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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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8858
UNITIL CORPORATION
(Exact name of registrant as specified in its charter)
New Hampshire 02-0381573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
216 Epping Road, Exeter, New Hampshire 03833-4571
(Address of principal executive office (Zip Code)
Registrant's telephone number, including area code: (603) 772-0775
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
Common Stock, No Par Value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has 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 (or for such
shorter period that the registrant was required to file such reports),
and (2) has 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 registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendments to this Form 10-K [ X ]
Based on the closing price of March 1, 1996, the aggregate market
value of common stock held by non-affiliates of the registrant was
$103,580,088.
The number of common shares outstanding of the registrant was 4,338,433 as of
March 1, 1996.
Documents Incorporated by Reference:
Portions of the Proxy Statement relating to the Annual Meeting of
Shareholders to be held April 18, 1996, are incorporated by reference
into Part III of this Report.
UNITIL CORPORATION
FORM 10-K
For the Fiscal Year Ended December 31, 1995
Table of Contents
Item Description Page
PART I
1 Business
General.............................................. 2
Competition and Industry Restructuring............... 3
Rates and Regulation................................. 5
Resource Planning.................................... 6
Energy Requirements.................................. 7
Fuel Supplyz......................................... 8
Gas Operations and Supply............................ 8
Environmental Matters................................ 9
Capital Requirements................................. 9
Financing Activities................................. 10
Employee Relations................................... 10
Executive Officers of Registrant..................... 10
2 Properties............................................... 11
3 Legal Proceedings........................................ 12
4 Submission of Matters to a Vote of Securities Holders.... 13
PART II
5 Market for Registrant's Common Equity and Related Stockholders
Matters.................................................... 14
6 Selected Financial Data.................................. 14
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................... 15
8 Financial Statements and Supplementary Data.............. 23
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................... 41
PARTIII
10 Directors and Executive Officers of the Registrant..... 42
11 Executive Compensation................................. 42
12 Security Ownership of Certain Beneficial Owners and Management42
13 Certain Relationships and Related Transactions......... 42
PART IV
14 Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 43
Signatures.................................................. 50
Schedule VIII Valuation and Qualifying Accounts and Reserves 52
Exhibit 10.2 E&H Labor Agreement effective June 25, 1995
Exhibit 11.1 Computation in Support of Earnings per Share
Exhibit 12.1 Computation in Support of Ratio of Earnings to Fixed Charges
Exhibit 21.1 Subsidiaries of Registrant
Exhibit 27.0 Financial Data Schedule
Exhibit 28.1 Form 11-K Annual Report of the UNITIL Corporation Tax
Deferred Savings and Investment Plan for the year ended
December 31, 1995
Exhibit 99.1 1996 Proxy Statement
PART I
Item 1. Business.
General
Unitil Corporation (the Company), a registered public utility
holding company, was incorporated under the laws of The State of New
Hampshire on September 7, 1984. Through Concord Electric Company
(CECo), Exeter & Hampton Electric Company (E&H), Fitchburg Gas and
Electric Light Company (FG&E) and Unitil Power Corp. (Unitil Power),
all of which are wholly owned utility subsidiaries of the Company, the
Company's principal business is the purchase, transmission,
distribution and sale of electricity at retail, and the distribution
and sale of natural gas at retail by FG&E. The Company was initially
incorporated in connection with a business combination between CECo
and E&H, which became subsidiaries of the Company on January 23, 1985
through a share exchange. Prior to this share exchange, the Company
conducted no business operations and had no assets. FG&E became a
wholly owned subsidiary of the Company by a "pooling of interests"
merger between FG&E and the Company on April 28, 1992. Unitil Power, a
New Hampshire corporation incorporated on October 9 , 1984, is the
wholesale supplier of electricity to CECo and E&H. The Company has
three additional subsidiaries: Unitil Realty Corp. (Unitil Realty),
Unitil Resources, Inc. (Unitil Resources) and Unitil Service Corp.
(Unitil Service). The Company's principal executive office is located
at 216 Epping Road, Exeter, New Hampshire 03833-4571. (Telephone (603)
772-0775)
CECo, a New Hampshire corporation incorporated in 1901, is engaged
in the purchase, transmission, distribution and sale of electricity at
retail to approximately 26,350 customers in the City of Concord, which
is the state capital, and twelve surrounding towns, all in New
Hampshire. CECo's service area consists of approximately 240 square
miles in the Merrimack River Valley of south central New Hampshire.
The service area includes the City of Concord and major portions of
the surrounding towns of Bow, Boscawen, Canterbury, Chichester, Epsom,
Salisbury and Webster, and limited areas in the towns of Allenstown,
Dunbarton, Hopkinton, Loudon and Pembroke.
CECo serves residential, commercial and industrial customers. The
State of New Hampshire's government operations are located within
CECo's service area, including the executive, legislative, judicial
branches and offices and facilities for all major state government
services. In addition, CECo's service area is a retail trading center
for the north central part of the state and has over sixty diversified
businesses relating to insurance, printing, electronics, granite,
belting, plastic yarns, furniture, machinery, sportswear and lumber.
Of CECo's 1995 retail electric revenues, approximately 34% was derived
from residential sales, 52% from commercial and non-manufacturing
sales, 12% from industrial/manufacturing sales and 2% from other
sales.
E&H, a New Hampshire corporation incorporated in 1908, is engaged
in the purchase, transmission, distribution and sale of electricity at
retail to approximately 37,120 customers in Exeter and in all or part
of seventeen surrounding towns, all in New Hampshire. E&H's service
area consists of approximately 168 square miles in southeastern New
Hampshire. The service area includes all of the towns of Atkinson,
Danville, East Kingston, Exeter, Hampton, Hampton Falls, Kensington,
Kingston, Newton, Plaistow, Seabrook, South Hampton and Stratham, and
portions of the towns of Derry, Brentwood, Greenland, Hampstead and
North Hampton.
E&H serves residential, commercial and industrial customers.
Commercial and industrial customers are quite diversified and include
retail stores, shopping centers, motels, farms, restaurants, apple
orchards and office buildings, as well as manufacturing firms engaged
in the production of sportswear, automobile parts and electronic
components. It is estimated that there are over 150,000 daily summer
visitors to E&H's territory, which includes several popular resort
areas and beaches along the Atlantic Ocean. Of E&H's 1995 retail
electric revenues, approximately 47% was derived from residential
sales, 41% from commercial and non-manufacturing sales, 10% from
industrial/manufacturing sales and 2% from other sales.
FG&E, a Massachusetts corporation organized in 1852, is an
operating public utility providing electric and natural gas service in
the City of Fitchburg and several surrounding communities. FG&E's
service area encompasses approximately 170 square miles in north
central Massachusetts.
Electric service is supplied by FG&E to approximately 25,250
customers in the communities of Fitchburg, Ashby, Townsend and
Lunenburg. FG&E provides electric service to residential, commercial,
and industrial customers. FG&E's industrial customers include paper
manufacturing and allied products companies, rubber and plastics
manufacturers, chemical products companies and printing, publishing
and allied industries. Of FG&E's 1995 electric revenues, approximately
36% was derived from residential sales, 35% from commercial and
non-manufacturing sales, 28% from industrial/manufacturing sales and
1% from other sales.
Natural gas service is supplied by FG&E to approximately 15,000
customers in the communities of Fitchburg, Lunenburg, Townsend, Ashby,
Gardner and Westminster, all located in Massachusetts. Of FG&E's 1995
gas operating revenues, approximately 52% was derived from residential
sales, 24% from commercial sales, 11% from firm sales to industrial
customers, and 13% from interruptible sales (which are sales to
customers who possess alternative energy sources and who use gas on an
as-available basis). Approximately 30% of FG&E's industrial gas
revenue was derived from firm sales to paper manufacturing and allied
products companies. The industrial gas revenue was derived from firm
sales to fabricated metal products manufacturers, rubber and plastics
manufacturers, primary iron manufacturers and other miscellaneous
industries.
Natural gas sales in New England are seasonal, and the Company's
results of operations reflect this seasonality. Accordingly, results
of operations are typically positively impacted by gas operations
during the five heating season months from November through March of
the following year. Electric sales in New England are far less
seasonal than natural gas sales; however, the highest usage typically
occurs in the summer and winter months due to air conditioning and
heating requirements, respectively.
Unitil Power, a New Hampshire corporation incorporated in 1984, is
the full requirements wholesale supplier of electricity to CECo and
E&H. (See Energy Requirements and Regulation and Rates.)
Unitil Realty, a New Hampshire corporation incorporated in 1986,
was established to acquire real estate to support the growth and
expansion of the Company's utility and energy related business. Unitil
Realty, until February 1995, owned the Company's corporate
headquarters and related land located on Epping Road in Exeter, New
Hampshire. This property was taken by the State of New Hampshire,
through eminent domain, for the planned expansion of Route 101. (See
"Capital Requirements" under Item 1 of this report) UNITIL Realty did
purchase land in Hampton, New Hampshire during 1995, on which it is
currently constructing UNITIL's new corporate headquarters.
Unitil Resources, a New Hampshire corporation incorporated in
1993, provides consulting and other services on energy related matters
to non-affiliates. These services include power brokering, financial,
accounting, regulatory and related operational services.
Unitil Service, a New Hampshire corporation incorporated in 1984,
supplies centralized professional and support services to the Unitil
System of Companies.
Competition and Industry Restructuring
The current focus on restructuring the electric industry has been
building in recent years due to a variety of economic, social, and
political forces. They include legislative and regulatory changes,
technological advances and consumer demands for lower prices.
Competition at the wholesale level has existed for a number of
years, and has been increasing as a result of the passage of the
Energy Policy Act of 1992, initiatives in transmission pricing and
policy at the Federal Energy Regulatory Commission (FERC), and greater
contracting activity among utility and non-utility suppliers. As a
wholesale purchaser of electric energy for resale to customers,
wholesale competition has provided the Company with many opportunities
for achieving significant power supply savings for its customers. The
focus of industry restructuring has now shifted to the retail electric
market, however, where electricity is provided directly to the
ultimate users.
For many utilities this shift from natural monopoly to open
competition is causing dramatic changes in their traditional way of
doing business. Increasing competition is moving the industry towards
an unbundling of the traditional vertically integrated utility
structure into separate generation, transmission and distribution
activities. As the industry continues to unbundle into these separate
functional areas, it is likely that the transmission and distribution
of electricity will remain largely regulated as monopoly services,
while the generation and sale of energy will shift to open
competition.
For Unitil, preparation for and adaptation to a competitive
environment has long been part of the Company's business strategy.
Unitil has always been structured along functional business lines
reflecting a separation of its core distribution operations from its
market based energy acquisition and supply business. For over a
decade Unitil has managed and delivered competitively priced, market
based energy supplies to its customers, putting it "ahead of the
curve" as many utilities are now just beginning to struggle to make
this transition. As a result of this strategy, Unitil has a track
record of offering reliable energy services at prices that are now
among the lowest in our region. Further, as new competitive
opportunities emerge, Unitil is designing new services and pricing its
products to be the supplier of choice.
The Unitil Companies have received regulatory approval for the
Company's Energy Bank(TM) program. Energy Bank(TM) is an innovative
economic development program designed to bring low-cost energy to new
and expanding industrial customers. With rates in the range of 5
cents/KWH, this program offers electric energy at a price that is
equal to the national average industrial rate and is 40% below the
current average industrial rate in New England. In addition to
providing substantial benefits to new and expanding industrial
customers in the form of very competitive market pricing, Energy
Bank(TM) will also provide significant benefits to all the System's
customers in the form of local economic development activity, reduced
power costs, and lower costs to all customers through the issuance of
Power Dividends.
Unitil has also taken steps to prepare for competitive
opportunities in new, unregulated energy markets. On January 5, 1996,
Unitil filed an application on Form U-1 with the SEC to allow Unitil
Resources to engage in electric power, natural gas and other energy
commodity marketing at wholesale and at retail. Unitil Resources is
currently authorized to engage in the business of providing energy
related management and consulting services, including power brokering,
to entities outside the Unitil holding company system. Unitil
Resources will have to comply with any applicable federal and state
regulation on its activities in the wholesale and retail
electricity and natural gas markets, but will otherwise be free to
compete on an unregulated basis with other competitive energy
suppliers in the evolving competitive marketplace. Approval of this
request is expected in the spring of 1996.
Unitil continues to actively participate in industry, legislative
and regulatory proceedings on the issues of competition and industry
restructuring at both the federal and state levels, favoring a
reasonable and orderly transition to competition and more choice for
all customers.
Both the New Hampshire Public Utilities Commission ( the "NHPUC")
and the New Hampshire Legislature have been involved in discussions
and analysis relative to competition in the industry. Early in 1995,
in response to a petition by a power marketer seeking to sell to
certain industrial customers of an investor-owned New Hampshire
utility, the NHPUC ruled that utilities in New Hampshire do not have
exclusive franchise territories as a matter of law. This decision has
been appealed to the New Hampshire Supreme Court, where a decision is
now pending. In June 1995, New Hampshire Senate Bill 168 (SB 168),
was signed into law. SB 168 established a legislative committee to
consider changes in the structure of the electric utility industry and
directed the NHPUC to begin a retail wheeling pilot program. The
legislative committee and its subcommittees met regularly during the
summer and fall of 1995, and several members sponsored new
legislation, now actively under consideration, that would require
utility restructuring and retail customer choice as early as 1997.
The NHPUC issued its final guidelines on a retail wheeling pilot
program on February 28, 1996, requiring utility compliance filings by
March 15, 1996, and implementation on May 28, 1996.
During 1995, the MDPU concluded initial hearings in an
electric industry restructuring docket, and issued an order requiring
the three largest Massachusetts electric utilities to file
restructuring plans in February 1996, and the remaining Massachusetts'
electric utilities (including FG&E) to file restructuring plans three
months after the MDPU issues orders regarding the first three plans.
The three utilities filed plans on February 19, 1996, but the
Department subsequently decided to undertake a generic rulemaking
proceeding in order to establish consistent statewide ground rules for
industry restructuring. This process is expected to take several
months, culminating in utility compliance filings on October 6, 1996.
One aspect of the restructuring of the electric industry which
could have an adverse impact on the Company is the rate treatment
accorded by regulators to a utility company's potentially "stranded
costs", i.e., investments in electric generation facilities and
contractual obligations from purchased power contracts, which have a
fair market value, based upon current wholesale market conditions, which
is less than the book value of such assets or the contract price. To
the extent that regulators implement open retail competition and
resulting retail market rates are comparable to current wholesale
prices, and to the extent utilities are unable to recover such costs
from ratepayers or to mitigate such costs through expense reductions
or other means, such utilities may incur losses and may be forced to
write-down certain investments in connection with the restructuring of
the industry. The Company's subsidiaries which own relatively few electric
generation assets, rely more heavily than most other utilities on
competitively-acquired purchased power contracts subject to FERC
regulation, and offer retail rates that are among the lowest in the
New England region, but the financial impact, if any, on the Company
of regulatory treatment of stranded costs in industry restructuring is
impossible to predict at this time.
Although regulatory change with respect to natural gas utilities
has been much less active in 1995 than for electric utilities, the
Department issued an Order on March 15, 1996, clarifying its standards
for review of gas purchase contracting decisions by local gas
distribution companies. The Department has also ordered a
Massachusetts gas company subject to its jurisdiction to undertake a
pilot program on retail competition for residential customers, and the
Unitil companies are now participating on the committees which have
been set up to advise, develop and monitor the pilot program.
Although the Company cannot predict the outcome of these
legislative changes and regulatory proceedings, the Company believes
that increasing competition in the industry is inevitable. The Company
also believes that it is well positioned to respond positively to the
changing regulatory environment and the shift to more open
competition.
Rates and Regulation
The Company is registered with the Securities and Exchange
Commission (SEC) as a holding company under the Public Utility Holding
Company Act of 1935 (1935 Act), and it and its subsidiaries are
subject to the provisions of the 1935 Act. The Company and its
subsidiaries, where applicable, are subject to regulation by the
Federal Energy Regulatory Commission (FERC), the NHPUC and the MDPU
with respect to rates, adequacy of service, issuance of securities,
accounting and other matters. Unitil Power, as a wholesale utility, is
subject to rate regulation by the FERC. Both CECo and E&H, as retail
electric utilities in New Hampshire, are subject to rate regulation by
the NHPUC, and FG&E is subject to MDPU regulation with respect to gas
and electric retail rates, and FERC regulation with respect to New
England Power Pool (NEPOOL) interchanges and other wholesale sales of
electricity.
The revenues of the Company's three retail operating subsidiaries
are collected pursuant to rates on file with the NHPUC, the MDPU and,
to a minor extent, the FERC. In general, retail rates are comprised
of a base rate component, established during comprehensive base rate
cases, and various periodic rate adjustment mechanisms, which track
and reconcile particular expense elements with associated collected
revenues. The last comprehensive regulatory proceedings to increase
base rates for the Company's retail operating subsidiaries were in
1985 for CECo, 1984 for FG&E, and 1982 for E&H. The majority of the
System's utility operating revenues are collected under various rate
adjustment mechanisms, including revenues collected from customers for
fuel, purchased power, cost of gas, and demand-side management program
costs.
The Unitil System Agreement (System Agreement), as approved by the
FERC, governs wholesale sales by Unitil Power to its New Hampshire
retail distribution affiliates, CECo and E&H, and provides for
recovery by Unitil Power of all costs incurred in the provision of
service. Unitil Power has continued to adjust its wholesale rates
every six months in accordance with the System Agreement, and CECo and
E&H have continued to file corresponding semi-annual changes in their
retail fuel and purchased power adjustment clauses with the NHPUC for
approval.
FG&E also files a quarterly electric fuel charge and a
semi-annual gas adjustment factor with the MDPU for approval to adjust
its rates for changes in fuel and gas related costs. Although all of
FG&E's fuel costs and the largest portion of its purchased power costs
are fully recovered under the Department's Electric Fuel Charge
regulations, FG&E's electric generation entitlements are subject to
annual performance reviews. Performance targets are filed by FG&E in
advance and approved by the Department, and in January of each year
FG&E files data on actual unit performance for the prior November to
October period. The Department will investigate reasons why units
failed to meet target performance criteria, and has in some cases
disallowed recovery of replacement power costs for unplanned outages
which the Department deemed to be due to imprudent operations or
actions.
The NHPUC issued its final guidelines on a retail wheeling pilot
program on February 28, 1996, requiring utility compliance filings by
March 15, 1996, and implementation on May 28, 1996. The guidelines
provide that up to 3% of each utility's retail customer's will be
allowed to select from among competing electric supply providers and
have this supply delivered across the local utility system. All
utilities, including Unitil's New Hampshire based retail operating
companies, CECo and E&H, have filed plans with the Commission and
hearings are scheduled in early April. The Commission Guidelines
have, in some cases, raised legal and jurisdictional issues which
parties in the proceeding have tried to resolve through alternative
proposals and settlements in order to avoid protracted litigation.
The Unitil companies, on March 20, 1996, filed a settlement agreement
with the Office of the Consumer Advocate which, if accepted by the
NHPUC, would resolve the companies' key concerns regarding federal and
state ratemaking jurisdiction. Unitil's plans for the pilot program
involve CECo and E&H providing delivery services to customers
participating in the pilot within their own service areas, and Unitil
Resources offering competitive electric supply services to pilot
program customers throughout the entire state.
FG&E, the Company's combination gas and electric retail operating
subsidiary, has been incurring FERC-approved transition charges from
interstate pipeline suppliers, resulting from the transition to a
comprehensive set of new regulations under FERC Order 636. In June,
1994, the MDPU opened an investigation for the purpose of setting
standards for the recovery by Massachusetts gas utilities of FERC
Ordered 636-related transition costs billed by interstate pipeline
companies. On March 8, 1995, the MDPU issued its final Order in this
proceeding, which authorized and directed all gas utilities to recover
Order 636-related transition costs as incurred through the cost of gas
adjustment mechanism on a flat volumetric rate. Through the end of
1995, the amount of transition costs incurred by FG&E totaled
approximately $2.2 million. These costs have been recovered directly
from FG&E's gas customers through the cost of gas adjustment
mechanism. Based on estimates included in rate filings before the
FERC, and on other publicly available information, it is estimated
that FG&E may incur up to an additional $1.2 million of transition
costs in future years. FG&E expects full recovery of these costs
through billings to customers.
On May 2, 1995, Unitil made an application to the SEC on Form U-1
seeking renewed authority and approval for short-term bank borrowings
by Unitil and its subsidiaries and for renewed approval for and
operation of the Unitil System Companies' cash pooling and loan
arrangement. The SEC published the requisite notice with respect to
this filing on May 26, 1995. On July 11, 1995, the SEC approved
Unitil's application on this matter.
Resource Planning
Within both New Hampshire and Massachusetts state jurisdictions,
the Company's utility operating subsidiaries are subject to regulatory
review of their forecasting, planning, and long term resource
acquisition processes. The operating companies are required to file
resource planning documents and plans every two years, in accordance
with Integrated Resource Management (IRM) rules in Massachusetts and
the Integrated Resource Planning (IRP) process in New Hampshire.
Additionally, the operating companies are currently required to file
annually comprehensive Demand-Side Management (DSM)Program Plans with
their respective state regulatory commissions.
Electric Resource Planning
In New Hampshire, an IRP was filed with the NHPUC on April 30,
1994. The NHPUC approved the IRP on February 22, 1995. The 1995/96 DSM
Program Plan was filed with the NHPUC on February 1, 1995 and was
approved June 28, 1995, for implementation beginning on July 1, 1995.
In Massachusetts, FG&E filed its first IRM with the MDPU on
August 3, 1992. In January 1993, FG&E filed a Comprehensive Settlement
of Phase I of the IRM process. On November 15, 1993, FG&E made its
Phase III IRM filing, in which it proposed DSM programs for 1994-1995,
and supply side initiatives. On February 15, 1994, the MDPU approved
this filing, authorized the DSM programs to proceed through July 1995,
and approved the supply resources. A 12-month DSM Program Plan was
filed on April 7, 1995, covering the period from August, 1995 to July,
1996. This plan was approved on July 18, 1995.
Gas Resource Planning
The MDPU requires that gas companies file long term gas
forecasts and resource plans consistent with IRP principles, and
further requires that all contracts in excess of one year be filed for
approval in advance. FG&E filed a gas IRP on July 29, 1994. The MDPU
has initiated a review of FG&E's gas IRP, which is currently ongoing.
Anorder is expected in early 1996.
Energy Requirements
CECo, E&H, FG&E and Unitil Power are members of NEPOOL. Under the
NEPOOL Agreement, to which virtually all New England electric
utilities are parties, substantially all operation and dispatching of
electric generation and bulk transmission capacity in New England is
performed on a regional basis. The NEPOOL Agreement imposes generating
capacity and reserve obligations and provides for the use of major
transmission facilities and payments associated therewith. Each
company's capability responsibility under NEPOOL involves carrying an
allocated share of New England capacity requirements which is
determined for each six-month period based on regional reliability
criteria. Unitil Power, as the full requirements supplier to CECo and
E&H, had a capability responsibility as of December, 1995 of 224.85 MW
and a corresponding peak demand of 195.61 MW that occurred on July 14,
1995. FG&E's capability responsibility as of December, 1995 was 91.99
MW, with a corresponding peak demand of 79.69 MW that occurred on June
20, 1995.
To meet the needs of CECo and E&H, Unitil Power has contracted for
generating capacity and energy and for associated transmission
services as needed to meet NEPOOL requirements and to provide a
diverse and economical energy supply. Unitil Power's purchases are
from various utility and non-utility generating units using a variety
of fuels and from several utility systems in the U.S. and Canada. For
the twelve months ending December 31,1995, Unitil Power's energy needs
were provided by the following fuel sources: nuclear (32%), oil (21%),
coal (19%), gas (13%), wood and refuse (5%) , hydro (1%), and system
and other (9%).
FG&E meets its capacity requirements through ownership interests
and power purchase contracts. FG&E's purchases are from various
utility and non-utility generating units using a variety of fuels and
from several utility systems in the U.S. and Canada. For the twelve
months ending December 31, 1995, FG&E's energy needs, including
generation from joint-owned units, were provided from the following
fuel sources: nuclear (24%), oil (22%), wood (25%), hydro (4%), coal
(7%) and system and other (18%).
FG&E has a 4.5% ownership interest, or 20.12 MW, in an oil and
natural gas-fired generating plant in New Haven, Connecticut, which is
operated by The United Illuminating Company, the plants' majority
owner. FG&E also has a 0.1822% ownership interest, or 1.13 MW, in an
oil-fired generating plant in Yarmouth, Maine, which is operated by
Central Maine Power Company as the majority owner, and a 0.217%
ownership interest, or 2.5 MW, in the Millstone 3 nuclear unit
operated by Northeast Utilities, parent of the principal owners of
that unit. In addition, FG&E operates an oil-fired combustion turbine
with a current capability of 26.6 MW under a long-term financing
lease.
Fuel Supply
Oil. Approximately 22% of FG&E's and 21% of Unitil Power's
electric power in 1995 was provided by oil-fired units, some of which
are owned by FG&E. Most fuel oil used by New England electric
utilities is acquired from foreign sources and is subject to
interruption and price increases by foreign governments.
Coal. Approximately 7% of FG&E's and 19% of Unitil Power's 1995
requirements were from coal-burning facilities. The facilities
generally purchase their coal under long term supply agreements with
prices tied to economic indices. Although coal is stored both on-site
and by fuel suppliers, long term interruptions of coal supply may
result in limitations in the production of power or fuel switching to
oil and thus result in higher energy prices.
Nuclear. FG&E has a 0.217% ownership interest in Millstone Unit
No. 3 (the Unit). The Unit has contracted for certain segments of the
nuclear fuel production cycle through various dates. This cycle
includes, among other things, mining, enrichment and disposal of used
fuel. Contracts for various segments of the fuel cycle will be
required in the future, and their availability, prices and terms
cannot now be predicted.
Pursuant to the Nuclear Waste Policy Act of 1982, the participants
in Millstone 3 were required to enter into contracts with the United
States Department of Energy, prior to the operation of that Unit, for
the transport and disposal of spent fuel at a nuclear waste
repository. Under the Act, a national repository for nuclear waste was
anticipated to be in operation by 1998. FG&E cannot predict whether
the Federal government will be able to provide interim storage or
permanent disposal repositories for spent fuel.
Gas Operations and Supply
FG&E distributes gas purchased from domestic and Canadian
suppliers under long term contracts as well as gas purchased from
producers and marketers on the spot market. The diversity and
flexibility of supply reflects FG&E's commitment to securing a
reliable gas supply at the lowest possible cost. The following tables
summarize actual gas purchases by source of supply and the cost of gas
sold for the years 1993 through 1995:
Sources of Gas Supply
(Expressed as percent of total MMBtu of gas purchased)
Natural Gas: 1995 1994 1993
Domestic firm.................. 82.3% 81.9% 58.4%
Canadian firm.................. 5.6% 6.2% 11.0%
Domestic spot market........... 11.1% 9.0% 25.2%
Total natural gas.................. 99.0% 97.1% 94.6%
Supplemental gas................... 1.0% 2.9% 5.4%
Total gas purchases................ 100.0% 100.0% 100.0%
Cost of Gas Sold
1995 1994 1993
Cost of gas purchased and sold per MMBtu $3.03 $3.47 $3.78
Percent Increase (Decrease) from prior year(12.7)% (8.2)% 0.8%
Under Order 636, issued by the FERC in 1992, FG&E's former sole
supplier of pipeline services, TGP, was required to unbundle its
transportation services and its sales services. As a result, all Local
Distribution Companies (LDCs) now arrange for a portfolio of
transport, storage and supply contracts to meet customer requirements.
In 1993, FG&E added two long term purchases of gas supply that
replaced supplies previously provided by TGP. These contracts expire
on October 1999 and October 1996 respectively. The MDPU approved these
contracts in March 1994. FG&E also has underground storage contracts
which provide significant natural gas storage capacity. TGP also
provides FG&E with underground storage. FG&E has firm transportation
agreements with TGP for delivery of storage gas .
As a supplement to pipeline natural gas, FG&E owns a propane air
gas plant and has under a financial lease a liquefied natural gas
(LNG) storage and vaporization facility. These plants are used
principally during peak load periods to augment the supply of pipeline
natural gas.
Environmental Matters
The Company does not expect that compliance with environmental
laws or regulations will have a material effect on its business, or
the businesses of its subsidiaries. The Company does not know whether,
or to what extent, such regulations may affect it or its subsidiaries
by impinging on the operations of other electric and gas utilities in
New England.
Unitil Power and FG&E purchase wholesale capacity and energy from
a diverse group of suppliers using various fuel sources and FG&E has
ownership interests in certain generating plants. Some of the purchase
power contracts contain cost adjustment provisions that may allow the
supplier to pass through environmental remediation costs. The Company
has not been informed whether any of these suppliers are likely to
incur significant environmental remediation costs and, if so, which if
any such costs may be passed through.
The Company continues to work with federal and state environmental
agencies to assess the environmental contamination in the vicinity of
former gas manufacturing sites operated by Fitchburg Gas and Electric
Light Company, the Company's combination gas and electric operating
subsidiary. Based on information developed over the last several
years, it has been discovered that there is environmental
contamination at a former gas manufacturing plant in Fitchburg, MA
(the Sawyer Passway site). In December 1995 the Company accepted a
Tier 1B permit from the Massachusetts Department of Environmental
Protection (DEP) to address the site pursuant to the requirements of
the Massachusetts Contingency Plan. Further investigations are
necessary to assess the extent and nature of the contamination, and to
evaluate potential remedies. Reports on those investigations are due
to be filed with the DEP in early 1997. Because these investigations
are at an early stage management cannot, at this time, predict the
costs of future analysis and remediation. The costs of such
assessments and any remedial action determined to be necessary will
initially be funded from traditional sources of capital and recovered
from customers under a rate recovery mechanism approved by the MDPU.
The Company also has a number of liability insurance policies that may
provide coverage for environmental remediation at this site.
Capital Requirements
Net capital expenditures increased approximately $3.7 million in
1995 as a result of planned spending for utility system improvements,
as well as the taking by the State of New Hampshire of the Company's
current headquarters and the commencement of construction of a new
corporate headquarters. This increase in capital expenditures from
1994 to 1995 reflects increased spending of approximately $5.7
million, $2.3 million for normal utility system improvements and $3.4
million for the construction on a new corporate headquarters, offset
by proceeds of $2.0 million from the taking of the Company's corporate
headquarters.
In February 1995, Unitil's corporate headquarters, located in
Exeter, New Hampshire, was taken by the State of New Hampshire through
eminent domain in connection with the Route 101 highway expansion
project. As a result of this taking, the Company purchased land in
Hampton, New Hampshire, during 1995, and began construction of a new
corporate headquarters, which is scheduled for completion during the
summer of 1996.
In 1996, total capital expenditures are expected to approximate
$18.9 million. This projection reflects capital expenditures of
approximately $14.8 million for normal utility system expansions,
replacements and other improvements and capital expenditures of
approximately $4.1 million related to the completion of construction
of the new corporate headquarters.
Financing Activities
No long-term debt was issued by any of the Unitil System companies
during 1995, however, during both 1994 and 1993 various Unitil System
Companies completed private placements of long-term debt. The funds
generated by these transactions were primarily used to repay the
short-term indebtedness incurred by each system company to fund their
ongoing construction programs, and also to redeem higher coupon
long-term debt issues prior to their maturity. The impact of these
transactions has been to gradually lower the average cost of the
System's long-term debt portfolio.
The Company currently has unsecured committed bank lines for
short-term debt aggregating $10,000,000 with three banks for which it
pays commitment fees. At December 31, 1995, the unused portion of the
committed credit lines outstanding was $7,300,000. The average
interest rate on all short-term borrowings outstanding during 1995 was
6.59%.
Employee Relations
As of December 31, 1995, the Company and its subsidiaries had 324
full-time employees. The Company considers its relationship with its
employees to be good and has not experienced any major labor
disruptions since the early 1960's.
There are 120 employees represented by labor unions. In 1995, one
of Unitil's retail operating subsidiaries, E&H, reached a new three
year pact with its employees covered by a collective bargaining
agreement. In 1994, two of Unitil's retail operating subsidiaries,
CECo and FG&E, reached new three year pacts with their respective
employees covered by collective bargaining agreements. The agreements
provide for discreet salary adjustments, established work practices
and provided uniform benefit packages.
The Company and its subsidiaries, where applicable, have in effect
funded Retirement Plans and related Trust Agreements providing
retirement annuities for participating employees at age 65. The
Company's policy is to fund the pension cost accrued. (See Note 9 of
Notes to Consolidated Financial Statements contained in Part II Item
8. , page 35 .)
Executive Officers of the Registrant
The names, ages and positions of all of the executive officers of
the Company as of March 1, 1995 are listed below, along with a brief
account of their business experience during the past five years. All
officers are elected annually by the Board of Directors at the
Directors' first meeting following the annual meeting which is held on
the third Thursday in April, or at a special meeting held in lieu
thereof. There are no family relationships among these officers, nor
is there any arrangement or understanding between any officer and any
other person pursuant to which the officer was selected. Officers of
the Company also hold various Director and Officer positions with
subsidiary companies.
NAME, AGE BUSINESS EXPERIENCE
and Position During Past 5 years
PETER J. STULGIS, 45, MR. STULGIS HAS BEEN A DIRECTOR
Chairman of the Board of of the Company since its
Directors and Chief incorporation in 1984, and
Executive Officer Chairman of the Board and Chief
Executive Officer since 1992.
From 1987 - 1992, Mr. Stulgis
was Executive Vice President and
Chief Financial Officer of the
Company.
MICHAEL J. DALTON, 55, MR. DALTON HAS BEEN A DIRECTOR,
President and President and Chief Operating
Chief Operating Officer Officer of the Company since its
incorporation in 1984.
GAIL A. SIART, 37, MS. SIART WAS PROMOTED TO CHIEF
Chief Financial Officer, Financial Officer in 1994. Ms.
Secretary and Treasurer Siart has been Secretary of the
Company since 1988 and Treasurer
since 1992. Prior to being
elected Treasurer in 1992, Ms.
Siart was the System's
Subsidiary Treasurer since 1988.
JAMES G. DALY, 38 MR. DALY WAS PROMOTED TO SENIOR
Senior Vice President Vice President of Unitil Service
Energy Resources in 1994. Mr. Daly was Vice
Unitil Service President of Unitil Service from
1992 to 1994, and Asst. Vice
President of Unitil Service from
1988 to 1992.
GEORGE R. GANTZ, 44 MR. GANTZ WAS PROMOTED TO SENIOR
Senior Vice President Vice President of Unitil Service
Business Development in 1994. Mr. Gantz was Vice
Unitil Service President of Unitil Service from
1989 to 1994, and Asst. Vice
President of Unitil Service from
1986 to 1989.
Item 2. Properties
CECo's distribution service center building and adjoining
administration building, totaling 37,560 square feet of office,
warehouse and garage area, are located on land in the City of Concord
owned by CECo in fee. CECo's seventeen electric distribution
substations constitute 94,400 KVA of capacity for the transformation
of electric energy from the 34.5 KV transmission voltage to primary
distribution voltage levels. The electric substations are, with one
exception, located on land owned by CECo in fee. The sole exception is
located on land occupied pursuant to a perpetual easement.
CECo has in excess of 39 pole miles of 34.5 KV electric
transmission facilities located, with minor exceptions, either on land
owned by CECo in fee or on land occupied pursuant to perpetual
easements. CECo also has 618 pole miles of overhead electric
distribution primary voltage lines and approximately 97 cable miles of
underground primary voltage lines. The electric distribution lines are
located in, on or under public highways or private lands pursuant to
lease, easement, permit, municipal consent, tariff conditions,
agreement or license, expressed or implied through use by CECo without
objection by the owners. In the case of certain distribution lines,
CECo owns only a part interest in the poles upon which its wires are
installed, the remaining interest being owned by telephone and
telegraph companies.
Additionally, CECo owns in fee 137.7 acres of land located on the
east bank of the Merrimack River in the City of Concord. Of the total
acreage, 81.2 acres are located within an industrial park zone, as
specified in the zoning ordinances of the City of Concord.
The physical properties of CECo (with certain exceptions) and
its franchises are subject to the lien of its Indenture of Mortgage
and Deed of Trust, as supplemented, under which the respective series
of First Mortgage Bonds of CECo are outstanding.
E&H's distribution and engineering service center building is
located on land owned by E&H in fee. E&H's fourteen electric
distribution substations, together with a 5,000 KVA mobile substation,
constitute 91,400 KVA of capacity for the transformation of electric
energy from the 34.5 KV transmission voltage to primary distribution
voltage levels. The electric substations are located on land owned by
E&H in fee.
E&H has in excess of 68 pole miles of 34.5 KV electric
transmission facilities located on land either owned or occupied
pursuant to perpetual easements. E&H also has 688 pole miles of
overhead electric distribution primary voltage lines and approximately
74 cable miles of underground primary voltage lines. The electric
distribution lines are located in, on or under public highways or
private lands pursuant to lease, easement, permit, municipal consent,
tariff conditions, agreement or license, expressed or implied through
use by E&H without objection by the owners. In the case of certain
distribution lines, E&H owns only a part interest in the poles upon
which its wires are installed, the remaining interest being owned by
telephone and telegraph companies.
Certain physical properties of E&H and its franchises are subject
to the lien of its Indenture of Mortgage and Deed of Trust, as
supplemented, under which the respective series of First Mortgage
Bonds of E&H are outstanding.
FG&E owns a propane gas plant and leases an LNG plant, both of
which are located on land owned by it in fee. The Company has entered
into agreements for joint ownership with others of one nuclear and two
fossil fuel generating facilities. At December 31, 1995, the electric
properties of the Company consisted principally of 70 miles of
transmission lines, 18 transmission and distribution substations with
a total capacity of 383,275 KVA and 656 miles of distribution lines.
Electric transmission facilities (including substations) and steel,
cast iron and plastic gas mains owned by the Company are, with minor
exceptions, located on land owned by the Company in fee or occupied
pursuant to perpetual easements. The Company leases its service
building, and its combustion turbine electric peaking generator and
LNG facility. (See Business - Electric Operations and Energy Supply
and Gas Operations and Supply above for additional information
regarding the Company's plants, facilities and gas mains and
services.)
Unitil Realty currently owns 12 acres of land in fee, which is
located in the Town of Hampton, New Hampshire. This land, which was
purchased during 1995, is the site of Unitil's future corporate
headquarters building. This facility, which began construction during
the fall of 1995, is scheduled to be completed during the summer of
1996, with occupancy by the Company to follow completion. The
Company believes that its facilities are currently adequate for their
intended uses.
Unitil Realty was, until February 13, 1995, the owner of the
Company's corporate headquarters and 36 acres of related land located
in the Town of Exeter, New Hampshire. On that date, the State of New
Hampshire (the "State") took title to and possession of the land and
building through eminent domain. The building is to be demolished in
connection with the State's Route 101 highway expansion. (See Capital
Requirements under Item 1. of this Report). The State of New
Hampshire is currently renting this facility back to the Company,
until the Company completes the construction of its new corporate
headquarters building.
Item 3. Legal Proceedings
In June, 1993, E&H was served with a complaint from Zeabrook
Associates, the owner of an apartment complex. In that complaint filed
in the New Hampshire Superior Court for Rockingham County, the owner
asserts that the Company improperly imposed a cash deposit requirement
for new residential customers in the claimant's apartment complex
resulting in lost rental income and damages to reputation. The Company
believes that these claims are entirely without merit, and it has
continued to defend itself against them. The likelihood of an
unfavorable outcome or extent of loss cannot be estimated at this
time.
The Company is also involved in other legal and administrative
proceedings and claims of various types which arise in the ordinary
course of business. In the opinion of the Company's management, based
upon information furnished by counsel and others, the ultimate
resolution of these claims will not have a material impact on the
Company's financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
Item 5. Market For the Registrant's Common Equity and Related
Stockholder Matters
Common Stock Data
Dividends Paid Per Common Share
1995 1994
1st Quarter $0.32 $0.31
2nd Quarter 0.32 0.31
3rd Quarter 0.32 0.31
4th Quarter 0.32 0.31
The Year $1.28 $1.24
Price Range of Common Stock
1995 1994
High/Ask Low/Bid High/Ask Low/Bid
1st Quarter 17 5/8 16 19 5/8 18 1/4
2nd Quarter 17 5/8 16 1/8 19 1/2 16 3/4
3rd Quarter 20 1/8 16 5/8 19 15 7/8
4th Quarter 21 3/8 19 1/8 18 1/4 16
ITEM 6. SELECTED FINANCIAL DATA
1995 1994 1993 1992 1991
Consolidated Statements of
Earnings (000's)
Operating Income $14,225 $13,754 $14,066 $13,328 $12,358
Non-operating Expenses 217 64 62 94 626
Income Before Interest 14,008 13,690 14,004 13,238 11,732
Expense
Interest Expense, Net 5,639 5,652 6,404 6,822 7,796
Unsolicited Tender
Offer and Merger Expenses
(Net of Taxes) ---- ---- ---- (155) 1,571
Net Income 8,369 8,038 7,600 6,416 3,936
Dividends on 284 291 298 352 315
Preferred Stock
Net Income Applicable to
Common Stock $8,085 $7,747 $7,302 $6,064 $3,621
Balance Sheet Data (000's)
Utility Plant (original $190,177 $178,777 $171,540 $165,880 $160,775
cost)
Total Assets 211,702 204,521 201,509 172,348 170,390
Capitalization and
Short-term Debt:
Common Stock Equity 63,895 59,997 56,234 52,608 49,887
Preferred Stock 3,999 4,094 4,198 4,277 4,412
Long-Term Debt 63,505 65,580 57,378 62,041 60,442
Short-Term Notes 2,700 ---- 8,400 4,780 9,550
Payable
Total Capitalization 134,099 129,671 126,210 123,706 124,291
Capitalization Ratios:
Common Stock Equity 49% 46% 45% 43% 40%
Preferred Stock 3% 3% 3% 3% 4%
Long-Term & 48% 51% 52% 54% 56%
Short-Term Debt
Common Stock Data (000's)
Shares of Common Stock 4,330 4,268 4,205 4,152 4,119
(Year-End)
Shares of Common Stock 4,299 4,234 4,181 4,133 4,115
(Average)
Per Share Data
Earnings Per Average $1.88 $1.83 $1.75 $1.50 $0.50
Share
Dividends Paid Per $1.28 $1.24 $1.15 $1.10 $1.04
Share
Book Value Per Share $14.76 $14.06 $13.37 $12.67 $12.11
Electric and Gas
Statistics
Electric Sales-(MWH) 1,401,292 1,358,165 1,303,326 1,260,747 1,230,049
Customers Served-Year End 88,316 86,782 85,383 85,131 84,222
Gas Sales-(000's of Therms) 22,303 23,057 22,763 23,281 20,394
Customers Served-Year End 14,846 15,012 15,340 15,514 15,713
Note: The above data have been combined and restated to reflect the
merger of FG&E into the Unitil System and the two-for-one stock split
that occurred in 1992.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Earnings and Dividends
Unitil's earnings were $1.88 per common share for the year ending
December 31, 1995, an increase over the prior year record earnings per
share achieved in 1994 and 1993 of $1.83 and $1.75, respectively. The
average return on common equity in 1995 was 13.1%. 1995's earnings'
performance primarily reflects increased electric base revenue from
higher energy sales by Unitil's retail operating companies as well as
the continued ability to effectively manage and control the System's
operating costs.
In 1995, Unitil continued its history of steadily increasing its
dividend. Common stock dividends in 1995 were $1.28 per share, an
increase of 3.2% over the 1994's annual dividend and a dividend payout
ratio of 68%. At its January 1996 meeting, the Unitil Board of
Director's increased the quarterly dividend by 3.1% to $0.33 per
share, resulting in the current effective annualized dividend of $1.32
per share.
Year in Review
The System's total electric base revenue was up by 2.5% in 1995
due to an overall increase in kilowatt-hour sales and kilowatt billing
demands of 3.2% and 4.4%, respectively. This increase was mainly due
to continuing growth in the demand for energy by the System's largest
industrial and commercial customers. In 1995, kilowatt-hour sales grew
by 7.9% to this group of customers. In addition, extreme seasonal
weather patterns in 1995 also played a significant role on sales to
the more weather-sensitive residential and commercial customer groups.
In the third quarter, electric sales used for cooling purposes was
supported by one of the hottest third quarters on record in New
England. In contrast, there was a significant decline in
weather-sensitive energy sales during the first quarter of the year,
during one of the mildest winter heating seasons in 30 years. The
weather in this quarter, as measured by heating degree days, was 16%
warmer than the same period last year. As a result, electric
kilowatt-hour sales to residential customers, whose usage was impacted
most by the mild first quarter, remained relatively unchanged from the
prior year.
The following table details total kilowatt -hour sales in each of
the last three years by customer group:
KWH Sales (000's)
1995 1994 1993
Residential 507,233 507,071 495,395
Commercial 381,292 374,769 375,413
Large Commercial/Industrial 500,945 464,357 419,989
Other Sales 11,822 11,968 12,053
Total KWH Sales 1,401,292 1,358,165 1,302,848
The mild winter in the first quarter of 1995 also had a negative
impact on gas sales for the year. In 1995, gas base revenue decreased
by 3.3% due to lower gas firm therm sales compared to the prior year.
The bulk of the decrease in firm therm sales was caused by a decrease
of more than 6% in sales to residential customers, reflecting the
extremely mild winter heating season. The following table details
total firm therm sales in each of the last three years by customer
group:
Firm Therm Sales (000's)
1995 1994 1993
Residential 12,523 13,345 13,399
Commercial 6,208 5,892 5,642
Industrial 3,572 3,820 3,722
Total Therm Sales 22,303 23,057 22,763
With more normal winter weather, growth of both electric and gas
sales in the first quarter of 1996 should show marked improvement over
1995. In addition, electric energy sales to industrial and commercial
customers are also expected to continue to increase in 1996 as new
businesses look to Unitil for their energy services and existing
customers expand their operations. In particular, the Company will be
aggressively marketing its Energy BankTM program throughout 1996.
Energy BankTM is an innovative economic development program designed
to bring low-cost energy to new and expanding industrial customers.
With rates in the range of 5 cents/KWH this program offers electric
energy at a price that is equal to the National Average industrial
rate and is 40% below the current average industrial rate in New
England.
The System's operations-related costs (not including fuel,
purchased power and conservation program costs, which are normally
recovered from customers through periodic cost recovery adjustment
mechanisms) were relatively unchanged in 1995 compared to 1994,
reflecting the continued success of the Company's disciplined approach
to cost management practices and procedures. Local property taxes
increased 13.2% in1995, compared to prior year levels, mainly
reflecting annual property tax increases on utility property.
OPERATING REVENUES
The following Table compares the major components of Operating
Revenues for 1995, 1994 and 1993.
Operating Revenue ($000's)
1995 1994 1993
Base Electric Revenue $45,458 $44,381 $43,406
Fuel and Purchased Power 90,558 88,103 88,001
Conservation Program Costs 2,084 1,613 1,348
Total Electric Revenue 138,099 134,097 132,755
Base Gas Revenue 7,105 7,348 7,332
Cost of Gas 8,202 9,935 10,066
Interruptible Revenue 2,323 1,412 1,088
Total Gas Revenue 17,630 18,695 18,486
Other Revenue 941 625 368
Total Operating Revenue $156,670 $153,416 $151,609
Electric Operating Revenue increased by approximately $4.0
million, or 3%, in 1995 compared to 1994. Total electric operating
revenue is comprised of electric base revenue, fuel and purchased
power revenue and conservation and load management program revenue.
Fuel and purchased power revenue are collected from customers through
the operation of periodic cost recovery adjustment mechanisms. Changes
in this component of operating revenue do not affect net income as
they normally mirror corresponding changes in fuel and purchased power
costs. Conservation and load management program revenue is also
collected from customers through a periodic cost recovery mechanisms,
reflecting underlying changes in conservation and load management
program costs. Electric base revenue is that portion of electric
operating revenue that has a direct impact on net income. In 1995,
electric base revenue rose by approximately $1.0 million. This 2.5%
increase in electric base revenue was due to the continued growth in
the System's electric energy sales to its customers.
In 1994, the System's electric operating revenue increased by
approximately $1.3 million, or 1% with the electric base revenue
portion increasing by approximately 2.2%. This increase in electric
base revenue in 1994, compared to 1993, was due to the growth in the
System's total electric kilowatt-hour sales and kilowatt billing
demands of 4.2% and 3.3%, respectively. Partially offsetting this
comparative year-over-year increase in electric base revenue was the
full-year impact of a voluntary base rate reduction that was
implemented by the Company's Massachusetts retail operating subsidiary
in December 1993.
Gas Operating Revenue decreased by about $1.1 million, or 5.7%, in
1995 compared to 1994. Gas operating revenue is comprised of three
components: cost of gas revenue, interruptible revenue and gas base
revenue. Cost of gas revenue is collected from customers through the
operation of a cost of gas adjustment mechanism. Changes in this
component of gas operating revenue does not affect net income as it
reflects corresponding changes in gas supply costs. Interruptible
revenue increased by about $900,000, an increase of more than 64%, due
to very favorable spot market prices for gas in 1995. Margins earned
on interruptible gas sales are used to directly lower rates to firm
customers through the cost of gas adjustment mechanism and do not
directly impact the Company's net income. Gas base revenue is that
portion of gas operating revenue that has a direct impact on net
income. In 1995, gas base revenue decreased approximately $243,000
based on an overall decrease of 3.3% in firm therm sales, due to an
extremely mild heating season.
In 1994, total gas operating revenue increased by about $200,000,
or 1%, as compared to 1993. Interruptible revenue increased more than
29%, reflecting an improvement in the competitive pricing of gas a
fuel choice for duel-fuel interruptible customers in 1994, as compared
to 1993. Gas base revenue increased slightly in 1994 due to an
increase of 1.3% in therm sales to firm customers. Partially
offsetting this comparative year-over-year increase in gas base
revenue was a full year impact of a voluntary base-rate reduction that
was implemented by the Company's Massachusetts retail operating
subsidiary in December 1993.
Other Revenue of $940,954 in 1995 and $624,560 in 1994 was
principally derived from Unitil Resources, the Company's energy
consulting subsidiary, which began providing consulting services to
non-affiliate companies in mid-1993. These consulting services have
chiefly related to the provision of administrative, management, and
power brokering services. One of Unitil Resources principal customers
terminated its service agreement with the Company as of December 31,
1995, which will reduce Unitil Resource's contributions to earnings in
1996, unless new agreements are entered into to replace the revenue
that was billed under this former agreement.
OPERATING EXPENSES
Fuel and Purchased Power reflects the cost of fuel used in
electric generation and wholesale energy and capacity purchased to
meet the Unitil System's electric energy requirements. Fuel and
purchased power expenses (normally recoverable from customers through
periodic cost recovery adjustment mechanisms) increased $2.0 million,
or 2.2% in 1995 compared to 1994. The change reflects an increase in
the System's total energy requirements in 1995, partially offset by
reduction in the average unit cost of the System's power supply
portfolio. Power supply markets continued to be very competitive in
1995, providing many opportunities to achieve cost savings through
active participation in the market and management of the System's
resource portfolio. The combined resource portfolio of the Unitil
System is comprised of a variety of power supply sources, including
owned generation, utility purchase power contracts and purchases from
non-utility generators. The Unitil System's total energy supply
resources for 1995 were comprised of: 16% from subsidiary-owned
generation; 61% from various utility-purchased power contracts; and
23% representing purchases from non-utility generation units.
In 1994 compared to 1993, fuel and purchase power expenses were
relatively unchanged reflecting favorable pricing of existing
long-term power supply commitments and competitive short-term power
supply markets.
Purchased Gas reflects gas purchased and made to supply the
System's total gas energy requirements. Purchased Gas decreased by
approximately $617,000 or 5.5% in 1995 as compared to 1994.
Significant decreases in gas prices due to favorable gas supply
markets more than offset the 10.5% increase in therms purchased
(including gas purchased for interruptible sales). Purchased Gas
increased by almost $44,000, or 0.4% in 1994 as compared to 1993,
based on an increase of 7.2% in therms purchased, offset by a lower
unit cost of gas. Purchased Gas is normally recoverable from customers
through the cost of gas adjustment mechanism.
Under Order 636, the Federal Energy Regulatory Commission (FERC)
has allowed gas pipeline suppliers to recover prudently incurred costs
resulting from the transition into a deregulated environment. The
Company's combination gas & electric utility operating subsidiary, has
been incurring FERC-approved transition charges from its natural gas
pipeline supplier since 1992. Through the end of 1995, the amount of
transition costs incurred by the Company totaled approximately
$2,200,000. These costs are being recovered directly from gas
customers customers through the cost of gas adjustment mechanism. On
the basis of estimates included in rate filings before the FERC and
other publicly available information, the Company currently estimates
that it may incur up to an additional $1,200,000 of transition costs
in future years. The Company expects full recovery of these costs
through billings to customers.
Operation and Maintenance expense increased by about $900,000, or
4.2% in 1995 compared to 1994. This increase primarily reflects higher
conservation and load management program expenditures (which are
recoverable from customers through periodic cost recovery mechanisms).
In 1995, expenditures on this component of operation and maintenance
expenses was over $2.1 million -- a 30% increase over 1994's
conservation and load management program expenditure level. Excluding
these costs, the System's total operating and maintenance costs were
relatively unchanged in 1995 compared to 1994. This performance
primarily reflects the success of the Company's disciplined approach
to cost management practices and procedures.
In 1994, Operation and Maintenance expense increased by almost
$900,000 million, or 4.3%. Almost one-third of the increase in
Operating and Maintenance was due to a 20% rise in expenditures on
demand-side management and conservation programs during 1994, as
compared to 1993. The remaining increase in 1994's Operating and
Maintenance reflects modest overall growth of about $500,000, or 2.7%
in the System's operation and maintenance costs. The majority of this
increase was due to extensive gas distribution system maintenance and
repairs conducted in 1994.
DEPRECIATION, AMORTIZATION and TAXES
Depreciation and Amortization expense increased more than 3% for
both 1995 and 1994 over the prior year due primarily to a higher level
of plant in service.
Amortization of the Cost of Abandoned Properties principally
relates to the abandonment of an investment in the Seabrook Nuclear
Power Plant by the Company's Massachusetts retail operating
subsidiary. A portion of the former investment in this project is
being recovered in rates to electric customers as allowed by the
Massachusetts Department of Public Utilities.
Federal and State Income Taxes remained relatively unchanged in
1995 compared to 1994 despite an increase in net income before taxes
of approximately $309,000, or 2.5%. This result primarily reflects
non-recurring tax benefits realized by the Company from a donation of
land to the Park 2000 project in Fitchburg, Massachusetts and the tax
loss realized on the State of New Hampshire's taking by eminent domain
of the Company's corporate headquarters in Exeter, New Hampshire.
Federal and State Income Taxes increased by $462,000 or 12.5% in 1994
due to higher net income before taxes of approximately $900,000.
Local Property Taxes increased $353,956, or 13.2%, in 1995. This
increase mainly reflects the annual property tax increases set by
local communities. Local Property taxes increased in 1994, compared to
1993 by 14.4%.
NON-OPERATING EXPENSES
For 1995, Non-Operating Expenses increased by approximately
$152,700, primarily reflecting a $141,000 non-operating loss as a
result of the State of New Hampshire's taking by eminent domain of the
Company's corporate headquarters in Exeter, New Hampshire.
INTEREST EXPENSE
Interest Expense, Net remained relatively unchanged in 1995 over
1994, as interest income and reduced short-term borrowing costs
offset increased long-term debt related interest costs. Higher
long-term debt interest costs in1995, compared to the prior year,
reflect the conversion of short-termdebt into long-term debt in late
1994 by the Company's New Hampshire retail operating subsidiaries.
Interest Expense decreased approximately 12% in 1994 compared to
1993, due primarily to the refinancing of long-term debt at lower
interest rates. Also contributing to lower interest costs was the
general decline in short-term borrowing costs during this period.
CAPITAL REQUIREMENTS AND LIQUIDITY
The Unitil System companies require capital for the acquisition of
property, plant and equipment in order to improve, protect, maintain
and expand their electric and gas operating systems. Capital necessary
to meet these requirements are derived primarily from the Company's
retained earnings and through the System's Dividend Reinvestment and
Common Share Purchase Plan. When internally-generated funds are not
available, it is the Company's policy to borrow interim funds on a
short-term basis to meet the capital requirements of its subsidiaries
and, when necessary, to repay short-term debt through the issuance of
permanent financing on an individual company basis. The size and
timing of such financings depend on developments in the securities
markets, the ability to meet certain financing covenants and the
receipt of appropriate regulatory approval. The Company attempts to
maintain a conservative capitalization structure, which contributes to
both the stability of Unitil and its ability to market new securities.
The Company has been able to access the financial markets to meet its
capital requirements and does not anticipate a change in its access
to, or the availability of, capital in the coming year.
Operating Activities (in $000's):
1995 1994 1993
Net Cash Provided by
Operating Activities $17,018 $16,349 $12,989
Cash flow from operations increased by $0.7 million in 1995 after
increasing by $3.4 million in 1994. These larger cash flow balances in
recent years reflect increased earnings by the Company and changes in
its working capital requirements, as detailed in the Consolidated Cash
Flow Statements.
Investing Activities (in $000's):
1995 1994 1993
Net Cash Used in Investing Activities $12,645 $8,943 $7,714
Cash flow from investing activities increased approximately $3.7
million in 1995 as a result of planned spending for utility system
improvements, as well as the State of New Hampshire's taking by
eminent domain of the Company's current headquarters and the
associated commencement of construction of a new corporate
headquarters. Total capital expenditures increased by $5.7 million in
1995, to $14.6 million, reflecting increased spending of approximately
$2.3 million for normal utility system improvements and $3.4 million
for the construction on a new corporate headquarters. These increases
in capital expenditures were offset by proceeds of $2.0 million from
the taking of the Company's corporate headquarters.
In February 1995 Unitil's corporate headquarters located in
Exeter, New Hampshire was taken by the State of New Hampshire through
eminent domain, in connection with the State's Route 101 highway
expansion project. While the impact of this transaction has been fully
recognized in the financial results for 1995, Unitil is currently
appealing the valuation placed upon its land and building by the State
during the taking process and is seeking additional compensation. As a
result of this taking, the Company purchased land in Hampton, New
Hampshire during 1995 and began construction of a new corporate
headquarters, which is scheduled for completion during the summer of
1996.
In 1996, total capital expenditures are expected to approximate
$18.9 million. This projection reflects capital expenditures of
approximately $14.8 million for normal utility system expansions,
replacements and other improvements and capital expenditures of
approximately $4.1 million related to the completion of construction
of its new corporate headquarters.
Financing Activities (in $000's):
1995 1994 1993
Net Cash Used In Financing Activities
Financing $4,785 $5,301 $5,789
The change in cash flows from financing activities in 1995
compared to 1994 primarily reflects increases in the System's
short-term borrowings and capitalized lease obligations at year end as
detailed in the Consolidated Cash Flow Statements. Short term
borrowing requirements are met through Unitil's committed credit
facilities with three different banks, which currently total $10
million.
No long-term debt was issued by any of the Unitil System companies
during 1995, however during both 1994 and 1993 Unitil's three retail
operating companies completed private placements of long-term debt.
The funds generated by these transactions were primarily used to repay
the short-term indebtedness incurred by each System company to fund
their ongoing construction programs, and to redeem higher coupon
long-term debt issues prior to their maturity. The impact of these
transactions has been to lower the average cost of the System's
long-term debt portfolio.
The Company does expect to undertake a long-term financing for
Unitil Realty Corp. during 1996, following the completion of
construction on its new corporate headquarters. The purpose of this
financing will be to repay short-term debt incurred to finance
construction of the building.
During 1995, the Company raised $1,009,499 of additional common
equity capital through the issuance of 58,457 shares of common stock
in connection with the Dividend Reinvestment and Tax Deferred Savings
and Investment plans. The Company raised $1,037,809 of additional
common equity capital in 1994 and $880,154 of additional equity
capital in 1993, through the respective issuance of 58,229 and 46,291
shares of common stock in connection with these plans. The Company
also issued shares during each of the years from 1993 through 1995 as
a result of the exercise of options granted under the Company's Key
Employee Stock Option Plan (KESOP). The total number of shares issued
under the KESOP plan in 1995, 1994 and 1993 were 3,291 shares, 4,110
shares and 6,966 shares, respectively.
REGULATORY MATTERS
At the state level in both New Hampshire and Massachusetts, and at
the federal level, recent regulatory activity has focused on
determining how to deregulate the retail sale of electricity to allow
for a more competitive market. As the trend continues towards
competition in the electric utility industry, Unitil has actively
participated in industry, legislative and regulatory proceedings on
the issues of competition and industry restructuring at both the
federal and state levels, favoring a reasonable and orderly transition
to competition and more choice for all customers.
Both the New Hampshire Public Utilities Commission (the "NHPUC")
and the New Hampshire Legislature have been involved in discussions
and analysis relative to competition in the industry. Early in 1995,
the NHPUC issued an order in response to a petition by a power
marketer seeking to sell to certain industrial customers of an
investor-owned New Hampshire utility. In that order the NHPUC ruled
that utilities in New Hampshire do not have exclusive franchise
territories as a matter of law and directed the marketer to seek a
declaratory order from the Federal Energy Regulatory Commission
regarding its proposed transactions. This decision has been appealed
to the New Hampshire Supreme Court. In June 1995 New Hampshire
Senate Bill 168 (SB 168), was signed into law. SB 168 establishes a
legislative committee to consider changes in the structure of the
electric utility industry. The act also directs the NHPUC to begin a
retail competition pilot program and to act within five months to
establish standards for utility discounts to industrial customers.
The legislative committee and its subcommittees met regularly during
the summer and fall of 1995. Several members sponsored new
legislation, including legislation currently being debated that would
require utilities to file restructuring plans with the NHPUC by June
1996, with statewide retail competition by June 1998. The NHPUC has
issued its preliminary guidelines for the retail wheeling pilot
program incorporating implementation by May 1996 and is expected to
issue its final guidelines in March 1996. The NHPUC issued its final
guidelines on discount rates for industrial customers in November
1995. The NHPUC aproved the Company's Energy BankTM program in
accordance with these guidelines in December 1995.
During 1995, the Massachusetts Department of Public Utilities (the
"MDPU") concluded the initial hearings in an electric industry
restructuring docket and has issued an order requiring the three
largest Massachusetts' electric utilities to file restructuring plans
in February1996 and the remaining Massachusetts' electric utilities
(including FG&E) to file restructuring plans three months after the
MDPU issues orders regarding the first three plans.
CECo, E&H, and FG&E have all received regulatory approval for the
Company's Energy BankTM program. Energy Bank is an innovative
economic development program designed to bring low-cost energy to new
and expanding industrial customers. With rates in the range of 5
cents/KWH this program offers electric energy at a price that is equal
to the National Average industrial rate and is 40% below the current
average industrial rate in New England. In addition to providing
substantial benefits to new and expanding industrial customers in the
form of very competitive and responsive market pricing, Energy Bank
will also provide significant benefits to all the System's customers
in the form of local economic development activity, reduced power
costs, and lower costs to all customers through the issuance of Power
Dividends.
The last formal regulatory hearings to increase base rates for
Unitil's three retail operating subsidiaries occurred in 1985 for
Concord Electric Company, 1984 for Fitchburg Gas and Electric Light
Company and 1981 for Exeter & Hampton Electric Company. A majority of
the System's operating revenues are collected under various periodic
rate adjustment mechanisms including: fuel, purchased power, cost of
gas and conservation program cost recovery mechanisms.
