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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, 2000
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 office 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
(561) 691-7171
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
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 not 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, 2000, there were issued and outstanding 10,000 shares of
ESI Tractebel Funding Corp.'s common stock.
As of December 31, 2000, there were issued and outstanding 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, a Massachusetts limited partnership, and NJEA, a New Jersey limited
partnership, 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, through Tractebel and Tractebel Power of Tractebel S.A., a
Belgian energy, industrial services and energy services business, and a
member of the Suez group). 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 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.
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., a Delaware corporation, 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
lend funds to the Partnerships and was subsequently exchanged for public
debt under the Act.
On January 12, 1998, the Acquisition Corp., a Delaware corporation, 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 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 47% September 15, 2016
Boston Edison 84 29 September 15, 2011
Commonwealth 25 9 September 15, 2016
Commonwealth 21 7 September 15, 2016
Montaup 25 8 September 15, 2021
NEA Total 290 100%
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 subsidiary. 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, some or all of the 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
subsidiary. This subsidiary buys and sells wholesale energy commodities,
such as natural gas, oil 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 a payment of $10 million
was made 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, 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), which affect the efficiency and
capacity of the combined-cycle facilities. Payments due to NJEA under the
JCP&L power purchase agreement during the winter and summer seasons 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
wholesale electric market prices. 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. 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 wholesale electricity market and 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.
Item 2. Properties
As of December 31, 2000, 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,
2000 1999 1998 1997 1996
(Thousands of Dollars)
SELECTED CONSOLIDATED DATA OF NE LP AND SUBSIDIARIES:
Operating revenues ...................................... $ 337,579 $ 336,299 $ 302,693 $ - n/a
Net income .............................................. $ 19,636 $ 33,303 $ 14,098 $ - n/a
Total assets ............................................ $1,282,309 $1,345,858 $1,410,343 $ - n/a
Long-term debt, excluding current maturities ............ $ 618,720 $ 638,880 $ 665,213 $ - n/a
Amounts due utilities for energy bank balances .......... $ 162,756 $ 168,885 $ 173,356 $ - n/a
SELECTED COMBINED DATA OF THE PARTNERSHIPS:
Operating revenues ...................................... $ 337,579 $ 336,299 $ (a)(b) $312,154 $272,262
Net income .............................................. $ 37,716 $ 51,329 $ (a)(b) $ 36,673 $ 9,924
Total assets ............................................ $1,276,271 $1,339,102 $1,403,045 $541,545 $566,534
Long-term debt, excluding current maturities ............ $ 398,720 $ 418,880 $ 445,213 $468,724 $490,287
Amounts due utilities for energy bank balances .......... $ 162,756 $ 168,885 $ 173,356 $230,565 $220,922
SELECTED DATA OF THE FUNDING CORP.:
Operating revenues ...................................... $ - $ - $ - $ - $ -
Net income .............................................. $ - $ - $ - $ - $ -
Total assets ............................................ $ 418,881 $ 445,214 $ 468,725 $490,288 $514,363
Long-term debt, excluding current maturities ............ $ 398,720 $ 418,880 $ 445,213 $468,724 $490,287
SELECTED DATA OF THE ACQUISITION CORP.:
Operating revenues ...................................... $ - $ - $ - n/a n/a
Net income .............................................. $ 9 $ 9 $ 8 n/a n/a
Total assets ............................................ $ 220,152 $ 220,152 $ 220,152 n/a n/a
Long-term debt, excluding current maturities ............ $ 220,000 $ 220,000 $ 220,000 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 to the Consolidated and Combined Financial Statements -
Acquisitions).
(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 for the years ended December 31, 2000 and 1999 - NE LP's results of
operations declined in 2000 primarily due to increased fuel costs, partly
offset by slightly higher revenues. Revenues in 2000 were comprised of $333.4
million of power sales to utilities and $4.2 million of steam sales. In 1999,
revenues 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 $23.7 million and $22.2 million in 2000 and
1999, respectively. The changes in energy bank balances, which increased
reported revenues, are determined in accordance with scheduled or specified
rates under certain power purchase agreements.
Fuel expense increased primarily as a result of the increased price of
natural gas required to fuel the facilities. These fuel costs were partly
offset in 2000 and 1999 by $20.8 million of deferred credit amortization for
fuel contracts.
NE LP for the years ended December 31, 1999 and 1998 - NE LP's operations
for 1999 reflect a full year of operations versus operations for 1998, which
primarily reflect the operation of NE LP subsequent to the acquisitions on
January 14, 1998 and the related allocation of the purchase price.
NE LP's results of operations increased in 1999 primarily due to increased
revenues, partly offset by higher fuel costs. Revenues increased due to
higher power purchase rates paid by utilities, as well as increased
generation resulting from less plant outages in 1999. Revenues increased
due to higher power purchase rates paid by utilities, as well as increased
generation resulting from less plant outages in 1999. Revenues in 1999 were
comprised of $331.4 million of power sales to utilities and $4.9 million of
steam sales. In 1998, revenues 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 $22.2 million and $15.6
million in 1999 and 1998, respectively. The changes in energy bank balances,
which increased reported revenues, are determined in accordance with
scheduled or specified rates under certain power purchase agreements.
