Item 1. Business
General
Cambridge Electric Light Company (the Company) is engaged in the production, distribution and sale of electricity at retail to approximately 44,500 customers in the city of Cambridge, Massachusetts. The service territory encompasses a seven square mile area with a population of approximately 96,000. In addition, the Company sells power for resale to the New England Power Pool (NEPOOL) and to the Town of Belmont, Massachusetts (Belmont), and sells steam from its electric generating stations at wholesale to an affiliated company for distribution to customers for use in connection with space heating and other purposes.
The Company, which was organized on January 28, 1886 pursuant to a special act of the legislature of the Commonwealth of Massachusetts, operates under the jurisdiction of the Massachusetts Department of Public Utilities (DPU), which regulates retail rates, accounting, issuance of securities and other matters. The Company also files its wholesale rates with the Federal Energy Regulatory Commission (FERC). The Company is a wholly-owned subsidiary of Commonwealth Energy System ("System"), which, together with its subsidiaries, is referred to as "the system."
By virtue of its charter, which is unlimited in time, the Company distributes electricity without direct competition in kind from any privately or municipally-owned utility. Alternate sources of energy are available to customers within the service territory, but competition from these sources to date has not been a significant factor affecting the Company.
However, the Massachusetts Institute of Technology (MIT) is constructing a 19 MW natural gas-fired cogeneration facility which is expected to be completed in January 1995. MIT expects that this cogeneration facility will meet approximately 94% of its power, heating and cooling requirements. Sales to MIT in 1993 accounted for approximately 9.4% of the Company's total unit sales. MIT and the Company are presently negotiating a buy and sell arrangement which will require the approval of the DPU.
Of the Company's 1993 retail electric unit sales, 12% was sold to residential customers, 74% to commercial customers, 6% to industrial customers and 8% to municipal and other customers.
Electric Power Supply
The Company owns generating facilities with a total capacity of 114.5 MW, of which 51.5 MW is used for peaking purposes. The Company relies primarily on purchased power to meet its energy requirements.
Power purchases for the Company and Commonwealth Electric Company (Commonwealth Electric), the other wholly-owned electric distribution subsidiary of the System, are arranged whereby power is made available to the subsidiaries in accordance with their requirements including purchases from CAMBRIDGE ELECTRIC LIGHT COMPANY
Canal Electric Company (Canal), an affiliated wholesale electric generating company located in Sandwich, Massachusetts, and a major source of purchased power for the Company. Under long-term contracts, system entitlements include one-quarter (143 MW) of the capacity and energy of Canal Unit 1 and one-half (292 MW) of the capacity and energy of Canal Unit 2.
In response to solicitations made to NEPOOL member companies by Northeast Utilities (NU), Canal, on behalf of the Company and Commonwealth Electric, agreed to purchase entitlements through various contracts ranging up to five years in length. The terms of a five-year agreement stipulate the purchase of 50 MW, on average, from NU annually from November 1989 through October 1994. The Company and Commonwealth Electric are each appropriated a portion of the power received from NU based on need.
In addition, the Company has ownership interests (2 1/2% to 4 1/2%) in three operating nuclear units located in New England with power entitlements totaling 67.6 MW. On February 26, 1992, Yankee Atomic Electric Company's Board of Directors decided to permanently cease power operation at a nuclear unit located in Rowe, Massachusetts and, in time, decommission the facility. The Company has a 2% interest in this facility. For further information, refer to Note 4(d) of the Notes to Financial Statements filed under Item 8 of this report. In addition, through Canal's equity ownership in Hydro-Quebec Phase II and joint-ownership in the Seabrook nuclear unit, the Company has entitlements of 19.7 MW and 8.1 MW, respectively.
The Company expects to provide for future peak load plus reserve requirements through existing and planned system generation, including purchasing excess capacity from neighboring utilities. These and other bulk electric power purchases are necessary in order to fulfill the system's NEPOOL obligation and for Canal to acquire and deliver electric generating capacity to meet the Company's and Commonwealth Electric's requirements.
Power Contracts and Capacity Acquisition and Disposition Agreement
The Company has long-term contracts for the purchase of electricity from various sources. In addition, the Company's future generation needs will be met substantially through a Capacity Acquisition and Disposition Agreement with Canal. For further information, refer to Note 4(b) of the Notes to Financial Statements filed under Item 8 of this report.
New England Power Pool
The Company, together with other electric utility companies in the New England area, is a member of NEPOOL, which was formed in 1971 to provide for the joint planning and operation of electric systems throughout New England.
NEPOOL operates a centralized dispatching facility to ensure reliability of service and to dispatch the most economically available generating units of member companies to fulfill the region's energy requirements. This concept is accomplished through the use of computers to monitor and forecast load requirements and provide for the economic dispatch of generation.
The Company and the System's other electric subsidiaries are also members of the Northeast Power Coordinating Council (NPCC), an advisory CAMBRIDGE ELECTRIC LIGHT COMPANY
organization which includes the major power systems in New England and New York plus the provinces of Ontario and New Brunswick in Canada. NPCC establishes criteria and standards for reliability and serves as a vehicle for coordination in the planning and operation of these systems in enhancing reliability.
The reserve requirements used by the NEPOOL participants in planning future additions are determined by NEPOOL to meet the reliability criteria recommended by NPCC. The system estimates that, during the next ten years, reserve requirements so determined will be in the range of 23% to 29% of peak load.
Energy Mix
The Company's energy mix, including purchased power, was as follows:
1993 1992 1991
Oil 43% 58% 55% Nuclear 44 38 40 Natural gas 12 4 5 Hydro 1 - - Total 100% 100% 100%
Oil-fired generation, although reduced from prior year levels, still accounts for a large percentage of the Company's total generation sources. The Company's energy mix shifted during 1993 from oil to natural gas and other types of generation due to the availability of capacity from an independent power producing (IPP) facility (Altresco Pittsfield) and, to a lesser extent, an effort to reduce its reliance on oil. In addition to power purchases, the Company is actively pursuing sales of certain available capacity to utilities in and outside the New England region.
Rates and Regulation
(a) Retail Rate Proceeding
The Company operates under the jurisdiction of the DPU, which regulates retail rates, accounting, issuance of securities and other matters. The DPU requires historical test-year information to support changes in rates.
On May 28, 1993, the DPU issued an order increasing the Company's retail revenues by approximately $7.2 million or 6.4%. The rates, based on a June 30, 1992 test-year and effective June 1, 1993, provide an overall return of 9.95%, including an equity return of 11% and represented approximately 70% of the amount requested. More than 80% of the increase related to: 1) plant additions since the Company's last retail rate proceeding in 1989; 2) capacity costs associated with certain purchased power contracts; and 3) costs of postretirement benefits other than pensions. The costs associated with these postretirement benefits were determined in accordance with Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," issued in 1990 and adopted by the Company as of January 1, 1993. The DPU authorized recovery of these costs over a four-year period with carrying costs on the deferred portion. In CAMBRIDGE ELECTRIC LIGHT COMPANY
addition, the new base rates also reflect the roll-in of costs associated with power from the Seabrook nuclear power plant which are billed to the Company by Canal. Previously these costs were recovered through the Company's Fuel Charge decimal.
(b) Wholesale Rate Proceedings
The Company requires FERC approval to increase its wholesale rates to Belmont, a "partial requirements" customer of the Company since 1986. These rates include a fuel adjustment clause which reflects changes in costs of fuels and purchased power used to supply Belmont.
On March 23, 1990, the Company filed a request with the FERC to increase its wholesale rates to Belmont by $2,252,000 annually. The request was largely due to increased purchased power costs and major additions to plant- in-service. The proposed rates were accepted by the FERC, subject to refund, on August 1, 1990. On September 19, 1990, the Company and Belmont filed an uncontested Offer of Settlement which the FERC approved on December 6, 1990 resolving all issues with the exception of Seabrook 1 costs which were subject to change based upon the results of the FERC's final review of Canal's investment in the unit. This settlement required the Company to adjust its Belmont rate to reflect the final allocation of power purchased by Canal on behalf of the Company and Commonwealth Electric. The Company made a refund to Belmont in August 1991 and filed the requisite compliance report with the FERC on September 16, 1991.
A settlement agreement between Canal and Belmont addressing all Seabrook cost-of-service issues (except rate of return on common equity) was filed with the FERC on April 16, 1991 and subsequently approved by the FERC on November 13, 1991. In addition, this settlement changed the effective date of the Belmont Service Agreement from August 1, 1990 to June 30, 1990. The charges and refunds resulting from this settlement were applied to Belmont's bill in January 1992.
On November 12, 1991 a settlement agreement between Canal and Belmont addressing the rate of return on common equity in the Seabrook Power Contract was filed with the FERC. The return on equity settlement, which was approved by the FERC on January 29, 1992, allowed a return on equity of 11.72% and required Canal to refund certain sums to the Company and Commonwealth Electric and to make a compliance report to the FERC. On March 12, 1992, Canal made its compliance filing with the FERC indicating that all refunds were made to the Company and Commonwealth Electric on February 27, 1992.
As a result of the return on equity settlement, the Company was required to refund certain sums to Belmont. On April 2, 1992 the Company made its requisite compliance filing with the FERC indicating that refunds were made to Belmont in the March 1992 billings.
(c) Cost Recovery
Rate Schedule - The Company files a Fuel Charge rate schedule, which provides for the current recovery, from retail customers, of fuel used in electric production, purchased power and transmission costs. This schedule requires the quarterly computation and DPU approval of a Fuel Charge decimal CAMBRIDGE ELECTRIC LIGHT COMPANY
based on forecasts of fuel, purchased power and transmission costs and billed unit sales for each period. To the extent that collections under the rate schedule do not match actual costs for that period, an appropriate adjustment is reflected in the calculation of the decimal for the next calendar quarter.
