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Commission
File Number |
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Exact name of registrants as specified in their charters,
State of Incorporation, address of principal executive offices
and registrants' telephone number |
IRS Employer
Identification
Number |
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33-87902
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ESI TRACTEBEL FUNDING CORP.
(a Delaware corporation) |
04-3255377
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33-87902-02 |
NORTHEAST ENERGY ASSOCIATES,
A LIMITED PARTNERSHIP
(a Massachusetts limited partnership) |
04-2955642 |
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33-87902-01 |
NORTH JERSEY ENERGY ASSOCIATES,
A LIMITED PARTNERSHIP
(a New Jersey limited partnership) |
04-2955646 |
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333-52397 |
ESI TRACTEBEL ACQUISITION CORP.
(a Delaware corporation) |
65-0827005 |
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333-52397-01 |
NORTHEAST ENERGY, LP
(a Delaware limited partnership) |
65-0811248 |
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c/o FPL Energy, LLC
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 691-7171
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Securities registered pursuant to Section 12(b) of the Act:
None |
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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 |
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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 March 31, 2002, there were issued and outstanding 10,000 shares of ESI Tractebel Funding Corp.'s common stock.
As of March 31, 2002, there were issued and outstanding 20 shares of ESI Tractebel Acquisition Corp.'s common stock.
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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.
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Term |
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Meaning |
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Acquisition Corp.
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ESI Tractebel Acquisition Corp.
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Act |
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Securities Act of 1933, as amended |
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avoided cost |
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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 |
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Boston Edison |
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Boston Edison Company |
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Broad Street |
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Broad Street Contract Services, Inc. |
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Btu |
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British thermal units, a unit of energy |
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cogeneration |
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power production technology that provides for the sequential generation of two or more useful forms of energy from a single primary fuel source |
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Commonwealth |
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Commonwealth Electric Company |
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ESI Energy |
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ESI Energy, LLC |
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ESI GP |
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ESI Northeast Energy GP, Inc. |
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ESI LP |
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ESI Northeast Energy LP, Inc. |
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ESI Northeast Acquisition |
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ESI Northeast Energy Acquisition Funding, Inc. |
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ESI Northeast Funding |
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ESI Northeast Energy Funding, Inc. |
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ESI Northeast Fuel |
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ESI Northeast Fuel Management, Inc. |
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ETURC |
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ESI Tractebel Urban Renewal Corporation, previously IEC Urban Renewal Corporation |
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FAS |
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Statement of Financial Accounting Standards No. |
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FERC |
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Federal Energy Regulatory Commission |
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FPL |
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Florida Power & Light Company |
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FPL Energy |
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FPL Energy, LLC |
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FPL Group |
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FPL Group, Inc. |
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FPL Group Capital |
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FPL Group Capital Inc |
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FPLE Operating Services |
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FPL Energy Operating Services, Inc. |
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Funding Corp. |
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ESI Tractebel Funding Corp., previously IEC Funding Corp. |
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IEC |
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Intercontinental Energy Corporation, a Massachusetts corporation |
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JCP&L |
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Jersey Central Power & Light |
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kwh |
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kilowatt-hour |
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Management's Discussion |
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Montaup |
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Montaup Electric Company |
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MMBtu |
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millions of Btu |
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mw |
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megawatt(s) |
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NE LLC |
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Northeast Energy, LLC |
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NE LP |
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Northeast Energy, LP |
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NEA |
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Northeast Energy Associates, A Limited Partnership |
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NJEA |
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North Jersey Energy Associates, A Limited Partnership |
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NEPOOL |
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New England power pool |
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Note _ |
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Note _ to Consolidated and Combined Financial Statements or Note _ to Financial Statements, as the case may be |
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O&M |
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operations and maintenance |
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Partners |
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ESI GP and ESI LP together with Tractebel GP and Tractebel LP |
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Partnerships |
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NEA together with NJEA |
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PJM |
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Pennsylvania-New Jersey-Maryland power pool |
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ProGas |
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ProGas Limited of Alberta, Canada |
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PSE&G |
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Public Service Electric & Gas of Newark, New Jersey |
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PURPA |
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Public Utility Regulatory Policies Act of 1978, as amended |
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qualifying facilities |
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Non-utility power production facilities meeting the requirements of a qualifying facility under PURPA |
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Reform Act |
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Private Securities Litigation Reform Act of 1995 |
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Rule 144A |
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Rule 144A promulgated under the Act |
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Tractebel |
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Tractebel, Inc. |
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Tractebel GP |
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Tractebel Northeast Generation GP, Inc. |
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Tractebel LP |
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Tractebel Associates Northeast LP, Inc. |
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Tractebel Power |
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Tractebel Power, Inc. |
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Trustee |
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State Street Bank and Trust Company, a Massachusetts banking corporation |
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Westinghouse |
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Siemens Westinghouse Operating Services Company |
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Westinghouse Power |
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Siemens Westinghouse Power Corporation |
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 |
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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) made by or on behalf of the registrants 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 s
tatements 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.