Fuel expense increased primarily as a result of the increased price of
natural gas required to fuel the facilities. These fuel costs were partly
offset in 1999 and 1998 by $20.8 million and $20.1 million, respectively, of
deferred credit amortization for fuel contracts.
The Partnerships for the years ended December 31, 2000 and 1999 - The
Partnerships' results of operations declined in 2000 primarily due to
increased fuel costs, partly offset by slightly higher revenues. Revenues in
2000 were comprised of $333.4 million of power sales to utilities and $4.2
million of steam sales. In 1999, revenues 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 $23.7 million
and $22.2 million in 2000 and 1999, respectively. The changes in energy bank
balances, which increased reported revenues, are determined in accordance
with scheduled or specified rates under certain power purchase agreements.
Fuel expense increased primarily as a result of the increased price of
natural gas required to fuel the facilities. These fuel costs were partly
offset in 2000 and 1999 by $20.8 million of deferred credit amortization for
fuel contracts.
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 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.
The Partnerships for the years ended December 31, 1999 and 1998 - The
Partnerships' operations for 1999 reflect a full year of operations versus
operations for 1998, which primarily reflect the operation of the
Partnerships subsequent to the acquisitions on January 14, 1998 and the
related allocation of the purchase price.
The Partnerships' results of operations increased in 1999 primarily due to
increased revenues, partly offset by higher fuel costs. Revenues in 1999
were comprised of $331.4 million of power sales to utilities and $4.9
million of steam sales. In 1998, revenues 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 $22.2 million
and $15.6 million in 1999 and 1998, respectively. The changes in energy bank
balances, which increased reported revenues, are determined in accordance
with scheduled or specified rates under certain power purchase agreements.
Fuel expense increased primarily as a result of the increased price of
natural gas required to fuel the facilities. These fuel costs were partly
offset in 1999 and 1998 by $20.8 million and $20.1 million, respectively, of
deferred credit amortization for fuel contracts.
The Funding Corp. - During the three years ended December 31, 2000, the
Funding Corp. used principal payments and interest income received from the
notes receivable from the Partnerships to make scheduled principal and
interest payments on its outstanding debt.
The Acquisition Corp. - During the three years ended December 31, 2000, the
Acquisition Corp. used interest income received from the notes receivable
from NE LP to make scheduled interest payments on its outstanding debt.
New Accounting Rule - Effective January 1, 2001, the Registrants adopted
Financial Accounting Standards No. (FAS) 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by FAS 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities." For
information concerning the adoption of FAS 133/138, see Note 2 to the
Consolidated and Combined Financial Statements - Accounting for Derivative
Instruments and Hedging Activities.
Liquidity and Capital Resources
The Funding Corp. and the Partnerships - Cash flow generated by the
Partnerships during 2000 was sufficient to fund operating expenses as well
as fund the debt service requirements of the Funding Corp. During December
2000, $26.3 million principal amount of 8.43% Senior Secured Notes matured and
were repaid. Debt maturities of the Funding Corp. will require cash outflows
of approximately $315 million in principal and interest through 2005,
including $59.5 million in 2001. It is anticipated that cash requirements
for principal and interest payments in 2001 will be satisfied with
operational cash flow.
The Acquisition Corp. and NE LP - Cash flow generated by NE LP during 2000 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 $433.5 million in principal and interest through 2005,
including $77.1 million in 2001. It is anticipated that cash requirements
for principal and interest payments in 2001 will be satisfied with
operational cash flow.
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:
2000
Hypo-
thetical
Increase
Carrying Fair in Fair
Value Value Value
(Thousands of Dollars)
Long-term debt of NE LP/Acquisition Corp. ...................... $220,000 $ 220,000(a) $ 11,000
Long-term debt of Partnerships/Funding Corp. ................... $418,880 $ 450,000(a) $ 17,000
_______________
(a) Based on the borrowing rate on January 8, 2001 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 40% decrease in natural
gas prices:
2000
Hypo-
thetical
Decrease
Carrying Fair in Fair
Value Value Value
(Thousands of Dollars)
Gas swap agreements of NE LP/the Partnerships .................. $ - $ 22,608(a) $ 19,992
_______________
(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,
2000 and 1999, and for each of the three years in the period ended December
31, 2000, and the combined financial statements of Northeast Energy
Associates, A Limited Partnership and North Jersey Energy Associates, A
Limited Partnership, two of the subsidiaries of Northeast Energy, LP, as of
December 31, 2000 and 1999, and for the years ended December 31, 2000 and
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 on Form 10-K to the Securities and
Exchange Commission for the year ended December 31, 2000. These financial
statements are the responsibility of the respective Partnerships'
managements. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 as of December 31, 2000 and 1999 and the results of
their operations and their cash flows for the above-stated periods in
conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 29, 2001
NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 35,360 $ 33,085
Accounts receivable .............................................................. 32,857 32,332
Due from related party ........................................................... 2,762 152
Spare parts inventories .......................................................... 11,251 9,977
Fuel inventories ................................................................. 3,793 4,361
Prepaid expenses and other current assets ........................................ 452 335
Total current assets ........................................................... 86,475 80,242
Non-current assets:
Deferred debt issuance costs (net of accumulated amortization of $1,811 and
$1,179, respectively) .......................................................... 5,149 5,781
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $64,866 and $42,807, respectively) ............................. 454,068 470,851
Power purchase agreements (net of accumulated amortization of $152,246 and
$99,811, respectively) ......................................................... 736,510 788,945
Other assets ..................................................................... 107 39
Total non-current assets ....................................................... 1,195,834 1,265,616
TOTAL ASSETS ....................................................................... $1,282,309 $1,345,858
