------------------------------------------------------------------------
Major Line Other Other
of Energy- Investment Investment
Related in Last in This Reason for Difference
Business U-9C-3 Report U-9C-3 Report in Other Investment
----------- ------------- ------------- ------------------------
NONE
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
-------------------------------------------------------------------------------
Instructions
-------------------------------------------------------------------------------
A. Financial Statements
1. Financial statements are required for reporting companies in which
the registered holding company system has at least 50% equity or
other ownership interest. For all other rule 58 companies, the
registered holding company shall make available to the Commission
such financial statements as are available to it.
2. For each reporting company, provide a balance sheet as of the end
of the quarter and income statements for the three-month and year-
to-date periods ending as of the end of the quarter, together with
any notes thereto. Financial statements shall be for the first
three quarters of the fiscal year of the registered holding
company.
3. If a reporting company and each of its subsidiaries engage
exclusively in single category of energy-related or gas-related
activity, consolidated financial statements may be filed.
4. Separate financial statements need not be filed for inactive
companies or for companies engaged solely in the ownership of
interests in energy-related or gas-related companies.
B. Exhibits
1. Copies of contracts required to be provided by Item 3 shall be
filed as exhibits.
2. A certificate stating that a copy of the report for the previous
quarter has been filed with interested state commissions shall be
filed as an exhibit. The certificate shall provide the names and
addresses of the state commissions.
-------------------------------------------------------------------------------
A. Financial Statements
Select Energy, Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Northeast Generation Services Company:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Select Energy Contracting, Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Reeds Ferry Supply Co., Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
HEC/Tobyhanna Energy Project, Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Yankee Energy Services Company:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
ERI/HEC EFA-Med, LLC:
Not available as of June 30, 2003
E. S. Boulos Company:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
NGS Mechanical, Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Northeast Utilities (Parent):
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Select Energy New York, Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
HEC/CJTS Energy Center LLC:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Woods Electrical Co., Inc.:
Balance Sheet - As of June 30, 2003
Income Statement - Three and six months ended June 30, 2003
Greenport Power, LLC:
Not available as of June 30, 2003
B. Exhibits
Exhibit No. Description
----------- -----------
6.B.1.1a Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1b Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.1c Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.2 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.3 Copy of contract required by Item 3 - filed under confidential
treatment pursuant to Rule 104(b).
6.B.2.1 The company certifies that a conformed copy of Form U-9C-3 for
the previous quarter was filed with the following state
commissions:
Ms. Louise E. Rickard
Acting Executive Secretary
Department of Public Utility Control
10 Franklin Square
New Britain, CT 06051
Ms. Mary L. Cottrell, Secretary
Massachusetts Department of Telecommunications and Energy
100 Cambridge Street
Boston, MA 02202
Mr. Thomas B. Getz
Executive Director and Secretary
State of New Hampshire
Public Utilities Commission
8 Old Suncook Road, Building One
Concord, NH 03301-7319
SELECT ENERGY, INC.
BALANCE SHEET
(Unaudited)
June 30,
2003
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Receivables, net $277,015
Accounts receivable from affiliated companies 152,337
Unbilled revenue 16,531
Taxes receivable 1,467
Special deposits 42,796
Derivative assets 132,697
Prepaid option premiums 15,655
Prepayments and other 50,965
--------
689,463
--------
Property, Plant and Equipment:
Competitive energy 12,733
Less: Accumulated depreciation 9,440
--------
3,293
Construction work in progress 5,372
--------
8,665
--------
Deferred Debits and Other Assets:
Goodwill and intangibles, net 16,229
Prepaid pension 1,828
Long-term accounts receivable 6,433
Long-term contracts assets 44,397
Other 37,695
--------
106,582
--------
Total Assets $804,710
========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC.
