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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Exact name of Registrants as specified in
their charters, State of Incorporation, IRS Employer
Commission address of principal executive offices and Identification
File Number Registrants' telephone number Number
- ----------- ------------------------------------------ --------------
33-87902 ESI Tractebel Funding Corp. 04-3255377
(a Delaware corporation)
33-87902-02 Northeast Energy Associates, 04-2955642
A Limited Partnership
(a Massachusetts limited partnership)
33-87902-01 North Jersey Energy Associates, 04-2955646
A Limited Partnership
(a New Jersey limited partnership)
333-52397 ESI Tractebel Acquisition Corp. 65-0827005
(a Delaware corporation)
333-52397-01 Northeast Energy, LP 65-0811248
(a Delaware limited partnership)
------------------------------------------
c/o FPL Energy, LLC
700 Universe Boulevard
Juno Beach, Florida 33408-2683
(561) 691-7171
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
8.43% Senior Secured Notes due 2000, Series A
9.16% Senior Secured Notes due 2002, Series A
9.32% Senior Secured Bonds due 2007, Series A
9.77% Senior Secured Bonds due 2010, Series A
7.99% Secured Bonds due 2011, Series B
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) have been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405
of Regulation S-K is no contained herein, and will not be contained, to the
best of Registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
As of December 31, 1999, there were issued and outstanding 10,000 shares of
ESI Tractebel Funding Corp.'s common stock.
As of December 31, 1999, there were issued 20 shares of ESI Tractebel
Acquisition Corp.'s common stock.
----------------------------------
This combined Form 10-K represents separate filings by ESI Tractebel Funding
Corp., Northeast Energy Associates, A Limited Partnership, North Jersey
Energy Associates, A Limited Partnership, ESI Tractebel Acquisition Corp. and
Northeast Energy, LP. Information contained herein relating to an individual
registrant is filed by that registrant on its own behalf. Each registrant
makes representations only as to itself and makes no representations
whatsoever as to any other registrant.
DEFINITIONS
Acronyms and defined terms used in the text include the following:
Term Meaning
Acquisition Corp. ESI Tractebel Acquisition Corp.
Act Securities Act of 1933, as amended
avoided cost the incremental cost to an electric utility of electric energy and/or capacity that, but
for the purchase from a qualifying facility, such utility would generate itself or
purchase from another source
Boston Edison Boston Edison Company
Broad Street Broad Street Contract Services, Inc.
Btu British thermal units, a unit of energy
Cogeneration Power production technology that provides for the sequential generation of two or more
useful forms of energy from a single primary fuel source
Commonwealth Commonwealth Electric Company
ESI Energy ESI Energy, LLC
ESI GP ESI Northeast Energy GP, Inc.
ESI LP ESI Northeast Energy LP, Inc.
ESI Northeast Acquisition ESI Northeast Energy Acquisition Funding, Inc.
ESI Northeast Funding ESI Northeast Energy Funding, Inc.
ESI Northeast Fuel ESI Northeast Fuel Management, Inc.
ETURC ESI Tractebel Urban Renewal Corporation, previously IEC Urban Renewal Corporation
FERC Federal Energy Regulatory Commission
FPL Florida Power & Light Company
FPL Energy FPL Energy, LLC
FPL Group FPL Group, Inc.
FPL Group Capital FPL Group Capital Inc
FPLE Operating Services FPL Energy Operating Services, Inc.
Funding Corp. ESI Tractebel Funding Corp., previously IEC Funding Corp.
IEC Intercontinental Energy Corporation, a Massachusetts corporation
JCP&L Jersey Central Power & Light
kwh kilowatt-hour
Management's Discussion Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Montaup Montaup Electric Company
MMBtu millions of Btu
mw megawatt(s)
NE LLC Northeast Energy, LLC
NE LP Northeast Energy, LP
NEA Northeast Energy Associates, A Limited Partnership
NJEA North Jersey Energy Associates, A Limited Partnership
NEPOOL New England power pool
O&M operations and maintenance
Partners ESI GP and ESI LP together with Tractebel GP and Tractebel LP
Partnerships NEA together with NJEA
PJM Pennsylvania-New Jersey-Maryland power pool
ProGas ProGas Limited of Alberta, Canada
PSE&G Public Service Electric & Gas of Newark, New Jersey
PURPA Public Utility Regulatory Policies Act of 1978, as amended
qualifying facilities Non-utility power production facilities meeting the requirements of a qualifying
facility under PURPA
Reform Act Private Securities Litigation Reform Act of 1995
Rule 144A Rule 144A promulgated under the Act
Tractebel Tractebel, Inc.
Tractebel GP Tractebel Northeast Generation GP, Inc.
Tractebel LP Tractebel Associates Northeast LP, Inc.
Tractebel Power Tractebel Power, Inc.
Trustee State Street Bank and Trust Company, a Massachusetts banking corporation
Westinghouse Siemens Westinghouse Operating Services Company
Westinghouse Power Siemens Westinghouse Power Corporation
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
In connection with the safe harbor provisions of the Reform Act, the Funding
Corp., the Partnerships, the Acquisition Corp. and NE LP (all five entities
collectively, the Registrants) are hereby filing cautionary statements
identifying important factors that could cause the Registrants' actual
results to differ materially from those projected in forward-looking
statements (as such term is defined in the Reform Act) of the Registrants
made by or on behalf of the Registrants which are made in this combined Form
10-K, in presentations, in response to questions or otherwise. Any statements
that express, or involve discussions as to expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as will likely result, are
expected to, will continue, is anticipated, estimated, projection, outlook)
are not statements of historical facts and may be forward-looking. Forward-
looking statements involve estimates, assumptions and uncertainties.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the following important factors that could cause
the Registrants' actual results to differ materially from those contained in
forward-looking statements made by or on behalf of the Registrants.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Registrants undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date
on which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of
each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statement.
Some important factors that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements include
changes in laws or regulations, changing governmental policies and regulatory
actions, including those of the FERC and PURPA, acquisition, disposal,
depreciation and amortization of assets and facilities, operation and
construction of plant facilities, recovery of fuel and purchased power costs,
and present or prospective competition.
The business and profitability of the Registrants are also influenced by
economic and geographic factors including political and economic risks,
changes in and compliance with environmental and safety laws and policies,
weather conditions, population growth rates and demographic patterns,
competition for retail and wholesale customers, availability, pricing and
transportation of fuel and other energy commodities, market demand for energy
from plants or facilities, changes in tax rates or policies or in rates of
inflation or in accounting standards, unanticipated delays or changes in
costs for capital projects, unanticipated changes in operating expenses and
capital expenditures, capital market conditions, competition for new energy
development opportunities and legal and administrative proceedings (whether
civil, such as environmental, or criminal) and settlements.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results, and are beyond the control of the
Registrants.
PART I
Item 1. Business
General. NE LP, a Delaware limited partnership, was formed on November 21,
1997 for the purpose of acquiring ownership interests in two partnerships,
NEA and NJEA, each of which owns an electric power generation station in the
northeastern United States. NE LP is jointly owned by ESI GP and ESI LP
(indirect wholly-owned subsidiaries of FPL Energy, which is an indirect
wholly-owned subsidiary of FPL Group, a company listed on the New York Stock
Exchange) and Tractebel GP and Tractebel LP (indirect wholly-owned
subsidiaries of Tractebel S.A., a Belgian energy and environmental services
business). NE LP also formed a wholly-owned entity, NE LLC, to assist in such
acquisitions. On January 14, 1998, NE LP and NE LLC acquired all of the
interests in the Partnerships from IEC and from certain individuals.
The Partnerships were formed in 1986 to develop, construct, own, operate and
manage the power generation stations. NEA's facility commenced commercial
operation in September 1991 and is located in Bellingham, Massachusetts.
NJEA's facility commenced commercial operation in August 1991 and is located
in Sayreville, New Jersey.
In connection with the acquisition of the Partnerships' interests, the
Funding Corp. was acquired by a subsidiary of ESI Energy, Tractebel Power and
Broad Street from IEC. This entity was established in 1994 solely for the
purpose of issuing debt. This debt was privately issued under Rule 144A to
acquire outstanding bank debt and to loan funds to the Partnerships and was
subsequently exchanged for public debt under the Act.
On January 12, 1998, the Acquisition Corp. was formed. The Acquisition
Corp.'s common stock is jointly owned by a subsidiary of ESI Energy and a
subsidiary of Tractebel Power. On February 12, 1998, the Acquisition Corp.
issued $220 million of debt under Rule 144A which was also subsequently
exchanged for public debt under the Act. The proceeds were loaned to NE LP
and then distributed to direct subsidiaries of FPL Energy and Tractebel
Power. Repayment of the debt is expected from distributions from the
Partnerships.
None of the Registrants or the Partners have any employees.
Partnerships' Operations. The Partnerships operate in the independent power
industry. In the United States, regulated electric utilities have been the
dominant producers and suppliers of electric energy since the early 1900s. In
1978, PURPA removed regulatory constraints relating to the production and
sale of electric energy by certain non-utility power producers and required
electric utilities to buy electricity from certain types of non-utility power
producers under certain conditions, thereby encouraging companies other than
electric utilities to enter the electric power production market. The
Partnerships were created as a result of the PURPA legislation.
Each of the Partnerships owns and derives substantially all of its revenues
from a nominal 300 mw natural gas-fired combined-cycle cogeneration facility.
The facilities were constructed by Westinghouse Power and use natural gas to
produce electrical energy and thermal energy in the form of steam. The
Partnerships were developed and are operated as qualifying facilities under
PURPA and the regulations promulgated thereunder by the FERC. The
Partnerships must satisfy certain annual operating and efficiency standards
and ownership requirements to maintain qualifying facility status, which
exempts the Partnerships from certain federal and state regulations. The
Partnerships are, however, not exempt from state regulatory commission
general supervisory powers relating to environmental and safety matters.
NEA and NJEA sell substantially all of their output to regulated utilities
under power purchase agreements as follows:
% of Power Purchase
Power Purchaser MW Capacity Agreement Expiration
NEA:
Boston Edison 135 45% September 15, 2016
Boston Edison 84 28 September 15, 2011
Commonwealth 25 8 September 15, 2016
Commonwealth 21 7 September 15, 2016
Montaup 25 8 September 15, 2021
NEA Total 290 96%
NJEA:
JCP&L 250 83% August 13, 2011
The remainder of the net electrical energy produced by the Partnerships is
available for sale to the marketplace either directly to third parties or via
FPL Energy's power marketing group. The power purchase agreements provide for
substantially continuous delivery of base load power.
Certain of the power purchase agreements require the establishment of energy
banks to record cumulative payments made by the utilities in excess of
avoided cost rates scheduled or specified in such agreements. Some of the
energy bank balances bear interest at various rates specified in the
agreements. Upon termination of the agreements, remaining amounts recorded in
the energy banks will be required to be repaid. Energy bank balances are
partially secured by letters of credit.
To meet the FERC regulations for a qualifying facility, both NEA and NJEA
sell at least 5% of the thermal energy produced to unrelated third parties.
NEA sells steam to a third party which leases a carbon dioxide facility owned
by NEA and located on NEA's property.
Approximately 80% of the natural gas that fuels the Partnerships' facilities
is supplied pursuant to long-term gas supply agreements with ProGas and, in
the case of NJEA, also pursuant to a long-term gas supply agreement with
PSE&G. Gas is transported to, or stored for later use by, the Partnerships
pursuant to long-term gas transportation and storage agreements. The
remainder of the daily fuel requirements is satisfied by open-market
purchases. Price escalators under the long-term gas agreements are intended
to correlate to the price escalators under the power purchase agreements,
thereby reducing the risk associated with increases in the price of natural
gas. ESI Northeast Fuel, an indirect wholly-owned subsidiary of FPL Energy,
is the fuel manager for the Partnerships and provides fuel management and
administrative services by contracting with FPL Energy's power marketing
group. This group buys and sells wholesale energy commodities, such as
natural gas and electric power.
O&M of the Partnerships was provided by Westinghouse, a subsidiary of
Westinghouse Power, through December 31, 1998. Effective December 31, 1998,
the O&M contracts between Westinghouse Power and the Partnerships were
terminated by mutual consent of both parties and the payment of $10 million
to Westinghouse. FPLE Operating Services, a wholly-owned indirect subsidiary
of FPL Energy, became the new provider of O&M services for the Partnerships
on January 1, 1999. See Management's Discussion - Results of Operations.
Seasonality. The performance of the Partnerships is dependent on ambient
conditions (principally air temperature, air pressure and humidity), which
affect the efficiency and capacity of the combined-cycle facilities. Payments
due to NJEA under the JCP&L power purchase agreement during winter and summer
season are substantially higher than those in spring and fall. Otherwise, the
business of the Partnerships is not materially subject to seasonal factors.
Competition. Recent regulatory change has created additional competition in
the form of wholesale power marketers that engage in purchase and resale
transactions between power producers and power distributors. Although
substantially all of the Partnerships' output is committed under the power
purchase agreements described above, these factors may adversely affect
energy prices under certain power purchase agreements that are tied to the
actual costs of the purchasing utility.
Deregulation. Both Massachusetts and New Jersey have enacted legislation
designed to deregulate the production and sale of electricity. By allowing
customers to choose their electricity supplier, deregulation is expected to
result in a shift from cost-based rates to market-based rates for energy
production. Similar initiatives are also being pursued on the federal level.
The Partnerships operate in two power pools. NEA operates in NEPOOL and NJEA
operates in PJM, each of which has an independent system operator that manages
the transmission of electricity. While legislators and state regulatory
commissions will decide what impact, if any, competitive forces will have on
retail transactions, the FERC has jurisdiction over potential changes which
could affect competition in wholesale transactions. The FERC has approved
various filings submitted by NEPOOL and PJM that further electric industry
deregulation initiatives.
NE LP and the Partnerships do not expect electric utility industry
restructuring to result in any material adverse change to prices under the
Partnerships' power purchase agreements. However, the impact of electric
utility industry restructuring on the companies that purchase power from the
Partnerships is uncertain.