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. ............................. $ 20,160 $ 26,333
Accounts payable ................................................................. 17,457 16,745
Due to related parties ........................................................... 954 1,306
Other accrued expenses ........................................................... 12,811 5,978
Total current liabilities ...................................................... 51,382 50,362
Non-current liabilities:
Deferred credit - fuel contracts ................................................. 271,735 292,581
Notes payable - the Funding Corp. ................................................ 398,720 418,880
Note payable - the Acquisition Corp. ............................................. 220,000 220,000
Amounts due utilities for energy bank balances ................................... 162,756 168,885
Lease payable .................................................................... 969 996
Total non-current liabilities .................................................. 1,054,180 1,101,342
COMMITMENTS AND CONTINGENCIES
Partners' equity:
General partners ................................................................. 3,534 3,882
Limited partners ................................................................. 173,213 190,272
Total partners' equity ......................................................... 176,747 194,154
TOTAL LIABILITIES AND PARTNERS' EQUITY ............................................. $1,282,309 $1,345,858
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)
Years Ended December 31,
2000 1999 1998
REVENUES ............................................................... $337,579 $336,299 $302,693
COSTS AND EXPENSES:
Fuel ................................................................. 145,827 129,716 121,438
Operations and maintenance ........................................... 13,959 14,206 14,321
Depreciation and amortization ........................................ 74,501 73,094 69,540
General and administrative ........................................... 9,099 8,822 9,432
Total costs and expenses ........................................... 243,386 225,838 214,731
OPERATING INCOME ....................................................... 94,193 110,461 87,962
OTHER EXPENSE (INCOME):
Amortization of debt issuance costs .................................. 632 632 548
Interest expense ..................................................... 76,626 78,790 76,336
Interest income ...................................................... (2,701) (2,264) (3,020)
Total other expense - net .......................................... 74,557 77,158 73,864
NET INCOME.............................................................. $ 19,636 $ 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)
Years Ended December 31,
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................... $ 19,636 $ 33,303 $ 14,098
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ................................... 75,133 73,724 70,091
Amortization of fuel and O&M contracts .......................... (20,848) (20,844) (24,632)
Other ........................................................... - - 273
(Increase) decrease in accounts receivable ...................... (525) (2,586) 14,295
(Increase) decrease in due from related party ................... (2,610) (152) -
(Increase) decrease in other current assets ..................... (823) (9,332) 2,086
Increase (decrease) in accounts payable and accrued expenses .... 7,545 996 (18,965)
Increase (decrease) in amounts due utilities for energy bank
balances ...................................................... (6,129) (4,471) 1,427
Increase (decrease) in due to related parties ................... (352) 506 (1,479)
Increase (decrease) in lease payable ............................ (27) 996 -
Net cash provided by operating activities ......................... 71,000 72,140 57,194
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................ (5,350) (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 ............................. (5,350) (120) (413,011)
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners ......................................... - - 545,412
Principal payments on the Funding Corp. notes ...................... (26,332) (23,510) (21,563)
Net proceeds from loan by the Acquisition Corp. ..................... - - 215,202
Distributions to partners ........................................... (37,043) (51,463) (347,196)
Net cash provided by (used in) financing activities ............... (63,375) (74,973) 391,855
Net increase (decrease) in cash and cash equivalents .................. 2,275 (2,953) 36,038
Cash and cash equivalents at beginning of period ...................... 33,085 36,038 -
Cash and cash equivalents at end of period ............................ $ 35,360 $ 33,085 $ 36,038
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest .............................................. $ 59,005 $ 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
Net income ........................................................... 393 19,243 19,636
Distributions to partners ............................................ (741) (36,302) (37,043)
Balances, December 31, 2000 ............................................ $ 3,534 $ 173,213 $ 176,747
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,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents ......................................................... $ 34,471 $ 32,144
Accounts receivable ............................................................... 32,857 32,332
Due from related party ............................................................ 2,762 152
Spare parts inventories ........................................................... 11,251 9,977
Fuel inventories .................................................................. 3,793 4,361
Prepaid expenses and other current assets ......................................... 452 301
Total current assets ............................................................ 85,586 79,267
Non-current assets:
Cogeneration facilities and carbon dioxide facility (net of accumulated
depreciation of $64,866 and $42,807, respectively) .............................. 454,068 470,851
Power purchase agreements (net of accumulated amortization of $152,246
and $99,811, respectively) ...................................................... 736,510 788,945
Other assets ...................................................................... 107 39
Total non-current assets ........................................................ 1,190,685 1,259,835
TOTAL ASSETS ........................................................................ $1,276,271 $1,339,102
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable - the Funding Corp. .............................. $ 20,160 $ 26,333
Accounts payable .................................................................. 17,457 16,745
Due to related parties ............................................................ 842 1,167
Other accrued expenses ............................................................ 12,784 5,978