Purchased Power - The Company has long-term contracts for the purchase of electricity from various sources. Generally, these contracts are for fixed periods and require that the Company pay a demand charge for its capacity entitlement and an energy charge to cover the cost of fuel. The DPU ordered the Company, effective July 1, 1991, to collect a portion of capacity-related purchased power costs associated with certain long-term power and transmission agreements through base rates. Prior to that date the Company was recovering these costs through its Fuel Charge. The recovery mechanism for these costs uses a per kilowatthour (KWH) factor that is calculated using historical (test-period) capacity costs and unit sales. This factor is then applied to current monthly KWH sales. When current period capacity costs and/or unit sales vary from test-period levels, the Company experiences a revenue excess or shortfall which can have a significant impact on net income. All other capacity and energy-related purchased power costs are recovered through the Company's Fuel Charge. The Company and Commonwealth Electric made a filing in late 1992 with the DPU seeking an alternative method of recovery. This request was denied in a letter order issued on October 6, 1993. However, the Company and Commonwealth Electric were encouraged by the DPU's acknowledgement that the issues presented warrant further consideration. The DPU encouraged each company to continue to work with other interested parties, including the Attorney General of Massachusetts, to reach a consensus solution on the issue for consideration in each company's next base rate proceeding.
Seabrook Costs - The full commission of the FERC, in a final order issued on August 4, 1992, approved full recovery of Canal's investment in the Seabrook nuclear power plant. The Company and Commonwealth Electric had been billing, subject to refund, Seabrook 1 charges to their retail customers since August 1, 1990 through Fuel Charge decimals approved by the DPU. As discussed in the aforementioned retail rate proceeding section, the Company is now recovering its Seabrook 1 costs in base rates.
The Company and Commonwealth Electric collect, through their respective Fuel Charge, amounts being billed to them by Canal for costs associated with Seabrook 2 (over a ten-year period ending in 1997) pursuant to a Capacity Acquisition Agreement the terms of which were approved by both FERC and the DPU.
Conservation and Load Management Programs - The Company and Commonwealth Electric have received approval from the DPU to recover conservation and load management program (C&LM) costs. The programs offer opportunities to all customers to save energy by investing in C&LM measures. The objective of the programs is to reduce capacity and energy requirements which in turn reduce the cost of providing service. The Company has Conservation Charge (CC) rate schedules which allow for current cost recovery from retail customers. On June 30, 1993, the DPU issued an order in Phase I of a C&LM filing by the Company and Commonwealth Electric which authorizes the recovery of "lost base revenues" from electric customers. The recovery of lost base revenues is allowed by the DPU to encourage effective implementation of C&LM programs. CAMBRIDGE ELECTRIC LIGHT COMPANY
The KWH savings that are realized as a result of the successful implementation of C&LM programs serve as the basis for determining lost base revenues. The amount to be recovered is $88,000 for the Company and is based on anticipated KWH savings for the eighteen-month period beginning January 1, 1993. The revenue will be recovered from customers over a twelve-month period which began July 1, 1993.
On October 25, 1993, the DPU issued an order in Phase II of the C&LM proceeding. In that order, the DPU ruled that approximately $526,000 in C&LM Task Force related expenditures are not recoverable by the Company "at this time" because certain programs have yet to be implemented and thus ratepayers are receiving no current benefits. The Company removed these costs from the current CC decimal and is continuing with the development of the programs and plans to seek recovery of these costs in a subsequent filing with the DPU. Based on the language in the order and subsequent discussions with the parties involved in the proceeding, management believes that the ultimate recovery of a substantial portion of these costs is likely.
Environmental Matters
The Company is subject to laws and regulations administered by federal, state and local authorities relating to the quality of the environment. These laws and regulations affect, among other things, the siting and operation of generating facilities, and will continue to impact future operations, capital costs and construction schedules. Air emission regulations require the use of more costly lower-sulphur content fuels (0.5% maximum in the case of the Company's facilities, which are located in a populated urban area) in electric generating facilities. The amendments to the federal Clean Air Act enacted in 1990 will impose restrictions on air emissions, and have a particular impact on the cost of electric generating operations. Regulations enacted by the state of Massachusetts will require a reduction in sulphur dioxide emission rates effective December 31, 1994. A plan to meet this target date was developed and submitted to the state in compliance with applicable regulations. These regulations may also result in an increase in the cost of power purchased from others. The Company recovers its cost of fuel and purchased power through its Fuel Charge or base rates.
In October 1992, the Company received a statutory demand letter alleging the Company is jointly and severally liable, along with numerous other (unrelated) entities, for the clean-up of a hazardous waste site located in Waltham, Massachusetts. The Company anticipates that its share of site clean- up costs will not be material. The Company is investigating these allegations and will respond in accordance with state law.
Construction and Financing
Information concerning the Company's construction and financing programs is contained in Note 4(a) of the Notes to Financial Statements filed under Item 8 of this report. CAMBRIDGE ELECTRIC LIGHT COMPANY Employees
The Company has 167 regular employees, 122 employees (73%) are represented by the Utility Workers' Union of America, A.F.L.-C.I.O. The existing collective bargaining agreement expires June 15, 1995. Employee relations have generally been satisfactory and management views the current work force level to be appropriate to service the Company's customers.
Item 2.
Item 2. Properties
The Company owns and operates two steam generating plants and two gas turbine units located in Cambridge with a total capability of 114.5 MW together with an integrated system of distribution lines and substations.
At December 31, 1993, the Company's electric transmission and distribution system consisted of 93 pole miles of overhead lines, 672 cable miles of underground line, 217 substations and 44,920 active customer meters.
Item 3.
Item 3. Legal Proceedings
The Company is not a party to any pending material legal proceeding. CAMBRIDGE ELECTRIC LIGHT COMPANY
PART II.
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
(a) Principal Market
Not applicable. The Company is a wholly-owned subsidiary of Commonwealth Energy System.
(b) Number of Stockholders at December 31, 1993
One
(c) Frequency and Amount of Dividends Declared in 1993 and 1992
1993 1992 Per Share Per Share Declaration Date Amount Declaration Date Amount
April 26, 1993 $ .95 October 21, 1992 $1.40 July 26, 1993 .90 October 18, 1993 4.50 $6.35
Reference is made to Note 7 of the Notes to Financial Statements filed under Item 8 of this report for the restriction against the payment of cash dividends.
(d) Future dividends may vary depending upon the Company's earnings and capital requirements as well as financial and other conditions existing at that time. CAMBRIDGE ELECTRIC LIGHT COMPANY
Item 7.
Item 7. Management's Discussion and Analysis of Results of Operations
The following is a discussion of certain significant factors which have affected operating revenues, expenses and net income during the periods included in the accompanying statements of income and is presented to facilitate an understanding of the results of operations. This discussion should be read in conjunction with the Notes to Financial Statements filed under Item 8
Item 8. Financial Statements and Supplementary Data
The Company's financial statements required by this item are filed herewith on pages 16 through 35 of this report.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None. CAMBRIDGE ELECTRIC LIGHT COMPANY
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Cambridge Electric Light Company:
We have audited the accompanying balance sheets of CAMBRIDGE ELECTRIC LIGHT COMPANY (a Massachusetts corporation and wholly-owned subsidiary of Commonwealth Energy System) as of December 31, 1993 and 1992, and the related statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1993. These financial statements and schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cambridge Electric Light Company as of December 31, 1993 and 1992, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Note 5 to the financial statements, effective January 1, 1993, the Company changed its method of accounting for costs associated with postretirement benefits other than pensions.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to financial statements and schedules are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO. Arthur Andersen & Co.
Boston, Massachusetts, February 17, 1994. CAMBRIDGE ELECTRIC LIGHT COMPANY INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PART II.
FINANCIAL STATEMENTS
Balance Sheets at December 31, 1993 and 1992
Statements of Income for the Years Ended December 31, 1993, 1992 and
Statements of Retained Earnings for the Years Ended December 31, 1993, 1992 and 1991
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and
Notes to Financial Statements
PART IV.
SCHEDULES
III Investments in, Equity in Earnings of, and Dividends Received From Related Parties for the Years Ended December 31, 1993, 1992 and
V Property, Plant and Equipment for the Years Ended December 31, 1993, 1992 and 1991
VI Accumulated Depreciation of Property, Plant and Equipment for the Years Ended December 31, 1993, 1992 and 1991
VIII Valuation and Qualifying Accounts for the Years Ended December 31, 1993, 1992 and 1991
IX Short-Term Borrowings for the Years Ended December 31, 1993, 1992 and 1991
SCHEDULES OMITTED
All other schedules are not submitted because they are not applicable or not required or because the required information is included in the financial statements or notes thereto.
Financial statements of 50% or less owned companies accounted for by the equity method have been omitted because they do not, considered individually, constitute a significant subsidiary. CAMBRIDGE ELECTRIC LIGHT COMPANY BALANCE SHEETS DECEMBER 31, 1993 AND 1992 ASSETS
1993 1992 (Dollars in Thousands)
PROPERTY, PLANT AND EQUIPMENT, at original cost $145 324 $142 790 Less - Accumulated depreciation 52 382 49 996 92 942 92 794 Add - Construction work in progress 1 013 96 93 955 92 890
INVESTMENTS Equity in nuclear electric power companies 9 059 9 089 Other 5 5 9 064 9 094
CURRENT ASSETS Cash 1 624 2 Accounts receivable - Affiliated companies 1 036 1 253 Customers, less reserves of $491,000 in 1993 and $453,000 in 1992 10 178 8 764 Unbilled revenues 3 835 2 019 Inventories, at average cost - Materials and supplies 738 742 Electric production fuel oil 575 811 Prepaid taxes - Property 1 600 1 397 Income 423 1 016 Other 976 870 20 985 16 874
DEFERRED CHARGES (Notes 1 and 4) Yankee Atomic purchased power contract 6 900 8 341 Other 3 084 852 9 984 9 193
$133 988 $128 051 CAMBRIDGE ELECTRIC LIGHT COMPANY BALANCE SHEETS DECEMBER 31, 1993 AND 1992 CAPITALIZATION AND LIABILITIES
1993 1992 (Dollars in Thousands) CAPITALIZATION Common Equity - Common stock, $25 par value - Authorized and outstanding - 346,600 shares in 1993 and 1992, wholly-owned by Commonwealth Energy System (Parent) $ 8 665 $ 8 665 Amounts paid in excess of par value 27 953 27 953 Retained earnings (Note 7) 7 056 6 156 43 674 42 774 Long-term debt, including premiums, less current sinking fund requirements and maturing debt (Note 3) 42 189 42 351 85 863 85 125 CURRENT LIABILITIES Interim Financing (Note 3) - Notes payable to banks 2 000 1 500 Advances from affiliates 1 305 - 3 305 1 500 Other Current Liabilities - Current sinking fund requirements 160 98 Accounts payable - Affiliated companies 4 972 4 817 Other 5 187 4 687 Accrued taxes - Local property and other 1 611 1 398 Income 97 - Accrued interest 1 003 987 Other 2 776 1 281 15 806 13 268 19 111 14 768 DEFERRED CREDITS Accumulated deferred income taxes 12 189 10 749 Unamortized investment tax credits 2 130 2 225 Yankee Atomic purchased power contract 6 900 8 341 Other 7 795 6 843 29 014 28 158 COMMITMENTS AND CONTINGENCIES (Note 4)
$133 988 $128 051
The accompanying notes are an integral part of these financial statements. CAMBRIDGE ELECTRIC LIGHT COMPANY STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991 (Dollars in Thousands)
ELECTRIC OPERATING REVENUES $126 073 $112 948 $118 277
OPERATING EXPENSES Fuel used in production 2 376 2 589 3 811 Electricity purchased for resale 74 102 64 131 60 318 Transmission 7 719 7 922 8 435 Other operation 20 301 20 997 18 753 Maintenance 2 996 2 910 3 162 Depreciation 3 795 3 601 3 490 Conservation and load management 2 905 4 246 8 135 Taxes - Income (Note 2) 1 452 (691) 1 632 Local property 2 683 2 298 1 859 Payroll and other 860 763 775 119 189 108 766 110 370
OPERATING INCOME 6 884 4 182 7 907
OTHER INCOME (EXPENSE),net 251 (50) 625
INCOME BEFORE INTEREST CHARGES 7 135 4 132 8 532
INTEREST CHARGES Long-term debt 3 797 3 549 3 427 Other interest charges 246 540 1 137 Allowance for borrowed funds used during construction (9) (21) (71) 4 034 4 068 4 493
NET INCOME $ 3 101 $ 64 $ 4 039
The accompanying notes are an integral part of these financial statements. CAMBRIDGE ELECTRIC LIGHT COMPANY STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991 (Dollars in Thousands)
Balance at beginning of year $ 6 156 $ 6 577 $ 6 604 Add (Deduct) Net income 3 101 64 4 039 Cash dividends on common stock (2 201) (485) (4 066) Balance at end of year $ 7 056 $ 6 156 $ 6 577
The accompanying notes are an integral part of these financial statements. CAMBRIDGE ELECTRIC LIGHT COMPANY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991 (Dollars in Thousands)
OPERATING ACTIVITIES Net income $ 3 101 $ 64 $ 4 039 Effects of non-cash items - Depreciation and amortization 3 842 3 716 4 309 Deferred income taxes 1 081 1 170 (487) Investment tax credits (95) (96) (96) Earnings from corporate joint ventures (1 069) (1 321) (1 430) Dividends from corporate joint ventures 1 099 1 335 1 278 Change in working capital, exclusive of cash and interim financing - Accounts receivable and unbilled revenues (3 013) 2 258 5 179 Prepaid (accrued) taxes 700 (1 906) 293 Accounts payable and other 2 362 839 (3 142) All other operating items (1 549) (348) 1 818 Net cash provided by operating activities 6 459 5 711 11 761
INVESTING ACTIVITIES Additions to property, plant and equipment (exclusive of AFUDC) (4 270) (3 686) (4 658) Allowance for borrowed funds used during construction (9) (21) (71) Connecticut Yankee debenture redemption - - 684 Net cash used for investing activities (4 279) (3 707) (4 045)
FINANCING ACTIVITIES Sale of common stock to Parent - 5 250 - Payment of dividends (2 201) (485) (4 066) Proceeds from (payment of) short-term borrowings 500 (10 200) (2 550) Proceeds from (payment of) affiliate borrowings 1 305 (1 540) (805) Long-term debt issue - 15 000 - Retirement of long-term debt through sinking funds (162) (162) (162) Long-term debt issue refunded - (10 000) - Net cash provided used for financing activities (558) (2 137) (7 583) Change in cash 1 622 (133) 133 Cash at beginning of period 2 135 2 Cash at end of period $ 1 624 $ 2 $ 135
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid (net of capitalized amounts) $ 3 863 $ 3 481 $ 4 254 Income taxes paid (refunded) $ (44) $ 229 $ 728
The accompanying notes are an integral part of these financial statements. CAMBRIDGE ELECTRIC LIGHT COMPANY NOTES TO FINANCIAL STATEMENTS
(1) Significant Accounting Policies
(a) General and Regulatory
Cambridge Electric Light Company (the Company) is a wholly-owned subsidiary of Commonwealth Energy System. The parent company is referred to in this report as the "System" and, together with its subsidiaries, is collectively referred to as "the system." The Company is regulated as to rates, accounting and other matters by various authorities including the Federal Energy Regulatory Commission (FERC) and the Massachusetts Department of Public Utilities (DPU). The System is an exempt holding company under the provisions of the Public Utility Holding Company Act of 1935 and, in addition to its investment in the Company, has interests in other utility companies and several nonregulated companies.
The Company has established various regulatory assets in cases where the DPU has permitted, or is expected to permit, recovery of specific costs over time. At December 31, 1993, principal regulatory assets, included in deferred charges, were $6.9 million for unrecovered plant and decommissioning costs for the Yankee Atomic nuclear plant and $1.1 million for postretirement benefits. The more significant regulatory liabilities, reflected in deferred credits, include $3.9 million related to income taxes and $6.9 million related to the Yankee Atomic nuclear plant.
(b) Reclassifications
Certain prior year amounts are reclassified from time to time to conform with the presentation used in the current year's financial statements.
(c) Transactions with Affiliates
Transactions between the Company and other system companies include purchases and sales of electricity, including purchases of electricity through Canal Electric Company (Canal). Other Canal transactions include costs relating to the abandonment of Seabrook 2 for the three years ending in 1993 and the recovery of a portion of Seabrook 1 pre-commercial operation financing costs in 1991. Transactions with other system companies include purchases of gas and sales of steam. In addition, payments for management, accounting, data processing and other services are made to affiliate COM/Energy Services Company. Transactions with other system companies are subject to review by the DPU.
The Company's operating expenses include the following major intercompany transactions for the periods indicated:
Purchased Power and Transmission Period Ended Purchased Power Purchased Power From Canal December 31, Canal Units Seabrook 1 As Agent (Dollars in Thousands) 1993 $12 637 $ 9 082 $10 896 1992 13 596 9 335 9 600 1991 12 209 12 681 9 915 CAMBRIDGE ELECTRIC LIGHT COMPANY
The Company also purchased gas from affiliate Commonwealth Gas Company totaling $1,485,000 in 1993, $2,253,000 in 1992 and $4,708,000 in 1991.
(d) Equity Method of Accounting
The Company uses the equity method of accounting for its investments in four nuclear electric power companies due, in part, to its ability to exercise significant influence over operating and financial policies of these entities. Under this method, it records as income the proportionate share of the net earnings of the nuclear power companies with a correspond- ing increase in the carrying value of the investment. The investment is reduced as cash dividends are received.
(e) Operating Revenues
Customers are billed for their use of electricity on a cycle basis throughout the month. To reflect revenues in the proper period, the estimated amount of unbilled sales revenue is recorded each month.
The Company is generally permitted to bill customers currently for fuel used in electric production, transmission and purchased power costs and conservation and load management costs through adjustment clauses. The Company collects capacity-related costs associated with certain long-term power arrangements through base rates. Amounts recoverable under the adjustment clauses are subject to review and adjustment by the DPU. The amount of such fuel and energy costs incurred but not yet reflected in customers' bills, which totaled $1,850,000 in 1993 and $514,000 in 1992, is recorded as unbilled revenues.
(f) Depreciation
Depreciation is provided using the straight-line method at rates intended to amortize the original cost and the estimated cost of removal less salvage of properties over their estimated economic lives. The average composite depreciation rate was 2.66% in 1993, 2.59% in 1992 and 2.58% in 1991.
(g) Maintenance
Expenditures for repairs of property and replacement and renewal of items determined to be less than units of property are charged to maintenance expense. Additions, replacements and renewals of property considered to be units of property are charged to the appropriate plant accounts. Upon retirement, accumulated depreciation is charged with the original cost of property units and the cost of removal net of salvage.