ENVIRONMENTAL
The Company continues to work with federal and state environmental
agencies to assess the environmental contamination in the vicinity of
former gas manufacturing sites operated by Fitchburg Gas and Electric
Light Company, the Company's combination gas and electric operating
subsidiary. Based on information developed over the last several
years, it has been discovered that there is environmental
contamination at a former gas manufacturing plant in Fitchburg, MA
(the Sawyer Passway site). In December 1995 the Company accepted a
Tier 1B permit from the Massachusetts Department of Environmental
Protection (DEP) to address the site pursuant to the requirements of
the Massachusetts Contingency Plan. Further investigations are
necessary to assess the extent and nature of the contamination, and to
evaluate potential remedies. Reports on those investigations are due
to be filed with the DEP in early 1997. Because these investigations
are at an early stage management cannot, at this time, predict the
costs of future analysis and remediation. The costs of such
assessments and any remedial action determined to be necessary will
initially be funded from traditional sources of capital and recovered
from customers under a rate recovery mechanism approved by the MDPU.
The Company also has a number of liability insurance policies that may
provide coverage for environmental remediation at this site.
NEW ACCOUNTING STANDARDS
Effective for fiscal years beginning after December 15, 1995,
Statement of Financial Accounting Standards No. 121 (SFAS 121)
"Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed of," will require the Company to review
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. It is expected that the adoption of this standard will
not have a material impact on the results of operations. financial
condition, or cash flows of the Company.
Effective for fiscal 1996, SFAS No. 123, "Accounting for
Stock-Based Compensation," is required to be implemented. This
statement provides the Company with the choice to continue with its
current method of accounting for stock-based compensation or to adopt
a new "fair value" method contained in SFAS No. 123. The Company
expects to continue with its current method of accounting for
stock-based compensation and to provide the SFAS No. 123 required
disclosures in the notes to the financial statements.
Item 8. Financial Statements and Supplementary Data
Report of Independent Certified Public Accountants
To the Shareholders of Unitil Corporation:
We have audited the accompanying consolidated balance sheets and
consolidated statements of capitalization of Unitil Corporation and
subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of earnings, cash flows and changes in common
stock equity for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Unitil Corporation and subsidiaries as of December 31, 1995 and
1994, and the consolidated results of their operations and their
consolidated cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted
accounting principles.
We have also audited Schedule VIII of Unitil Corporation and
subsidiaries as of December 31, 1995 and for the three years then
ended included in Part IV Item 14(a)(2). In our opinion, the schedule
presents fairly, in all material respects, the information required to
be set forth therein.
GRANT THORNTON LLP
Boston, Massachusetts
February 9, 1996
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
1995 1994
Utility Plant:
Electric $148,458,414 $142,311,415
Gas 27,220,705 25,652,522
Common 8,494,093 9,783,183
Construction Work in Progress 6,003,991 1,029,681
Utility Plant 190,177,203 178,776,801
Less: Accumulated Depreciation 60,682,742 57,203,799
Net Utility Plant 129,494,461 121,573,002
Other Property & Investments 42,448 137,698
Current Assets:
Cash 3,397,931 3,810,123
Accounts Receivable - Less
Allowance for Doubtful Accounts of 14,931,699 13,281,686
$622,596 and $573,849
Materials and Supplies 2,275,865 2,089,979
Prepayments 434,727 408,701
Accrued Revenue 2,577,715 2,292,297
Total Current Assets 23,617,937 21,882,786
Deferred Assets:
Debt Issuance Costs 885,258 955,931
Cost of Abandoned Properties 27,254,791 28,772,838
Prepaid Pension Costs 6,689,093 5,801,714
Other Deferred Assets 23,718,296 25,397,492
Total Deferred Assets 58,547,438 60,927,975
TOTAL $211,702,284 $204,521,461
(The accompanying Notes are an integral part of these statements.)
CAPITALIZATION AND LIABILITIES
December 31,
1995 1994
Capitalization:
Common Stock Equity $63,894,789 $59,997,198
Preferred Stock, 225,000 225,000
Non-Redeemable, Non-Cumulative
Preferred Stock, Redeemable, 3,773,900 3,868,600
Cumulative
Long-Term Debt, Less Current 62,211,000 65,288,231
Portion
Total Capitalization 130,104,689 129,379,029
Capitalized Leases, Less Current 3,732,947 3,377,389
Portion
Current Liabilities:
Long-Term Debt, Current Portion 1,294,000 292,090
Short-Term Debt 2,700,000 ----
Accounts Payable 14,565,075 12,491,041
Dividends Declared and Payable 170,796 152,210
Refundable Customer Deposits 2,237,851 2,482,779
Taxes Accrued 216,596 (345,243)
Interest Accrued 1,425,876 1,376,477
Capitalized Leases, Current Portion 741,832 460,152
Accrued and Other Current 2,202,096 2,546,878
Liabilities
Total Current Liabilities 25,554,122 19,456,384
Deferred Liabilities:
Investment Tax Credits 1,803,821 2,006,168
Other Deferred Liabilities 9,763,878 9,212,872
Total Deferred Liabilities 11,567,699 11,219,040
Deferred Income Taxes 40,742,827 41,089,619
Commitments and Contingencies (Note 10)
TOTAL $211,702,284 $204,521,461
(The accompanying Notes are an integral part of these statements.)
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended December 31,
1995 1994 1993
Operating Revenues:
Electric $138,099,371 $134,096,627 $132,754,707
Gas 17,629,879 18,694,703 18,486,105
Other 940,954 624,560 368,010
Total Operating Revenues 156,670,204 153,415,890 151608822
Operating Expenses:
Fuel and Purchased Power 92,346,024 90,342,737 90,485,320
Gas Purchased for Resale 10,522,742 11,139,311 11,094,848
Operation and Maintenance 22,824,218 21,903,619 21,010,303
Depreciation 6,315,613 6,129,617 5,949,072
Amortization of Cost of 1,518,047 1,605,640 1,528,873
Abandoned Properties
Provisions for Taxes:
Local Property and Other 4,784,109 4,384,032 3,779,459
Federal and State Income 4,134,826 4,156,479 3,694,573
Total Operating Expenses 142,445,579 139,661,435 137,542,448
Operating Income 14,224,625 13,754,455 14,066,374
Non-Operating Expenses 216,860 64,108 62,084
Income Before Interest Expense 14,007,765 13,690,347 14,004,290
Interest Expense, Net 5,638,969 5,652,148 6,404,223
Net Income 8,368,796 8,038,199 7,600,067
Less Dividends on Preferred 283,749 291,543 297,577
Stock
Net Income Applicable to Common $8,085,047 $7,746,656 $7,302,490
Stock
Average Common Shares Outstanding 4,298,752 4,234,062 4,180,534
Earnings Per Average Common Share $1.88 $1.83 $1.75
Share
(The accompanying Notes are an integral part of these statements.)
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31,
1995 1994
Common Stock Equity
Common Stock, No Par Value (Authorized - $32,822,673 $31,751,984
8,000,000 shares; Outstanding - 4,329,585
and 4,267,837 Shares)
Paid in Capital - Stock Options 1,299,177 1,062,198
Retained Earnings 29,772,939 27,183,016
Total Common Stock Equity 63,894,789 59,997,198
Preferred Stock
CECo Preferred Stock, Non-Redeemable, 225,000 225,000
Non-Cumulative:
6% Series, $100 Par Value
CECo Preferred Stock, Redeemable, 215,000 230,000
Cumulative:
8.70% Series, $100 Par Value
E&H Preferred Stock, Redeemable, Cumulative:
5% Series, $100 Par Value 98,000 105,000
6% Series, $100 Par Value 168,000 175,000
8.75% Series, $100 Par Value 344,300 344,300
8.25% Series, $100 Par Value 406,000 436,000
FG&E Preferred Stock, Redeemable, Cumulative:
5.125% Series, $100 Par Value 1,076,600 1,108,100
8% Series, $100 Par Value 1,466,000 1,470,200
Total Preferred Stock 3,998,900 4,093,600
Long-Term Debt
CECo First Mortgage Bonds:
Series C, 6.75%, due January 15, 1998 1,584,000 1,584,000
Series H, 9.43%, due September 1, 2003 6,500,000 6,500,000
Series I, 8.49%, due October 14, 2024 6,000,000 6,000,000
E&H First Mortgage Bonds:
Series E, 6.75%, due January 15, 1998 511,000 518,000
Series H, 8.50%, due December 15, 2002 910,000 1,015,000
Series J, 9.43%, due September 1, 2003 5,000,000 5,000,000
Series K, 8.49%, due October 14, 2024 9,000,000 9,000,000
FG&E Long-term Notes:
Twelve year Notes, 8.55%, due March 31, 15,000,000 15,000,000
2004
Thirty year Notes, 6.75%, due November 19,000,000 19,000,000
30, 2023
Unitil Realty Promissory Note:
10.59%, due October 25, 1998 ---- 1,963,321
Total Long-Term Debt 63,505,000 65,580,321
Less: Long-Term Debt, Current Portion 1,294,000 292,090
Total Long-Term Debt, Less Current 62,211,000 65,288,231
Portion
Total Capitalization $130,104,689 $129,379,029
(The accompanying Notes are an integral part of these statements.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1995 1994 1993
Cash Flows From Operating Activities:
Net Income $8,368,796 $8,038,199 $7,600,067
Adjustments to Reconcile
Net Income to Net Cash Provided
by Operating Activities:
Depreciation and 7,833,660 7,735,257 7,477,945
Amortization
Deferred Taxes (314,365) 257,630 (333,569)
Amortization of (202,347) (210,676) (216,698)
Investment Tax Credit
Amortization of Debt 72,252 63,882 118,602
Issuance Costs
Provision for Doubtful 889,320 717,735 837,589
Accounts
Loss on Taking of Land 140,698 ---- ----
and Building
Changes in Assets and Liabilities:
(Increase) Decrease In:
Accounts Receivable (2,539,334) (281,549) (301,328)
Materials and Supplies (185,886) 437,485 96,069
Prepayments and (913,405) (704,790) (567,381)
Prepaid Pension
Accrued Revenue (285,418) 1,354,192 (174,327)
Increase (Decrease) In:
Accounts Payable 2,074,034 (949,245) 1,501,166
Refundable Customer (244,928) 744,325 (160,621)
Deposits
Taxes and Interest 611,238 (396,700) (791,986)
Accrued
Other, Net 1,713,521 (456,528) (2,096,725)
Net Cash Provided by Operating
Activities 17,017,836 16,349,217 12,988,803
Cash Flows From Investing Activities:
Acqusition of Property, (14,644,963) (8,943,491) (7,713,542)
Plant & Equipment
Proceeds from Taking of 2,000,000 0 0
Land & Building
Net Cash Used in Investing
Activities (12,644,963) (8,943,491) (7,713,542)
Cash Flows from Financing Activities:
Proceeds From (Repayment 2,700,000 (8,400,000) 3,620,000
of) Short-Term Debt
Proceeds From Issuance of ---- 15,000,000 19,000,000
Long-Term Debt
Repayment of Long-Term Debt (2,075,321) (6,797,773) (23,662,436)
Dividends Paid (5,760,286) (5,514,283) (5,076,146)
Issuance of Common Stock 1,070,689 1,108,976 1,016,590
Retirement of Preferred (94,700) (104,100) (78,800)
Stock
Repayment of Capital Lease (625,447) (594,209) (608,569)
Obligations
Net Cash Used in Financing (4,785,065) (5,301,389) (5,789,361)
Activities
Net Increase (Decrease) in Cash (412,192) 2,104,337 (514,100)
Cash at Beginning of Year 3,810,123 1,705,786 2,219,886
Cash at End of Year $3,397,931 $3,810,123 $1,705,786
Supplemental Cash Flow Information:
Interest Paid $5,942,933 $5,518,586 $6,633,002
Federal Income Taxes Paid $3,435,000 $4,141,527 $3,930,700
Non-Cash Financing Activities:
Capital Leases Incurred $1,262,685 $237,243 $206,502
(The accompanying Notes are an integral part of these statements.)
CONSOLIDATED STATEMENTS OF
CHANGES IN COMMON STOCK EQUITY
Deferred
Stock
Common Option Retained
Shares Plan Earnings Total
Balance at January 01,1993 $29,626,419 $800,674 $22,180,481 $52,607,574
Net income for 1993 7,600,067 7,600,067
Dividends on preferred shares (297,577) (297,577)
Dividends on common shares-
at an annual rate of $1.15 per share (4,803,095) (4,803,095)
Stock Option Plan 177,425 177,425
Exercised stock options -
6,966 shares 136,436 (67,207) 69,229
Issuance of 46,291 common 880,154 880,154
shares (a)
Balance at December 31, 1993 30,643,009 910,892 24,679,876 56,233,777
Net income for 1994 8,038,199 8,038,199
Dividends on preferred shares (291,543) (291,543)
Dividends on common shares -
at an annual rate of $1.24 per share (5,243,516) (5,243,516)
Stock Option Plan 180,475 180,475
Exercised stock options -
4,110 shares 71,166 (29,169) 41,997
Issuance of 58,229 common 1,037,809 1,037,809
shares (a)
Balance at December 31, 1994 31,751,984 1,062,198 27,183,016 59,997,198
Net income for 1995 8,368,796 8,368,796
Dividends on preferred shares (283,749) (283,749)
Dividends on common shares -
at an annual rate of $1.28 per share (5,495,124) (5,495,124)
Stock Option Plan 248,127 248,127
Exercised stock options -
3,291 shares 61,190 (11,148) 50,042
Issuance of 58,457 common
shares (a) 1,009,499 1,009,499
Balance at December 31, 1995 $32,822,673 $1,299,177 $29,772,939 $63,894,789
(a) Shares sold and issued in connection with the Company's Dividend
Reinvestment and Stock Purchase Plan and Employee 401(k) Tax Deferred
Savings and Investment Plan (See Note 2).