Total current liabilities ....................................................... 51,243 50,223
Non-current liabilities:
Deferred credit - fuel contracts .................................................. 271,735 292,581
Notes payable - the Funding Corp. ................................................. 398,720 418,880
Amounts due utilities for energy bank balances .................................... 162,756 168,885
Lease payable ..................................................................... 969 996
Total non-current liabilities ................................................... 834,180 881,342
COMMITMENTS AND CONTINGENCIES
Partners' equity:
General partner ................................................................... 3,909 4,075
Limited partners .................................................................. 386,939 403,462
Total partners' equity .......................................................... 390,848 407,537
TOTAL LIABILITIES AND PARTNERS' EQUITY .............................................. $1,276,271 $1,339,102
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
2000 1999 1998 (Prior Basis)
REVENUES ......................................... $337,579 $336,299 $302,693 $ 13,109
COSTS AND EXPENSES:
Fuel ........................................... 145,827 129,716 121,438 5,774
Operations and maintenance ..................... 13,959 14,206 14,321 974
Depreciation and amortization .................. 74,501 73,094 69,540 894
General and administrative ..................... 9,099 8,817 9,150 538
Total costs and expenses ..................... 243,386 225,833 214,449 8,180
OPERATING INCOME ................................. 94,193 110,466 88,244 4,929
OTHER EXPENSE (INCOME):
Interest expense ............................... 59,048 61,208 61,154 2,422
Interest income ................................ (2,571) (2,071) (2,910) (402)
Total other expense - net .................... 56,477 59,137 58,244 2,020
NET INCOME ....................................... $ 37,716 $ 51,329 $ 30,000 $ 2,909
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
2000 1999 1998 (Prior Basis)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................... $ 37,716 $ 51,329 $ 30,000 $ 2,909
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 74,501 73,092 69,543 894
Amortization of fuel and O&M contracts.......... (20,848) (20,844) (24,632) -
(Increase) decrease in due from related party .. (2,610) (152) - 114
(Increase) decrease in accounts receivable ..... (525) (2,586) 14,295 (10,005)
(Increase) decrease in other current assets .... (857) (9,298) 2,086 426
Increase (decrease) in accounts payable and
accrued expenses.............................. 7,518 997 (18,809) 7,217
Increase (decrease) in amounts due utilities
for energy bank balances...................... (6,129) (4,471) 1,427 (52)
Increase (decrease) in due to related parties... (325) 504 663 (71)
Increase (decrease) in lease payable ........... (27) 996 - -
Net cash provided by operating activities ........ 88,414 89,567 74,573 1,432
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................... (5,350) (120) - -
Release of restricted cash collateral .............. - - 69,156 -
Net cash provided by (used in) investing
activities ..................................... (5,350) (120) 69,156 -
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners ........................ - - 10,000 -
Principal payments on notes ........................ (26,332) (23,510) (21,563) -
Distributions to partners .......................... (54,405) (68,945) (159,649) -
Net cash used in financing activities ............ (80,737) (92,455) (171,212) -
Net increase (decrease) in cash and cash equivalents . 2,327 (3,008) (27,483) 1,432
Cash and cash equivalents at beginning of period ..... 32,144 35,152 62,635 61,203
Cash and cash equivalents at end of period ........... $ 34,471 $ 32,144 $ 35,152 $ 62,635
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ............................. $ 41,427 $ 43,663 $ 46,045 $ -
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 PARTNERS' EQUITY(DEFICIENCY)
(Thousands of Dollars)
General Limited Partners'
Partner Partners Equity
Prior Basis
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
Net income............................................................ 378 37,338 37,716
Distributions to partners ............................................ (544) (53,861) (54,405)
Balances, December 31, 2000 ............................................ $ 3,909 $ 386,939 $ 390,848
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, 2000
Year Ended December 31, 1999
Period From January 14, 1998 to December 31, 1998
Period From January 1, 1998 to January 13, 1998
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, industrial services and
energy services business, and a member of the Suez group. 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.
The Partnerships were formed in 1986 to develop, construct, own, operate and
manage two separate 300 megawatt (mw) 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
securities which were registered with the Securities and Exchange Commission
in an exchange offer. The proceeds were loaned to NE LP and then distributed
to direct subsidiaries of FPL 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 relating to the debt issued by the Acquisition Corp.
2. Summary of Significant Accounting Policies
Basis of Presentation - The accompanying consolidated financial statements
include the accounts of NE LP and subsidiaries (including 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. The accompanying combined financial statements
include the accounts of NEA and NJEA for all periods and are combined based
on common ownership. All material intercompany transactions have been
eliminated in the combination. Certain amounts included in prior years'
consolidated and combined financial statements have been reclassified to
conform to the current year's presentation.
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
were subject to pushdown accounting, which gave rise to a new basis of
accounting by the Partnerships. The purchase price was allocated to the
assets and liabilities acquired based on their relative 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.
Impairment of Long-Lived Assets - NE LP and the Partnerships evaluate on an
ongoing basis the recoverability of its assets and related intangible assets
for impairment, based on estimated future cash flows, whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable as described in FAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
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, 2000 and 1999,
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, 2000, 1999 and 1998, the Partnerships recorded
major maintenance expense of $4.8 million, $5.1 million and $2.8 million,
respectively. At December 31, 2000 and 1999, the Partnerships had $6.5
million and $3.3 million of accrued major maintenance expense, 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 from that date, 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 a payment
of $10 million was made to the previous O&M provider. See Note 7 O&M of the
Cogeneration Facilities.