(h) Allowance for Funds Used During Construction
Under applicable rate-making practices, the Company is permitted to include an allowance for funds used during construction (AFUDC) as an element of its depreciable property costs. This allowance is based on the amount of construction work in progress that is not included in the rate base on which the Company earns a return. An amount equal to the AFUDC CAMBRIDGE ELECTRIC LIGHT COMPANY
capitalized in the current period is reflected in the accompanying Statements of Income.
While AFUDC does not provide funds currently, these amounts are recoverable in revenues over the service life of the constructed property. The amount of AFUDC recorded was at a weighted average rate of 3.5% in 1993, 4.5% in 1992 and 6.8% in 1991.
(2) Income Taxes
For financial reporting purposes, the Company provides federal and state income taxes on a separate return basis. However, for federal income tax purposes, the Company's taxable income and deductions are included in the consolidated income tax return of the System and it makes tax payments or receives refunds on the basis of its tax attributes in the tax return in accordance with applicable tax regulations.
The following is a summary of the provisions for income taxes for the years ended December 31, 1993, 1992 and 1991.
1993 1992 1991 (Dollars in Thousands) Federal: Current $ 327 $(1 636) $1 808 Deferred 973 1 252 (485) Investment tax credits (96) (96) (96) 1 204 (480) 1 227 State: Current 140 (129) 407 Deferred 195 240 (2) 335 111 405 1 539 (369) 1 632 Amortization of regulatory liability relating to deferred income taxes (87) (322) - $1 452 $ (691) $1 632
Effective January 1, 1992, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109). SFAS No. 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the year in which the differences are expected to reverse. CAMBRIDGE ELECTRIC LIGHT COMPANY
Accumulated deferred income taxes consisted of the following in 1993 and 1992: 1993 1992 (Dollars in Thousands) Liabilities Property-related $14 820 $13 580 Postretirement benefits plan 358 74 All other 1 076 905 16 254 14 559 Assets Investment tax credit 1 375 1 381 Pension plan 704 609 Regulatory liability 1 256 1 450 All other 959 745 4 294 4 185 Accumulated deferred income taxes, net $11 960 $10 374
The net year-end deferred income tax liability above is net of a current deferred tax asset of $229,000 in 1993 and $375,000 in 1992 which was included in prepaid income taxes in the accompanying Balance Sheets.
The following table, detailing the significant timing differences for 1991 which resulted in deferred income taxes, is required to be disclosed pursuant to accounting standards for income taxes in effect prior to adoption of SFAS No. 109: (Dollars in Thousands)
Accelerated depreciation $ 933 Seabrook power contract settlement (597) Capitalized interest during construction (25) Contributions in aid of construction (58) Pension costs and deferred compensation (84) Transmission costs (193) Conservation and load management (219) Other (244)
Deferred income tax provision $ (487) CAMBRIDGE ELECTRIC LIGHT COMPANY
The total income tax provision set forth previously represents 32% in 1993, 110% in 1992 and 29% in 1991 of income before such taxes. The following table reconciles the statutory federal income tax rate to these percentages:
1993 1992 1991 (000's)
Federal statutory rate 35% 34% $(213) 34% Increase (Decrease) from statutory rate: Dividend received deduction (6) 50 (315) (6) Tax versus book depreciation 1 (5) 35 1 State tax net of federal tax benefit 5 (14) 86 5 Amortization of investment tax credits (2) 15 (95) (1) Amortization of excess deferred reserves (2) 29 (180) (4) Other 1 1 (9) - Effective federal tax rate 32% 110% $(691) 29%
As a result of the Revenue Reconciliation Act of 1993, the Company's federal income tax rate increased to 35% effective January 1, 1993.
(3) Long-Term Debt and Interim Financing
(a) Long-Term Debt
Long-term debt outstanding exclusive of maturing debt issues, current sinking fund requirements and related premiums is as follows:
Original Balance December 31, Issue 1993 1992 (Dollars in Thousands)
7-Year Notes - 9.97%, due 1996 $20 000 $20 000 $20 000 7-Year Notes - 8.04%, due 1999 10 000 10 000 10 000 15-Year Notes - 8.70%, due 2007 5 000 5 000 5 000 30-Year Notes - Series C, 6 1/4%, due 1997 6 000 4 380 4 440 Series D, 7 3/4%, due 2002 5 000 2 800 2 900 $42 180 $42 340
The balance of long-term debt at December 31, 1992 was exclusive of $62,000 principal amounts purchased by the Company and deposited with the Trustee in anticipation of future sinking fund requirements. The Company may continue to purchase its outstanding notes in advance of sinking fund requirements under favorable conditions. CAMBRIDGE ELECTRIC LIGHT COMPANY
Under terms of its Indenture of Trust, the Company is required to make periodic sinking fund payments for retirement of outstanding long-term debt. These payments and balances of maturing debt issues for the five years subsequent to December 31, 1993 are as follows:
Sinking Fund Maturing Year Payments Debt Issues Total (Dollars in Thousands)
1994 $160 $ - $ 160 1995 160 - 160 1996 160 20 000 20 160 1997 100 4 260 4 360 1998 100 - 100
(b) Notes Payable to Banks
The Company and other system companies maintain both committed and uncommitted lines of credit for the short-term financing of their construction programs and other corporate purposes. As of December 31, 1993, system companies had $115 million of committed lines of credit that will expire at varying intervals in 1994. These lines are normally renewed upon expiration and require annual fees of up to .1875% of the individual line. At December 31, 1993, the uncommitted lines of credit totaled $70 million. Interest rates on the outstanding borrowings generally are at an adjusted money market rate. The Company's notes payable to banks totaled $2,000,000 and $1,500,000 at December 31, 1993 and 1992, respectively.
(c) Advances from Affiliates
The Company is a member of the COM/Energy Money Pool (the Pool), an arrangement among the subsidiaries of the System, whereby short-term cash surpluses are used to help meet the short-term borrowing needs of the utility subsidiaries. In general, lenders to the Pool receive a higher rate of return than they otherwise would on such investments, while borrowers pay a lower interest rate than that available from banks. The Company had borrowings from the Pool totaling $1,305,000 at December 31, 1993.
(d) Disclosures about Fair Value of Financial Instruments
As required by Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," the fair value of certain financial instruments included in the accompanying Balance Sheets as of December 31, 1993 and 1992 are as follows:
1993 1992 (Dollars in Thousands)
Carrying Fair Carrying Fair Value Value Value Value
Long-Term Debt $ 42 349 $ 45 782 $ 42 449 $ 45 394 CAMBRIDGE ELECTRIC LIGHT COMPANY
The carrying amount of cash and advances from affiliates approximates the fair value because of the short maturity of these financial instruments.
The estimated fair value of long-term debt is based upon quoted market prices of the same or similar issues or on the current rates offered for debt with the same remaining maturity. The fair values shown above do not purport to represent the amounts at which those obligations would be settled.
(4) Commitments and Contingencies
(a) Financing and Construction Programs
The Company is engaged in a continuous construction program presently estimated at $33.1 million for the five-year period 1994 through 1998. Of that amount, $10.3 million is estimated for 1994. The program is subject to periodic review and revision because of factors such as changes in business conditions, rates of customer growth, effects of inflation, maintenance of reliable and safe service, equipment delivery schedules, licensing delays, availability and cost of capital and environmental factors. The Company expects to finance these expenditures on an interim basis with internally generated funds and short-term borrowings which are ultimately expected to be repaid with the proceeds from sales of long-term debt and equity securities.
(b) Power Contracts and Capacity Acquisition and Disposition Agreement
The Company has entered into Power Contracts with Canal for a portion of the capacity from Canal Units 1 and 2. The cost to the Company in 1993 for purchases under these contracts was $12,637,000.
In addition, Canal seeks to secure bulk electric power on a single system basis to provide cost savings for the customers of the Company and Commonwealth Electric under terms of a Capacity Acquisition and Disposition Agreement (CADA) which has been accepted for filing as an amendment to Canal's rate schedule by the FERC. The CADA allows Canal to act as agent for the Company and Commonwealth Electric in the procurement of additional capacity for one or both companies, or, to sell a portion of each company's entitlement in capacity and/or energy produced by Canal Unit 2. Such "Commitments" are in effect for Seabrook 1, Phases I and II of Hydro-Quebec and for power acquired from Northeast Utilities (NU). Exchange agreements are in place with several of these utilities whereby, in certain circum- stances, it is possible to exchange capacity so that the mix of power improves the pricing for dispatch for both the seller and the purchaser. Power contracts are in place whereby Canal bills or credits the Company and Commonwealth Electric for the costs or revenues received associated with these facilities. The Company and Commonwealth Electric, in turn, have billed or are billing these net charges (net of revenues from sales) to their customers through rates which are subject to DPU approval.
Currently, Canal's principal activities under the CADA are its ownership interest in the Seabrook nuclear power plant and its Power Sales Agreements with NU. Canal contracted to purchase 50 MW, on average, from NU annually from November 1989 through 1994 to fulfill the system's NEPOOL capacity CAMBRIDGE ELECTRIC LIGHT COMPANY
obligation and to have sufficient energy supply to meet customer needs. In 1993, the costs to the Company for power purchases from Seabrook 1 and NU were $9,082,000 and $9,380,000, respectively.
The Company has ownership interests in four nuclear generating facilities in New England and is obligated to pay its proportionate share of the capacity and energy costs associated with these units, which include depreciation, operations and maintenance, a return on invested capital and the estimated cost of decommissioning the nuclear plants at the end of their estimated service lives. Pertinent information with respect to life-of-the- unit contracts for power from the operating nuclear units is as follows:
Connecticut Maine Vermont Yankee Yankee Yankee
Location Haddam Neck, Wiscasset, Vernon, Connecticut Maine Vermont
Year of initial operation 1968 1972 1972 Contract expiration date 1998 2008 2012 Equity ownership 4.50% 4.00% 2.50% Plant entitlement 4.50% 3.59% 2.25% Plant capability (MW) 560.0 870.0 496.0 Company entitlement (MW) 25.2 31.2 11.2 1991 Actual cost ($000) $ 9 692 $5 900 $3 383 1992 Actual cost ($000) 9 508 6 671 3 970 1993 Actual cost ($000) 10 016 7 050 4 076 1994 Estimated cost ($000) 10 005 6 755 3 755
The Company pays its share of decommissioning expense to each of the operators of the nuclear facilities as a cost of electricity purchased for resale.
The Company has also contracted to purchase power and transmission capacity from various other generating and transmission facilities as follows:
Estimated 1991 1992 1993 1994 MW Cost MW Cost MW Cost MW Cost (Dollars in Thousands) Purchased Power - Nuclear 6.5 $1 670 8.7 $1 986 11.7 $3 789 21.0 $4 880 Hydro 4.5 1 162 6.0 1 377 8.2 2 639 14.6 3 390 Waste-to-energy and other 30.9 5 075 35.3 4 608 9.3 2 952 18.9 4 394 Transmission - (Hydro-Quebec) - 1 586 - 1 222 - 1 232 - 1 292
Costs under these and other contracts are included in electricity purchased for resale and fuel in the accompanying Statements of Income and are recoverable in revenues through either the Fuel Charge or in base rates. CAMBRIDGE ELECTRIC LIGHT COMPANY
In addition, the Company incurred costs for purchases from NEPOOL for $11,039,000, $11,215,000 and $7,546,000 in 1993, 1992 and 1991, respec- tively.
The system's 3.52% interest in the Seabrook nuclear power plant is owned by Canal, a wholesale electric generating subsidiary, to provide for a portion of the capacity and energy needs of the Company and Commonwealth Electric. Canal is recovering 100% of its Seabrook 1 investment through a power contract with the Company and Commonwealth Electric pursuant to FERC approval. The Company received DPU approval to recover Seabrook 1 costs through base rates effective with the June 1, 1993 rate order.
(c) Guarantee Agreement
In connection with its investment in Maine Yankee Atomic Power Company (Maine Yankee), the Company has guaranteed its pro-rata portion of that company's nuclear fuel financing. At December 31, 1993, the Company's portion amounted to $480,000.
(d) Yankee Atomic
On February 26, 1992, the Board of Directors of Yankee Atomic Electric Company agreed to permanently discontinue power operation of its plant and, in time, decommission the facility. The plant provided less than 1% of the Company's capacity. The Company's 2% investment in Yankee Atomic was approximately $475,000 at December 31, 1993. Presently, purchased power costs, which include a provision for ultimate decommissioning of the unit, are billed to the Company and collected from customers.
The Company has estimated their unrecovered share of all costs associated with the shutdown of the facility, recovery of its plant investment and decommissioning and closing the plant to be approximately $6.9 million. This amount is reflected in the accompanying Balance Sheets as a liability and a corresponding regulatory asset at December 31, 1993.
(e) Price-Anderson Act
The Price-Anderson Act (the Act) is a federal statute that includes among its provisions a requirement that licensees of nuclear electric generating units maintain financial protection to cover public liability claims resulting from a nuclear incident or precautionary evacuation. In 1988, Congress enacted a 15 year extension of the Act and increased the available insurance and the maximum liability. The higher liability is provided by existing private insurance and retrospective assessments for costs in excess of that covered by insurance, up to $66.15 million for each nuclear reactor which is licensed to operate with a maximum assessment of $10 million per incident within one calendar year. Based on the Company's equity ownership interest in four nuclear generating facilities, its retrospective premium could be as high as $1.6 million yearly or a cumulative total of $10.3 million, exclusive of the effect of inflation indexing (at five-year intervals) and a 5% surcharge ($3.3 million) in the event that total public liability claims from a nuclear incident exceed the funds available to pay such claims. CAMBRIDGE ELECTRIC LIGHT COMPANY
(f) Environmental Matters
The Company is subject to laws and regulations administered by federal, state and local authorities relating to the quality of the environment. These laws and regulations affect, among other things, the siting and operation of electric generating and transmission facilities and can require the installation of expensive air and water pollution control equipment. These regulations have had an impact upon the Company's operations in the past and will continue to have an impact upon future operations, capital costs and construction schedules of major facilities.
(5) Employee Benefit Plans
(a) Pension
The Company has a noncontributory pension plan covering substantially all regular employees who have attained the age of 21 and have completed a year of service. Pension benefits are based on an employee's years of service and compensation. The Company makes monthly contributions to the plan consistent with the funding requirements of the Employee Retirement Income Security Act of 1974.
Components of pension expense were as follows:
1993 1992 1991 (Dollars in Thousands)
Service cost $ 459 $ 471 $ 443 Interest cost 1 646 1 544 1 417 Return on plan assets (3 175) (2 156) (4 121) Net amortization and deferral 1 781 849 3 051 Total pension expense 711 708 790 Transfers from affiliated companies, net 101 321 299 Less: Amounts capitalized and deferred 93 111 114 Net pension expense $ 719 $ 918 $ 975
The following economic assumptions were used to measure year-end obliga- tions and the estimated pension expense for the subsequent year:
1993 1992 1991
Discount rate 7.25% 8.50% 8.50% Assumed rate of return 8.50 8.50 8.50 Rate of increase in future compensation 4.50 5.50 5.50
Pension expense reflects the use of the projected unit credit method which is also the actuarial cost method used in determining future funding of the plan. The Company, in accordance with current rate-making, is deferring the difference between pension contribution, which is allowed currently in base rates, and pension expense, recognized pursuant to Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions." The funded status of the Company's pension plan (using a measurement date of December 31) is as follows: CAMBRIDGE ELECTRIC LIGHT COMPANY
1993 1992 (Dollars in Thousands) Accumulated benefit obligation: Vested $(17 172) $(14 212) Nonvested (2 267) (591) $(19 439) $(14 803)
Projected benefit obligation $(23 109) $(18 836) Plan assets at fair market value 23 236 21 002 Projected benefit obligation less than plan assets 127 2 166 Unamortized transition obligation 1 099 1 236 Unrecognized prior service cost 1 091 876 Unrecognized gain (3 600) (5 322) Accrued pension cost $ (1 283) $ (1 044)
Plan assets consist primarily of fixed income and equity securities. Fluctuations in the fair market value of plan assets will affect pension expense in future years. The increase in the accumulated benefit obligation and the projected benefit obligation from December 31, 1992 to December 31, 1993 was primarily due to a reduction in the discount rate in light of current interest rates.
(b) Other Postretirement Benefits
Through December 31, 1992, the Company provided postretirement health care and life insurance benefits to eligible retired employees. Employees became eligible for these benefits if their age plus years of service at retirement equaled 75 or more provided, however, that such service was performed for a subsidiary of the System. As of January 1, 1993, the Company eliminated postretirement health care benefits for those nonbargain- ing employees who were less than 40 years of age or had less than 12 years of service at that date. Under certain circumstances, eligible employees are now required to make contributions for postretirement benefits. Certain bargaining employees are also participating under these new eligibility requirements.
Effective January 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS No. 106). This new standard requires the accrual of the expected cost of such benefits during the employees' years of service and the recognition of an actuarially determined postretirement benefit obligation earned by existing retirees. The assumptions and calculations involved in determining the accrual and the accumulated postretirement benefit obligation (APBO) closely parallel pension accounting requirements. The cumulative effect of implementation of SFAS No. 106 as of January 1, 1993 was approximately $10 million which is being amortized over 20 years. Prior to 1993, the cost of postretirement benefits was recognized as the benefits were paid. The cost of retiree medical care and life insurance benefits under the traditional pay-as-you-go method totaled $428,000 in 1992 and $434,000 in 1991.
In 1993, the Company began making contributions to various voluntary employee beneficiary association (VEBA) trusts that were established CAMBRIDGE ELECTRIC LIGHT COMPANY
pursuant to section 501(c)9 of the Internal Revenue Code (the Code). The Company also made contributions to a sub-account of its pension plan pursuant to section 401(h) of the Code to satisfy a portion of its postretirement benefit obligation. The Company contributed approximately $1,100,000 to these trusts during 1993.
The net periodic postretirement benefit cost for the year ended December 31, 1993 included the following components:
(Dollars in Thousands)
Service cost $ 201 Interest cost 839 Return on plan assets (74) Amortization of transition obligation over 20 years 498 Net amortization and deferral (7) Total postretirement benefit cost 1 457 Less: Amounts capitalized and deferred 734 Net postretirement benefit cost $ 723
The funded status of the Company's postretirement benefit plan using a measurement date of December 31, 1993 is as follows:
(Dollars in Thousands)
Accumulated postretirement benefit obligation: Retirees $ (5 837) Active participants (4 522) (10 359) Plan assets at fair market value 980 Projected postretirement benefit obligation greater than plan assets (9 379) Unamortized transition obligation 9 453 Unrecognized gain (74) $ -
In determining its estimated APBO and the funded status of the plan, the Company assumed a discount rate of 7.25%, an expected long-term rate of return on plan assets of 8.5%, and a medical care cost trend rate of 9%, which gradually decreases to 5% in the year 2007 and remains at that level thereafter. The estimate also reflects a trend rate of 14.9% for reimbursement of Medicare Part B premiums which decreases to 5% by 2007 and a dental care trend rate of 5% in all years. A one percent change in the medical trend rate would have a $160,000 impact on the Company's annual expense (interest component - $111,000; service cost - $49,000) and would change the accumulated benefit obligation by approximately $1.4 million.