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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.
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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, including the PURPA, changing governmental policies and regulatory actions, including those of the FERC, 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.
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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 (including natural disasters), 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, 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.
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All such factors are difficult to predict, contain uncertainties which may materially affect actual results, and are beyond the control of the registrants.
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PART I |
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Item 1. Business
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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. |
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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.
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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.
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On November 13, 1997, 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 to be made from distributions from the Partnerships.
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None of the registrants or the Partners have any employees.
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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. |
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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.
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NEA and NJEA sell substantially all of their output to regulated utilities under power purchase agreements as follows:
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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. |
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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.
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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.
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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.
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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. Additionally, in 1998, 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.
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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.
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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.
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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.
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Item 2. Properties
As of December 31, 2001, the Partnerships had the following properties:
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations |
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This discussion should be read in conjunction with the Notes to Consolidated and Combined Financial Statements contained herein.
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Critical Accounting Policies and Estimates
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The preparation of financial statements requires the application of numerous complex accounting principles. One of the more significant accounting principles considered in the preparation of NE LP and the Partnerships' (collectively, the registrants) financial statements is FAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by FAS 137 and 138 (collectively, FAS 133). FAS 133 requires companies to record derivative instruments at fair value as either an asset or liability. Beginning in January 2001, derivative instruments are recorded on the registrant's balance sheets as either an asset (in prepaid expenses and other current assets) or liability (in other accrued expenses) measured at fair value. The registrants use derivative instruments (primarily swaps and options) to manage the commodity price risk inherent in fuel purchases as described in Note 2 - Accounting for Derivative Instruments and Hedging Activities.
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Changes in the derivatives' fair values are recognized currently in earnings (in change in fair value of derivatives) unless hedge accounting is applied. While substantially all of the registrants' derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument's effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. Hedges are considered highly effective when a correlation coefficient of .8 or higher is achieved. All of the transactions that the registrants have designated as hedges are cash flow hedges. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified in
to earnings in the period(s) during which the transaction being hedged affects earnings. The ineffective portion of these hedges flows through earnings in the current period. Settlement gains and losses are recorded in fuel expense.
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Results of Operations
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NE LP for the years ended December 31, 2001 and 2000 - NE LP's results of operations declined in 2001 primarily due to increased fuel costs and the adoption of FAS 133, partly offset by higher revenues and lower interest expense from decreasing principal balances on the securities payable and energy bank and other liabilities. As a result of FAS 133, earnings of NE LP and the Partnerships' were negatively affected by $3.3 million for the year ended December 31, 2001. For additional information regarding FAS 133, see Note 2 - Accounting for Derivative Instruments and Hedging Activities.
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Revenues for the year ended December 31, 2001 improved primarily as a result of increased electricity sales prices. Revenues in 2001 were comprised of $360.6 million of power sales to utilities and $3.8 million of steam sales. In 2000, revenues were comprised of $333.4 million of power sales to utilities and $4.2 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $23.1 million and $23.7 million in 2001 and 2000, 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.
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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 2001 and 2000 by $20.8 million of deferred credit amortization for fuel contracts.
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NE LP makes scheduled interest and/or principal payments on its outstanding debt. NE LP is scheduled to make semi-annual principal and/or interest payments on June 30 and December 30. Interest expense for NE LP decreased in each of 2001 and 2000 as a result of decreasing principal balances on the securities payable.
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In January 2001, NE LP recorded an unrealized $18.3 million gain as the cumulative effect of adopting FAS 133, representing the effect of those derivative instruments for which hedge accounting was not applied. In addition, for the year ended December 31, 2001, NE LP recorded a net mark-to-market loss of $21.6 million representing the change in fair value of derivative instruments. See Note 2 - Accounting for Derivative Instruments and Hedging Activities.
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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 does 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.
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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.
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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.
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The Partnerships for the years ended December 31, 2001 and 2000
- The Partnerships' results of operations declined in 2001 primarily due to increased fuel costs and the adoption of FAS 133, partly offset by higher revenues and lower interest expense from decreasing principal balances on the securities payable and energy bank and other liabilities. As a result of FAS 133, earnings of the Partnerships were negatively affected by $3.3 million for the year ended December 31, 2001. For additional information regarding FAS 133, see Note 2 - Accounting for Derivative Instruments and Hedging Activities. |
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Revenues for the year ended December 31, 2001 improved primarily as a result of increased electricity sales prices. Revenues in 2001 were comprised of $360.6 million of power sales to utilities and $3.8 million of steam sales. In 2000, revenues were comprised of $333.4 million of power sales to utilities and $4.2 million of steam sales. Power sales to utilities reflect changes in utility energy bank balances of $23.1 million and $23.7 million in 2001 and 2000, 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.
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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 2001 and 2000 by $20.8 million of deferred credit amortization for fuel contracts.
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The Partnerships make scheduled interest and/or principal payments on their outstanding debt. The Partnerships are scheduled to make semi-annual principal and/or interest payments on June 30 and December 30. Interest expense for the Partnerships decreased in each of 2001 and 2000 as a result of decreasing principal balances on the securities payable.
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In January 2001, the Partnerships recorded an unrealized $18.3 million gain as the cumulative effect of adopting FAS 133, representing the effect of those derivative instruments for which hedge accounting was not applied. In addition, for the year ended December 31, 2001, the Partnerships recorded a net mark-to-market loss of $21.6 million representing the change in fair value of derivative instruments. See Note 2 - Accounting for Derivative Instruments and Hedging Activities.
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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 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.
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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. |
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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.
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The Funding Corp. and the Acquisition Corp.
- Both the Funding Corp. and the Acquisition Corp. use interest income and/or principal payments received from the notes receivable from the Partnerships and NE LP, respectively, to make scheduled interest and/or principal payments on their outstanding debt. Both are scheduled to make semi-annual principal and/or interest payments on June 30 and December 30. Interest expense for the Funding Corp. decreased in each of 2001 and 2000 as a result of decreasing principal balances on the securities payable. |
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New Accounting Rules
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Accounting for Derivative Instruments
- Effective January 1, 2001, the registrants adopted FAS 133. For information concerning the adoption of FAS 133, see Note 2 - Accounting for Derivative Instruments and Hedging Activities. |
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Goodwill and Other Intangible Assets
- Effective January 1, 2002, the registrants adopted FAS 142, "Goodwill and Other Intangible Assets." For information concerning the adoption of FAS 142, see Note 2 - Goodwill and Other Intangible Assets. |
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Accounting for Obligations Associated with the Retirement of Long-Lived Assets
- In August 2001, the Financial Accounting Standards Board (FASB) issued FAS 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets." For information concerning the adoption of FAS 143, see Note 2 - Accounting for the Obligations Associated with the Retirement of Long-Lived Assets. |
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Related Party Information
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NE LP and the Partnerships receive O&M, fuel management and administrative services from entities related to FPL Energy. Payments to these entities approximate $3.3 million annually. For additional information see Note 5.
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Liquidity and Capital Resources |
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The Funding Corp. and the Partnerships
- Cash flow generated by the Partnerships during 2001 was sufficient to fund operating expenses as well as fund the debt service requirements of the Funding Corp. Debt maturities of the Funding Corp. will require cash outflows of approximately $334.0 million in principal and interest through 2006, including $60.1 million in 2002. It is anticipated that cash requirements for principal and interest payments in 2002 will be satisfied with operational cash flow. Operational cash flow may be affected by, among other things, changes in laws or regulations, including the PURPA, weather conditions, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, and market demand for energy. See Funding Corp.'s Note 3 and Note 4 to Consolidated and Combined Financial Statements - Funding Corp. |
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Letters of credit were established to satisfy requirements in certain power purchase agreements. These letters of credit can be drawn upon in the event of default under one such agreement, or a termination of the other such agreement at a time when there shows a positive energy bank balance. See Note 7 to Consolidated and Combined Financial Statements - Energy Bank and Loan Collateral.
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The Acquisition Corp. and NE LP
- Cash flow generated by NE LP during 2001 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 $462.3 million in principal and interest through 2006, including $86.3 million in 2002. It is anticipated that cash requirements for principal and interest payments in 2002 will be satisfied with operational cash flow. Operational cash flow may be affected by, among other things, changes in laws or regulations, including the PURPA, weather conditions, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, and market demand for energy. See Acquisition Corp.'s Note 3 and Note 4 to Consolidated and Combined Financial Statements - Acquisition Corp. |
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Letters of credit were established to satisfy requirements in certain power purchase agreements. These letters of credit can be drawn upon in the event of default under one such agreement, or a termination of the other such agreement at a time when there shows a positive energy bank balance. See Note 7 to Consolidated and Combined Financial Statements - Energy Bank and Loan Collateral.
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