BALANCE SHEET
(Unaudited)
June 30,
2003
-----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 98,200
Accounts payable 323,289
Accounts payable to affiliated companies 20,909
Derivative liabilities 103,550
Unearned option premiums 20,267
Other 57,465
--------
623,680
--------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 6,328
Other 3,511
--------
9,839
--------
Capitalization:
Long-Term Debt from NU Parent 150,000
--------
Common Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 249,263
Accumulated deficit (230,507)
Accumulated other comprehensive income 2,435
--------
Common Stockholder's Equity 21,191
--------
Total Capitalization 171,191
--------
Total Liabilities and Capitalization $804,710
========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(Thousands of Dollars)
Operating Revenues $ 573,621 $1,124,459
----------- ----------
Operating Expenses:
Operation -
Purchased power, net interchange
power and capacity 551,429 1,097,886
Other 15,463 29,611
Depreciation and amortization 2,872 5,725
Taxes other than income taxes 1,604 2,227
----------- ----------
Total operating expenses 571,368 1,135,449
----------- ----------
Operating Income/(Loss) 2,253 (10,990)
Interest Expense, Net 1,650 2,949
Other (Loss)/Income, Net (725) 3,310
----------- ----------
Loss Before Income Tax Expense/(Benefit) (122) (10,629)
Income Tax Expense/(Benefit) 95 (5,903)
----------- ----------
Net Loss $ (217) $ (4,726)
=========== ==========
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,
2003
-----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1
Receivables, net 7,668
Accounts receivable from affiliated companies 6,104
Taxes receivable 619
Unbilled revenues 3,281
Fuel, materials and supplies, at average cost 2
Prepayments and other 1,356
----------
19,031
----------
Property, Plant and Equipment:
Competitive energy 2,913
Less: Accumulated depreciation 940
----------
1,973
Construction work in progress 696
----------
2,669
----------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 329
Prepaid pension 826
Intangible assets, net and other 24,976
----------
26,131
----------
Total Assets $ 47,831
==========
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,
2003
--------------
(Thousands of
Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Notes payable to affiliated companies $ 14,300
Accounts payable 8,393
Accounts payable to affiliated companies 3,113
Other 1,105
---------
26,911
---------
Deferred Credits and Other Liabilities 956
---------
Capitalization:
Long-Term Debt 5,000
---------
Common Stockholder's Equity:
Common stock, $1 par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 15,486
Accumulated deficit (480)
Accumulated comprehensive loss (42)
---------
Common Stockholder's Equity 14,964
---------
Total Capitalization 19,964
---------
Total Liabilities and Capitalization $ 47,831
=========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(Thousands of Dollars)
Operating Revenues $ 17,190 $ 29,470
----------- ----------
Operating Expenses:
Operation -
Other 13,752 24,155
Maintenance 3,300 5,520
Depreciation and amortization 66 134
Taxes other than income taxes 468 988
----------- ----------
Total operating expenses 17,586 30,797
----------- ----------
Operating Loss (396) (1,327)
Interest Expense, Net 153 307
Other Income, Net 1,470 1,411
----------- ----------
Income/(Loss) Before Income Tax Expense 921 (223)
Income Tax Expense 724 266
----------- ----------
Net Income/(Loss) $ 197 $ (489)
=========== ==========
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,
2003
-----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 385
Receivables, net 18,393
Materials and supplies, at average cost 324
Prepayments and other 116
----------
19,218
----------
Property, Plant and Equipment:
Competitive energy 6,893
Less: Accumulated depreciation 4,555
----------
2,338
----------
Deferred Debits and Other Assets:
Goodwill, net 17,220
Other 129
----------
17,349
----------
Total Assets $ 38,905
==========
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,
2003
-----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 6,140
Accounts payable to affiliated companies 10,343
Accrued taxes 11
Other 1,437
----------
17,931
----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,101
Other 2,293
----------
3,394
----------
Capitalization:
Common Stockholder's Equity:
Common stock, $1 par value - 100,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 15,094
Retained earnings 2,486
----------
Common Stockholder's Equity 17,580
----------
Total Capitalization 17,580
----------
Total Liabilities and Capitalization $ 38,905
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY CONTRACTING, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------- -----------
(Thousands of Dollars)
Operating Revenues $ 21,101 $ 36,429
------------- -----------
Operating Expenses:
Operation 19,363 33,284
Maintenance 168 317
Depreciation 306 612
Taxes other than income taxes 123 670
------------- -----------
Total operating expenses 19,960 34,883
------------- -----------
Operating Income 1,141 1,546
Interest Expense, Net 41 94
Other Loss, Net (5) (2)
------------- -----------
Income Before Income Tax Expense 1,095 1,450
Income Tax Expense 522 620
------------- -----------
Net Income $ 573 $ 830
============= ===========
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,
2003
-----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 5
Receivables, net 92
----------
97
----------
Deferred Debits and Other Assets:
Goodwill, net 248
----------
Total Assets $ 345
==========
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 92
Accounts payable to affiliated companies 295
----------
387
Capitalization: ----------
Common Stockholder's Equity:
Common stock, 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 $ 345
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
REEDS FERRY SUPPLY CO., INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(Thousands of Dollars)
Operating Revenues $ 420 $ 656
Operating Expenses 420 656
----------- ---------
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,
2003
-----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Receivables, net $ 790
----------
Property, Plant and Equipment:
Other, net 714
----------
Deferred Debits and Other Assets:
Contracts receivable 27,666
Other 3,902
----------
31,568
----------
Total Assets $ 33,072
==========
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Long-term debt - current portion $ 802
Accounts payable to affiliated companies 6,380
Accrued taxes 204
Accrued interest 706
Other 493
----------
8,585
----------
Capitalization:
Long-Term Debt 23,666
----------
Common Stockholder's Equity:
Common stock, $1 par value - 100 shares
authorized and outstanding -
Retained earnings 821
----------
Total Common Stockholder's Equity 821
----------
Total Capitalization 24,487
----------
Total Liabilities and Capitalization $ 33,072
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/TOBYHANNA ENERGY PROJECT, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ -----------
(Thousands of Dollars)
Interest Expense, Net $ 475 $ 956
Other Income, Net 577 1,160
----------- ----------
Income Before Income Tax Expense 102 204
Income Tax Expense 57 90
----------- ----------
Net Income $ 45 $ 114
=========== ==========
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,
2003
-----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Notes receivable from affiliated companies $ 100
Taxes receivable 287
-------
387
-------
Deferred Debits and Other Assets:
Accumulated deferred income taxes 436
Investments and other 4,595
-------
5,031
-------
Total Assets $ 5,418
=======
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,
2003
-----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 455
Other 3
-------
458
-------
Deferred Credits and Other Liabilities 5
-------
Capitalization:
Common Stockholder's Equity:
Common stock, no par value - 10,000 shares
authorized and 200 shares outstanding 1
Capital surplus, paid in 7,881
Accumulated deficit (2,927)
-------
Common Stockholder's Equity 4,955
-------
Total Capitalization 4,955
-------
Total Liabilities and Capitalization $ 5,418
=======
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
YANKEE ENERGY SERVICES COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(Thousands of Dollars)
Operating Revenues $ 2 $ 9
Operating Expenses 4 9
------------ ----------
Operating Loss (2) -
Interest Expense, Net 1 4
Other Income, Net 2 3
------------ -----------
Loss Before Income Tax Expense (1) (1)
Income Tax Expense 2 4
------------ -----------
Net Loss $ (3) $ (5)
============ ===========
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,
2003
-----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 240
Receivables, net 9,520
Accounts receivable from affiliated companies 234
Taxes receivable 274
Unbilled revenues 3,657
Materials and supplies 220
---------
14,145
---------
Property, Plant and Equipment:
Competitive energy 853
Less: Accumulated depreciation 282
---------
571
---------
Deferred Debits and Other Assets:
Goodwill 6,963
Other 29
---------
6,992
---------
Total Assets $ 21,708
=========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
BALANCE SHEET
(Unaudited)
June 30,
2003
-----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Advance from parent, non-interest bearing $ 2,948
Accounts payable 2,581
Accounts payable to affiliated companies 1,268
Other 179
---------
6,976
---------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 424
Other 686
---------
1,110
---------
Capitalization:
Common Stockholder's Equity:
Common stock, no par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 7,539
Retained earnings 6,083
---------
Common Stockholder's Equity 13,622
---------
Total Capitalization 13,622
---------
Total Liabilities and Capitalization $ 21,708
=========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
E.S. BOULOS COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(Thousands of Dollars)
Operating Revenues $ 9,245 $ 18,529
-------- --------
Operating Expenses:
Operating 298 602
Maintenance 8,995 17,709
Depreciation 41 78
-------- --------
Total operating expenses 9,334 18,389
-------- --------
Operating (Loss)/Income (89) 140
Other Income, Net 2 221
-------- --------
(Loss)/Income Before Income Tax Expense (87) 361
Income Tax Expense 253 399
-------- --------
Net Loss $ (340) $ (38)
======== ========
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,
2003
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 10
---------
Total Assets $ 10
=========
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable to affiliated companies $ 2
---------
Capitalization:
Common Stockholder's Equity:
Common stock, no par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 10
Accumulated deficit (2)
---------
Common Stockholder's Equity 8
---------
Total Capitalization 8
---------
Total Liabilities and Capitalization $ 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.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(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,
2003
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 962
Notes receivable from affiliated companies 243,900
Notes and accounts receivable 2,826
Accounts receivable from affiliated companies 2,628
Taxes receivable 2,213
Prepayments 12,624
---------
265,153
---------
Deferred Debits and Other Assets:
Investments in subsidiary companies, at equity 2,542,538
Other 16,658
----------
2,559,196
----------
Total Assets $2,824,349
==========
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,
2003
-----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Notes payable to banks $ 63,000
Long-term debt - current portion 23,000
Accounts payable 444
Accounts payable to affiliated companies 654
Accrued interest 6,043
Other 20,234
----------
113,375
----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,348
Other 1,477
----------
5,825
----------
Capitalization:
Long-Term Debt 490,655
----------
Common Stockholder's Equity:
Common shares, $5 par value - authorized
225,000,000 shares; 149,916,375 shares issued and
126,934,753 shares outstanding 749,582
Capital surplus, paid in 1,105,241
Deferred contribution plan - employee stock
ownership plan (80,170)
Retained earnings 798,796
Accumulated other comprehensive income 1,789
Treasury stock (360,744)
----------
Common Stockholder's Equity 2,214,494
----------
Total Capitalization 2,705,149
----------
Total Liabilities and Capitalization $2,824,349
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
STATEMENT OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------- -----------
(Thousands of Dollars)
Operating Revenues $ - $ -
-------- --------
Operating Expenses:
Other 2,345 4,360
-------- --------
Operating Loss (2,345) (4,360)
-------- --------
Interest Expense 2,867 9,655
-------- --------
Other Income, Net:
Equity in earnings of subsidiaries 28,408 91,149
Other 1,982 4,786
-------- --------
Other income, net 30,390 95,935
-------- --------
Income Before Income Tax Benefit 25,178 81,920
Income Tax Benefit 1,691 5,153
-------- --------
Net Income $ 26,869 $ 87,073
======== ========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY NEW YORK, INC.
BALANCE SHEET
(Unaudited)
June 30,
2003
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 17,882
Receivables, net 39,221
Accounts receivable from affiliated companies 2,210
Special deposits 2,907
Derivative assets 27,654
Prepaid option premiums 9,128
Prepayments and other 7,647
----------
106,649
----------
Property, Plant and Equipment:
Competitive energy 555
Less: Accumulated depreciation 310
----------
245
----------
Deferred Debits and Other Assets 3,582
----------
Total Assets $ 110,476
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY NEW YORK, INC.
BALANCE SHEET
(Unaudited)
June 30,
2003
----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Accounts payable $ 24,395
Accounts payable to affiliated companies 8,566
Accrued taxes 1,884
Derivative liabilities 5,378
Other 2,650
----------
42,873
----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 8,544
Pension obligation 674
Other 21
----------
9,239
----------
Capitalization:
Long-Term Debt 20,699
----------
Common Stockholder's Equity:
Common stock, $1 par value - authorized
and outstanding 10,000 shares 10
Capital surplus, paid in 9,962
Retained earnings 23,827
Accumulated other comprehensive income 3,866
----------
Common Stockholder's Equity 37,665
----------
Total Capitalization 58,364
----------
Total Liabilities and Capitalization $ 110,476
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY NEW YORK, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ ----------
(Thousands of Dollars)
Operating Revenues $ 150,491 $ 221,578
---------- ----------
Operating Expenses:
Purchased power, net interchange
power and capacity 149,160 211,393
Other 2,203 4,263
Taxes other than income taxes (384) (823)
---------- ----------
Total operating expenses 150,979 214,833
---------- ----------
Operating (Loss)/Income (488) 6,745
Interest Expense, Net 121 260
Other Income, Net 94 174
---------- ----------
(Loss)/Income Before Income
Tax (Benefit)/Expense (515) 6,659
Income (Benefit)/Tax Expense (181) 2,738
---------- ----------
Net (Loss)/Income $ (334) $ 3,921
========== ==========
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,
2003
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 1
----------
Total Assets $ 1
==========
LIABILITIES AND CAPITALIZATION
------------------------------
Capitalization:
Common Stockholder's Equity:
Capital surplus, paid in $ 12
Accumulated deficit (11)
----------
Common Stockholder's Equity 1
----------
Total Capitalization 1
----------
Total Liabilities and Capitalization $ 1
==========
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
HEC/CJTS ENERGY CENTER LLC
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------ -----------
(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,
2003
----------
(Thousands
of Dollars)
ASSETS
------
Current Assets:
Cash $ 187
Receivables, net 1,308
Taxes receivable 290
Unbilled revenue 58
Materials and supplies 58
Prepayments and other 18
---------
1,919
---------
Property Plant and Equipment:
Competitive energy 318
Less: Accumulated depreciation 35
---------
283
---------
Deferred Debits and Other Assets:
Goodwill and other purchased intangible assets, net 7,669
---------
Total Assets $ 9,871
=========
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,
2003
----------
(Thousands
of Dollars)
LIABILITIES AND CAPITALIZATION
------------------------------
Current Liabilities:
Advance from Northeast Generation Services
Company, non-interest bearing $ 250
Accounts payable 211
Accounts payable to affiliated companies 294
Other 19
---------
774
---------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 87
Other 74
---------
161
---------
Capitalization:
Long-Term Debt 4,450
---------
Common Stockholder's Equity:
Common stock, no par value - 20,000 shares
authorized and 100 shares outstanding -
Capital surplus, paid in 5,000
Accumulated deficit (514)
---------
Common Stockholder's Equity 4,486
---------
Total Capitalization 8,936
---------
Total Liabilities and Capitalization $ 9,871
=========
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.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2003 2003
------------- -----------
(Thousands of Dollars)
Operating Revenues $ 1,383 $ 2,885
------------ ----------
Operating Expenses:
Other 383 801
Maintenance 1,171 2,533
Depreciation 11 20
Taxes other than income taxes 3 (7)
------------ ----------
Total operating expenses 1,568 3,347
------------ ----------
Operating Loss (185) (462)
Interest Expense, Net 81 160
Other Income, Net - 3
------------ ----------
Loss Before Income Tax Benefit (266) (619)
Income Tax Benefit (213) (213)
------------ ----------
Net Loss $ (53) $ (406)
============ ==========
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
Select Energy, Inc.
Select Energy New York, Inc.
Northeast Generation Services Company
E.S. Boulos Company
NGS Mechanical, Inc.
Woods Electrical Co., Inc.
Select Energy Contracting, Inc.
Reeds Ferry Supply Co., Inc.
HEC/Tobyhanna Energy Project, Inc.
HEC/CJTS Energy Center 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 western Massachusetts through three wholly
owned subsidiaries: The Connecticut Light and Power Company, Public Service
Company of New Hampshire and Western Massachusetts Electric Company. Another
wholly owned subsidiary, North Atlantic Energy Corporation, previously sold
all of its entitlement to the capacity and output of the Seabrook Station
nuclear unit (Seabrook) to PSNH under the terms of two life-of-unit, full
cost recovery contracts. Seabrook was sold on November 1, 2002. 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 and, in some cases, for other New England utilities. Northeast
Utilities Service Company provides centralized accounting, administrative,
engineering, financial, information resources, legal, operational, planning,
purchasing, and other services to NU's companies. Until the sale of Seabrook
on November 1, 2002, North Atlantic Energy Service Corporation had
operational responsibility for Seabrook. Three other subsidiaries construct,
acquire or lease some of the property and facilities used by NU's companies.
NU Enterprises, Inc. 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 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 and manages 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. 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.
Yankee has certain wholly owned subsidiaries, including Yankee Energy
Services Company (YESCO).
Select Energy, SENY, NGS, Boulos, NGS Mechanical, Woods Electrical, Select
Energy Contracting, Reeds Ferry, HEC/Tobyhanna, HEC/CJTS, 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 engages in wholesale and retail energy marketing activities.
Select Energy is an integrated energy business that buys, markets, sells, and
trades electricity, gas, oil and energy-related products and services to both
wholesale and retail customers in the Northeastern United States. Select
Energy procures and delivers energy and capacity required to serve its
electric, gas and oil customers. Select Energy, collectively with its
affiliated 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.
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. NGS also provides consulting services which
include engineering services, construction management, permitting, and
compliance management.
5. About Boulos
Boulos is an electrical contracting company which specializes in high voltage
electrical construction and maintenance in Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, and Vermont. Boulos is wholly owned by NGS.
6. About NGS Mechanical
NGS Mechanical provides mechanical services in certain New England states and
New York. NGS Mechanical is wholly owned by NGS.
7. About Woods Electrical
Woods Electrical is a wholly owned subsidiary of NGS and is in the electrical
contracting business in Connecticut. Woods Electrical is also registered in
the electrical contracting business in Maine, Massachusetts and New
Hampshire. NGS acquired Woods Electrical on July 31, 2002, and the results of
Woods Electrical's operations since July 1, 2002, are included in this
report.
8. 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.
9. About Reeds Ferry
Reeds Ferry is an equipment wholesaler which purchases equipment on behalf of
Select Energy Contracting.
10. 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.
11. About HEC/CJTS
HEC/CJTS is a special purpose entity formed to facilitate the financing of
SESI's construction of an energy center at the Connecticut Juvenile Training
School in Middletown, Connecticut. HEC/CJTS is wholly owned by SESI.
12. About YESCO
YESCO has disposed of most of its assets and has wound down its energy-
related services for its customers.
13. Public Utility Regulation
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935 (1935
Act), and 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. The operating subsidiaries are subject to further regulation
for rates, accounting and other matters by the FERC and/or applicable state
regulatory commissions.
14. Presentation
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
15. New Accounting Standards
Energy Trading and Risk Management Activities: In October 2002, the Emerging
Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB)
reached consensuses on EITF Issue No. 02-3, "Accounting for Contracts
Involved in Energy Trading and Risk Management Activities."
One consensus rescinded EITF Issue No. 98-10, "Accounting for Contracts
Involved in Energy Trading and Risk Management Activities for Energy Trading
Activities," under which Select Energy previously accounted for energy
trading activities. This consensus requires companies engaged in energy
trading activities to discontinue fair value accounting effective January 1,
2003, for contracts that do not meet the definition of a derivative. Select
Energy and SENY adopted this consensus effective October 1, 2002.
The second consensus requires that companies engaged in energy trading
activities classify revenues and expenses associated with energy trading
contracts on a net basis in revenues effective January 1, 2003. Select
Energy and SENY decided to transition to this net reporting effective July 1,
2002, before this consensus was reached by the EITF.
In July 2003, the EITF reached a consensus on Issue No. 03-11, "Reporting
Realized Gains and Losses on Derivative Instruments That Are Subject to FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, and Not "Held for Trading Purposes" as Defined in EITF Issue No.