(The accompanying Notes are an integral part of these statements.)
Note 1: Summary of Significant Accounting Policies
Nature of Operations--- The Company is registered with the Securities
and Exchange Commission (SEC) as a holding company (with subsidiaries
providing electric service in New Hampshire, electric and gas service
in Massachusetts and consulting services on energy related
matters)under the Public Utility Holding Company Act of 1935 (1935
Act), and it and its subsidiaries are subject to the provisions of the
1935 Act. In addition, the Company and several of its wholly-owned
utility operating subsidiaries; Concord Electric Company (CECo),
Exeter & Hampton Electric Company (E&H), Fitchburg Gas and Electric
Light Company (FG&E), and Unitil Power Corp. (Unitil Power), are
subject to regulation by various other agencies. With respect to their
rates and accounting; two of the retail subsidiaries, CECo and E&H,
are subject to regulation by the New Hampshire Public Utilities
Commission (NHPUC), FG&E is subject to regulation by the Massachusetts
Department of Public Utilities (MDPU) and Unitil Power is regulated by
the Federal Energy Regulatory Commission (FERC). CECo, E&H, FG&E and
Unitil Power conform with generally accepted accounting principles, as
applied in the case of regulated public utilities, and conform with
the accounting requirements and ratemaking practices of the regulatory
authorities having jurisdiction.
Principles of Consolidation --- Unitil Corporation (the Company) is
the parent company of the Unitil System (the System). The consolidated
financial statements include the accounts of the Company and all of
its wholly-owned subsidiaries. All material inter-company balances and
transactions have been eliminated in consolidation.
Use of Estimates --- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and 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.
Revenue Recognition --- The Company's operating subsidiaries record
electric and gas operating revenues based upon the amount of
electricity and gas delivered to customers through the end of the
accounting period.
Depreciation --- Depreciation provisions for the Company's utility
operating subsidiaries are determined on a group straight-line basis.
Provisions for depreciation were equivalent to the following composite
rates, based on the average depreciable property balances at the
beginning and end of each year: 1995 - 3.48 percent; 1994 - 3.49
percent, and 1993 - 3.53 percent.
Amortization of Abandoned Properties --- FG&E is recovering a portion
of its former investment in the Seabrook Nuclear Power Plant in rates
to its' customers through a Seabrook Amortization Surcharge as ordered
by the MDPU.
Federal Income Taxes --- Income taxes are accounted for in accordance
with the Statement of Financial Accounting Standards No. 109 ("SFAS
No. 109") "Accounting for Income Taxes." Under SFAS No. 109, deferred
tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities, and
are measured by applying tax rates applicable to the taxable years in
which those differences are expected to reverse.
The Tax Reduction Act of 1986 eliminated investment tax credits.
Investment tax credits generated prior to 1986 are being amortized,
for financial reporting purposes, over the productive lives of the
related assets.
New Accounting Standards --- Effective for fiscal years beginning
after December 15, 1995, Statement of Financial Accounting Standards
No. 121 (SFAS 121) "Accounting for the Impairment of Long-Lived Assets
and For Long-Lived Assets to be Disposed of," will require a review of
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. It is expected that the adoption of this standard will
not have a material impact on the cash flows, financial condition or
results of operations of the Company.
Effective for fiscal 1996, SFAS No. 123, "Accounting for
Stock-Based Compensation," is required to be implemented. This
statement provides the Company with the choice to continue with its
current method of accounting for stock-based compensation or to adopt
a new "fair value" method contained in SFAS No. 123. The Company
expects to continue with its current method of accounting for
stock-based compensation and to provide the SFAS No. 123 required
disclosures in the notes to the financial statements.
Reclassifications --- Reclassification of amounts are made
periodically to previously issued financial statements to conform with
the current year presentation.
Note 2: Common Stock
New Shares Issued --- During 1995, the Company raised $1,009,499 of
additional common equity capital through the issuance of 58,457 shares
of common stock in connection with the Dividend Reinvestment and Stock
Purchase Plan and Employee 401(k)Tax Deferred Savings and Investment
Plan. The Dividend Reinvestment and Stock Purchase Plan provides
participants in the plan a method for investing cash dividends on the
Company's Common Stock and cash payments in additional shares of the
Company's Common Stock. The Employee 401(k)Tax Deferred Savings and
Investment Plan is described in Note 9 below. In 1994, the Company
raised $1,037,809 of additional common equity capital through the
issuance of 58,229 shares of common stock in connection with these
plans.
The Company maintains a Key Employee Stock Option Plan (KESOP ),
which provides for the granting of options to key employees. The
number of shares granted under this plan, as well as the terms and
conditions of each grant , are determined by the Board of Directors,
subject to plan limitations. All options granted under the KESOP
expire within ten years of the grant date, and no option can be issued
under the current plan after 1999. The plan provides for dividend
equivalents on options granted, which are recorded as compensation
expense. The total compensation expenses recorded by the Company with
respect to this plan were $248,127, $180,475 and $177,425 for the
years ended December 31, 1995, 1994 and 1993, respectively.
Share Option Activity of the KESOP is presented in the following
table:
1995 1994 1993
Beginning Options 147,981 142,354 133,216
Outstanding & Exercisable
Options Granted 17,000 --- 9,000
Dividend Equivalents Earned 11,672 9,737 8,404
Options Exercised (3,291) (4,110) (6,966)
Options Canceled --- --- (1,300)
Ending Options Outstanding & 173,362 147,981 142,354
Exercisable
Range of Option Grant Price $12.11-$14.93 $12.11-$17.74 $12.11-$17.74
per Share
Restrictions on Retained Earnings ---Unitil Corporation has no
restriction on the payment of common dividends from retained earnings.
Its three retail distribution subsidiaries do have restrictions. Under
the terms of the First Mortgage Bond Indentures, CECo and E&H had
$5,402,238 and $8,031,846, respectively, available for the payment of
cash dividends on their common stock at December 31, 1995. Under the
terms of long-term debt Purchase Agreements, FG&E had $11,500,927 of
retained earnings available for the payment of cash dividends on its
common stock at December 31, 1995.
Note 3: Preferred Stock
Certain of the Unitil subsidiaries have redeemable Cumulative
Preferred Stock outstanding and one subsidiary, CECo, has a
Non-Redeemable, Non-Cumulative Preferred Stock issue outstanding. All
such subsidiaries are required to offer to redeem annually a given
number of shares of each series of Redeemable Cumulative Preferred
Stock and to purchase such shares that shall have been tendered by
holders of the respective stock. All such subsidiaries may redeem, at
their option, the Redeemable Cumulative Preferred Stock at a given
redemption price, plus accrued dividends.
The aggregate purchases of Redeemable Cumulative Preferred Stock
during 1995, 1994 and 1993 were: 1995 - $94,700; 1994 - $104,100; and
1993 - $78,800. The aggregate amount of sinking fund requirements of
the redeemable Cumulative Preferred Stock for each of the five years
following 1995 are $206,000 per year.
Note 4: Long-Term Debt
On October 14, 1994, CECo arranged for the private placement, at
par, of $6,000,000 of 30-year Series I First Mortgage Bonds, bearing a
fixed annual interest rate of 8.49% and maturing in 2024. The proceeds
of this financing were utilized to repay short-term indebtedness and
to redeem two higher coupon long-term debt issues prior to their
maturity. The redemption's included $930,000 of Series D First
Mortgage Bonds, 8.70%, due November 15, 2001, and $1,500,000 of Series
G First Mortgage Bonds, 9.85%, due October 15, 1997.
On October 14, 1994, E&H arranged for the private placement, at
par, of $9,000,000 of 30-year Series K First Mortgage Bonds, bearing a
fixed annual interest rate of 8.49% and maturing in 2024. The proceeds
of this financing were utilized to repay short-term indebtedness and
to redeem three higher coupon long-term debt issues prior to their
maturity. The redemption's included $1,235,000 of Series F First
Mortgage Bonds, 8.70%, due November 15, 2001, $930,000 of Series G
First Mortgage Bonds, 8.875%, due April 1, 2004, and $1,400,000 of
Series I First Mortgage Bonds, 9.85%, due October 15, 1997.
Under the terms of both CECo's Indenture of Mortgage and Deed of
Trust and the supplemental indenture thereto relating to long-term
debt, the sinking fund requirements of CECo's Series C Bonds may be
satisfied by certifying to the Mortgage Trustee net additional
property in lieu of making cash redemptions. In 1995 and 1994, CECo
satisfied its requirements with respect to its Series C Bonds by
certifying to the Mortgage Trustee net additional property. In 1995,
sinking fund payments relating to long-term debt amounted to $112,000.
Certain of the loan agreements contain provisions which, among
other things, limit the incurrence of additional long-term debt.
The aggregate amount of sinking fund requirements and normal
scheduled redemptions for each of the five years following 1995 are:
1996-$1,294,000; 1997-$1,294,000; 1998-$4,307,000; 1999-$2,290,000,
and 2000-$2,290,000.
The fair value of the Company's long-term debt is estimated based
on the quoted market prices for the same or similar issues, or on the
current rates offered to the Company for debt of the same remaining
maturities. In management's opinion, the carrying value of the debt
approximated its fair value at December 31, 1995 and 1994.
Note 5: Credit Arrangements
At December 31, 1995, the Company had unsecured committed bank
lines for short-term debt aggregating $10,000,000 with three banks for
which it pays commitment fees. At December 31, 1995, the unused
portion of the committed credit lines outstanding was $7,300,000. The
average interest rates on all short-term borrowings were 6.59% and
4.43% during 1995 and 1994, respectively.
Note 6: Leases
The Company's subsidiaries conduct a portion of their operations
in leased facilities and also lease some of their operations and
office equipment. FG&E has a facility lease for twenty-two years which
began in February 1981. The lease allows five, five-year renewal
periods at the option of FG&E. The equipment leases include a
twenty-five-year lease, which began on April 1, 1973, for a combustion
turbine and a liquefied natural gas storage and vaporization facility.
This lease provides for a ten-year renewal period at the option of
FG&E. In addition, FG&E leases some equipment under operating leases.
The following schedule of the leased property under capital leases
by major classes:
Asset Balances at
December 31,
Classes of Utility Plant 1995 1994
Electric $2,054,025 $2,054,025
Gas 726,329 726,329
Common 5,061,846 3,816,643
Gross Plant 7,842,200 6,596,997
Less: Accumulated Depreciation 3,367,421 2,759,456
Net Plant $4,474,779 $3,837,541
The following is a schedule by years of future minimum lease payments
and present value of net minimum lease payments under capital and
operating leases as of December 31, 1995:
Year Ending December 31, Capital Operating
1996 $1,087,343 $228,727
1997 846,578 258,369
1998 583,106 226,174
1999 559,785 190,618
2000 545,498 189,912
2001 - 2005 1,776,339 47,478
Total Minimum Lease Payments $5,398,649 $1,141,278
Less: Amount Representing 923,870
Interest
Present Value of Net Minimum $4,474,779
Lease Payments
Total rental expense charged to operations for the years ended
December 31, 1995, 1994 and 1993 amounted to $447,000; $320,000; and
$601,000, respectively.
Note 7: Income Taxes
The components of the Federal and State income tax provisions
reflected in the accompanying consolidated statements of earnings for
the years ended December 31, 1995, 1994 and 1993 were as follows:
1995 1994 1993
Federal:
Current $3,959,976 $3,497,311 $3,633,205
Deferred (298,192) 186,060 (179,080)
Amortization of (202,347) (210,676) (216,698)
Investment Tax Credits
Total Federal Tax 3,459,437 3,472,695 3,237,427
Provision
State:
Current 691,563 612,214 611,635
Deferred (16,174) 71,570 (154,489)
Total State Tax 675,389 683,784 457,146
Provision
Total Provision for Federal
and State Income Taxes $4,134,826 $4,156,479 $3,694,573
On January 1, 1993, the Company adopted the provisions of SFAS 109.