Item 2. Properties
As of December 31, 1999, the Partnerships had the following properties:
Facility Type Location Principal Use
NEA cogeneration facility (1) Bellingham, MA Power production
NEA carbon dioxide plant (2) Bellingham, MA Carbon dioxide
production
NEA residential properties (3) Bellingham, MA Private residences
NJEA cogeneration facility (2) Sayreville, NJ Power production
(1) Subject to the liens of a first and second mortgage.
(2) Subject to the lien of a first mortgage.
(3) NEA owns 12 properties, most with single-family dwellings, located on
land immediately adjacent to the facility site. These properties are subject
to the lien of a mortgage.
Item 3. Legal Proceedings
None of the Registrants are involved in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrants' Common Equity and Related Stockholder
Matters
This item is not applicable for the Registrants.
Item 6. Selected Financial Data
Years Ended December 31,
1999 1998 1997 1996 1995
(Thousands of Dollars)
SELECTED DATA OF NE LP
Operating revenues ...................................... $ 336,299 $ 302,693 $ - n/a n/a
Net income .............................................. $ 33,303 $ 14,098 $ - n/a n/a
Total assets ............................................ $1,345,858 $1,410,343 $ - n/a n/a
Long-term debt, excluding current maturities ............ $ 638,880 $ 665,213 $ - n/a n/a
Amounts due utilities for energy bank balances .......... $ 168,885 $ 173,356 $ - n/a n/a
SELECTED DATA OF THE PARTNERSHIPS
Operating revenues ...................................... $ 336,299 $ (a)(b) $312,154 $272,262 $280,549
Net income .............................................. $ 51,329 $ (a)(b) $ 36,673 $ 9,924 $ 26,857
Total assets ............................................ $1,339,102 $1,403,045 $541,545 $566,534 $617,034
Long-term debt, excluding current maturities ............ $ 418,880 $ 445,213 $468,724 $490,287 $514,362
Amounts due utilities for energy bank balances .......... $ 168,885 $ 173,356 $230,565 $220,922 $188,053
SELECTED DATA OF THE FUNDING CORP.
Operating revenues ...................................... $ - $ - $ - $ - $ -
Net income .............................................. $ - $ - $ - $ - $ -
Total assets ............................................ $ 445,214 $ 468,725 $490,288 $514,363 $539,567
Long-term debt, excluding current maturities ............ $ 418,880 $ 445,213 $468,724 $490,287 $514,362
SELECTED DATA OF THE ACQUISITION CORP.
Operating revenues ...................................... $ - $ - n/a n/a n/a
Net income .............................................. $ 9 $ 8 n/a n/a n/a
Total assets ............................................ $ 220,152 $ 220,152 n/a n/a n/a
Long-term debt, excluding current maturities ............ $ 220,000 $ 220,000 n/a n/a n/a
(a) On January 14, 1998, NE LP and NE LLC acquired all of the interests in the Partnerships from IEC resulting in a
new basis of accounting by the Partnerships (See Note 2 - Summary of Significant Accounting Policies -
Acquisitions to the consolidated financial statements).
(b) Split period
1/1 to 1/13 1/14 to 12/31
Operating revenues ................................. $13,109 $302,693
Net income ........................................ $ 2,909 $ 30,000
n/a - not applicable because entities were not in existence.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
NE LP, a Delaware limited partnership, was formed on November 21, 1997 for
the purpose of acquiring ownership interests in two partnerships, NEA and
NJEA, each of which owns an electric power generation station in the
northeastern United States. On January 14, 1998, NE LP acquired all of the
interests in the Partnerships and the Funding Corp. for approximately $545
million, including approximately $10 million of acquisition costs. The
acquisition of the Partnerships was accounted for using the purchase method
of accounting and was subject to pushdown accounting, which gave rise to a
new basis of accounting by the Partnerships. During 1998, the Acquisition
Corp. issued $220 million of 7.99% Secured Bonds Due 2011 to qualified
institutional buyers as defined in Rule 144A for the purpose of reimbursing
certain partners of NE LP for a portion of their equity contributions used to
acquire the Partnerships and the Funding Corp.
O&M of the Partnerships was provided by Westinghouse through December 31,
1998. Effective December 31, 1998, the O&M contracts between Westinghouse
Power and the Partnerships were terminated by mutual consent of both parties
and the payment of $10 million to Westinghouse. The Partnerships recorded a
net gain of $4.2 million, the effect of which is reflected in the statement
of operations for the period ended December 31, 1998. Additionally, the
Partnerships agreed to pay Westinghouse a total of $15.6 million, which
approximates market value, for spare parts purchased in 1999. FPLE Operating
Services became the new provider of O&M services for the Partnerships on
January 1, 1999.
NE LP for the year ended December 31, 1999 - Revenues year to date totaled
$336.3 million and were comprised of $331.4 million of power sales to
utilities and $4.9 million of steam sales. Power sales to utilities reflect
changes in utility energy bank balances of $22.2 million (which increased
reported revenues) that are determined in accordance with scheduled or
specified rates under certain power purchase agreements.
Fuel expense of $129.7 million includes $150.5 million of fuel purchased for
the Partnerships and the fixed and variable costs associated with the
delivery and use of the fuel for operations. These fuel costs are offset by
$20.8 million of deferred credit amortization for fuel contracts.
O&M expenses of $14.2 million are comprised of O&M provider salaries and site
expenses. Included in O&M expenses is the major maintenance accrual described
in Note 2 - Summary of Significant Accounting Policies - Major Maintenance to
the consolidated financial statements.
Depreciation and amortization of $73.1 million is comprised of depreciation
for the cogeneration and carbon dioxide facilities of $21.8 million and $51.3
million of amortization of the power purchase agreements.
General and administrative expenses of $8.8 million are comprised primarily
of management and professional fees and property taxes.
Interest expense of $78.8 million is comprised primarily of interest on notes
payable to the Funding Corp. ($43.5 million), interest on energy bank
balances ($17.7 million) and interest on the Acquisition Corp. notes ($17.6
million).
Interest income reflects cash balances earning investment income.
NE LP for the year ended December 31, 1998 - NE LP's operations for the year
ended December 31, 1998 primarily reflect the operations of the Partnerships
subsequent to the acquisitions on January 14, 1998 and the related allocation
of the purchase price.
Revenues year to date totaled $302.7 million and were comprised of $298.2
million of power sales to utilities and $4.5 million of steam sales. Power
sales to utilities reflect changes in utility energy bank balances of $15.6
million (which increased reported revenues) that are determined in accordance
with scheduled or specified rates under certain power purchase agreements.
Fuel expense of $121.4 million includes $141.5 million of fuel purchased for
the Partnerships and the fixed and variable costs associated with the
delivery and use of the fuel for operations. These fuel costs are offset by
$20.1 million of deferred credit amortization for fuel contracts as a result
of the purchase price allocation of the acquisitions.
O&M expenses of $14.3 million are comprised of O&M provider fees and site
expenses of $23.0 million offset by $4.5 million of deferred credit
amortization for O&M contracts as a result of the purchase price allocation
of the acquisitions and offset by a $4.2 million net gain recorded from the
early termination of the O&M contracts between Westinghouse Power and the
Partnerships. Included in O&M expenses is the major maintenance accrual
described in Note 2 - Summary of Significant Accounting Policies - Major
Maintenance to the consolidated financial statements.
Depreciation and amortization of $69.5 million is comprised of depreciation
for the cogeneration and carbon dioxide facilities of $21.0 million and $48.5
million of amortization of the power purchase agreements as a result of the
purchase price allocation of the acquisitions.
General and administrative expenses of $9.4 million are comprised primarily
of management and professional fees and site expenses.
Interest expense of $76.3 million is comprised primarily of interest on notes
payable to the Funding Corp. ($43.7 million), interest on energy bank
balances ($17.4 million) and interest on the Acquisition Corp. notes ($15.2
million).
Interest income reflects cash balances earning investment income and reflects
the impact of the release and distribution of debt service reserve cash and
energy bank collateral restricted cash during 1998.
The Partnerships for the year ended December 31, 1999 - Revenues year to date
totaled $336.3 million and were comprised of $331.4 million of power sales to
utilities and $4.9 million of steam sales. Power sales to utilities reflect
changes in utility energy bank balances of $22.2 million (which increased
reported revenues) that are determined in accordance with scheduled or
specified rates under certain power purchase agreements.
Fuel expense of $129.7 million includes $150.5 million of fuel purchased for
the Partnerships and the fixed and variable costs associated with the
delivery and use of the fuel for operations. These fuel costs are offset by
$20.8 million of deferred credit amortization for fuel contracts.
O&M expenses of $14.2 million are comprised of O&M provider salaries and site
expenses. Included in O&M expenses is the major maintenance accrual described
in Note 2 - Summary of Significant Accounting Policies - Major Maintenance to
the combined financial statements.
Depreciation and amortization of $73.1 million is comprised of depreciation
for the cogeneration and carbon dioxide facilities of $21.8 million and $51.3
million of amortization of the power purchase agreements.
General and administrative expenses of $8.8 million are comprised primarily
of management and professional fees and property taxes.
Interest expense of $61.2 million is comprised of interest on notes payable
to the Funding Corp. ($43.5 million) and interest on energy bank balances
($17.7 million).
Interest income reflects cash balances earning investment income.
The Partnerships for the period from January 14, 1998 to December 31, 1998
(post-acquisition) - Subsequent to January 13, 1998, the basis of
presentation of the results of operations for the Partnerships reflects the
new basis of accounting discussed in Note 1 and Note 2 to the combined
financial statements.
Revenues period to date totaled $302.7 million and were comprised of $298.2
million of power sales to utilities and $4.5 million of steam sales. Power
sales to utilities reflect changes in utility energy bank balances of $15.6
million (which increased reported revenues) that are determined in accordance
with scheduled or specified rates under certain power purchase agreements.
Fuel expense of $121.4 million includes $141.5 million of fuel purchased for
the Partnerships and the fixed and variable costs associated with the
delivery and use of the fuel for operations. These fuel costs are offset by
$20.1 million of deferred credit amortization for fuel contracts as a result
of the purchase price allocation of the acquisitions.
O&M expenses of $14.3 million are comprised of O&M provider fees and site
expenses of $23.0 million offset by $4.5 million of deferred credit
amortization for O&M contracts as a result of the purchase price allocation
of the acquisitions and offset by a $4.2 million net gain recorded from the
early termination of the O&M contracts between Westinghouse Power and the
Partnerships. Included in O&M expenses is the major maintenance accrual
described in Note 2 - Summary of Significant Accounting Policies - Major
Maintenance to the combined financial statements.
Depreciation and amortization of $69.5 million is comprised of depreciation
for the cogeneration and carbon dioxide facilities of $21.0 million and $48.5
million of amortization of the power purchase agreements as a result of the
purchase price allocation of the acquisitions.
General and administrative expenses of $9.2 million are comprised primarily
of management and professional fees and site expenses.
Interest expense of $61.2 million is comprised primarily of interest on notes
payable to the Funding Corp. ($43.7 million) and interest on energy bank
balances ($17.4 million).
Interest income reflects cash balances earning investment income and reflects
the impact of the release and distribution of debt service reserve cash and
energy bank collateral restricted cash during 1998.
The Partnerships for the period from January 1, 1998 to January 13, 1998
(pre-acquisition) - Revenues for the thirteen-day period totaled $13.1
million and were comprised of $12.9 million of power sales to utilities and
$200 thousand of steam sales. Power sales to utilities reflect changes in
utility energy bank balances which are determined in accordance with
scheduled or specified rates under certain power purchase agreements.
Fuel expense of $5.8 million includes fuel purchased for the Partnerships and
the fixed and variable costs associated with the delivery and use of the fuel
for operations.
O&M expenses of $974 thousand are comprised of O&M provider fees and site
utility expenses.
Depreciation and amortization of $894 thousand is comprised of depreciation
for the cogeneration and carbon dioxide facilities.
General and administrative expenses of $538 thousand are comprised primarily
of management fees.
Interest expense is comprised primarily of interest on notes payable to the
Funding Corp. ($1.7 million) and interest on energy bank balances ($630
thousand).
Interest income reflects cash balances earning investment income.
The Partnerships for the year ended December 31, 1997 - Revenues totaled
$312.2 million and were comprised of $307.5 million of power sales to
utilities and $4.7 million of steam sales. Power sales to utilities reflect
changes in utility energy bank balances which are determined in accordance
with scheduled or specified rates under certain power purchase agreements.
Fuel expense of $151.5 million includes fuel purchased for the Partnerships
and the fixed and variable costs associated with the delivery and use of the
fuel for operations.
O&M expenses of $25.7 million are comprised of O&M provider fees and site
utility expenses.
Depreciation and amortization of $25.0 million is comprised of depreciation
for the cogeneration and carbon dioxide facilities.
General and administrative expenses of $16.0 million are comprised primarily
of management, consulting and overhead fees, as well as a write-off of
approximately $1.5 million in accounts receivable.
Interest expense is comprised primarily of interest on notes payable to the
Funding Corp. ($47.3 million) and interest on energy bank balances ($17.4
million).
Interest income reflects cash balances earning investment income.
The Funding Corp. - Debt principal payments were $23.5 million, $21.6 million
and $24.1 million for the years ended December 31, 1999, 1998 and 1997,
respectively. Debt interest payments were $43.5 million, $45.3 million and
$47.3 million for the years ended December 31, 1999, 1998 and 1997,
respectively.
The Acquisition Corp. - Debt interest payments of $17.6 million and $15.2
million were made by the Acquisition Corp. during 1999 and 1998,
respectively.
Both Massachusetts and New Jersey have enacted legislation designed to
deregulate the production and sale of electricity. By allowing customers to
choose their electricity supplier, deregulation is expected to result in a
shift from cost-based rates to market-based rates for energy production.
Similar initiatives are also being pursued on the federal level. NE LP and the
Partnerships do not expect electric utility industry restructuring to result
in any material adverse change to the Partnerships' power purchase
agreements. However, the impact of electric utility industry restructuring on
the companies that purchase power from the Partnerships is uncertain.
Year 2000 - The Registrants did not experience any significant year 2000-
related problems. The total cost of addressing year 2000 issues was
approximately $500 thousand.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in
the balance sheet as either an asset or liability measured at its fair value.