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.
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.
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 - Effective
January 1, 2001, the Registrants adopted Statement of Financial Accounting
Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by FAS 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." The 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
derivatives' fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Upon settlement, any gains or losses will
be passed through fuel expense.
In January 2001, NE LP and the Partnerships recorded an initial adjustment
to record the fair values of instruments not previously reported on the
balance sheet resulting in derivative assets of $22.6 million. Hedge
accounting has been applied to some of these contracts, resulting in a
credit of $4.3 million to other comprehensive income (in partners' equity)
for NE LP and the Partnerships. An adjustment to record the cumulative
effect on NE LP and the Partnerships' earnings of a change in accounting
principle in the amount of a $18.3 million gain was recorded, representing
the effect of those derivative instruments for which hedge accounting was
not applied.
In December 2000, the Financial Accounting Standards Board's (FASB)
Derivatives Implementation Group (DIG) discussed several issues related to
the power generation industry, but did not reach conclusions on those
issues. In March 2001, the FASB discussed some of these issues, but the
conclusions were not final or effective. The ultimate resolution of these
issues could result in a requirement to mark certain of NE LP and the
Partnerships' power purchase agreements to their fair market values each
reporting period. If these agreements are required to be treated as
derivative instruments, the new accounting would first be applied in the
quarter following final resolution of the issues.
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 three power purchase
agreements with three Massachusetts utilities, and in 1988, NEA entered into
two power purchase agreements with two Massachusetts utilities. Under the
five power purchase agreements, NEA agreed 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,
2000.
For the years ended December 31, 2000, 1999 and 1998, power sale revenues
from two different utilities accounted for approximately 42% and 42%, 45%
and 41%, and 47% 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, some or all
of the 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 that 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 million 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 $45 million, $43
million and $46 million for the years ended December 31, 2000, 1999 and
1998, respectively. Total payments under such contracts were approximately
$133.7 million, $126.9 million and $125.4 million in 2000, 1999 and 1998,
respectively, inclusive of demand charges. Total charges under the contract
with PSE&G, including transportation costs, during 2000, 1999 and 1998, were
approximately $33.8 million, $27.0 million and $24.6 million, respectively.
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.'s secured notes (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., and, thus,
the Partnerships, has borrowings outstanding as follows:
December 31,
2000 1999
8.43% Senior Secured Notes Due 2000 ................................................ $ - $ 26,333,000
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 ............................................................. 418,880,000 445,213,000
Less current maturities ........................................................ 20,160,000 26,333,000
Long-term debt, excluding current maturities ................................... $398,720,000 $418,880,000
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:
2001 .................................................. $ 20,160,000
2002 .................................................. $ 22,688,000
2003 .................................................. $ 23,818,000
2004 .................................................. $ 28,564,000
2005 .................................................. $ 45,349,000
Thereafter ............................................ $278,301,000
Total ................................................. $418,880,000
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 and 1998.
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
2005 .................................................. $ 8,800,000
Thereafter ............................................ $184,800,000
Total ................................................. $220,000,000
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 which 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, 2000,
1999 and 1998, the Partnerships incurred $798 thousand, $782 thousand and
$765 thousand, respectively, in fees under the agreement.
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 each of the periods ended December 31,
2000, 1999 and 1998, the Partnerships incurred $1.5 million in fees under
the agreements. See Note 7 - O&M of the Cogeneration Facilities.
Fuel Management Agreements - Each of NEA and NJEA has entered into fuel
management agreements with an entity related to FPL Energy 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 which 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, 2000, 1999 and 1998,
the Partnerships incurred $909 thousand, $896 thousand and $881 thousand,
respectively, in fees under the agreements.
The Partnerships pay a management fee to NE LP in an amount equal to the
fees under 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 $796 thousand and $473 thousand at December 31, 2000 and
1999, respectively. Additionally, power sales to an entity related to FPL
Energy were $3.5 million, $2.5 million and $1.1 million for the years ended
December 31, 2000, 1999 and 1998, respectively.
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 interest rate swaps
expired during 1999. The notional amount of these interest rate swap
agreements was $5.5 million at December 31, 1998. 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 and $697 thousand for the years ended December 31, 1999 and 1998,
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 4.2 million MMBtu, 4.3 million MMBtu and 13.4
million MMBtu at December 31, 2000, 1999 and 1998, respectively. The net
gain reflected as a reduction in fuel costs resulting from the gas swap
agreements was $9.5 million, $2.4 million and $2.5 million for the years
ended December 31, 2000, 1999 and 1998, 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,
2000 1999
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
(Thousands of Dollars)
Long-term debt of Partnerships/Funding Corp. (a) ...................... $418,880 $450,000(b) $445,213 $454,000(b)
Long-term debt of NE LP/Acquisition Corp. ............................. $220,000 $220,000(b) $220,000 $204,000(b)
Gas swap agreements of NE LP/the Partnerships ......................... $ - $ 22,608(c) $ - $ 1,668(c)
_______________
(a) Includes current maturities.