02-3, "Issues Involved in Accounting for Derivative Contracts Held for
Trading Purposes and Contracts Involved in Energy Trading and Risk Management
Activities"." The EITF did not change any existing accounting guidance and
did not introduce new guidance addressing this issue.
Derivative Accounting: Effective January 1, 2001, Select Energy and SENY
adopted Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," which amends SFAS No. 133.
This new statement incorporates interpretations that were included in
previous Derivative Implementation Group (DIG) guidance, clarifies certain
conditions, and amends other existing pronouncements. It is effective for
contracts entered into or modified after June 30, 2003. The new rules
indicate that derivative contracts that are subject to unplanned netting and
can be settled for cash versus delivery would no longer qualify for the
normal purchases and sales exception, which would require fair value
accounting. Management is evaluating the impacts of SFAS No. 149,
particularly the definition of "subject to unplanned netting." This could
impact Select Energy's wholesale marketing contracts that currently qualify
for the normal purchases and sales exception.
On June 25, 2003 the DIG cleared Issue No. C-20 "Interpretation of the
Meaning of Not Clearly and Closely Related in Paragraph 10(b) regarding
Contracts with a Price Adjustment Feature." Management is evaluating the
impact of DIG Issue No. C-20 on the consolidated financial statements, but
does not believe that there will be a significant impact as a result of this
issue. DIG Issue No. C-20 is effective for Select Energy and SENY on
October 1, 2003.
16. 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 net income. Other contracts that are
derivatives but do not meet the definition of a cash flow hedge and cannot be
designated as being used for normal purchases or normal sales are also
recorded at fair value with changes in fair value included in net income.
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, a component of equity, until the underlying
transactions occur. For those contracts that meet the definition of a
derivative and meet the fair value hedge requirements, the changes in fair
value of the effective portion of those contracts are generally recognized on
the balance sheet as both the hedge and the hedged item are recorded at fair
value. 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 net income. Derivative contracts
that are entered into as a normal purchase or sale and will result in
physical delivery, and are documented as such, are recorded under accrual
accounting. For information regarding recent accounting changes related to
trading activities, see Note 15, "New Accounting Standards."
The tables below summarize Select Energy and SENY derivative assets and
liabilities at June 30, 2003. These amounts do not include premiums paid,
which amounted to $24.8 million at June 30, 2003 ($15.7 million for Select
Energy and $9.1 million for SENY). These amounts also do not include
premiums received by Select Energy, which amounted to $20.3 million at
June 30, 2003. The premium amounts relate primarily to energy trading
activities.
-------------------------------------------------------------------------------
(Millions of Dollars) Assets Liabilities Total
-------------------------------------------------------------------------------
Select Energy:
Trading $123.7 $ (92.7) $ 31.0
Nontrading 0.7 -- 0.7
Hedging 8.3 (10.8) (2.5)
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Total $132.7 $(103.5) $ 29.2
===============================================================================
-------------------------------------------------------------------------------
(Millions of Dollars) Assets Liabilities Total
-------------------------------------------------------------------------------
SENY:
Trading $ 18.9 $ (4.9) $ 14.0
Nontrading 2.2 (0.5) 1.7
Hedging 6.5 -- 6.5
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Total $ 27.6 $ (5.4) $ 22.2
===============================================================================
Trading: To gather market intelligence and utilize this information in risk
management activities for the wholesale marketing business, Select Energy
conducts 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 exposure.
Derivatives used in trading activities are recorded at fair value and
included in the balance sheets as derivative assets or liabilities. Changes
in fair value are recognized in operating revenues in the statements of
income in the period of change. The net fair value positions of the trading
portfolio at June 30, 2003 were assets of $31 million for Select Energy and
$14 million for SENY. These amounts include intercompany assets and
liabilities of $1.6 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; 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; and an option
component of a bilateral energy purchase contract, the fair value of which is
determined with the Blacks option pricing model. SENY's trading portfolio
also includes transmission congestion contracts. The fair value of certain
transmission congestion contracts is based on published market data. Market
information for other transmission congestion contracts is not available and
those contracts cannot be reliably valued. Management believes the amounts
paid for these contracts, which total $9.1 million, are equal to their fair
value.
Nontrading: Nontrading derivative contracts are used for delivery of energy
related to Select Energy's retail and wholesale marketing activities. These
contracts are not entered into for trading purposes, but 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 the normal
purchase and sale designation was not elected by management. The net fair
values of nontrading derivatives at June 30, 2003 were assets of $0.7 million
for Select Energy and $1.7 million for SENY.
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 retail supply 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. 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 and SENY maintain natural gas service agreements with certain
customers to supply gas at fixed prices for terms extending through 2005.
Select Energy and SENY have hedged their gas supply component of the risk
under these agreements through NYMEX futures contracts. Under these
contracts, which also extend through 2005, the purchase price of a specified
quantity of gas is effectively fixed over the term of the gas service
agreements. At June 30, 2003, the NYMEX futures contracts had notional values
of $26.7 million and were recorded at fair value as a derivative asset of
$3.4 million, net of tax.
B. Market Risk Information
Select Energy, along with SENY, 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
net income, 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.
Trading Portfolio: At June 30, 2003, Select Energy, along with SENY,
calculated the market price resulting from a 10 percent change in forward
market prices. That 10 percent change would result in approximately a $1.2
million increase or decrease in the fair value of the Select Energy and SENY
trading portfolio. In the normal course of business, Select Energy, along
with SENY, also faces risks that are either nonfinancial or nonquantifiable.
Such risks principally include credit risk, which is not reflected in this
sensitivity analysis.
Retail and Wholesale Marketing Portfolio: When conducting sensitivity
analyses of the change in the fair value of Select Energy's and SENY's
electricity, natural gas and oil nontrading derivatives portfolio, which
would result from a hypothetical change in the future market price of
electricity, natural gas and oil, the fair values of the contracts are
determined from models that take into account estimated future market prices
of electricity, natural gas and oil, the volatility of the market prices in
each period, as well as the time value factors of the underlying commitments.
In most instances, market prices and volatility are determined from quoted
prices on the futures exchange.
Select Energy, along with SENY, has determined a hypothetical change in the
fair value for its retail and wholesale marketing portfolio, which includes
cash flow hedges and electricity, natural gas and oil contracts and
generation assets, assuming a 10 percent change in forward market prices. At
June 30, 2003, a 10 percent change in market price would have resulted in an
increase or decrease in fair value of approximately $7.1 million.
The impact of a change in electricity, natural gas and oil prices on Select
Energy's and SENY's retail and wholesale marketing portfolio at June 30,
2003, is not necessarily representative of the results that will be realized
when the commodities provided for in these contracts are physically
delivered.
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 independent power producers, 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 are monitored regularly by a Risk Oversight
Council operating outside of the business units that create or actively
manage these risk exposures to ensure compliance with NU's stated risk
management policies.
NU tracks and re-balances the risks 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 are guaranteed by the NYMEX and
have a lower credit risk. 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 conditions (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 NU entering into trading activities. The appropriateness of
these limits is subject to continuing review. Concentrations among these
counterparties may impact NU'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, 2003, Select Energy maintained collateral balances from
counterparties of $39.6 million. This amount is included in special deposits
and other current liabilities on the accompanying balance sheets.
17. Special Deposits
Special deposits include cash collateral posted in connection with various
power purchase and sales agreements.
QUARTERLY REPORT OF NORTHEAST UTILITIES
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935 and the rules and regulations of the Securities and Exchange Commission
issued thereunder, the undersigned company has duly caused this report to be
signed on its behalf by the undersigned officer thereunto duly authorized.
NORTHEAST UTILITIES
(Registered Holding Company)
By: /s/ John P. Stack
(Signature of Signing Officer)
John P. Stack
----------------------------------------
Vice President-Accounting and Controller
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Date: August 27, 2003
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