Plan assets consist primarily of fixed income and equity securities. Fluctuations in the fair market value of plan assets will affect postretire- ment benefit expense in future years. CAMBRIDGE ELECTRIC LIGHT COMPANY
The DPU's policy on postretirement benefits is to allow in rates the maximum tax deductible contributions made to trusts that have been estab- lished specifically to pay postretirement benefits. Effective with its June 1, 1993 rate order from the DPU, the Company was allowed to recover its SFAS No. 106 expense in base rates over a four-year phase-in period with carrying costs on the deferred balance. Further, based on recent DPU action and discussions with regulators, the Company believes that it is appropriate to record the difference between the amount included in rates and SFAS No. 106 costs as a regulatory asset. At December 31, 1993, this deferral amounted to approximately $1.1 million.
(c) Savings Plan
The Company has an Employees Savings Plan that provides for Company contributions equal to contributions by eligible employees of up to four percent of each employee's compensation rate. Effective January 1, 1993, the rate was increased to five percent for those employees no longer eligible for postretirement benefits other than pensions. The Company's contribution was $321,000 in 1993, $327,000 in 1992 and $316,000 in 1991.
(6) Lease Obligations
The Company leases equipment and office space under arrangements that are classified as operating leases. These lease agreements are for terms of one year or longer. Leases currently in effect contain no provisions which prohibit the Company from entering into future lease agreements or obligations.
Future minimum lease payments, by period and in the aggregate, of non- cancelable operating leases consisted of the following at December 31, 1993:
Operating Leases (Dollars in Thousands)
1994 $1 577 1995 1 539 1996 1 256 1997 926 1998 892 Beyond 1998 2 675 Total future minimum lease payments $8 865
Total rent expense for all operating leases, except those with terms of a month or less, amounted to $1,577,000 in 1993, $1,688,000 in 1992 and $1,756,000 in 1991. There were no contingent rentals and no sublease rentals for the years 1993, 1992 and 1991.
(7) Dividend Restriction
At December 31, 1993, approximately $5,722,000 of retained earnings was restricted against the payment of cash dividends by terms of the Indenture of Trust securing long-term debt. As of the same date, retained earnings also included approximately $4,062,000 representing the Company's equity in undistributed earnings of the nuclear companies. CAMBRIDGE ELECTRIC LIGHT COMPANY
PART V.
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Index to Financial Statements
Financial statements and notes thereto of the Company together with the Report of Independent Public Accountants, are filed under Item 8 of this report and listed on the Index to Financial Statements and Schedules (page 17).
(a) 2. Index to Financial Statement Schedules
Filed herewith at page(s) indicated -
Schedule III - Investments in, Equity in Earnings of, and Dividends Received From Related Parties - Years Ended December 31, 1993, 1992 and 1991 (pages 45-47).
Schedule V - Property, Plant and Equipment - Years Ended December 31, 1993, 1992 and 1991 (pages 48-50).
Schedule VI - Accumulated Depreciation of Property, Plant and Equipment - Years Ended December 31, 1993, 1992 and 1991 (page 51).
Schedule VIII - Valuation and Qualifying Accounts - Years Ended December 31, 1993, 1992 and 1991 (page 52).
Schedule IX - Short-Term Borrowings - Years Ended December 31, 1993, 1992 and 1991 (page 53).
(a) 3. Exhibits: Notes to Exhibits -
a. Unless otherwise designated, the exhibits listed below are incorporated by reference to the appropriate exhibit numbers and the Securities and Exchange Commission file numbers indicated in parentheses.
b. If applicable, as designated by an asterisk, certain documents previously filed by the Company have been disposed of by the Commission pursuant to its Records Control Schedule and are hereby being refiled by the Company.
c. The following is a glossary of Commonwealth Energy System and subsidiary companies' acronyms that are used throughout the following Exhibit Index:
CES.....................Commonwealth Energy System CE......................Commonwealth Electric Company CEL.....................Cambridge Electric Light Company CEC.....................Canal Electric Company CG......................Commonwealth Gas Company NBGEL...................New Bedford Gas and Edison Light Company CAMBRIDGE ELECTRIC LIGHT COMPANY
Exhibit Index
Exhibit 3. Articles of incorporation and by-laws.
3.1 Articles of incorporation of CEL (Exhibit 1 to the CEL Form 10-K for 1990, File No.2-7909).
3.2 By-laws of CEL, as amended (Exhibit 2 to the CEL Form 10-K for 1990, File No.2-7909).
Exhibit 4. Instruments defining the rights of security holders; including indentures
Indenture of Trust or Supplemental Indenture of Trust.
4.1.1 Original Indenture on Form S-1 (April 1949) (Exhibit 7(a), File No. 2-7909). 4.1.2 First Supplemental on Form S-9 (January 1958) (Exhibit 2(b)2, File No. 2-13783). 4.1.3 Second Supplemental on Form 8-K (February 1962) (Exhibit A, File No. 2-7909). 4.1.4 Third Supplemental on Form 10-K (1984) (Exhibit 1, File No. 2- 7909). 4.1.5 Fourth Supplemental on Form 10-K (1984) (Exhibit 2, File No. 2- 7909). 4.1.6 Fifth Supplemental on Form 10-K (1983) (Exhibit 1, File No. 2- 7909). 4.1.7 Sixth Supplemental on Form 10-Q (June 1989) (Exhibit 1, File No. 2-7909). 4.1.8 Seventh Supplemental on Form 10-Q (June 1992) (Exhibit 1, File No. 2-7909).
Exhibit 10. Material Contracts.
10.1 Power Contracts.
10.1.1 Power Contract between CEC and CEL dated December 1, 1965 (Exhibit 13(a)(1) to the CEC Form S-1, File No. 2-30057).
10.1.2 Contract between CEC and NBGEL and CEL, affiliated companies, for the sale for specified amounts of electricity from CEC Unit 2 dated January 12, 1976 (Exhibit 7 to the CES Form 10-K for 1985, File No. 1-7316).
10.1.3 Power Contract, as amended to February 28, 1990, superseding the Power Contract dated September 1, 1986 and amendment dated June 1, 1988, between CEC (seller) and CE and CEL (purchasers) for seller's entire share of the Net Unit Capability of Seabrook 1 and related energy produced and other provisions (Exhibit 1 to the CEC Form 10- Q (March 1990), File No. 2-30057). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.4 Termination Supplement between CEC, CE and CEL RE: Seabrook Unit 2 dated December 8, 1986 (Exhibit 3 to the CEC Form 10-K for 1986, File No. 2-30057).
10.1.5 Agreement for Joint-Ownership, Construction and Operation of the New Hampshire Nuclear Units (Seabrook) between CE, Public Service Company of New Hampshire (PSNH) and others dated May 1, 1973 and filed by CE as Exhibit 13(N) on Form S-1 dated October 1973, File No. 2-49013, and as amended below:
10.1.5.1 First through Fifth Amendments to 10.1.5 dated May 24, 1974, June 21, 1974, September 25, 1975, October 25, 1974 and January 31, 1975, respectively (Exhibit 13(m) to CE's Form S-1, (November 7, 1975), File No. 2-54995).
10.1.5.2 Sixth through Eleventh Amendments to 10.1.5 dated April 18, 1979, April 18, 1979, April 25, 1979, June 8, 1979, October 11, 1979 and December 15, 1979, respectively (Refiled as Exhibit 1 to the CEC Form 10-K for 1989, File No. 2-30057).
10.1.5.3 Twelfth through Fourteenth Amendments to 10.1.5 dated May 16, 1980, December 31, 1980 and June 1, 1982, respectively (Refiled as Exhibits 1, 2 and 3 to the CE 1992 Form 10-K), File No. 2-7749).
10.1.5.4 Fifteenth and Sixteenth Amendment to 10.1.5 dated April 27, 1984 and June 15, 1984, respectively (Exhibit 1 to the CEC Form 10-Q (June 1984), File No. 2-30057).
10.1.5.5 Seventeenth Amendment to 10.1.5 dated March 8, 1985 (Exhibit 1 to the CEC Form 10-Q (March 1985), File No. 2-30057).
10.1.5.6 Eighteenth Amendment to 10.1.5 dated March 14, 1986 (Exhibit 1 to the CEC Form 10-Q (March 1986), File No. 2-30057).
10.1.5.7 Nineteenth Amendment to 10.1.5 dated May 1, 1986 (Exhibit 1 to the CEC Form 10-Q (June 1986), File No. 2-30057).
10.1.5.8 Twentieth Amendment to 10.1.5 dated September 19, 1986 (Exhibit 1 to the CEC Form 10-K for 1986, File No. 2-30057).
10.1.5.9 Twenty-First Amendment to 10.1.5 dated November 12, 1987 (Exhibit 1 to the CEC Form 10-K for 1989, File No. 2-30057).
10.1.5.10 Twenty-Second Amendment and Settlement Agreement to 10.1.5 both dated January 13, 1989, (Exhibit 4 to the CEC Form 10-K for 1988, File No. 2-30057).
10.1.6 Resolutions proposed by Merrill Lynch Capital Markets and adopted by the Joint-Owners of the Seabrook Nuclear Project regarding Project financing, dated May 14, 1984 (Exhibit 1 to the CEC Form 10-Q (March 1984), File No. 2-30057). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.7 Interim Agreement to Preserve and Protect the Assets of and Investment in the New Hampshire Nuclear Units by and between CEC, PSNH and other participants, dated April 27, 1984 (Exhibit 2 to the CEC Form 10-Q (June 1984), File No. 2-30057).
10.1.8 Agreement for Seabrook Project Disbursing Agent by and among CEC, PSNH and other participants establishing Yankee Atomic Electric Company as the disbursing agent under the Joint-Ownership Agreement, dated May 23, 1984, (Exhibit 4 to the CEC Form 10-Q (June 1984), File No. 2-30057).
10.1.8.1 First Amendment dated March 8, 1985 to 10.1.8 (Exhibit 2 to the CEC Form 10-Q (March 1985), File No. 2-30057).
10.1.8.2 Second through Fifth Amendments dated May 20, 1985, June 18, 1985, January 2, 1986 and November 12, 1987, respectively, to 10.1.8 (Exhibit 4 to the CEC Form 10-K for 1987, File No. 2-30057).
10.1.9 Capacity Acquisition Agreement between CEC, CEL and CE dated September 25, 1980 (Exhibit 1 to the 1991 CEC Form 10-K, File No. 2-30057).
10.1.9.1 Supplement to 10.1.9 consisting of three Capacity Acquisition Commitments each dated May 7, 1987, concerning Phases I and II of the Hydro-Quebec Project and electricity acquired from Connecticut Light and Power Company (Exhibit 1 to the CEC Form 10-Q (September 1987), File No. 2-30057).
10.1.9.2 Supplements to 10.1.9 consisting of two Capacity Acquisition Commitments each dated October 31, 1988, concerning electricity acquired from Western Massachusetts Electric Company and/or Connecticut Light and Power Company for periods ranging from November 1, 1988 to October 31, 1994 (Exhibit 2 to the CEC Form 10- Q (September 1989), File No. 2-30057).
10.1.9.3 Amendment to 10.1.9 as amended and restated June 1, 1993, henceforth referred to as the Capacity Acquisition and Disposition Agreement, whereby Canal Electric Company, as agent, in addition to acquiring power may also sell bulk electric power which the Company and/or Commonwealth Electric Company owns or otherwise has the right to sell (Exhibit 1 to Canal Electric's Form 10-Q (September 1993), File No. 2-30057).
10.1.10 Power Contract between Yankee Atomic Electric Company and CEL, dated June 30, 1959, as amended April 1, 1975 (Exhibit 1 to the CEL Form 10-K, File No. 2-7909).
10.1.10.1 Second, Third and Fourth Amendments to 10.1.10 as amended October 1, 1980, April 1, 1985 and May 6, 1988, respectively (Exhibit 2 to the CEL Form 10-Q (June 1988), File No. 2-7909).
10.1.10.2 Fifth and Sixth Amendments to 10.1.10 as amended June 26, 1989 and July 1, 1989, respectively (Exhibit 1 to the CEL Form 10-Q (September 1989), File No. 2-7909). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.11 Power Contract between Connecticut Yankee Atomic Power Company and CEL dated July 1, 1964 (Exhibit 13-K1 to the CES Form S-1, (April 1967) File No. 2-25597).
10.1.11.1 Additional Power Contract to 10.1.11 providing for extension on the contract term dated April 30, 1984 (Exhibit 5 to the CEL Form 10-Q (June 1984), File No. 2-7909).
10.1.11.2 Second Supplementary Power Contract to 10.1.11 providing for decommissioning financing dated April 30, 1984 (Exhibit 6 to the CEL Form 10-Q (June 1984), File No. 2-7909).
10.1.12 Power Contract between CEL and Vermont Yankee Nuclear Power Corporation dated February 1, 1968 (Exhibit 3 to the CEL 1984 Form 10-K, File No. 2-7909).
10.1.12.1 First Amendment (Section 7) and Second Amendment (decommissioning financing) to 10.1.12 as amended June 1, 1972 and April 15, 1983, respectively (Exhibits 1 and 2, respectively, to the CEL Form 10-Q (June 1984), File No. 2-7909).
10.1.12.2 Third and Fourth Amendments to 10.1.12 as amended April 1, 1985 and June 1, 1985, respectively (Exhibit 1 and 2 to the CEL Form 10-Q (June 1986) File No. 2-7909).
10.1.12.3 Fifth and Sixth Amendments to 10.1.12 both as amended May 6, 1988 (Exhibit 1 to the CEL Form 10-Q (June 1988), File No. 2-7909).
10.1.12.4 Seventh Amendment to 10.1.12 as amended June 15, 1989 (Exhibit 2 to the CEL Form 10-Q (September 1989), File No. 2-7909).
10.1.12.5* Additional Power Contract between CEL and Vermont Yankee Nuclear Power Corporation providing for decommissioning financing and contract extension dated February 1, 1984 (Refiled herewith as Exhibit 1).
10.1.13 Power Contract between Maine Yankee Atomic Power Company and CEL dated May 20, 1968 (Exhibit 5 to the System's Form S-7, File No. 2- 38372).
10.1.13.1 First Amendment (decommissioning financing) and Second Amendment (supplementary payments) to 10.1.13 as amended March 1, 1984 and January 1, 1984, respectively (Exhibits 3 and 4 to the CEL Form 10- Q (June 1984), File No. 2-7909).
10.1.13.2 Third Amendment to 10.1.13 as amended October 1, 1984 (Exhibit 1 to the CEL Form 10-Q (September 1984), File No. 2-7909).
10.1.14 Participation Agreement between Maine Electric Power Company and CEL and/or NBGEL for the construction of a 345 KV transmission line between Wiscasset, Maine and Mactaquac, New Brunswick, Canada and for the purchase of base and peaking capacity from the New Brunswick Electric Power Commission, dated June 20, 1969 (Exhibit 13 to the CES Form 10-K for 1984, File No. 1-7316). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.14.1 Supplement Amending 10.1.14, as amended June 24, 1970 (Exhibit 8 to the CES Form S-7, Amendment No. 1, File No. 2-38372).
10.1.15 Service Agreement for Non-Firm Transmission Service between Boston Edison Company and CEL dated July 5, 1984 (Exhibit 4 to the CEL 1984 Form 10-K, File No. 2-7909).
10.1.16 Power Exchange Agreement by and between Boston Edison Company and CEL dated December 1, 1984 (Exhibit 5 to the CEL 1984 Form 10-K, File No. 2-7909).
10.1.17 Agreement, dated September 1, 1985, With Respect To Amendment of Agreement With Respect To Use Of Quebec Interconnection, dated December 1, 1981, among certain NEPOOL utilities to include Phase II facilities in the definition of "Project" (Exhibit 1 to the CEC Form 10-Q (September 1985), File No. 2-30057).
10.1.17.1 Amendatory Agreement No. 3 to 10.1.17, as amended June 1, 1990 (Exhibit 1 to the CEC Form 10-Q (September 1990), File No. 2- 30057).
10.1.18 Preliminary Quebec Interconnection Support Agreement - Phase II among certain New England electric utilities, dated June 1,1984 (Exhibit 6 to the CE Form 10-Q (June 1984), File No. 2-7749).
10.1.18.1 First, Second and Third Amendments to 10.1.18 as amended March 1, 1985, January 1, 1986 and March 1, 1987, respectively (Exhibit 1 to the CEC Form 10-Q (March 1987), File No. 2-30057).
10.1.18.2 Fourth and Eighth Amendments to 10.1.18 as amended July 1, 1987 and August 1, 1988, respectively (Exhibit 3 to the CEC Form 10-Q (September 1988), File No. 2-30057).
10.1.18.3 Fifth, Sixth and Seventh Amendments to 10.1.18 as amended October 15, 1987, December 15, 1987 and March 1, 1988, respectively (Exhibit 1 to the CEC Form 10-Q (June 1988), File No. 2-30057).
10.1.18.4 Ninth and Tenth Amendments to 10.1.18 as amended November 1, 1988 and January 15, 1989, respectively (Exhibit 2 to the CEC Form 10-K for 1988, File No. 2-30057).
10.1.18.5 Eleventh Amendment to 10.1.18 as amended November 1, 1989 (Exhibit 4 to the CEC Form 10-K for 1989, File No. 2-30057).
10.1.18.6 Twelfth Amendment to 10.1.18 as amended April 1, 1990 (Exhibit 1 to the CEC Form 10-Q (June 1990), File No. 2-30057).
10.1.19 Agreement to Preliminary Quebec Interconnection Support Agreement - Phase II among Public Service Company of New Hampshire (PSNH), New England Power Co., Boston Edison Co. and CEC whereby PSNH assigns a portion of its interests under the original Agreement to the other three parties, dated October 1, 1987 (Exhibit 2 to the CEC 1987 Form 10-K, File No. 2-30057). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.20 Phase II Equity Funding Agreement for New England Hydro- Transmission Electric Company, Inc. (New England Hydro (Massachusetts) between New England Hydro and certain NEPOOL utilities, dated June 1, 1985 (Exhibit 2 to the CEC Form 10-Q (September 1985), File No. 2-30057).
10.1.21 Phase II Equity Funding Agreement for New England Hydro- Transmission Corporation (New Hampshire Hydro) between New Hampshire Hydro and certain NEPOOL utilities, dated June 1, 1985 (Exhibit 3 to the CEC Form 10-Q (September 1985), File No. 2- 30057).
10.1.21.1 Amendment No. 1 to 10.1.21 as amended May 1, 1986 (Exhibit 6 to the CEC Form 10-Q (March 1987), File No. 2-30057).
10.1.21.2 Amendment No. 2 to 10.1.21 as amended September 1, 1987 (Exhibit 3 to the CEC Form 10-Q (September 1987), File No. 2-30057).
10.1.22 Phase II Massachusetts Transmission Facilities Support Agreement dated June 1, 1985, refiled as a single agreement incorporating Amendments 1 through 7 dated May 1, 1986 through January 1, 1989, respectively, between New England Hydro-Transmission Electric Company, Inc. (New England Hydro) and certain NEPOOL utilities (Exhibit 2 the CEC Form 10-Q (September 1990), File No. 2-30057).
10.1.23 Phase II New Hampshire Transmission Facilities Support Agreement dated June 1, 1985, refiled as a single agreement incorporating Amendments 1 through 8 dated May 1, 1986 through January 1, 1990, respectively, between New England Hydro-Transmission Corporation (New Hampshire Hydro) and certain NEPOOL utilities (Exhibit 3 to the CEC Form 10-Q (September 1990), File No. 2-30057).
10.1.24 Phase II New England Power AC Facilities Support Agreement between New England Power and certain NEPOOL utilities, dated June 1, 1985 (Exhibit 6 to the CEC Form 10-Q (September 1985), File No. 2- 30057).
10.1.24.1 Amendments Nos. 1 and 2 to 10.1.24 as amended May 1, 1986 and February 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q (March 1987), File No. 2-30057).
10.1.24.2 Amendments Nos. 3 and 4 to 10.1.24 as amended June 1, 1987 and September 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q (September 1987), File No. 2-30057).
10.1.25 Phase II Boston Edison AC Facilities Support Agreement between Boston Edison Company and certain NEPOOL utilities, dated June 1, 1985 (Exhibit 7 to the CEC Form 10-Q (September 1985), File No. 2- 30057).
10.1.25.1 Amendments Nos. 1 and 2 to 10.1.25 as amended May 1, 1986 and February 1, 1987, respectively (Exhibit 2 to the CEC Form 10-Q (March 1987), File No. 2-30057). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.25.2 Amendments Nos. 3 and 4 to 10.1.25 as amended June 1, 1987 and September 1, 1987, respectively (Exhibit 4 to the CEC Form 10-Q (September 1987), File No. 2-30057).
10.1.26 Agreement Authorizing Execution of Phase II Firm Energy Contract among certain NEPOOL utilities in regard to participation in the purchase of power from Hydro Quebec, dated September 1, 1985 (Exhibit 8 to the CEC Form 10-Q (September 1985), File No. 2- 30057).
10.1.27 System Power Sales Agreement by and between Connecticut Light and Power (CL&P), Western Massachusetts Electric Company (Northeast Utilities companies), as sellers, and CEL, as buyer, of power in excess of firm power customer requirements from the electric systems of the Northeast Utilities companies, dated June 1, 1984, as effective October 25, 1985 (Exhibit 1 to the CEL 1985 Form 10-K, File No. 2-7909).
10.1.28 Power Sale Agreement dated November 1, 1988 by and between CEC (buyer) and CL&P (seller), whereby buyer will purchase generating capacity totaling 250 MW from various seller's units ("Slice of System") for the term of November 1, 1989 to October 31, 1994 (Exhibit 3 to the CEC Form 10-K for 1988, File No. 2-30057).
10.1.29 Power Sale Agreement by and between Altresco Pittsfield, L. P. and the Company for entitlement to the electric capacity and related energy to be produced by a cogeneration facility located in Pittsfield, Massachusetts, dated February 20, 1992 (Exhibit 1 to the CEL Form 10-Q (September 1993), File No. 2-7909).
10.1.29.1 System Exchange Agreement by and among Altresco Pittsfield, L.P., the Company, Commonwealth Electric Company (CE) and New England Power Company, dated July 2, 1993 (Exhibit 3 to the CE Form 10-Q (September 1993), File No. 2-7749).
10.2 Other Agreements.
10.2.1 Pension Plan for Employees of Commonwealth Energy System and Subsidiary Companies as amended and restated January 1, 1993 (Exhibit 1 to the System's Form 10-Q (September 1993), File No. 1- 7316).
10.2.2 Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies as amended and restated January 1, 1993 (Exhibit 2 to the System's Form 10-Q (September 1993), File No. 1-7316).
10.2.3 New England Power Pool (NEPOOL) Agreement dated September 1, 1971 as amended through August 1, 1977 between NEGEA Service Corporation, as agent for CEL, CEC, NBGEL and various other electric utilities operating in New England, together with amendments dated August 15, 1978, January 31, 1979 and February 1, 1980 (Exhibit 5(c)13 to the CES Form S-16 (April 1980), File No. 2- 64731). CAMBRIDGE ELECTRIC LIGHT COMPANY
10.2.3.1 Thirteenth Amendment to 10.2.3 dated September 1, 1981 (Exhibit 3 to the CES 1991 Form 10-K, File No. 1-7316).
10.2.3.2 Fourteenth through Twentieth Amendments to 10.2.3 as amended December 1, 1981, June 1, 1982, June 15, 1983, October 1, 1983, August 1, 1985, August 15, 1985 and September 1, 1985, respectively (Exhibit 4 to the CES Form 10-Q (September 1985), File No. 1-7316).
10.2.3.3 Twenty-first Amendment to 10.2.3 as amended to January 1, 1986 (Exhibit 1 to the CES Form 10-Q (March 1986), File No. 1-7316).
10.2.3.4 Twenty-second Amendment to 10.2.3 as amended to January 1, 1986 (Exhibit 1 to the CES Form 10-Q (September 1986), File No. 1-7316).
10.2.3.5 Twenty-third Amendment to 10.2.3 as amended April 30, 1987 (Exhibit 1 to the CES Form 10-Q (June 1987), File No. 1-7316).
10.2.3.6 Twenty-fourth Amendment to 10.2.3 as amended March 1, 1988 (Exhibit 1 to the CES 1987 Form 10-K, File No. 1-7316).
10.2.3.7 Twenty-fifth Amendment to 10.2.3 as amended May 1, 1988 (Exhibit 1 to the CES Form 10-Q (March 1988), File No. 1-7316).
10.2.3.8 Twenty-sixth Amendment to 10.2.3 as amended March 15, 1989 (Exhibit 1 to the CES Form 10-Q (March 1989), File No. 1-7316).
10.2.3.9 Twenty-seventh Amendment to 10.2.3 as amended October 1, 1990 (Exhibit 3 to the CES 1990 Form 10-K, File No. 1-7316).
10.2.4 Guarantee Agreement by CEL (as guarantor) and MYA Fuel Company (as initial lender) covering the unconditional guarantee of a portion of the payment obligations of Maine Yankee Atomic Power Company under a loan agreement and note initially between Maine Yankee and MYA Fuel Company (Exhibit 3 to the CEL 1985 Form 10-K, File No. 2- 7909).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended December 31, 1993.
SCHEDULE VIII
CAMBRIDGE ELECTRIC LIGHT COMPANY VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (Dollars in Thousands)
Additions Balance Provision Deductions Balance Beginning Charged to Accounts at End Description of Year Operations Recoveries Written-off of Year
Year Ended December 31, 1993
Allowance for Doubtful Accounts $453 $257 $280 $499 $491
Year Ended December 31, 1992
Allowance for Doubtful Accounts $309 $801 $ 1 $658 $453
Year Ended December 31, 1991
Allowance for Doubtful Accounts $287 $449 $104 $531 $309
SCHEDULE IX CAMBRIDGE ELECTRIC LIGHT COMPANY SHORT-TERM BORROWINGS (a) FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (Dollars in Thousands)
Maximum Weighted Month-End Average Weighted Category of Average Amount Amount Average Aggregate Balance Interest Outstanding Outstanding Interest Short-Term at End Rate at End During During the Rate During Borrowings of Period of Period the Period Period(b) the Period(c)
December 31, 1993 Notes Payable to Banks $2 000 3.1% $ 5 375 $ 1 850 3.3%
Notes Payable to System $ - - $ 1 050 $ 81 6.0%
COM/Energy Money Pool $1 305 3.2 $ 2 855 $ 737 3.2%
December 31, 1992 Notes Payable to Banks $1 500 3.5% $21 600 $ 6 396 4.0%
Notes Payable to System $ - - $ 705 $ 546 6.3%
COM/Energy Money Pool $ - - $ 1 205 $ 592 3.7%
December 31, 1991 Notes Payable to Banks $11 700 5.8% $15 625 $12 067 6.3%
Notes Payable to System $ 655 6.5% $ 655 $ 495 8.3%
COM/Energy Money Pool $ 885 4.6% $ 1 285 $ 907 5.8%
(a) Refer to Note 3 of Notes to Financial Statements filed under Item 8 of this report for the general terms of each category of short-term borrowings.
(b) The average amount outstanding during the period is determined by averaging the level of month-end principal balances outstanding for the prior thirteen-month period ending December 31.
(c) The weighted average interest rate during the period is determined by averaging the interest rates in effect on all loans transacted for the twelve-month period ended December 31. CAMBRIDGE ELECTRIC LIGHT COMPANY FORM 10-K DECEMBER 31, 1993
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CAMBRIDGE ELECTRIC LIGHT COMPANY (Registrant)
By: WILLIAM G. POIST William G. Poist, Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Principal Executive Officers:
WILLIAM G. POIST March 30, 1994 William G. Poist, Chairman of the Board and Chief Executive Officer
R. D. WRIGHT March 28, 1994 Russell D. Wright, President and Chief Operating Officer
Principal Financial Officer:
JAMES D. RAPPOLI March 30, 1994 James D. Rappoli, Financial Vice President and Treasurer
Principal Accounting Officer:
JOHN A. WHALEN March 28, 1994 John A. Whalen, Comptroller
A majority of the Board of Directors:
WILLIAM G. POIST March 30, 1994 William G. Poist, Director
R. D. WRIGHT March 28, 1994 Russell D. Wright, Director
JAMES D. RAPPOLI March 30, 1994 James D. Rappoli, Director