(b) Based on the borrowing rate on January 8, 2001 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. On July 1 and December 19, 2000, energy bank letters of
credit were renewed in face amounts of $13.9 million and $54 million. The
$13.9 million letter of credit expires on December 31, 2001 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, 2001 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. In addition, on July 1, 2000,
a letter of credit was renewed in the face amount of $23.4 million. The
$23.4 million letter of credit expires on December 31, 2001 and can be drawn
upon in multiple drawings in the event that insufficient funds are available
in the Partnership trust accounts to pay bond interest and principal.
Once the new credit arrangements mentioned above were put in place in 1998,
cash of approximately $69.2 million (plus approximately $2.5 million in
accrued interest) was released and distributed to the partners.
Additionally, in 1998 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.
A guaranty was made by a subsidiary of FPL Group in favor of the trustee
under the indenture relating to the Acquisition Corp. Securities. The
guarantor unconditionally and irrevocably guarantees the payment of an
amount equal to 50% of the debt service reserve requirement with respect to
the Acquisition Corp. Securities. The guaranty expires on December 31, 2001
and is automatically extended for successive one-year periods unless the
guarantor gives notice that it will not renew. Pursuant to a reimbursement
agreement, NE LP has agreed to repay any amounts paid under such guaranty.
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 for O&M and bonus
expenses for the year ended December 31, 1998. 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 $13.9 million and $14.2 million for O&M expense for the year ended
December 31, 2000 and 1999, respectively, of which $3.4 million and $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:
2001 .................................................. $ 225,000
2002 .................................................. $ 237,000
2003 .................................................. $ 249,000
2004 .................................................. $ 261,000
2005 .................................................. $ 273,000
Thereafter ............................................ $1,977,000
Lease expense under this agreement is recognized on a straight-line
levelized basis of approximately $198,000 annually over the lease term.
8. Quarterly Data (Unaudited)
Condensed consolidated quarterly financial information for 2000 and 1999 is
as follows:
March 31 (a) June 30 (a) September 30 (a) December 31 (a)
(thousands of dollars)
NE LP:
2000
Operating revenues ............ $90,102 $74,949 $90,937 $81,591
Operating income .............. $28,607 $15,905 $28,183 $21,498
Net income (loss) ............. $ 9,541 $(2,526) $ 9,459 $ 3,162
1999
Operating revenues ............ $90,332 $79,179 $88,305 $78,483
Operating income .............. $30,257 $27,264 $31,630 $21,310
Net income .................... $10,789 $ 7,910 $12,294 $ 2,310
The Partnerships:
2000
Operating revenues ............ $90,102 $74,949 $90,937 $81,591
Operating income .............. $28,607 $15,905 $28,183 $21,498
Net income .................... $14,087 $ 2,016 $13,916 $ 7,697
1999
Operating revenues ............ $90,332 $79,179 $88,305 $78,483
Operating income .............. $30,257 $27,269 $31,630 $21,310
Net income .................... $15,306 $12,461 $16,780 $ 6,782
_______________
(a) In the opinion of NE LP and the Partnerships, all adjustments, which consist of normal recurring accruals
necessary to present a fair statement of the amounts shown for such period have been made. Results of
operations for an interim period may not give a true indication of results for the year.
INDEPENDENT AUDITORS' REPORT
ESI TRACTEBEL FUNDING CORP.:
We have audited the accompanying financial statements of ESI Tractebel
Funding Corp. (the "Company") as of December 31, 2000 and 1999, and for each
of the three years in the period ended December 31, 2000, listed in the
accompanying index at Item 14(a)1 of this Annual Report on Form 10-K to the
Securities and Exchange Commission for the year ended December 31, 2000.
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 auditing standards generally
accepted in the United States of America. 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, 2000 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 29, 2001
ESI TRACTEBEL FUNDING CORP.
BALANCE SHEETS
(Thousands of Dollars)
December 31,
2000 1999
ASSETS
Current assets:
Cash .............................................................................. $ 1 $ 1
Current portion of notes receivable from the Partnerships.......................... 20,160 26,333
Total current assets ............................................................ 20,161 26,334
Notes receivable from the Partnerships .............................................. 398,720 418,880
TOTAL ASSETS ........................................................................ $ 418,881 $ 445,214
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt securities payable ........................................ $ 20,160 $ 26,333
Debt securities payable ............................................................. 398,720 418,880
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding ...... 1 1
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $ 418,881 $ 445,214
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,
2000 1999 1998
Interest income ......................................................... $ 41,426 $ 43,468 $ 45,327
Interest expense ........................................................ (41,426) (43,468) (45,327)
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,
2000 1999 1998
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.................................. 26,332 23,510 21,563
Principal payments on debt ........................................................ (26,332) (23,510) (21,563)
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 ............................................................ $ 41,426 $ 43,468 $ 45,327
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999 and 1998
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,
2000 1999
8.43% Senior Secured Notes Due 2000 ................................................ $ - $ 26,333,000
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 ............................................................. 418,880,000 445,213,000
Less current maturities ........................................................ 20,160,000 26,333,000
Long-term debt, excluding current maturities ................................... $398,720,000 $418,880,000
Interest on the 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:
2001 .................................................. $ 20,160,000
2002 .................................................. $ 22,688,000
2003 .................................................. $ 23,818,000
2004 .................................................. $ 28,564,000
2005 .................................................. $ 45,349,000
Thereafter ............................................ $278,301,000
Total ................................................. $418,880,000
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, 2000 and 1999 was $450 million and $454
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. Quarterly Data (Unaudited)
Condensed consolidated quarterly financial information for 2000 and 1999 is
as follows:
March 31 (a) June 30 (a) September 30 (a) December 31 (a)
(thousands of dollars)
2000
Operating revenues ............ $ - $ - $ - $ -
Operating income .............. $ - $ - $ - $ -
Net income .................... $ - $ - $ - $ -
1999
Operating revenues ............ $ - $ - $ - $ -
Operating income .............. $ - $ - $ - $ -
Net income .................... $ - $ - $ - $ -
____________
(a) In the opinion of Funding Corp., all adjustments, which consist of normal recurring accruals necessary
to present a fair statement of the amounts shown for such period have been made. Results of operations for
an interim period may not give a true indication of results for the year.
INDEPENDENT AUDITORS' REPORT
ESI TRACTEBEL ACQUISITION CORP.:
We have audited the accompanying financial statements of ESI Tractebel
Acquisition Corp. (the "Company") as of December 31, 2000 and 1999, and for
the years ended December 31, 2000 and 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 on Form 10-K to the Securities
and Exchange Commission for the year ended December 31, 2000. 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 auditing standards generally
accepted in the United States of America. 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, 2000 and 1999, and the results of its operations and its cash
flows for the years ended December 31, 2000 and 1999 and the period from
January 12, 1998 (Date of Formation) to December 31, 1998 in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 29, 2001
ESI TRACTEBEL ACQUISITION CORP.
BALANCE SHEETS
(Thousands of Dollars)
December 31,
2000 1999
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 ............................................................... $ 14 $ 9
Deferred credit - interest rate hedge ................................................ 112 126
Debt securities payable .............................................................. 220,000 220,000
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, $.10 par value, 100 shares authorized, 20 shares issued .............. - -
Retained earnings .................................................................. 26 17
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 Year Ended January 12, 1998
December 31, December 31, (Date of Formation)
2000 1999 to December 31, 1998
Interest income ......................................... $ 17,578 $ 17,578 $ 15,182
Interest expense ........................................ (17,564) (17,564) (15,170)
Income before income taxes .............................. 14 14 12
Income tax expense ...................................... (5) (5) (4)
NET INCOME .............................................. $ 9 $ 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 Year Ended January 12, 1998
December 31, December 31, (Date of Formation)
2000 1999 to December 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................... $ 9 $ 9 $ 8
Adjustment to reconcile net income to net cash provided
by operating activities:
Other - net............................................... (9) (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 $ 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 Retained Stockholders'
Stock 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
Net income .............................................. - 9 9
Balances, December 31, 2000 ............................. $ - $ 26 $ 26
The accompanying notes are an integral part of these financial statements.
ESI TRACTEBEL ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999 and 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,
2000 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
2005 ............................................... $ 8,800,000
Thereafter ......................................... $184,800,000
Total .............................................. $220,000,000
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 guaranty 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 $112 thousand and $126 thousand as of
December 31, 2000 and 1999, respectively.
The estimated fair value of the Securities and the note receivable from NE
LP at December 31, 2000 and 1999 was $220 million and $204 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.
7. Quarterly Data (Unaudited)
Condensed consolidated quarterly financial information for 2000 and 1999 is
as follows:
March 31 (a) June 30 (a) September 30 (a) December 31 (a)
(thousands of dollars)
2000
Operating revenues ............ $ - $ - $ - $ -
Operating income .............. $ - $ - $ - $ -
Net income .................... $ 2 $ 2 $ 3 $ 2
1999
Operating revenues ............ $ - $ - $ - $ -
Operating income .............. $ - $ - $ - $ -
Net income .................... $ 2 $ 2 $ 3 $ 2
____________
(a) In the opinion of Acquisition Corp., all adjustments, which consist of normal recurring accruals
necessary to present a fair statement of the amounts shown for such period have been made.
Results of operations for an interim period may not give a true indication of results for the year.
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, 36, is director of business management of
FPL Energy. 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, 48, is vice president of Tractebel
Power. He was appointed to the NE LP Management Committee by Tractebel GP in
March 1998.
Michael L. Leighton. Mr. Leighton, 55, is vice president of business
management of FPL Energy. He was formerly vice president of project
development of FPL Energy from April 1994 to April 2000. He was appointed to
the NE LP Management Committee by ESI GP in May 2000.
Werner E. Schattner. Mr. Schattner, 55, 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.
Lewis Hay III. Mr. Hay, 45, is president of FPL Energy. He was formerly
vice president, finance and chief financial officer of FPL Group and senior
vice president, finance and chief financial officer of FPL, from August 1999
to March 2000. Prior to that, Mr. Hay was senior vice president and chief
financial officer of U.S. Foodservice, a foodservice distributor, from 1991
to 1997, and executive vice president and chief financial officer from 1997
to 1999. He has been a director of the Funding Corp. and the Acquisition
Corp. since March 2000.
Eric M. Heggeseth. Mr. Heggeseth, 48, 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, 55, 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, 43, 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. He has been a
director of the Funding Corp. and the Acquisition Corp. since 1998.