The statement requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria
are met. The Registrants are currently assessing the effect, if any, on their
financial statements of implementing FAS 133. The Registrants will be
required to adopt FAS 133 beginning in 2001.
Liquidity and Capital Resources
The Funding Corp. and the Partnerships - Cash flow generated by the
Partnerships during 1999 was sufficient to fund operating expenses as well as
fund the debt service requirements of the Funding Corp. Debt maturities of
the Funding Corp. will require cash outflows of approximately $308 million in
principal and interest through 2004, including $67.8 million in 2000. It is
anticipated that cash requirements for principal and interest payments in
2000 will be satisfied with operational cash flow. For the year ended
December 31, 1999, there were $68.9 million in distributions to partners.
The Acquisition Corp. and NE LP - Cash flow generated by NE LP during 1999 was
sufficient to fund operating expenses as well as fund the debt service
requirements of the Acquisition Corp. and the Funding Corp. Debt maturities of
the Acquisition Corp. and the Funding Corp. will require cash outflows of
approximately $419.7 million in principal and interest through 2004,
including $85.4 million in 2000. It is anticipated that cash requirements for
principal and interest payments in 2000 will be satisfied with operational
cash flow. For the year ended December 31, 1999, there were $51.5 million in
distributions to partners.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
All financial instruments and positions held by NE LP and the Partnerships
described below are held for purposes other than trading.
Interest rate risk - The fair value of NE LP's and the Partnerships' long-
term debt is affected by changes in interest rates. The following presents
the sensitivity of the fair value of debt to a hypothetical 10% decrease in
interest rates:
1999
Hypo-thetical
Increase
Carrying Fair in Fair
Value Value Value
(Thousands of Dollars)
Long-term debt of NE LP/Acquisition Corp. ......................................... $220,000 $ 204,000(a) $ 12,000
Long-term debt of Partnerships/Funding Corp. ...................................... $445,213 $ 454,000(a) $ 20,000
(a) Based on the borrowing rate currently available for debt instruments with similar terms and average maturities.
Commodity price risk - The prices received by the Partnerships for power
sales under their long-term contracts do not move precisely in tandem with
the prices paid by the Partnerships for natural gas. To mitigate the price
risk associated with purchases of natural gas, the Partnerships may, from
time to time, enter into certain transactions either through public exchanges
or by means of over-the-counter transactions with specific counterparties.
The Partnerships mitigate their risk associated with purchases of natural gas
through the use of natural gas swap agreements that require the Partnerships
to pay a fixed price (absolutely or within a specified range) in return for a
variable price on specified notional quantities of natural gas. The following
presents the sensitivity of the fair value of gas swap agreements to a
hypothetical 10% increase in natural gas prices:
1999
Hypo-thetical
Decrease
Carrying Fair in Fair
Value Value Value
(Thousands of Dollars)
Gas swap agreements of NE LP/the Partnerships ...................................... $ - $ 1,668(a) $ 1,018
(a) Based on estimated cost to terminate the agreements.
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
NORTHEAST ENERGY, LP
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP:
We have audited the accompanying consolidated financial statements of
Northeast Energy, LP (a partnership) and subsidiaries, as of December 31,
1999 and 1998, and for the years ended December 31, 1999 and 1998, and for
the period from November 21, 1997 (Date of Formation) to December 31, 1997,
and the combined financial statements of two of the subsidiaries of Northeast
Energy, LP, named Northeast Energy Associates, A Limited Partnership and
North Jersey Energy Associates, A Limited Partnership, as of December 31,
1999 and 1998, and for the year ended December 31, 1999, and for the periods
from January 1, 1998 to January 13, 1998, and from January 14, 1998 to
December 31, 1998, listed in the accompanying index at Item 14(a)1 of this
Annual Report (Form 10-K) to the Securities and Exchange Commission for the
year ended December 31, 1999. These financial statements are the
responsibility of the respective Partnership's management. Our
responsibility is to express an opinion on these financial statements 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, such financial statements present fairly, in all material
respects, the consolidated financial position of Northeast Energy, LP and its
subsidiaries, and the combined financial position of Northeast Energy
Associates, A Limited Partnership, and North Jersey Energy Associates, A
Limited Partnership, and the results of their operations and their cash flows
for the above-stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 20, 2000
INDEPENDENT AUDITORS' REPORT
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP, AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP:
In our opinion, the combined statements of operations, of cash flows and of
partners' equity for the year ended December 31, 1997 (appearing on pages 18
through 27 of this Form 10-K Annual Report) present fairly, in all material
respects, the results of operations and cash flows of Northeast Energy
Associates, A Limited Partnership, and North Jersey Energy Associates, A
Limited Partnership (the "Partnerships") for the year ended December 31,
1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Partnerships' management;
our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit of these statements in accordance
with generally accepted auditing standards, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. We have not audited the
combined financial statements of the Partnerships for any period subsequent
to December 31, 1997.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
March 24, 1998
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 33,085 $ 36,038
Accounts receivable .............................................................. 32,332 29,746
Due from related party ........................................................... 152 -
Spare parts inventories .......................................................... 9,977 194
Fuel inventories ................................................................. 4,361 4,935
Prepaid expenses and other current assets ........................................ 335 212
Total current assets ........................................................... 80,242 71,125
Non-current assets:
Deferred debt issuance costs (net of accumulated amortization of $1,179 and
$548, respectively) ............................................................ 5,781 6,412
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $42,807 and $20,987, respectively) ............................. 470,851 492,566
Power purchase agreements (net of accumulated amortization of $99,811 and
$48,545, respectively) ......................................................... 788,945 840,211
Other assets ..................................................................... 39 29
Total non-current assets ....................................................... 1,265,616 1,339,218
TOTAL ASSETS ....................................................................... $1,345,858 $1,410,343
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. ............................. $ 26,333 $ 23,511
Accounts payable ................................................................. 16,745 12,338
Due to related parties ........................................................... 1,306 800
Other accrued expenses ........................................................... 6,974 9,384
Total current liabilities ...................................................... 51,358 46,033
Non-current liabilities:
Deferred credit - fuel contracts ................................................. 292,581 313,427
Notes payable - the Funding Corp. ................................................ 418,880 445,213
Note payable - the Acquisition Corp. ............................................. 220,000 220,000
Amounts due utilities for energy bank balances ................................... 168,885 173,356
Total non-current liabilities .................................................. 1,100,346 1,151,996
Partners' equity:
General partners ................................................................. 3,882 4,246
Limited partners ................................................................. 190,272 208,068
Total partners' equity ......................................................... 194,154 212,314
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,345,858 $1,410,343
The accompanying notes are an integral part of these consolidated financial
statements.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
Period from
November 21,
1997 (Date of
Year Ended Year Ended Formation) to
December 31, December 31, December 31,
1999 1998 1997
REVENUES ............................................................... $336,299 $302,693 $ -
COSTS AND EXPENSES:
Fuel ................................................................. 129,716 121,438 -
Operations and maintenance ........................................... 14,206 14,321 -
Depreciation and amortization ........................................ 73,094 69,540 -
General and administrative ........................................... 8,822 9,432 -
Total costs and expenses ........................................... 225,838 214,731 -
OPERATING INCOME ....................................................... 110,461 87,962 -
OTHER EXPENSE (INCOME):
Amortization of debt issuance costs .................................. 632 548 -
Interest expense ..................................................... 78,790 76,336 -
Interest income ...................................................... (2,264) (3,020) -
Total other expense - net .......................................... 77,158 73,864 -
NET INCOME.............................................................. $ 33,303 $ 14,098 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Period from
November 21,
1997 (Date of
Year Ended Year Ended Formation) to
December 31, December 31, December 31,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................... $33,303 $ 14,098 $ -
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ................................... 73,724 70,091 -
Amortization of fuel and O&M contracts .......................... (20,844) (24,632) -
Other ........................................................... - 273 -
(Increase) decrease in accounts receivable ...................... (2,586) 14,295 -
(Increase) decrease in due from related party ................... (152) - -
(Increase) decrease in other current assets ..................... (9,332) 2,086 -
Increase (decrease) in accounts payable and accrued expenses .... 1,992 (18,965) -
Increase (decrease) in amounts due utilities for energy bank
balances ...................................................... (4,471) 1,427 -
Increase (decrease) in due to related parties ................... 506 (1,479) -
Net cash provided by operating activities ......................... 72,140 57,194 -
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................ (120) - -
Release of restricted cash collateral ............................... - 69,156 -
Acquisition purchase price, net of $62,635 cash acquired ............ - (482,167) -
Net cash used in investing activities ............................. (120) (413,011) -
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners ......................................... - 545,412 -
Principal payments on the Funding Corp. notes ...................... (23,510) (21,563) -
Net proceeds from loan by the Acquisition Corp. ..................... - 215,202 -
Distributions to partners ........................................... (51,463) (347,196) -
Net cash provided by (used in) financing activities ............... (74,973) 391,855 -
Net increase (decrease) in cash and cash equivalents .................. (2,953) 36,038
Cash and cash equivalents at beginning of period ...................... 36,038 - -
Cash and cash equivalents at end of period ............................ $33,085 $ 36,038 $ -
Supplemental disclosure of cash flow information:
Cash paid for interest .............................................. $61,241 $ 61,227 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(Thousands of Dollars)
General Limited Partners'
Partners Partners Equity
Balances, December 31, 1997 ............................................ $ - $ - $ -
Contributions from partners .......................................... 10,908 534,504 545,412
Net income ........................................................... 282 13,816 14,098
Distributions to partners ............................................ (6,944) (340,252) (347,196)
Balances, December 31, 1998 ............................................ 4,246 208,068 212,314
Net income ........................................................... 665 32,638 33,303
Distributions to partners ............................................ (1,029) (50,434) (51,463)
Balances, December 31, 1999 ............................................ $ 3,882 $ 190,272 $ 194,154
The accompanying notes are an integral part of these consolidated financial
statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED BALANCE SHEETS
(Thousands of Dollars)
December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents ......................................................... $ 32,144 $ 35,152
Accounts receivable ............................................................... 32,332 29,746
Due from related party ............................................................ 152 -
Spare parts inventories ........................................................... 9,977 194
Fuel inventories .................................................................. 4,361 4,935
Prepaid expenses and other current assets ......................................... 301 212
Total current assets ............................................................ 79,267 70,239
Non-current assets:
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $42,807 and $20,987, respectively) ............................. 470,851 492,566
Power purchase agreements (net of accumulated amortization of $99,811
and $48,545, respectively) ...................................................... 788,945 840,211
Other assets ...................................................................... 39 29
Total non-current assets ........................................................ 1,259,835 1,332,806
TOTAL ASSETS ........................................................................ $1,339,102 $1,403,045
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. .............................. $ 26,333 $ 23,511
Accounts payable .................................................................. 16,745 12,338
Due to related parties ............................................................ 1,167 663
Other accrued expenses ............................................................ 6,974 9,384
Total current liabilities ....................................................... 51,219 45,896
Non-current liabilities:
Deferred credit - fuel contracts .................................................. 292,581 313,427
Notes payable - the Funding Corp. ................................................. 418,880 445,213
Amounts due utilities for energy bank balances .................................... 168,885 173,356
Total non-current liabilities ................................................... 880,346 931,996
Partners' equity:
General partner ................................................................... 4,075 4,252
Limited partners .................................................................. 403,462 420,901
Total partners' equity .......................................................... 407,537 425,153
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,339,102 $1,403,045
The accompanying notes are an integral part of these combined financial
statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
Period from
Period from January 1,
January 14, 1998 to Year Ended
Year Ended 1998 to January 13, December 31,
December 31, December 31, 1998 1997
1999 1998 (Prior Basis) (Prior Basis)
REVENUES ......................................... $336,299 $302,693 $ 13,109 $312,154
COSTS AND EXPENSES:
Fuel ........................................... 129,716 121,438 5,774 151,476
Operations and maintenance ..................... 14,206 14,321 974 25,689
Depreciation and amortization .................. 73,094 69,540 894 24,992
General and administrative ..................... 8,817 9,150 538 15,984
Total costs and expenses ..................... 225,833 214,449 8,180 218,141
OPERATING INCOME ................................. 110,466 88,244 4,929 94,013
OTHER EXPENSE (INCOME):
Interest expense ............................... 61,208 61,154 2,422 67,271
Interest income ................................ (2,071) (2,910) (402) (9,931)
Total other expense - net .................... 59,137 58,244 2,020 57,340
NET INCOME ....................................... $ 51,329 $ 30,000 $ 2,909 $ 36,673
The accompanying notes are an integral part of these combined financial
statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Period from
Period from January 1,
January 14, 1998 to Year Ended
Year Ended 1998 to January 13, December 31,
December 31, December 31, 1998 1997
1999 1998 (Prior Basis) (Prior Basis)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................... $ 51,329 $ 30,000 $ 2,909 $ 36,673
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 73,092 69,543 894 27,155
Amortization of fuel and O&M contracts.......... (20,844) (24,632) - -
(Increase) decrease in due from related party .. (152) - 114 -
(Increase) decrease in accounts receivable ..... (2,586) 14,295 (10,005) 9,635
(Increase) decrease in other current assets .... (9,298) 2,086 426 (34)
Increase (decrease) in accounts payable and
accrued expenses.............................. 1,993 (18,809) 7,217 (996)
Increase (decrease) in amounts due utilities
for energy bank balances...................... (4,471) 1,427 (52) 9,643
Increase (decrease) in due to related parties... 504 663 (71) 99
Net cash provided by operating activities ........ 89,567 74,573 1,432 82,175
CASH FLOWS FROM INVESTING ACTIVITIES:
Release of restricted cash collateral .............. - 69,156 - -
Capital expenditures ............................... (120) - - (378)
Net cash provided by (used in) investing
activities ..................................... (120) 69,156 - (378)
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners ........................ - 10,000 - -
Principal payments on notes ........................ (23,510) (21,563) - (24,075)
Distributions to partners .......................... (68,945) (159,649) - (46,380)
Net cash used in financing activities ............ (92,455) (171,212) - (70,455)
Net increase (decrease) in cash and cash equivalents . (3,008) (27,483) 1,432 11,342
Cash and cash equivalents at beginning of period ..... 35,152 62,635 61,203 49,861
Cash and cash equivalents at end of period ........... $ 32,144 $ 35,152 $ 62,635 $ 61,203
Supplemental disclosure of cash flow information:
Cash paid for interest ............................. $ 43,663 $ 46,045 $ - $ 48,794
Supplemental schedule of noncash investing and
financing activities:
Accrued capitalized facility costs ................. $ - $ - $ - $ 240
The accompanying notes are an integral part of these combined financial
statements.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
COMBINED STATEMENTS OF PARTNERS' EQUITY(DEFICIT)
(Thousands of Dollars)
General Limited Partners'
Partner Partners Equity
Prior Basis
Balances, December 31, 1996 ............................................ $(4,616) $(182,863) $(187,479)
Net income............................................................ 366 36,307 36,673
Distributions to partners ............................................ (464) (45,916) (46,380)
Balances, December 31, 1997 ............................................ (4,714) (192,472) (197,186)
Net income from January 1 to January 13, 1998 ........................ 29 2,880 2,909
Balances, January 13, 1998.............................................. (4,685) (189,592) (194,277)
New Basis
Adjustment of balance due to adoption of new basis.................... 10,133 728,946 739,079
Capital contributions from partners................................... 100 9,900 10,000
Net income............................................................ 300 29,700 30,000
Distributions to partners ............................................ (1,596) (158,053) (159,649)
Balances, December 31, 1998 ............................................ 4,252 420,901 425,153
Net income............................................................ 512 50,817 51,329
Distributions to partners ............................................ (689) (68,256) (68,945)
Balances, December 31, 1999 ............................................ $ 4,075 $ 403,462 $ 407,537
The accompanying notes are an integral part of these combined financial
statements.
