Printer Friendly

/REPEATING FOR POINTS NEEDED/

 NEW ENGLAND ELECTRIC TO RECORD $22 MILLION CHARGE
 TO SECOND QUARTER EARNINGS BEFORE TAXES
 WESTBOROUGH, Mass., June 10 /PRNewswire/ -- New England Electric System (NYSE: NES)(NEES) announced today that it will record a charge to its second quarter earnings of $22 million before taxes; which amounts to $14 million after tax, or 21 cents per share. The charge relates to the potential response costs for wastes associated with manufactured gas plants operated by Massachusetts gas utilities once owned by NEES. The second quarter charge is in addition to reserves of $18 million before tax established in prior periods related to these gas waste liabilities. As previously reported by NEES on May 27, the U.S. Court of Appeals for the First Circuit affirmed on appeal an adverse decision involving the allocation of gas plant waste response costs for properties in Lynn, Mass. The decision held NEES and two subsidiaries, Massachusetts Electric Company (MECo) and New England Power Service Company (NEPSCo), liable for those costs.
 NEES is currently aware of 37 locations in Massachusetts at which gas may have been manufactured and/or stored by former NEES subsidiaries or their predecessors. These companies were later sold to gas utilities. There are significant uncertainties as to the potential costs to investigate and, when necessary, remediate manufactured gas sites. Factors such as the evolving nature of remediation technology and regulatory requirements and the particular characteristics of each site, including, for example, the size of the site, the nature and amount of waste disposed at the site, and the surrounding geography and land use, make precise estimates difficult. In addition, the tendency for the process to involve extensive discussions with appropriate regulatory agencies over a long period of time makes estimates of the ultimate cost even more uncertain. A preliminary review by a consultant hired by the NEES companies, of the potential cost of investigating and, if necessary, remediating the 37 sites mentioned above, resulted in costs ranging from less than $1 million to $18 million per site. An informal survey of other utilities conducted on behalf of NEES and its subsidiaries indicated costs in a similar range.
 Since the Court of Appeals decision, NEES and MECo have continued to assess their potential liability for response costs at the various Massachusetts sites. Although the circumstances differ from site to site, the Circuit Court opinion has adverse implications for the potential liability of NEES and its subsidiaries with respect to many of the other gas manufacturing locations.
 The $40 million reserve which has been established reflects preliminary estimates of remediation costs at the Lynn site and two other sites and of costs for investigation and monitoring of the other 34 locations. The reserve for the 34 locations does not include any costs related to groundwater or soil remediation that may be required. The actual liability, therefore, could be substantially higher than the reserve established. Nevertheless, NEES continues to believe that these liabilities will not be material (10 percent of common equity) to its financial position.
 NEES intends to review regularly and, when appropriate, revise the reserve level as more information about particular sites becomes available.
 The NEES companies intend to seek rate recovery for response costs that they incur. It is uncertain, however, what portion, if any, would be allowed in rates, particularly in circumstances in which NEES or NEPSCo, rather than MECo, incurs these costs. Where appropriate, the companies also intend to seek recovery form their insurers and from other potentially responsible parties, but it is uncertain whether, and to what extent, such efforts will be successful.
 New England Electric System is a public utility holding company headquartered in Westborough, Mass. MECo serves 922,000 customers in 146 Massachusetts communities and New England Power Service Company provides, at cost, administrative, engineering, construction, legal, and financial services to NEES and its subsidiaries.
 -0- 6/10/93 R
 /CONTACT: Michael E. Jesanis, (financial) 508-366-9011 (days), 508-849-7626 (evenings), or Harry Stapleford (media) 508-366-9011 (days), 508-836-9835 (evenings)/
 (NES)


CO: New England Electric System ST: Massachusetts IN: OIL SU:

DJ -- NE006A -- 0690 06/10/93 14:16 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jun 10, 1993
Words:679
Previous Article:/REPEATING FOR POINTS NEEDED/
Next Article:ICC TECHNOLOGIES TELLS ANALYSTS AT CONFERENCE 'COMPANY WILL BE PROFITABLE FOR FIRST TIME IN 1994'
Topics:


Related Articles
THE LIMITED, INC. TO OWN TUTTLE MALL DEVELOPMENT RIGHTS
DATA BROADCASTING CORP. ANNOUNCES EUROPEAN DISTRIBUTION
ELECTROMEDICS LAUNCHES OPERATION IN FRANCE
CLAIRE'S STORES, INC. REPORTS FEBRUARY SALES UP 10 PERCENT; SAME-STORE SALES INCREASE 6 PERCENT
HOSPOSABLE PRODUCTS REPORTS INCREASED SALES AND EARNINGS FOR YEAR ENDING DEC. 31, 1992
FINA CONFIRMS FIRE AT BIG SPRING REFINERY
CHECKERS DRIVE-IN RESTAURANTS COMPLETES MERGERS OF CLAR-WAY CORPORATION AND SMITH ENTERPRISES
FANNIE MAE ISSUES DEBENTURE PRICING
PE CALLS PREFERRED STOCK ISSUES
THE CATO CORPORATION REPORTS SALES INCREASES OF 17 PERCENT FOR JULY AND 25 PERCENT FOR SECOND QUARTER

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters