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MASSACHUSETTS ELECTRIC COMPANY SETTLEMENT AGREEMENT LOWERS RATES TO CUSTOMERS AND RESOLVES ENVIRONMENTAL RESPONSE COST ISSUES

 WESTBOROUGH, Mass., Oct. 14 /PRNewswire/ -- Massachusetts Electric Company (Mass. Electric), a subsidiary of New England Electric System (NEES)(NYSE: NES), announced today that it has filed a rate agreement with the Massachusetts Department of Public Utilities. The agreement among Mass. Electric, the Massachusetts Attorney General, and the Energy Consortium, a group of industrial customers, provides for a $30 million reduction in rates. The agreement, if approved, would also resolve all issues associated with providing funds and securing rate recovery for environmental clean up costs in Massachusetts, including manufactured gas waste sites formerly owned by Mass. Electric and its affiliates.
 Under the proposed agreement, Mass. Electric would implement a general rate decrease effective Nov. 1, 1993 of about $26 million, or $1.43 per month for a typical 500 kwh per month residential customer. This rate reduction would continue in effect until Sept. 30, 1994. There would also be a rate reduction of up to approximately $4 million for large commercial and industrial customers that enter into service extension agreements with Mass. Electric for the period ending Sept. 30, 1994, growing to about $11 million per year thereafter. Mass. Electric would also agree not to increase its base rates for two years.
 As previously reported, Mass. Electric, NEES and its other subsidiaries are aware of a number of Massachusetts locations at which they may have liability for the costs to investigate and, where necessary, remediate the prior disposal of manufactured gas waste. The agreement would allow these costs, as well as other environmental clean up costs, to be met by establishing a special interest bearing fund on the books of Mass. Electric. The fund's initial balance of $30 million would come from reserves previously on the books of Mass. Electric and its affiliates, and would not be recoverable from customers. Annual contributions of $3 million per year, adjusted for inflation, would be added to the fund by Mass. Electric and be recoverable in rates. In addition, any shortfalls in the fund would be paid by Mass. Electric and recovered through rates over seven years, without interest.
 Under the agreement, Mass. Electric would be allowed to amortize over five years $8 million of winter storm restoration expenditures and out-of-pocket reorganization costs incurred during the last year. The agreement also provides for Mass. Electric to begin recognizing for accounting purposes, commencing in October 1993, revenues for electricity delivered but not yet billed. Unbilled revenues at Sept. 30, 1993, estimated to be about $35 million, would be amortized to income over a 15 month period.
 The agreement is subject to review and approval by the Massachusetts Department of Public Utilities.
 Mass. Electric serves 922,000 customers in 146 communities in the Commonwealth. Other NEES subsidiaries include The Narragansett Electric Company, serving 321,000 customers in 27 Rhode Island communities; Granite State Electric, serving 35,000 customers in 21 New Hampshire communities; and New England Power Company, providing electric generation and transmission services.
 -0- 10/14/93
 /CONTACT: Harry Stapleford of New England Electric, 508-366-9011 (days), 617-498-9880 (evenings)/
 (NES)


CO: Massachusetts Electric Company; New England Electric System ST: Massachusetts IN: OIL ENV SU:

DJ-CM -- NE016 -- 2492 10/14/93 17:58 EDT
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Publication:PR Newswire
Date:Oct 14, 1993
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