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
Year Ended December 31, 1999
Period From January 14, 1998 to December 31, 1998
Period From January 1, 1998 to January 13, 1998
Year Ended December 31, 1997
1. Nature of Business
Northeast Energy, LP (NE LP), a Delaware limited partnership, was formed on
November 21, 1997 for the purpose of acquiring ownership interests in two
partnerships, each of which owns an electric power generation station in the
northeastern United States (Northeast Energy Associates, A Limited Partnership
(NEA) and North Jersey Energy Associates, A Limited Partnership (NJEA),
collectively the Partnerships). NE LP is jointly owned by subsidiaries of
ESI Energy, LLC (ESI Energy) and Tractebel Power, Inc. (Tractebel Power). ESI
Energy is wholly-owned by FPL Energy, LLC (FPL Energy), which is an indirect
wholly-owned subsidiary of FPL Group, Inc., a company listed on the New York
Stock Exchange. Tractebel Power is a direct wholly-owned subsidiary of
Tractebel, Inc., which is a direct wholly-owned subsidiary of Tractebel S.A.,
a Belgian energy and environmental services business. NE LP also formed a
wholly-owned subsidiary, Northeast Energy, LLC (NE LLC) to assist in such
acquisitions. NE LP had no financial activity prior to January 1, 1998.
On January 14, 1998, NE LP and NE LLC acquired all of the interests in the
Partnerships from Intercontinental Energy Corporation (IEC), a Massachusetts
corporation. NE LP holds a one percent (1%) general partner and ninety-eight
percent (98%) limited partner interest in the Partnerships; NE LLC holds the
remaining one percent (1%) limited partner interest. See Note 2 - Acquisitions
for additional information relating to the acquisitions.
The Partnerships were formed in 1986 to develop, construct, own, operate and
manage two separate 300 megawatt (mw) natural gas-fired combined-cycle
cogeneration facilities. NEA's facility is located in Bellingham, Massachusetts
and NJEA's facility is located in Sayreville, New Jersey. NEA commenced
commercial operation in September 1991 and NJEA commenced commercial operation
in August 1991. The Partnerships operate in the independent power industry and
have been granted permission by the Federal Energy Regulatory Commission to
operate as qualifying facilities defined in the Public Utility Regulatory
Policies Act of 1978, as amended and as defined in federal regulations.
In connection with the acquisitions of the Partnerships' interests, an
existing special purpose funding corporation was acquired by an entity related
to FPL Energy and Tractebel Power. The funding corporation's name was changed
from IEC Funding Corp. to ESI Tractebel Funding Corp (Funding Corp.).
Additionally, as a means of funding portions of the purchase price of the
acquisitions of the Partnerships, ESI Tractebel Acquisition Corp. (Acquisition
Corp.), also an affiliate of FPL Energy and Tractebel Power, was formed. On
February 12, 1998, the Acquisition Corp. issued new debt which was registered
with the Securities and Exchange Commission in an exchange offer. The proceeds
were distributed to ESI Energy and Tractebel Power. Repayment of the new debt
is expected from distributions from the Partnerships and is guaranteed by all
interests in the Partnerships. See Note 4 for additional information.
The partners share profits and losses and have interests in assets and
liabilities and cash flows in proportion to their tax basis capital accounts.
Distributions to the partners may be made only after all funding requirements
of the Partnerships have been met, as described in the trust indenture.
2. Summary of Significant Accounting Policies
Basis of Presentation - The accompanying consolidated financial statements
include the accounts of the Partnerships subsequent to the acquisitions, as
they are indirectly wholly-owned by NE LP. All material intercompany balances
and transactions have been eliminated in consolidation. Certain amounts
included in prior years' consolidated and combined financial statements have
been reclassified to conform to the current year's presentation. The
accompanying combined financial statements include the accounts of the
Partnerships for all periods and are combined based on common ownership. All
material intercompany transactions have been eliminated in the combination.
Acquisitions - On January 14, 1998, NE LP and NE LLC acquired all of the
interests in the Partnerships for approximately $545 million, including
approximately $10 million of acquisition costs (the Acquisitions). The
Acquisitions were accounted for using the purchase method of accounting and
was subject to pushdown accounting, which gave rise to a new basis of
accounting by the Partnerships. The purchase price has been allocated to the
assets and liabilities acquired based on their fair values.
The following is a summary of the Partnerships' assets acquired and
liabilities assumed in the Acquisitions (thousands of dollars):
Assets:
Current assets ........................................ $114,286
Restricted cash ....................................... $ 69,156
Cogeneration facilities and carbon dioxide facility.... $513,523
Power purchase agreements ............................. $888,756
Other assets .......................................... $ 36
Liabilities:
Current liabilities ................................... $ 48,404
Operations and maintenance (O&M) contracts ............ $ 18,749
Fuel contracts ........................................ $333,544
Energy bank balances .................................. $171,530
Notes payable ......................................... $468,724
Carrying values of current assets, restricted cash and current liabilities
were considered to closely approximate fair value and were not adjusted.
Power purchase agreements were assigned a value based on the estimated amount
to be received over the contract period in excess of an independent
appraiser's assessment of market rates for power, discounted to the date of
acquisition. The cogeneration facilities and carbon dioxide facility were
initially assigned value based on an assessment of current replacement cost
for similar capacity, without the acquired power purchase agreements. In
accordance with Accounting Principles Board Opinion No. 16, the values
assigned to these long-lived assets were reduced by the net excess of the fair
values of all assets acquired over the purchase price. O&M and fuel contract
obligations were determined based on expected cash flows during contract
periods compared to estimated cash flows for similar services if contracted
for currently, discounted to the date of acquisition. Notes payable include
the previously existing debt of the Partnerships that was considered to
approximate market value. Energy bank balances were assigned a value
representing the estimated present value of future payments to utilities
in connection with certain existing power purchase agreements.
Cash and Cash Equivalents - Investments purchased with an original maturity of
three months or less are considered cash equivalents. Excess cash is invested
in high-grade money market accounts and commercial paper and is subject to
minimal credit and market risk. At December 31, 1999 and 1998, the recorded
amount of cash approximates its fair value.
Accounts Receivable and Revenue - Accounts receivable primarily consist of
receivables from three Massachusetts utilities and one New Jersey utility for
electricity delivered and sold under six power purchase agreements. Prices
are based on initial floor prices per kilowatt-hour (kwh), subject to
adjustment based on actual volumes of electricity purchased, escalation
factors and other conditions. Revenue is recognized based on power delivered
at rates stipulated in the power purchase agreements, except that revenue is
deferred to the extent that stipulated rates are in excess of amounts, either
scheduled or specified, in the agreements to the extent the Partnerships have
an obligation to repay such excess. The amount deferred is reflected as
amounts due utilities for energy bank balances on the balance sheets. Revenue
from steam sales is recognized upon delivery.
Cogeneration Facilities, Carbon Dioxide Facility and Other Assets - Effective
January 14, 1998, all facilities were revalued as a result of applying the
purchase method of accounting mentioned above. The facilities are depreciated
using the straight-line method over their estimated useful life which was
increased from 20 years to 34 years effective January 14, 1998.
Major Maintenance - Effective January 14, 1998, maintenance expenses are
accrued for certain identified major maintenance and repair items related to
the Partnerships' facilities. The expenses are accrued ratably over each
major maintenance cycle. The amounts accrued relate to maintenance costs
required for the equipment to operate over its depreciable life. For the
periods ended December 31, 1999 and 1998, the Partnerships recorded major
maintenance expense of $5.1 million and $2.8 million, respectively. At
December 31, 1999 and 1998, the Partnerships had $3.3 million and $4.1 million
of accrued major maintenance, respectively.
Inventories - Fuel inventories consist of natural gas and fuel oil and are
stated at the lower of cost, determined on an average cost basis, or market.
Prior to January 14, 1998, inventories were determined on a first-in, first-
out (FIFO) basis. The change did not have a significant impact on the
financial statements. Spare parts inventories consist primarily of spare
parts purchased from the previous O&M provider. Spare parts inventories are
stated at lower of cost or market and are determined by specific
identification.
Power Purchase Agreements - Effective January 14, 1998, power purchase
agreements which were determined to be in excess of prevailing rates for
similar agreements were adjusted as a result of applying the purchase method
of accounting mentioned above. These amounts are being amortized over the
respective agreement periods, ranging from 14 to 24 years, on a straight-line
basis or matched to scheduled fixed-price increases under the power purchase
agreements, as applicable.
Fuel Contracts - Effective January 14, 1998, fuel contracts which were
determined to be in excess of prevailing rates for similar contracts were
adjusted as a result of applying the purchase method of accounting mentioned
above. The fuel contracts are being amortized on a straight-line basis over
the remaining terms of the contracts, 16 years.
O&M Contracts - Effective January 14, 1998, O&M contracts which were
determined to be in excess of prevailing rates for similar contracts were
adjusted as a result of applying the purchase method of accounting mentioned
above. The O&M contracts were initially assigned a value of $18.7 million.
For the period ended December 31, 1998, the Partnerships recorded $4.5 million
of amortization expense for the O&M contracts. Effective December 31, 1998,
the O&M contracts between the previous O&M provider and the Partnerships were
terminated by mutual consent of both parties and the payment of $10 million
to the previous O&M provider. See Note 7 - Commitments and Contingencies -
O&M of the Cogeneration Facilities for further disclosure on the O&M
contracts.
Interest Rate Swaps - Interest rate swaps that do not qualify for hedge
accounting are recorded at fair value, with changes in the fair value
recognized currently in income as adjustments to interest expense. See Note 6
for further disclosure regarding interest rate swap agreements.
Natural Gas Hedging Instruments - Periodic settlements on natural gas swap
agreements are recognized as adjustments to fuel costs at monthly settlement
dates. Purchases of natural gas under forward purchase agreements are
accounted for as fuel costs at their contract price at delivery. See Note 6
for further disclosure regarding natural gas hedging instruments.
Deferred Debt Issuance Costs - Deferred debt issuance costs of NE LP are being
amortized over the approximate 14-year term of the Acquisition Corp.'s note
payable using the interest method.
Income Taxes - Partnerships are not taxable entities for Federal and state
income tax purposes. As such, no provision has been made for income taxes
since such taxes, if any, are the responsibilities of the individual partners.
Accounting for Derivative Instruments and Hedging Activities - In June 1998,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. (FAS) 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. The
Registrants are currently assessing the effect, if any, on their financial
statements of implementing FAS 133. The Registrants will be required to adopt
FAS 133 beginning in 2001.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and 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.
3. Cogeneration Facilities, Power Purchase Agreements and Carbon Dioxide
Facility Power Purchase Agreements - In 1986, NEA entered into five power
purchase agreements with three Massachusetts utilities to sell approximately
290 mw at initial floor prices per kwh subject to adjustment based on actual
volumes purchased, escalation factors and other conditions. Performance under
certain of these agreements is secured by a second mortgage on the NEA
facility. In 1987, NJEA entered into an agreement with a New Jersey utility
to sell 250 mw at an initial fixed price per kwh subject to adjustments, as
defined in the agreement. These power purchase agreements have initial terms
with expiration dates ranging from 2011 to 2021. The majority of the
Partnerships' power sales to utilities are generated through these agreements.
As such, the Partnerships are directly affected by changes in the power
generation industry. Substantially all of the Partnerships' accounts
receivable are with these utilities. The Partnerships do not require
collateral or other security to support their receivables. However, management
does not believe significant credit risk exists at December 31, 1999.
For the years ended December 31, 1999, 1998 and 1997, power sale revenues from
two different utilities accounted for approximately 45% and 41%, 47% and 40%
and 46% and 40%, respectively, of total revenues.
Both Massachusetts and New Jersey have enacted legislation designed to
deregulate the production and sale of electricity. While NE LP and the
Partnerships do not expect electric utility industry restructuring to result
in any material adverse change to the Partnerships' power purchase agreements,
the impact of electric utility industry restructuring on the companies that
purchase power from the Partnerships is uncertain.
Energy Bank Balances - Certain of the power purchase agreements require the
establishment of energy banks to record cumulative payments made by the
utilities in excess of avoided cost rates scheduled or specified in such
agreements. Some of the energy bank balances bear interest at various rates
specified in the agreements. Upon termination of the agreements, remaining
amounts recorded in the energy banks will be required to be repaid. Energy
bank balances are partially secured by letters of credit (see Note 7 - Energy
Bank and Loan Collateral).
Steam Sales Agreements and Carbon Dioxide Facility - In order for the
Partnerships' facilities to maintain qualifying facility status, the
facilities are required to generate five percent of the thermal energy
produced for sale to unrelated third parties. In 1990, NEA entered into an
amended and restated steam sales agreement with a processor and seller of
carbon dioxide. The amended and restated NEA steam sales agreement extends
for the same terms as the carbon dioxide facility's lease, with automatic
extension for any renewal period under the carbon dioxide facility's lease.
Pursuant to the steam sales agreement, NEA sells a portion of the steam
generated by the NEA facility at a price that fluctuates based on changes in
the price of a specified grade of fuel oil. In conjunction with this contract,
NEA constructed the carbon dioxide facility and, in 1989, entered into a 16-
year agreement to lease the facility to the steam user. Base rent under the
lease is $100,000 per month, adjusted by the operating results of the facility
as outlined in the lease agreement. Additionally, NEA pays the steam user
$100,000 annually for administrative services rendered related to the
operation of the carbon dioxide facility.
In 1989, NJEA entered into a 20-year steam sales agreement with a steam user
adjacent to the NJEA facility. Under this agreement, NJEA sells a quantity of
steam at a floor price that can increase based on changes in prices of coal.
This agreement automatically renews for two consecutive five-year terms
unless either party gives notice not to renew two years before the expiration
of each of the prior terms.
Fuel Supply, Transportation and Storage Agreements - Natural gas is provided
to the NEA and NJEA facilities primarily under long-term contracts for supply,
transportation and storage. The remaining fuel requirements are provided under
short-term spot arrangements. The long-term natural gas supply is provided
under contracts with ProGas Limited (ProGas) and Public Service Electric and
Gas Company (PSE&G). Various pipeline companies provide transportation of the
natural gas. Gas storage agreements provide contractual arrangements for the
storage of limited volumes of natural gas with third parties for future
delivery to the Partnerships.
The ProGas contracts commenced in 1991, and the initial 15-year terms were
subsequently extended an additional seven years. The maximum total volumes
of gas to be delivered under the ProGas contracts are approximately 48,800
and 22,000 millions of British thermal units (MMBtu) per day for NEA and NJEA,
respectively. The contract price, including transportation, of the ProGas
supply delivered to the import point is determined with reference to a base
price in 1990, re-determined annually thereafter based on specified inflation
indices. The PSE&G contract commenced in 1991 and provides for the sale and
delivery to NJEA of up to 25,000 MMBtu per day of gas for a term of 20 years.
The contract price of the PSE&G gas is established monthly using a
contractually specified mechanism.
With the exception of the PSE&G arrangement, all of the Partnerships' long-
term contractual arrangements call for monthly demand charge payments. These
demand charge payments reserve certain pipeline transportation capacity and
are made regardless of the Partnerships' specified fuel requirements in any
month and regardless of whether the Partnerships utilize the capacity
reserved. These demand charges totaled approximately $43 million, $46 million
and $46 million for the years ended December 31, 1999, 1998 and 1997,
respectively. Total payments under such contracts were approximately $126.9
million, $125.4 million and $112.5 million in 1999, 1998 and 1997,
respectively, inclusive of demand charges. Total charges under the contract
with PSE&G, including transportation costs, during 1999, 1998 and 1997, were
approximately $27.0 million, $24.6 million and $28.1 million, respectively.
In the event the available capacity under these agreements is not utilized by
the operations of the facilities, the Partnerships have the opportunity under
certain of these contractual arrangements to sell unused capacity to third
parties, but have not yet done so. NEA's facility also has the capability to
burn No. 2 fuel oil which is stored on site for contingency supply.
4. Loans Payable
Funding Corp. - The proceeds from the Funding Corp. Securities were used to
make loans to the Partnerships and notes of the Partnerships were issued to
the Funding Corp. in an aggregate principal amount equal to the Funding Corp.
Securities. The Funding Corp. has borrowings outstanding as follows:
December 31,
1999 1998
8.43% Senior Secured Notes Due 2000 ................................................ $ 26,333,000 $ 49,844,000
9.16% Senior Secured Notes Due 2002 ................................................ 31,500,000 31,500,000
9.32% Senior Secured Bonds Due 2007 ................................................ 215,740,000 215,740,000
9.77% Senior Secured Bonds Due 2010 ................................................ 171,640,000 171,640,000
Total long-term debt ............................................................. 445,213,000 468,724,000
Less current maturities ........................................................ 26,333,000 23,511,000
Long-term debt, excluding current maturities ................................... $418,880,000 $445,213,000
Interest on the Funding Corp. Securities is payable semiannually on each June
30 and December 30. Principal repayments are made semiannually in amounts
stipulated in the trust indenture. Future principal payments are as follows:
Year ending December 31:
2000 .................................................. $ 26,333,000
2001 .................................................. $ 20,160,000
2002 .................................................. $ 22,688,000
2003 .................................................. $ 23,818,000
2004 .................................................. $ 28,564,000
Thereafter ............................................ $323,650,000
The Funding Corp. Securities are not subject to optional redemption but are
subject to mandatory redemption in certain limited circumstances involving
the occurrence of an event of loss, as defined in the trust indenture, for
which the Partnerships fail to or are unable to restore a facility.
The Funding Corp. Securities are unconditionally guaranteed, jointly and
severally, by the Partnerships and are secured by a lien on, and a security
interest in, substantially all of the assets of the Partnerships. The
Partnerships are jointly and severally required to make scheduled payments on
the notes on dates and in amounts identical to the scheduled payments of
principal and interest on the Funding Corp. Securities. The Funding Corp.
Securities, the guarantees thereon provided by the Partnerships and the notes
are nonrecourse to the partners and are payable solely from the collateral
pledged as security.
The trust indenture governing the Funding Corp. Securities contains certain
restrictions on certain activities of the Partnerships, including incurring
additional indebtedness or liens, distributions to the partners, the
cancellation of power sale and fuel supply agreements, the use of proceeds
from the issuance of the Funding Corp. Securities and the execution of
mergers, consolidations and sales of assets.
Under the terms of a previous loan and credit agreement, the Partnerships
were required to enter into interest rate swap agreements providing for the
payments on a notional principal amount to be made by the Partnerships at
fixed interest rates, in exchange for payments to be made by such financial
institutions at floating interest rates. As a result of the repayment of such
loans with the proceeds of the Funding Corp. Securities, the original
interest swap agreements no longer qualified for hedge accounting and were
recorded at fair value at December 31, 1998. The swaps expired during 1999.
Changes in fair value are recognized in the statements of operations for the
periods ended December 31, 1999, 1998 and 1997.
Acquisition Corp. - During 1998, the Acquisition Corp. issued $220 million of
7.99% Secured Bonds Due 2011 (Acquisition Corp. Securities) for the purpose
of reimbursing certain partners of NE LP for a portion of $545 million in
equity contributions used to acquire the Partnerships. The proceeds from the
Acquisition Corp. Securities were loaned to NE LP, evidenced by a promissory
note. Interest on the Acquisition Corp. Securities is payable semiannually on
each June 30 and December 30. Principal repayments are made annually
commencing on June 30, 2002 and are in amounts stipulated in the trust
indenture. Future principal payments are as follows:
Year ending December 31:
2002 .................................................. $ 8,800,000
2003 .................................................. $ 8,800,000
2004 .................................................. $ 8,800,000
Thereafter ............................................ $193,600,000
The Acquisition Corp. Securities are subject to optional redemption after
June 30, 2008 at the redemption prices set forth in the trust indenture and
are subject to extraordinary mandatory redemption at a redemption price of
100% of the principal amount thereof in certain limited circumstances as
defined in the trust indenture.
The Acquisition Corp. Securities are unconditionally guaranteed by NE LP and
are payable solely from payments to be made by NE LP under the promissory
note and bond guaranty. NE LP's obligations to make payments under the
promissory note are nonrecourse to the direct and indirect owners of NE LP.
Payments with respect to the promissory note and, therefore, in respect of
the Acquisition Corp. Securities will be effectively subordinated to payment
of all indebtedness and other liabilities and commitments of the
Partnerships, including the guarantee by the Partnerships of their
indebtedness. Repayment of the Acquisition Corp. Securities is guaranteed by
all interests in the Partnerships. The Acquisition Corp. Securities will rank
senior to all subordinated indebtedness and rank evenly with all senior
indebtedness that the Acquisition Corp. incurs in the future.
5. Related Party Information
Administrative Services Agreement - NE LP and an entity related to FPL Energy
have entered into an administrative services agreement that provides for
management and administrative services to the Partnerships. The agreement
expires in 2018, provides for fees of a minimum of $600 thousand per year,
subject to certain adjustments, and reimburses costs and expenses of
performing services. For the periods ended December 31, 1999 and 1998, the
Partnerships incurred $782 thousand and $765 thousand under the agreement,
respectively.
O&M Agreements - NE LP and an entity related to FPL Energy have entered into
operations and maintenance agreements that provide for the O&M of the
Partnerships. The agreements expire in 2016, subject to extension by mutual
agreement of the parties before six months preceding expiration. The
agreements provide for fees of a minimum of $750 thousand per year, subject
to certain adjustments, for each Partnership and reimburse costs and expenses
of performing services. For the periods ended December 31, 1999 and 1998, the
Partnerships incurred $1.5 million under the agreements. See Note 7 - O&M of
the Cogeneration Facilities.
Fuel Management Agreements - NE LP and an entity related to FPL Energy have
entered into fuel management agreements that provide for the management of
all natural gas and fuel oil, transportation and storage agreements, and the
location and purchase of any additional required natural gas or fuel oil for
the Partnerships. The agreements expire in 2023, provide for fees of a
minimum of $450 thousand per year, subject to certain adjustments, for each
Partnership and reimburse costs and expenses of performing services. For the
periods ended December 31, 1999 and 1998, the Partnerships incurred $896
thousand and $881 thousand under the agreements, respectively.
The Partnerships pay a management fee to NE LP in an amount equal to the
administrative services, operations and maintenance and fuel management
agreements mentioned above.
Accrued expenses under the administrative services, O&M and fuel management
agreements were $473 thousand at December 31, 1999 and 1998. The average
balances due to related parties did not vary materially from these amounts.
Additionally, power sales to an entity related to FPL Energy were $2.5
million and $1.1 million for the years ended December 31, 1999 and 1998,
respectively.
For the year ended December 31, 1997, certain expenses were paid by IEC and
subsequently reimbursed by the Partnerships. Payments made by IEC for the
year ended December 31, 1997 were $5.0 million. Reimbursements made by the
Partnerships to IEC were $4.9 million for the year ended December 31, 1997.
6. Financial Instruments
The Partnerships have made use of derivative financial instruments to hedge
their exposure to fluctuations in both interest rates and the price of
natural gas.
Under the terms of a previous loan and credit agreement, the Partnerships
were required to enter into fixed interest rate swap agreements as a means of
managing exposure to the variable rate of interest of those borrowings. In
conjunction with the refinancing of those borrowings, the Partnerships
entered into counter-swap agreements so that the Partnerships would no longer
be exposed to changes in interest rates. The notional amount of these
interest rate swap agreements was $0 and $5.5 million at December 31, 1999
and 1998, respectively. The notional amount indicates the size of the
transaction entered into, not the Partnerships exposure to loss. Changes in
fair value from the interest rate swap agreements which are recognized in the
statements of operations were $191 thousand, $697 thousand and $1.1 million
for the years ended December 31, 1999, 1998 and 1997, respectively.
The prices received by the Partnerships for power sales under their long-term
contracts do not move precisely in tandem with the prices paid by the
Partnerships for natural gas. To mitigate the price risk associated with
purchases of natural gas, the Partnerships may, from time to time, enter into
certain transactions either through public exchanges or by means of over-the-
counter transactions with specific counterparties. The Partnerships mitigate
their risk associated with purchases of natural gas through the use of
natural gas swap agreements that require the Partnerships to pay a fixed
price (absolutely or within a specified range) in return for a variable price
on specified notional quantities of natural gas. The contract amount of these
agreements was 4.3 million MMBtu and 13.4 million MMBtu at December 31, 1999
and 1998, respectively. The net gain included in fuel costs resulting from
the gas swap agreements was $2.4 million, $2.5 million and $4.0 million for
the years ended December 31, 1999, 1998 and 1997, respectively.
The following estimates of the fair value of financial instruments have been
made using available market information and other valuation methodologies.
However, the use of different market assumptions or methods of valuation could
result in different estimated fair values.
December 31,
1999 1998
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
(Thousands of Dollars)
Long-term debt of Partnerships/Funding Corp. (a) ............. $445,213 $454,000(b) $468,724 $574,000(b)
Long-term debt of NE LP/Acquisition Corp. .................... $220,000 $204,000(b) $220,000 $250,000(b)
Gas swap agreements of NE LP/the Partnerships ................ $ - $ 1,668(c) $ - $ 788(c)
(a) Includes current maturities.
(b) Based on the borrowing rate currently available for debt instruments with similar terms and average maturities.
(c) Based on estimated cost to terminate the agreements.
7. Commitments and Contingencies
Energy Bank and Loan Collateral - Subsequent to the Acquisitions on January
14, 1998, certain credit arrangements were terminated and replaced with new
letters of credit and a guaranty to satisfy requirements in certain power
purchase agreements. Specifically, new energy bank letters of credit were
issued in face amounts of $12.7 million and $54 million. The $12.7 million
letter of credit expires on December 31, 2000 and can be drawn upon on one
occasion in the event that a certain power purchase agreement has terminated
at a time when there is a positive energy bank balance existing in favor of
the power purchaser. The $54 million letter of credit expires on December 31,
2000 and can be drawn upon in multiple drawings in the event that a certain
power purchase agreement has terminated at the time when there is a positive
energy bank balance existing in favor of the power purchaser. The NEA power
purchase agreements are also secured by a second mortgage on the NEA
cogeneration facilities.
A guaranty was made by a subsidiary of FPL Group, Inc. in favor of the
Partnerships' trustee. The guarantor unconditionally and irrevocably
guarantees the payment of an amount equal to 50% of the debt service reserve
requirement with respect to the Funding Corp. Securities. The guaranty
expires on December 31, 2000 and is automatically extended for successive
one-year periods unless the guarantor gives notice that it will not renew.
Once the new credit arrangements mentioned above were in place, cash of
approximately $69.2 million (plus approximately $2.5 million in accrued
interest) was released and distributed to the partners. Additionally, new
letters of credit were issued in substitution for cash on deposit in
Partnership trust accounts and approximately $33.2 million in cash was
released and distributed to the partners.
O&M of the Cogeneration Facilities - In 1989, the Partnerships entered into
two separate ten-year O&M agreements with an O&M provider (the previous O&M
provider) for an aggregate annual consideration of approximately $11.1
million, subject to changes in specified indices. Under these agreements, the
Partnerships were required to pay the previous O&M provider a bonus payable
annually over the term of the agreements based on operating performance. The
Partnerships incurred $16.7 million and $19.7 million for O&M and bonus
expenses for the years ended December 31, 1998 and 1997, respectively.
Effective December 31, 1998, the O&M contracts between the previous O&M
provider and the Partnerships were terminated by mutual consent of both
parties. The Partnerships paid the previous O&M provider $10 million in cash
to terminate the agreements and recorded a net gain of $4.2 million, the
effect of which is reflected in the statement of operations for the period
ended December 31, 1998. Additionally, the Partnerships agreed to pay the
previous O&M provider a total of $15.6 million, which approximates market
value, for spare parts purchased in 1999. An entity related to FPL Energy
became the new provider of O&M services for the Partnerships on January 1,
1999. The Partnerships incurred $14.2 million for O&M expense for the year
ended December 31, 1999, of which $3.8 million represented salaries paid to
the new O&M provider.
Operating Lease - NEA entered into a 26-year operating lease in 1986 for a
parcel of land. The lease may be extended for another 25 years at the option
of NEA. Lease payments under the operating lease are as follows:
Year ending December 31:
2000 .................................................. $ 213,000
2001 .................................................. $ 225,000
2002 .................................................. $ 237,000
2003 .................................................. $ 249,000
2004 .................................................. $ 261,000
Thereafter ............................................ $2,250,000
Lease expense under this agreement is recognized on a straight-line levelized
basis of approximately $198,000 annually over the lease term.
INDEPENDENT AUDITORS' REPORT
ESI TRACTEBEL FUNDING CORP.:
We have audited the accompanying financial statements of ESI Tractebel
Funding Corp. as of December 31, 1999 and 1998, and for the years ended
December 31, 1999 and 1998, listed in the accompanying index at Item 14(a)1
of this Annual Report (Form 10-K) to the Securities and Exchange Commission
for the year ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements 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, such financial statements present fairly, in all material
respects, the financial position of ESI Tractebel Funding Corp. as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years ended December 31, 1999 and 1998 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 20, 2000
INDEPENDENT AUDITORS' REPORT
ESI TRACTEBEL FUNDING CORP. (FORMERLY IEC FUNDING CORP.):
In our opinion, the statements of operations and of cash flows for the year
ended December 31, 1997 (appearing on pages 31 through 34 of this Form 10-K
Annual Report) present fairly, in all material respects, the results of
operations and cash flows of ESI Tractebel Funding Corp. (formerly IEC
Funding Corp.) (the "Company") for the year ended December 31, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. We have not audited the
financial statements of the Company for any period subsequent to December 31,
1997.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
March 24, 1998
ESI TRACTEBEL FUNDING CORP.
BALANCE SHEETS
(Thousands of Dollars)
December 31,
1999 1998
ASSETS
Current assets:
Cash .............................................................................. $ 1 $ 1
Current portion of notes receivable from the Partnerships.......................... 26,333 23,511
Total current assets ............................................................ 26,334 23,512
Notes receivable from the Partnerships .............................................. 418,880 445,213
TOTAL ASSETS ........................................................................ $ 445,214 $ 468,725
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of securities payable ............................................. $ 26,333 $ 23,511
Securities payable .................................................................. 418,880 445,213
Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 445,214 $ 468,725
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP.
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
Years Ended December 31,
1999 1998 1997
Interest income ......................................................... $43,468 $45,327 $47,303
Interest expense ........................................................ (43,468) (45,327) (47,303)
NET INCOME .............................................................. $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP.
STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Years Ended December 31,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................................................ $ - $ - $ -
Adjustment to reconcile net income to net cash provided by operating activities:
Other - net.................................................................... - - -
Net cash provided by operating activities ....................................... - - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments received from the Partnerships.................................. 23,510 21,563 24,075
Principal payments on debt ........................................................ (23,510) (21,563) (24,075)
Net cash provided by financing activities ....................................... - - -
Net increase in cash ................................................................ - - -
Cash at beginning of period ......................................................... 1 1 1
Cash at end of period ............................................................... $ 1 $ 1 $ 1
Supplemental disclosure of cash flow information:
Cash paid for interest ............................................................ $ 43,468 $ 45,327 $47,303
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1999, 1998 and 1997
1. Nature of Business
ESI Tractebel Funding Corp. (Funding Corp.) is a Delaware corporation
established in 1994 as a special purpose funding corporation for the purpose
of issuing the securities described in Note 3. On January 14, 1998, the
Funding Corp. was acquired by a subsidiary of ESI Energy, LLC (ESI Energy),
Tractebel Power, Inc. (Tractebel Power) and Broad Street Contract Services,
Inc. (Broad Street) from Intercontinental Energy Corporation (IEC), a
Massachusetts corporation. Broad Street participates for the purpose of
providing an independent director and has no economic interests. The Funding
Corp. changed its name from IEC Funding Corp. to its current name concurrent
with and related to its acquisition. The Funding Corp. acts as agent of
Northeast Energy Associates, A Limited Partnership and North Jersey Energy
Associates, A Limited Partnership (combined, the Partnerships) with respect
to the securities and holds itself out as agent of the Partnerships in all
dealings with third parties relating to the securities. The Partnerships,
owners of electric power generation stations in the northeastern United
States, are owned indirectly by subsidiaries of ESI Energy and Tractebel
Power.
2. Summary of Significant Accounting Policies
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and 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.
3. The Securities
The Funding Corp. previously issued secured notes (Securities). The proceeds
from the Securities were used to make loans to the Partnerships. In
connection with this transaction, the notes outstanding under a previous loan
and credit agreement of the Partnerships were surrendered and new notes of
the Partnerships were issued to the Funding Corp. in the aggregate principal
amount of the Securities. Borrowings outstanding are as follows:
December 31,
1999 1998
8.43% Senior Secured Notes Due 2000 ................................................ $ 26,333,000 $ 49,844,000
9.16% Senior Secured Notes Due 2002 ................................................ 31,500,000 31,500,000
9.32% Senior Secured Bonds Due 2007 ................................................ 215,740,000 215,740,000
9.77% Senior Secured Bonds Due 2010 ................................................ 171,640,000 171,640,000
Total long-term debt ............................................................. 445,213,000 468,724,000
Less current maturities ........................................................ 26,333,000 23,511,000
Long-term debt, excluding current maturities ................................... $418,880,000 $445,213,000
Interest on the Funding Corp. Securities is payable semiannually on each June
30 and December 30. Principal repayments are made semiannually in amounts
stipulated in the trust indenture. Future principal payments are as follows:
Year ending December 31:
2000 .................................................. $ 26,333,000
2001 .................................................. $ 20,160,000
2002 .................................................. $ 22,688,000
2003 .................................................. $ 23,818,000
2004 .................................................. $ 28,564,000
Thereafter ............................................ $323,650,000
The Securities are not subject to optional redemption but are subject to
mandatory redemption in certain limited circumstances involving the
occurrence of an event of loss, as defined in the trust indenture, for which
the Partnerships fail to or are unable to restore a facility.
The Securities are unconditionally guaranteed, jointly and severally, by the
Partnerships and are secured by a lien on, and a security interest in,
substantially all of the assets of the Partnerships. The Partnerships are
jointly and severally required to make scheduled payments on the notes on
dates and in amounts identical to the scheduled payments of principal and
interest on the Securities. The Securities, the guarantees thereon provided
by the Partnerships and the notes are nonrecourse to the partners and are
payable solely from the collateral pledged as security.
The trust indenture governing the Securities contains certain restrictions on
certain activities of the Partnerships, including the incurrence of
additional indebtedness or liens, distributions to the partners, the
cancellation of power sale and fuel supply agreements, the use of proceeds
from the issuance of the Securities and the execution of mergers,
consolidations and sales of assets.
4. Financial Instruments
The estimated fair value of the Securities and the notes receivable from the
Partnerships at December 31, 1999 and 1998 was $454 million and $574 million,
respectively. The estimate of the fair value has been made using available
market information and other valuation methodologies. However, the use of
different market assumptions or methods of valuation could result in different
estimated fair values.
INDEPENDENT AUDITORS' REPORT
ESI TRACTEBEL ACQUISITION CORP.:
We have audited the accompanying financial statements of ESI Tractebel
Acquisition Corp. as of December 31, 1999 and 1998, and for the year ended
December 31, 1999 and the period from January 12, 1998 (Date of Formation) to
December 31, 1998, listed in the accompanying index at Item 14(a)1 of this
Annual Report (Form 10-K) to the Securities and Exchange Commission for the
year ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements 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, such financial statements present fairly, in all material
respects, the financial position of ESI Tractebel Acquisition Corp. as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for the year ended December 31, 1999 and the period from January 12,
1998 (Date of Formation) to December 31, 1998 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 20, 2000
ESI TRACTEBEL ACQUISITION CORP.
BALANCE SHEETS
(Thousands of Dollars)
December 31,
.
1999 1998
ASSETS
Due from NE LP ....................................................................... $ 152 $ 152
Note receivable from NE LP ........................................................... 220,000 220,000
TOTAL ASSETS ......................................................................... $220,152 $220,152
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Income taxes payable ............................................................... $ 9 $ 4
Deferred credit - interest rate hedge ................................................ 126 140
Securities payable ................................................................... 220,000 220,000
Stockholders' equity:
Common stock, $.10 par value, 100 shares authorized, 20 shares issued .............. - -
Subscriptions receivable ........................................................... - -
Retained earnings .................................................................. 17 8
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................................... $220,152 $220,152
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL ACQUISITION CORP.
STATEMENTS OF OPERATIONS
(Thousands of Dollars)
Period From
Year Ended January 12, 1998
December 31, (Date of Formation)
1999 to December 31, 1998
Interest income ........................................................... $ 17,578 $ 15,182
Interest expense .......................................................... (17,564) (15,170)
Income before income taxes ................................................ 14 12
Income tax expense ........................................................ (5) (4)
NET INCOME ................................................................ $ 9 $ 8
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Period From
Year Ended January 12, 1998
December 31, (Date of Formation)
1999 to December 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................ $ 9 $ 8
Adjustment to reconcile net income to net cash provided by operating
activities:
Other - net............................................................ (9) (8)
Net cash provided by operating activities ............................... - -
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to NE LP ............................................................. - (215,202)
Net cash used in investing activities ................................... - (215,202)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt securities ............................................... - 215,050
Proceeds from interest rate hedge ......................................... - 152
Net cash provided by financing activities ............................... - 215,202
Net increase in cash ........................................................ - -
Cash at beginning of period ................................................. - -
Cash at end of period ....................................................... $ - $ -
Supplemental disclosure of cash flow information:
Cash paid for interest .................................................... $ 17,578 $ 15,182
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL ACQUISITION CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY
(Thousands of Dollars)
Common Subscriptions Retained Stockholders'
Stock Receivable Earnings Equity
Issuance of common stock ................................ $ - $ - $ - $ -
Stock subscriptions ..................................... - - - -
Net income .............................................. - - 8 8
Balances, December 31, 1998 ............................. - - 8 8
Net income .............................................. - - 9 9
Balances, December 31, 1999 ............................. $ - $ - $ 17 $ 17
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, 1999
Period Ended December 31, 1998
1. Nature of Business
ESI Tractebel Acquisition Corp. (Acquisition Corp.) is a Delaware corporation
established on January 12, 1998 as a special purpose funding corporation for
the purpose of issuing the securities described in Note 3. The Acquisition
Corp.'s common stock is jointly owned by a subsidiary of ESI Energy, LLC (ESI
Energy) and by a subsidiary of Tractebel Power, Inc. (Tractebel Power). The
Acquisition Corp. acts as agent of Northeast Energy, LP (NE LP) with respect
to the securities and holds itself out as agent of NE LP in all dealings with
third parties relating to the securities. NE LP is a Delaware limited
partnership that was established on November 21, 1997 for the purpose of
acquiring ownership interests in two electric power generation stations in
the northeastern United States (the Partnerships). NE LP is also owned by
subsidiaries of ESI Energy and Tractebel Power.
2. Summary of Significant Accounting Policies
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and 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.
3. The Securities
On February 12, 1998, the Acquisition Corp. issued $220 million of 7.99%
Secured Bonds Due 2011 (Securities). The proceeds from the Securities were
loaned to NE LP, evidenced by a promissory note, for the purpose of
reimbursing certain partners of NE LP for a portion of $545 million in equity
contributions used to acquire the Partnerships. The Securities are
unconditionally guaranteed by NE LP. Borrowings outstanding at December 31,
1999 were $220 million.
Interest on the Securities is payable semiannually on each June 30 and
December 30. Principal repayments are made annually commencing on June 30,
2002 and are in amounts stipulated in the trust indenture. Future principal
payments are as follows:
Year ending December 31:
2002 ............................................... $ 8,800,000
2003 ............................................... $ 8,800,000
2004 ............................................... $ 8,800,000
Thereafter ......................................... $193,600,000
The Securities are subject to optional redemption after June 30, 2008 at the
redemption prices set forth in the trust indenture and are subject to
extraordinary mandatory redemption at a redemption price of 100% of the
principal amount thereof in certain limited circumstances as defined in the
trust indenture.
The Securities are unconditionally guaranteed by NE LP and are payable solely
from payments to be made by NE LP under the promissory note and bond
guaranty. NE LP's obligations to make payments under the promissory note are
nonrecourse to the direct and indirect owners of NE LP. Payments with respect
to the promissory note and, therefore, in respect of the Securities will be
effectively subordinated to payment of all indebtedness and other liabilities
and commitments of the Partnerships, including the guarantee by the
Partnerships of its indebtedness. Repayment of the Securities is guaranteed
by all interests in the Partnerships. The Securities will rank senior to all
subordinated indebtedness and rank evenly with all senior indebtedness that
the Acquisition Corp. incurs in the future.
4. Financial Instruments
In January 1998, the Acquisition Corp. entered into a fixed interest rate
financial instrument to hedge its exposure to fluctuations in the interest
rate associated with the placement of originally issued securities. The
financial instrument was settled on February 17, 1998 and qualified for hedge
accounting. The gain resulting from the hedge was $152 thousand and is being
amortized into income using the effective interest method. The balances of
the deferred gain were $126 thousand and $140 thousand as of December 31,
1999 and 1998, respectively.
The estimated fair value of the Securities and the note receivable from NE LP
at December 31, 1999 and 1998 was $204 million and $250 million,
respectively. The estimate of the fair value has been made using available
market information and other valuation methodologies. However, the use of
different market assumptions or methods of valuation could result in different
estimated fair values.
5. Stockholders' Equity
On January 12, 1998 (Date of Formation), the Acquisition Corp. received stock
subscriptions and subsequently issued 20 shares of common stock, par value
$.10.
6. Income Taxes
The Acquisition Corp. acts as agent of NE LP with respect to the Securities
and holds itself out as agent of NE LP in all dealings with third parties
relating to the Securities. Accordingly, as a result of the agency
relationship, all tax activity of the Acquisition Corp. for federal and
state income tax purposes represents amounts due to NE LP.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrants
Management Committee of NE LP and the Partnerships
Nathan E. Hanson. Mr. Hanson, 35, is director of business management. He was
appointed to the NE LP Management Committee by ESI GP in March 2000. He was
formerly operations manager for Intercontinental Energy Corporation from 1995
to 1998.
Eric M. Heggeseth. Mr. Heggeseth, 47, is vice president of Tractebel Power.
He was appointed to the NE LP Management Committee by Tractebel GP in March
1998.
John J. O'Rourke. Mr. O'Rourke, 45, is regional director of business
management. He was appointed to the NE LP Management Committee by ESI GP in
March 2000.
Werner E. Schattner. Mr. Schattner, 54, is executive vice president of
Tractebel Power. He was appointed to the NE LP Management Committee by
Tractebel GP in January 1998.
Directors of the Funding Corp. and the Acquisition Corp.
Eric M. Heggeseth. Mr. Heggeseth, 47, is vice president of Tractebel Power.
He has been a director of the Funding Corp. and the Acquisition Corp. since
1998.
Werner E. Schattner. Mr. Schattner, 54, is executive vice president of
Tractebel Power. He has been a director of the Funding Corp. and the
Acquisition Corp. since 1998.
Glenn E. Smith. Mr. Smith, 42, is senior vice president of project
development of FPL Energy. He was formerly director of project development
for Nations Energy Corporation from May 1995 to June 1997. Prior to that, Mr.
Smith was vice president of BOT Financial Corp. He has been a director of the
Funding Corp. and the Acquisition Corp. since 1998.
Edward F. Tancer. Mr. Tancer, 39, is assistant secretary of FPL Energy and
senior attorney of FPL. He has been a director of the Funding Corp. and the
Acquisition Corp. since March 2000.
Directors of the Funding Corp. and the Acquisition Corp. are elected annually
and serve until their resignation, removal or until their respective
successors are elected. The members of the Management Committee of NE LP and
the Partnerships serve until their resignation, removal or until their
respective successors are elected. Except as noted, each director or
management committee member has held his position for five years or more and
his employment history is continuous.
Item 11. Executive Compensation
None.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Partnerships and NE LP. The following table sets forth the direct and
indirect interests of ownership:
Name and Address of Nature of Percentage
Title of Class Beneficial Owner Beneficial Ownership Interest
Partnerships:
General and Limited Partnership Interest NE LP(1) General Partner 98%LP
1%GP
Limited Partnership Interest NE LLC(1) Limited Partner 1%LP
NE LP:
General Partnership Interest ESI GP(1) General Partner in NE LP 1%GP
General Partnership Interest Tractebel GP(2) General Partner in NE LP 1%GP
Limited Partnership Interest ESI LP(1) Limited Partner in NE LP 49%LP
Limited Partnership Interest Tractebel LP(2) Limited Partner in NE LP 49%LP
(1) The address for each of NE LP, NE LLC, ESI GP and ESI LP is c/o FPL Energy, LLC, 700 Universe Blvd.,
Juno Beach, Florida 33408.
(2) The address for each of Tractebel GP and Tractebel LP is c/o Tractebel Power, Inc., 1177 West Loop South,
Suite 900, Houston, Texas 77027.
The Funding Corp. The following table sets forth the number of shares and
percentage owned of the Funding Corp.'s voting securities beneficially owned
by each person known to be the beneficial owner of more than five percent
(5%) of the voting securities:
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
Common Stock ESI Northeast Funding (1) 3,750 37.5%
Common Stock Tractebel Power (1) 3,750 37.5%
Common Stock Broad Street (2) 2,500 25.0%
(1) The address for ESI Northeast Funding is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach, Florida 33408
and the address for Tractebel Power, Inc. is 1177 West Loop South, Suite 900, Houston, Texas 77027.
(2) The address for Broad Street is Two Wall Street, New York, New York 10005. Broad Street is a nominee of the
Trustee and its sole purpose is to provide an independent director.
The Acquisition Corp. The following table sets forth the number of shares
and percentage owned of the Acquisition Corp.'s voting securities
beneficially owned by each person known to be the beneficial owner of more
than five percent (5%) of the voting securities:
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
Common Stock ESI Northeast Acquisition (1) 10 50.0%
Common Stock Tractebel Power 10 50.0%
(1) The address for ESI Northeast Acquisition is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach,
Florida 33408.
Item 13. Certain Relationships and Related Transactions
Administrative Services Agreement. NE LP and an entity related to FPL Energy
have entered into an administrative services agreement that provides for
management and administrative services to the Partnerships. The agreement
expires in 2018, provides for fees of a minimum of $600 thousand per year,
subject to certain adjustments, and reimburses costs and expenses of
performing services. For the periods ended December 31, 1999 and 1998, the
Partnerships incurred $782 thousand and $765 thousand under the agreement,
respectively.
O&M Agreements. NE LP and an entity related to FPL Energy have entered into
O&M agreements that provide for the operations and maintenance of the
Partnerships. The agreements expire in 2016, subject to extension by mutual
agreement of the parties before six months preceding expiration. The
agreements provide for fees of a minimum of $750 thousand per year, subject
to certain adjustments, for each Partnership and reimburse costs and expenses
of performing services. For the periods ended December 31, 1999 and 1998, the
Partnerships incurred $1.5 million under the agreements.
Fuel Management Agreements. NE LP and an entity related to FPL Energy have
entered into fuel management agreements that provide for the management of
all natural gas and fuel oil, transportation and storage agreements, and the
location and purchase of any additional required natural gas or fuel oil for
the Partnerships. The agreements expire in 2023, provide for fees of a
minimum of $450 thousand per year, subject to certain adjustments, for each
Partnership and reimburse costs and expenses of performing services. For the
periods ended December 31, 1999 and 1998, the Partnerships incurred $896
thousand and $881 thousand under the agreements, respectively.
Power Sales. From time to time, FPL Energy's power marketing group will
purchase excess power produced by the Partnerships and resell the power to
the marketplace. These purchases totaled $2.5 million and $1.1 million in
1999 and 1998, respectively.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements Page(s)
NE LP:
Independent Auditors' Report - Deloitte & Touche LLP 11
Consolidated Balance Sheets 13
Consolidated Statements of Operations 14
Consolidated Statements of Cash Flows 15
Consolidated Statements of Partners' Equity 16
Notes to Consolidated Financial Statements 21-27
Partnerships:
Independent Auditors' Report - Deloitte & Touche LLP 11
Independent Auditors' Report - PricewaterhouseCoopers LLP 12
Combined Balance Sheets 17
Combined Statements of Operations 18
Combined Statements of Cash Flows 19
Combined Statements of Partners' Equity 20
Notes to Combined Financial Statements 21-27
Funding Corp.:
Independent Auditors' Report - Deloitte & Touche LLP 28
Independent Auditors' Report - PricewaterhouseCoopers LLP 29
Balance Sheets 30
Statements of Operations 31
Statements of Cash Flows 32
Notes to Financial Statements 33-34
Acquisition Corp.:
Independent Auditors' Report - Deloitte & Touche LLP 35
Balance Sheets 36
Statements of Operations 37
Statements of Cash Flows 38
Statements of Stockholders' Equity 39
Notes to Financial Statements 40-41
2. Financial Statement Schedules - Schedules are omitted as not applicable or not required.
3. Exhibits including those Incorporated by Reference
Exhibit No. Description
3.1* Certificate of Incorporation of the Funding Corp.
3.1.1***** Certificate of Amendment of Certificate of Incorporation of the Funding Corp. as filed
with the Secretary of State of the State of Delaware on February 3, 1998
3.1.2****** Certificate of Incorporation of the Acquisition Corp. as filed with the Secretary of
State of the State of Delaware on January 12, 1998
3.2***** By-laws of the Funding Corp.
3.2.1****** By-laws of the Acquisition Corp.
3.3***** Amended and Restated Certificate of Limited Partnership of NEA as filed with the
Secretary of State of the Commonwealth of Massachusetts on March 31, 1986, as amended
and restated on January 9, 1987 and November 6, 1987, as further amended on July 6, 1989
and as amended and restated on February 16, 1998
3.4***** Amended and Restated Certificate of Limited Partnership of NJEA as filed with the
Secretary of State of the State of New Jersey on November 3, 1986, as amended and
restated on January 14, 1987, June 25, 1987, March 4, 1988 and February 16, 1998
3.5***** Amended and Restated Agreement of Limited Partnership of NEA dated as of November 21,
1997
3.6***** Amended and Restated Agreement of Limited Partnership of NJEA dated as of November 21,
1997
3.7***** Certificate of Limited Partnership of NE LP, a Delaware limited partnership, as filed
with the Secretary of State of the State of Delaware on November 21, 1997
3.8***** Agreement of Limited Partnership of NE LP, a Delaware limited partnership, dated as of
November 21, 1997
4.1* Trust Indenture dated as of November 15, 1994, among the Partnerships, the Funding Corp.
and the Trustee
4.2* First Supplemental Indenture dated as of November 15, 1994, among the Partnerships, the
Funding Corp and the Trustee, including forms of the securities
4.3* Credit Agreement dated as of December 1, 1994, among the Partnerships, each of the
institutions referred to therein and Sanwa Bank Limited, New York Branch (Sanwa)
4.4* Collateral Agency Agreement dated as of December 1, 1994 among the Partnerships, the
Funding Corp., the Trustee, Sanwa, the Swap Providers (as defined therein) and State
Street Bank and Trust Company, as Collateral Agent
4.5* Amended and Restated Project Loan and Credit Agreement dated as of December 1, 1994,
between the Partnerships and the Funding Corp.
4.6* Partnerships' Guarantee Agreement dated as of December 1, 1994, between the Partnerships
and the Trustee
4.7* Registration Rights Agreement dated as of November 21, 1994, among the Partnerships, the
Funding Corp., Chase Securities, Inc., Merrill Lynch, Pierce Fenner & Smith, Incorporated
and Salomon Brothers, Inc.
4.8* Pledge, Trust and Intercreditor Agreement dated as of December 1, 1994 among the
Partnerships, Sanwa, and Sanwa Bank Trust Company of New York and the Trustee
4.9* Assignment and Security Agreement dated as of December 1, 1994, between the Funding Corp.
and the Trustee
4.10* Amended and Restated Assignment and Security Agreement dated as of December 1, 1994,
between the Partnerships, NE LP and the Trustee
4.11* Amended and Restated Assignment and Security Agreement dated as of December 1, 1994,
between NEA and the Trustee
4.12* Amended and Restated Assignment and Security Agreement dated as of December 1, 1994,
between NJEA and the Trustee
4.13* Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Filing
dated as of December 1, 1994, made by NEA in favor of the Trustee
4.14* Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Filing
(Additional Properties) dated as of December 1, 1994, made by NEA in favor of the Trustee
4.15* Amended and Restated Indenture of Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing dated as of December 1, 1994, made by NJEA in favor of the Trustee
4.16* Amended and Restated Stock Pledge Agreement dated as of December 1, 1994, between NJEA
and the Trustee
4.17* Assignment of Mortgage dated as of December 1, 1994, between The Chase Manhattan Bank
(National Association) and the Trustee with respect to the Bellingham Mortgage dated as
of June 28, 1989
4.18* Assignment of Mortgage dated as of December 1, 1994, between The Chase Manhattan Bank
(National Association) and the Trustee with respect to the Bellingham Mortgage dated
August 10, 1989
4.19* Assignment of Mortgage dated as of December 1, 1994, between The Chase Manhattan Bank
(National Association) and the Trustee with respect to the Sayreville Mortgage dated
June 28, 1989
4.20* Assignment of Security Agreements dated as of December 1, 1994, among The Chase
Manhattan Bank (National Association), the Trustee, the Partnerships, the Funding Corp.
and NE LP
4.21***** Second Supplemental Trust Indenture dated as of January 14, 1998 among the Funding Corp.,
NEA, NJEA and the Trustee
4.22***** Amendment to Amended and Restated Assignment and Security Agreement by and between NEA,
NJEA, NE LP and the Trustee dated as of January 14, 1998
4.23***** Termination of Pledge, Trust and Intercreditor Agreement dated as of January 30, 1998
among NEA, NJEA, Sanwa, Sanwa Bank and Trust Company of New York and the Trustee
4.24****** Indenture, dated as of February 19, 1998 among the Acquisition Corp., NE LP, NE LLC, and
the Trustee
4.25****** Registration Rights Agreement, dated as of February 19, 1998 by and among the Acquisition
Corp., NE LP, and Goldman Sachs & Co.