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 (2) 3,750 37.5%
Common Stock Broad Street (3) 2,500 25.0%
_______________
(1) The address for ESI Northeast Funding is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach, Florida 33408.
(2) The address for Tractebel Power, Inc. is 1177 West Loop South, Suite 900, Houston, Texas 77027.
(3) 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 (2) 10 50.0%
_______________
(1) The address for ESI Northeast Acquisition is c/o FPL Energy, LLC, 700 Universe Blvd., Juno Beach,
Florida 33408.
(2) The address for Tractebel Power, Inc. is 1177 West Loop South, Suite 900, Houston, Texas 77027.
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 which 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, 2000,
1999 and 1998, the Partnerships incurred $798 thousand, $782 thousand and
$765 thousand, respectively, in fees under the agreement.
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 each of the periods ended December 31,
2000, 1999 and 1998, the Partnerships incurred $1.5 million in fees under
the agreements.
Fuel Management Agreements. Each of NEA and NJEA has entered into fuel
management agreements with an entity related to FPL Energy 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 which 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, 2000, 1999 and 1998,
the Partnerships incurred $909 thousand, $896 thousand and $881 thousand,
respectively, in fees under the agreements.
Power Sales. From time to time, FPL Energy's power marketing subsidiary
will purchase excess power produced by the Partnerships and resell the power
to the marketplace. These purchases totaled $3.5 million, $2.5 million and
$1.1 million in 2000, 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 9
Consolidated Balance Sheets 10
Consolidated Statements of Operations 11
Consolidated Statements of Cash Flows 12
Consolidated Statements of Partners' Equity 13
Notes to Consolidated Financial Statements 18-24
Partnerships:
Independent Auditors' Report 9
Combined Balance Sheets 14
Combined Statements of Operations 15
Combined Statements of Cash Flows 16
Combined Statements of Partners' Equity (Deficiency) 17
Notes to Combined Financial Statements 18-24
Funding Corp.:
Independent Auditors' Report 25
Balance Sheets 26
Statements of Operations 27
Statements of Cash Flows 28
Notes to Financial Statements 29-30
Acquisition Corp.:
Independent Auditors' Report 31
Balance Sheets 32
Statements of Operations 33
Statements of Cash Flows 34
Statements of Stockholders' Equity 35
Notes to Financial Statements 36-37
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, effective retroactive to
January 14, 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, assigned by NE LP to
NJEA on January 20, 1998
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
* Incorporated herein by reference from the Registration Statement on Form S-4 filed with the Securities
and Exchange Commission by the Funding Corp. on February 9, 1995 (file no. 33-87902).
** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the
Partnerships on April 1, 1996 (file nos. 33-87902,33-87902-01 and 33-87902-02).
*** Incorporated herein by reference from the Quarterly Report on Form 10-Q filed by the Funding Corp. and the
Partnerships on November 14, 1996 (file nos. 33-87902,33-87902-01 and 33-87902-02).
**** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the
Partnerships on March 31, 1997 (file nos. 33-87902,33-87902-01 and 33-87902-02).
***** Incorporated herein by reference from the Annual Report on Form 10-K filed by the Funding Corp. and the
Partnerships on March 27, 1998 (file nos. 33-87902,33-87902-01 and 33-87902-02).
****** Incorporated herein by reference from the Registration Statement on Form S-4 filed with the Securities
and Exchange Commission by the Acquisition Corp. and NE LP on May 12, 1998 (file nos. 333-52397 and
333-52397-01).
******* Incorporated herein by reference from Form 8-K filed by the Funding Corp. and the Partnerships on
September 4, 1998 (file nos. 33-87902,33-87902-01 and 33-87902-02).
(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.
LEWIS HAY III
Lewis Hay III
President
(Principal Executive Officer and Director)
Date: March 30, 2001
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 30, 2001:
ROBERT L. MCGRATH
Robert L. McGrath
Treasurer
(Principal Financial and Principal Accounting Officer)
Directors:
ERIC M. HEGGESETH
Eric M. Heggeseth
WERNER E. SCHATTNER
Werner E. Schattner
GLENN E. SMITH
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)
LEWIS HAY III
Lewis Hay III
President
(Principal Executive Officer and Director)
ROBERT L. MCGRATH
Robert L. McGrath
Vice President and Treasurer of ESI Northeast Energy GP, Inc.
(Principal Financial and Principal Accounting Officer and Director
of ESI Northeast Energy GP, Inc.)
Date: March 30, 2001
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 30, 2001:
Director of ESI Northeast Energy GP, Inc.:
GLENN E. SMITH
Glenn E. Smith
EXHIBIT 21
SUBSIDIARIES OF NE LP
State or Jurisdiction
Subsidiary of Incorporation
1. Northeast Energy, LLC (100%-Owned) .................................................... Florida
2. Northeast Energy Associates, A Limited Partnership (99%-Owned) (a) .................... Massachusetts
3. North Jersey Energy Associates, A Limited Partnership (99%-Owned) (a) ................. New Jersey
_______________
(a) Northeast Energy, LLC owns the remaining 1% interest.
SUBSIDIARIES OF NJEA
State or Jurisdiction
Subsidiary of Incorporation
1. ESI Tractebel Urban Renewal Corporation (100%-Owned) .................................. New Jersey