4.26****** Company & Partner Pledge Agreement dated as of February 19, 1998 by and among the
Acquisition Corp., NE LP, NE LLC in favor of the Trustee
4.27****** Sponsor Pledge Agreement dated as of February 19, 1998 by and among ESI Northeast
Acquisition, ESI GP, ESI LP, Tractebel GP, Tractebel LP, and Tractebel Power in favor
of the Trustee
10.1* Accommodation Agreement dated as of June 28, 1989, between NEA, BECO, Commonwealth,
Montaup, and The Chase Manhattan Bank (National Association)
10.2.1* Amended and Restated Operation and Maintenance Agreement dated as of June 28, 1989 (the
"Sayreville O&M Agreement"), between NJEA and Westinghouse Power
10.2.2* Letter Agreement regarding the Sayreville Heat Rate dated June 23, 1993, between NJEA
and Westinghouse Power
10.2.3* Letter Agreement regarding extension of the Sayreville O&M Agreement dated June 23, 1993,
between Westinghouse Power and NJEA
10.2.4* Second Amended and Restated Operation and Maintenance Agreement dated as of June 28, 1989
(the "Bellingham O&M Agreement"), between NEA and Westinghouse Power
10.2.5* Letter Agreement regarding the Bellingham Heat Rate dated June 23, 1993, between NEA and
Westinghouse
10.2.6* Letter Agreement regarding extension of the Bellingham O&M Agreement dated June 23, 1993,
between NEA and Westinghouse Power
10.2.7** Amendment No. 1 to the Bellingham O&M Agreement, dated as of May 1, 1995, by and between
NEA and Westinghouse Power
10.3.1* Power Purchase Agreement dated as of April 1, 1986 (the "BECO I Power Purchase
Agreement"), between NEA and BECO
10.3.2* First Amendment to the BECO I Power Purchase Agreement dated as of June 8, 1987, between
BECO and NEA
10.3.3* Second Amendment to the BECO I Power Purchase Agreement dated as of June 21, 1989,
between BECO and NEA
10.3.4* Power Purchase Agreement dated as of January 28, 1988 (the "BECO II Power Purchase
Agreement"), between NEA and BECO
10.3.5* First Amendment to the BECO II Power Purchase Agreement dated as of June 21, 1989,
between NEA and BECO
10.3.6* Power Sale Agreement dated as of November 26, 1986 (the "Commonwealth I Power Purchase
Agreement"), between NEA and Commonwealth
10.3.7* First Amendment to the Commonwealth I Power Purchase Agreement dated as of August 15,
1988, between Commonwealth and NEA
10.3.8* Second Amendment to the Commonwealth I Power Purchase Agreement dated as of January 1,
1989, between Commonwealth and NEA
10.3.9* Power Sale Agreement dated as of August 15, 1988 (the "Commonwealth II Power Purchase
Agreement"), between NEA and Commonwealth
10.3.10* First Amendment to the Commonwealth II Power Purchase Agreement dated as of January 1,
1989, between NEA and Commonwealth
10.3.11* Power Purchase Agreement dated as of October 17, 1986 (the "Montaup Power Purchase
Agreement"), between NEA and Montaup
10.3.12* First Amendment to the Montaup Power Purchase Agreement dated as of June 28, 1989,
between Montaup and NEA
10.3.13* Power Purchase Agreement dated as of October 22, 1987 (the "JCP&L Power Purchase
Agreement"), between NJEA and JCP&L
10.3.14* First Amendment to the JCP&L Power Purchase Agreement dated as of June 16, 1989, between
JCP&L and NJEA
10.4.1* Firm Transportation Service Agreement dated as of February 28, 1994, among CNG
Transmission Corporation, a Delaware corporation ("CNG"), NEA, ProGas U.S.A., Inc.,
a Delaware corporation ("ProGas USA") and ProGas
10.4.2* Firm Gas Transportation Agreement (Rate Schedule X-320) dated as of February 27, 1991,
between NEA and Transcontinental Gas Pipe Line Corporation, a Delaware corporation
("Transco")
10.4.3* Rate Schedule X-35 Firm Gas Transportation Agreement dated as of October 1, 1993, between
NEA and Algonquin Gas Transmission Company, a Delaware corporation ("Algonquin")
10.4.4* Service Agreement for Rate Schedule FTS-5 dated as of February 16, 1994, between NEA and
Texas Eastern Transmission Corporation, a Delaware corporation ("Texas Eastern")
10.4.5* ProGas/TransCanada NE Assignment Agreement dated as of July 30, 1993, between ProGas and
TransCanada Pipelines Limited, an Ontario corporation ("TransCanada")
10.4.6* Northeast Gas Substitution Agreement dated as of July 30, 1993, among ProGas, NEA and
TransCanada
10.4.7* Northeast Notice and Consent dated as of July 30, 1993, among NEA, ProGas and TransCanada
10.4.8* ProGas NE Producer Assignment Agreement dated as of July 30, 1993, between ProGas and
TransCanada
10.4.9* Firm Transportation Service Agreement dated as of February 28, 1994, among CNG, NJEA,
ProGas USA and ProGas
10.4.10* Firm Gas Transportation Agreement (Rate Schedule X-319) dated as of February 27, 1991,
between Transco and NJEA
10.4.11* Service Agreement for Rate Schedule FTS-5 dated as of February 16, 1994, between Texas
Eastern and NJEA
10.4.12* ProGas/TransCanada NJ Assignment Agreement dated as of July 30, 1993, between ProGas and
TransCanada
10.4.13* North Jersey Gas Substitution Agreement dated as of July 30, 1993, among ProGas, NJEA and
TransCanada
10.4.14* North Jersey Notice and Consent dated as of July 30, 1993, among NJEA, ProGas and
TransCanada
10.4.15* ProGas NJ Producer Assignment dated as of July 30, 1993, between ProGas and TransCanada
10.4.16* Gas Purchase and Sales Agreement dated as of May 4, 1989 (the "PSE&G Agreement"), between
NJEA and PSE&G
10.5.1* Service Agreement Applicable to the Storage of Natural Gas Under Rate Schedule GSS-II
dated as of September 30, 1993, between CNG and NEA
10.5.2* Service Agreement Applicable to the Storage of Natural Gas Under Rate Schedule GSS-II
dated as of September 30, 1993, between CNG and NJEA
10.5.3** Service Agreement Applicable to Transportation of Natural Gas under Rate Schedule FT
dated as of February 1, 1996, by and between CNG and NEA
10.5.4** Service Agreement Applicable to Transportation of Natural Gas under Rate Schedule FT
dated as of February 1, 1996, by and between CNG and NJEA
10.6.1* Gas Purchase Contract dated as of May 12, 1988 (the "Bellingham ProGas Agreement"),
between ProGas and NEA
10.6.2* First Amending Agreement to the Bellingham ProGas Agreement dated as of April 17, 1989,
between ProGas and NEA
10.6.3* Second Amending Agreement to the Bellingham ProGas Agreement dated as of June 23, 1989,
between ProGas and NEA
10.6.4* Amending Agreement to the ProGas Agreements (as defined below) dated as of November 1,
1991, between ProGas, NEA and NJEA
10.6.5* Third Amending Agreement to the Bellingham ProGas Agreement dated as of July 30, 1993,
between ProGas and NEA
10.6.6* Letter Agreement regarding the Bellingham ProGas Agreement dated as of September 14,
1992, between ProGas and NEA
10.6.7* Letter Agreement regarding the Bellingham ProGas Agreement dated as of July 30, 1993,
between ProGas and NEA
10.6.8* Gas Purchase Contract dated as of May 12, 1988 (the "Sayreville ProGas Agreement," and
together with the Bellingham ProGas Agreement, the "ProGas Agreements"), between ProGas
and NJEA
10.6.9* First Amending Agreement to the Sayreville ProGas Agreement dated April 17, 1989, between
ProGas and NJEA
10.6.10* Second Amending Agreement to the Sayreville ProGas Agreement dated June 23, 1989, between
ProGas and NJEA
10.6.11* Third Amending Agreement to the Sayreville ProGas Agreement dated July 30, 1993, between
ProGas and NJEA
10.6.12* Letter Agreement regarding the Sayreville ProGas Agreement dated as of September 14,
1992, between ProGas and NJEA, as amended as of April 22, 1994 by Letter Agreement
between ProGas and NJEA
10.6.13* Letter Agreement regarding the Sayreville ProGas Agreement dated July 30, 1993, between
ProGas and NJEA
10.7.1* Amended and Restated Steam Sales Agreement dated as of December 21, 1990, between NEA and
NECO-Bellingham, Inc., a Massachusetts corporation ("NECO")
10.7.2* Industrial Steam Sales Contract dated as of June 5, 1989, between NJEA and Hercules
Incorporated, a Delaware corporation ("Hercules")
10.8.1* Letter agreement regarding Bellingham Project power transmission arrangements dated
June 29, 1989, between NEA and BECO
10.8.2* Letter agreement regarding Bellingham Project power transmission arrangements dated
June 6, 1989, between NEA and Commonwealth
10.8.3* Letter agreement regarding Bellingham Project power transmission arrangements dated
June 28, 1989, between NEA and Montaup
10.9* Amended and Restated Interconnection Agreement dated as of September 24, 1993, between
BECO and NEA
10.10.1* Amended and Restated Lease Agreement dated as of December 21, 1990, between NEA and NECO
10.10.2* Carbon Dioxide Agreement dated as of December 21, 1990, between NECO and Praxair, Inc.,
as successor to Liquid Carbonic Carbon Dioxide Corporation ("Praxair")
10.10.3* BOC Gases Carbon Dioxide Agreement dated as of December 21, 1990, between NECO and the
BOC Gases of the BOC Group, Inc., a Delaware corporation ("BOC Gases")
10.10.4* Assignment and Security Agreement dated as of December 1, 1991, between NECO and NEA
10.10.5*** Operation and Maintenance Agreement by and between NECO-Bellingham, Inc. as Lessee and
Westinghouse as Operator for the Bellingham Project Carbon Dioxide Recovery Facility
dated as of May 1, 1995
10.10.5.1**** Guaranty of Contract for Operation and Maintenance dated May 12, 1995 by Westinghouse
Power
10.10.6* Licensing Agreement for the Fluor Daniel Carbon Dioxide Recovery Process dated as of
June 28, 1989, between Fluor Daniel Inc., a California corporation ("Fluor Daniel"), and
NEA
10.11.1* Ground Lease Agreement dated as of June 28, 1989, between NJEA and ETURC
10.11.2* Agreement of Sublease dated as of June 28, 1989, between ETURC and NJEA
10.11.3* Lease of Property dated as of June 1, 1986, between Prestwich Corporation and NE LP
10.12.1* Investment Agreement dated as of December 1, 1994, between Sanwa and Sanwa Bank Trust
Company of New York under the Pledge, Trust and Intercreditor Agreement
10.12.2* Investment Agreement dated as of December 1, 1994, between Sanwa and Sanwa Bank Trust
Company of New York under the Pledge, Trust and Intercreditor Agreement
10.13* Agreement between the Water and Sewer Commissioners of the Town of Bellingham and NEA
dated as of December 13, 1988 and December 30, 1988, respectively
10.14* Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated June 29, 1989,
by NEA in favor of BECO, Commonwealth and Montaup
10.15*** Declaration of Easements, Covenants, and Restrictions dated as of June 28, 1989 by NEA
10.16***** Operation and Maintenance Agreement dated as of November 21, 1997 by and between NE LP
and FPLE Operating Services
10.17***** Operation and Maintenance Agreement dated as of November 21, 1997 by and between NE LP
and FPLE Operating Services
10.18***** Fuel Management Agreement, dated as of January 20, 1998, by and between NE LP and ESI
Northeast Fuel , assigned by NE LP to NEA on January 20, 1998
10.19***** Fuel Management Agreement, dated as of January 20, 1998, effective retroactive to
January 14, 1998, by and between NE LP and ESI Northeast Fuel
10.20***** Administrative Services Agreement dated as of November 21, 1997 between NE LP and ESI GP
10.21****** Reimbursement Agreement dated as of November 21, 1997 by and among FPL Group Capital,
Tractebel Power and NE LP
16******* Change in Certifying Accountant Letter
21 Subsidiaries of the Registrants
27.1 Financial Data Schedule - ESI Tractebel Funding Corp.
27.2 Financial Data Schedule - Northeast Energy Associates, A Limited Partnership
27.3 Financial Data Schedule - North Jersey Energy Associates, A Limited Partnership
27.4 Financial Data Schedule - ESI Tractebel Acquisition Corp.
27.5 Financial Data Schedule - Northeast Energy LP
* Incorporated herein by reference from the Registration Statement on Form S-4, file no. 33-87902, filed with
the Securities and Exchange Commission by the Funding Corp. on February 9, 1995, as amended.
** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the
Partnerships on April 1, 1996.
*** Incorporated herein by reference from the Quarterly Report on Form 10-Q filed by the Funding Corp. and the
Partnerships on November 14, 1996.
**** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the
Partnerships on March 31, 1997.
***** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the
Partnerships on March 27, 1998.
****** Incorporated herein by reference from the Registration Statement on Form S-4, file no. 333-52397, filed
with
the Securities and Exchange Commission by the Acquisition Corp. on August 11, 1998, as amended.
******* Incorporated herein by reference from Form 8-K filed by the Funding Corp. and the Partnerships on
September 4, 1998.
(b) Reports On Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrants have duly caused this report to be signed on
their behalf by the undersigned, thereunto duly authorized.
ESI TRACTEBEL FUNDING CORP.
ESI TRACTEBEL ACQUISITION CORP.
EDWARD F. TANCER
Vice President
(Principal Executive Officer and Director)
Date: March 27, 2000
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
registrants and in the capacities and on the date indicated.
Signature and Title as of March 27, 2000:
DILEK L. SAMIL
Treasurer
(Principal Financial and Principal Accounting Officer)
Directors:
ERIC M. HEGGESETH
WERNER E. SCHATTNER
GLENN E. SMITH
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned, thereunto duly authorized.
NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
NORTHEAST ENERGY, LP
(ESI Northeast Energy GP, Inc. as Administrative General Partner)
DILEK L. SAMIL
Vice President and Treasurer of ESI Northeast Energy GP, Inc.
(Principal Executive, Principal Financial and Principal Accounting Officer and
Director
of ESI Northeast Energy GP, Inc.)
Date: March 27, 2000
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
registrants and in the capacities and on the date indicated.
Signature and Title as of March 27, 2000:
Director of ESI Northeast Energy GP, Inc.:
GLENN E. SMITH