The adoption of SFAS No. 109 had no material effect on net earnings
for 1993. Federal Income Taxes have been provided as follows:
Year Ended December 31,
1995 1994 1993
Current Federal Tax Provision
Operating Income $3,959,976 $3,497,311 $3,633,205
Amortization of Investment
Tax Credits (202,347) (210,676) (216,698)
Total Current Federal
Tax Provision 3,757,629 3,286,635 3,416,507
Deferred Federal Tax Provision:
Accelerated Tax Depreciation 545,233 590,655 528,500
Abandoned Properties (578,255) (611,620) (582,378)
Allowance for Funds Used
During Construction
and Overheads (73,191) (73,192) (73,192)
Post Retirement Benefits (19,941) (27,162) (25,238)
Other Than Pensions
Deferred Maintenance Cost and (86,178) (122,382) (89,471)
Miscellaneous Percentage Repair
Allowance 106,630 145,927 139,424
Unbilled Fuel --- --- (172,226)
Deferred Advances (482,112) 26,967 (95,877)
Deferred Pensions 289,622 256,867 191,378
Total Deferred Federal Tax (298,192) 186,060 (179,080)
Provision
Total Federal Tax $3,459,437 $3,472,695 $3,237,427
Provision
The differences between the Company's provisions for Federal
Income Taxes and the provisions calculated at the statutory federal
tax rate, expressed in percentages, are shown below:
Year Ended December 31,
1995 1994 1993
Statutory Federal Income Tax Rate 34% 34% 34%
Income Tax Effects of:
Investment Tax Credits (2) (2) (2)
Donation of Appreciated Land (1) 0 0
Federal Income Tax - Prior (1) 0 (1)
Other, Net (1) (2) (1)
Effective Federal Income Tax Rate 29% 30% 30%
At December 31, 1995, the Company has the following deferred tax
assets and liabilities recorded for temporary differences which
originated as a result of the application of the Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation"; a regulatory asset of approximately
$22,400,000 which is included in Other Deferred Assets, a regulatory
liability of approximately $7,500,000 which is included in Other
Deferred Liabilities, and additional deferred tax liabilities of
approximately $14,900,000 which are included in certain of the amounts
listed below.
SFAS No. 109, adopted on January 1, 1993, requires the use of the
asset and liability method of accounting for deferred income taxes on
all temporary differences. The major temporary differences which give
rise to deferred tax assets and liabilities at December 31, 1995, are
as follows:
Deferred Income Taxes for the Year Ended December 31,
1995 1994
Accelerated Depreciation $23,971,624 $23,526,226
Abandoned Property 10,381,893 10,960,148
Contributions in Aid to (3,166,565) (2,626,042)
Construction
Percentage Repair Allowance 1,599,813 1,517,573
Cathodic Protection 294,978 253,863
Retirement Loss 1,288,346 1,121,792
Deferred Pensions 2,303,456 2,091,056
AFUDC 78,878 96,211
Overheads 360,470 420,896
KESOP (451,009) (361,080)
Bad Debts (235,785) (217,220)
Accumulated Deferred (SFAS 109) 4,442,755 4,475,182
Other (126,027) (168,986)
Total Deferred Income Taxes $40,742,827 $41,089,619
Note 8: Joint Ownership Units
FG&E is participating, on a tenancy-in-common basis with other New
England utilities, in the ownership of three generating units. New
Haven Harbor is a dual-fired oil-and-gas station, and Wyman Unit No. 4
is an oil-fired station. They have been in commercial operation since
August 1975 and December 1978, respectively. Millstone Unit No. 3, a
nuclear generating unit, has been in commercial operation since April
1986. Kilowatt-hour generation and operating expenses of the joint
ownership units are divided on the same basis as ownership. FG&E's
proportionate costs are reflected in the 1995 Consolidated Statements
of Earnings. Information with respect to these units is set forth in
the table below:
Company's Share
Joint Amount of
Ownership Proportionate Share of Utility Plant Accumulated
Units State Ownership % Total MW in Service Depreciation
Millstone Unit No.3 CT 0.2170 2.50 $11,595,060 $3,155,675
Wyman Unit No.4 ME 0.1822 1.13 408,141 257,934
New Haven Harbor CT 4.5000 20.12 7,065,274 4,802,423
23.75 $19,068,475 $8,216,032
Note 9: Benefit Plans
Pension Plans --- Four of the Company's subsidiaries have Retirement
and Pension plans and related Trust Agreements to provide retirement
annuities for participating employees at age 65. These subsidiaries
follow the provisions of Statement of Financial Accounting Standards
No. 87, Employer's Accounting for Pensions (SFAS 87). The entire cost
of the plans is borne by the respective subsidiaries.
Net periodic pension (income) cost for 1995, 1994 and 1993
included the following components:
1995 1994 1993
Service Cost -- Benefits Earned
During the Period $616,016 $693,340 $645,226
Interest Cost on Projected
Benefit Obligation 1,811,981 1,795,836 1,758,782
Expected Return on Plan Assets (6,412,405) (2,714,751) (2,437,232)
Net Amortization and Deferral 3,652,029 (20,546) (2,742)
Net Periodic Pension (Income) Cost $(332,379) $(246,121) $(35,966)
The following table sets forth the plans' funded status at December
31, 1995, 1994 and 1993:
Projected Benefit Obligation:
1995 1994 1993
Vested $24,250,626 $19,970,389 $19,971,230
Non-Vested 148,106 331,910 149,810
Accumulated 24,398,732 20,302,299 20,121,040
Due to Recognition of Future 3,837,798 2,521,055 3,278,283
Salary Increases
Total 28,236,530 22,823,354 23,399,323
Plan Assets at Fair Value 32,858,602 27,343,779 29,273,216
Funded Status 4,622,072 4,520,425 5,873,893
Unrecognized Net Loss (Gain) 1,736,643 953,653 (1,181,666)
Unrecognized Prior Service Cost 124,718 138,204 151,690
Unrecognized Transition Obligation 205,660 189,432 173,204
Prepaid Pension Cost $6,689,093 $5,801,714 $5,017,121
Plan assets are invested in common stock, short-term investments
and various other fixed income security funds.
The weighted-average discount rates used in determining the
projected benefit obligation in 1995, 1994 and 1993 were 7.75%, 8.25%,
and 7.75%, respectively, while the rate of increase in future
compensation levels was 4.50 %, 4.50%, and 4.50%, respectively. The
expected long-term rate of return on assets was 9.50% in each of the
years 1995, 1994 and 1993.
Effective January 1, 1987, Unitil Service Corp. adopted a
Supplemental Executive Retirement Plan (SERP). The SERP is an unfunded
retirement plan with participation limited to executives selected by
the Board of Directors. The cost associated with the SERP amounted to
$60,000; $53,000; and $53,000 for the years ended December 31, 1995,
1994 and 1993, respectively.
Employee 401(k) Tax Deferred Savings Plan--- The Company sponsors a
defined contribution plan ((under Section 401 (k) of the Internal
Revenue Code)) covering substantially all of the Company's employees.
Participants may elect to defer from 1% to 12% of current compensation
to the plan. The Company matches contributions, with a maximum
matching contribution of 3% of current compensation. Employees may
direct the investment of their savings plan balances into a variety of
investment options, including a Company common stock fund.
Participants are 100% vested once completing three years of service in
contributions made on their behalf. The Company's share of
contributions to the plan were $308,454; $284,248; and $266,645 for
the years ended December 31, 1995, 1994 and 1993, respectively.
Post-Retirement Benefits --- Effective as of January 1, 1993, the
Company's subsidiaries significantly modified the duration of
post-retirement health care benefits. From that date forward, all
current retirees were offered such benefits only for an additional
twelve-month period and all future retirees will be entitled to such
benefits for a twelve-month period following their retirement. The
Company's subsidiaries continue to provide life insurance coverage to
retirees by making monthly premium payments to a life insurer. Life
insurance and limited health care post-retirement benefits required
the Company to adopt the provisions of Statement of Financial
Accounting Standard No. 106,"Employers' Accounting for Post-retirement
Benefits Other than Pensions --- (SFAS 106). For 1995 and 1994, the
costs associated with providing health care and life insurance
benefits under this arrangement were $86,522 and $82,625. This
statement requires accrual accounting for postretirement benefits
during the employee's years of service with the Company and the
recognition of the actuarially determined total postretirement benefit
obligation earned by existing retirees. At December 31, 1995 and 1994,
the accumulated postretirement benefit obligation (transition
obligation) was approximately $364,000 and $385,000, respectively,
under SFAS 106. This obligation is being recognized on a delayed basis
over the average remaining service period of active participants and
such period will not exceed 20 years. The Company has omitted certain
disclosures relating to SFAS 106, as the accumulated post-retirement
benefit obligation (transition obligation) is not material.
Note 10: Commitments and Contingencies
Environmental Matters --- The Company continues to work with federal
and state environmental agencies to assess the environmental
contamination in the vicinity of former gas manufacturing sites
operated by Fitchburg Gas and Electric Light Company, the Company's
combination gas and electric operating subsidiary. Based on
information developed over the last several years, it has been
discovered that there is environmental contamination at a former gas
manufacturing plant in Fitchburg, MA (the Sawyer Passway site). In
December 1995 the Company accepted a Tier 1B permit from the
Massachusetts Department of Environmental Protection (DEP) to address
the site pursuant to the requirements of the Massachusetts Contingency
Plan. Further investigations are necessary to assess the extent and
nature of the contamination, and to evaluate potential remedies.
Reports on those investigations are due to be filed with the DEP in
early 1997. Because these investigations are at an early stage
management cannot, at this time, predict the costs of future analysis
and remediation. The costs of such assessments and any remedial action
determined to be necessary will initially be funded from traditional
sources of capital and recovered from customers under a rate recovery
mechanism approved by the MDPU. The Company also has a number of
liability insurance policies that may provide coverage for
environmental remediation at this site.
Regulatory --- At the state level in both New Hampshire and
Massachusetts, and at the federal level, recent regulatory activity
has focused on determining how to deregulate the retail sale of
electricity to allow for a more competitive market. As the trend
continues towards competition in the electric utility industry, Unitil
has actively participated in industry, legislative and regulatory
proceedings on the issues of competition and industry restructuring at
both the federal and state levels, favoring a reasonable and orderly
transition to competition and more choice for all customers.
Both the New Hampshire Public Utilities Commission (the "NHPUC") and
the New Hampshire Legislature have been involved in discussions and
analysis relative to competition in the industry. Early in 1995, the
NHPUC issued an order in response to a petition by a power marketer
seeking to sell to certain industrial customers of an investor-owned
New Hampshire utility. In that order the NHPUC ruled that utilities
in New Hampshire do not have exclusive franchise territories as a
matter of law and directed the marketer to seek a declaratory order
from the Federal Energy Regulatory Commission regarding its proposed
transactions. This decision has been appealed to the New Hampshire
Supreme Court. In June 1995 New Hampshire Senate Bill 168 (SB 168),
was signed into law. SB 168 establishes a legislative committee to
consider changes in the structure of the electric utility industry.
The act also directs the NHPUC to begin a retailcompetitionpilot
program and to act within five months to establish standards for
utility discounts to industrial customers. The legislative committee
and its subcommittees met regularly during the summer and fall of
1995, and several members sponsored new legislation, including
legislation currently being debated that would require utilities to
file restructuring plans with the NHPUC by June 1996, with statewide
retail competition by June 1998. The NHPUC has issued its preliminary
guidelines for the retail wheeling pilot program incorporating
implementation by May 1996 and is expected to issue its final
guidelines in March 1996. The NHPUC issued its final guidelines on
discount rates for industrial customers in November 1995. The NHPUC
aproved the Company's Energy Bank program in accordance with these
guidelines in December 1995.
During 1995, the Massachusetts Department of Public Utilities (the
"MDPU") concluded the initial hearings in an electric industry
restructuring docket and has issued an order requiring the three
largest Massachusetts' electric utilities to file restructuring plans
in February1996 and the remaining Massachusetts' electric utilities
(including FG&E) to file restructuring plans three months after the
MDPU issues orders regarding the first three plans.
CECo, E&H, and FG&E have all received regulatory approval for the
Company's Energy Bank program. Energy Bank is an innovative economic
development program designed to bring low-cost energy to new and
expanding industrial customers. With rates in the range of 5 cents/KWH
this program offers electric energy at a price that is equal to the
National Average industrial rate and is 40% below the current average
industrial rate in New England. In addition to providing substantial
benefits to new and expanding industrial customers in the form of very
competitive and responsive market pricing, Energy Bank will also
provide significant benefits to all the System's customers in the form
of local economic development activity, reduced power costs, and lower
costs to all customers through the issuance of Power Dividends.
The last formal regulatory hearings to increase base rates for
Unitil's three retail operating subsidiaries occurred in 1985 for
Concord Electric Company, 1984 for Fitchburg Gas and Electric Light
Company and 1981 for Exeter & Hampton Electric Company. A majority of
the System's operating revenues are collected under various periodic
rate adjustment mechanisms including: fuel, purchased power, cost of
gas and conservation program cost recovery mechanisms.
Litigation --- The Company is also involved in other legal and
administrative proceedings and claims of various types which arise in
the ordinary course of business. In the opinion of the Company's
management, based upon information furnished by counsel and others,
the ultimate resolution of these claims will not have a material
impact on the Company's financial position.
Purchased Power and Gas Supply Contracts --- FG&E and Unitil Power
have commitments under long-term contracts for the purchase of
electricity and gas from various suppliers. Generally, these contracts
are for fixed periods and require payment of demand and energy
charges. Total costs under these contracts are included in Electricity
and Gas Purchased for Resale in the Consolidated Statements of
Earnings. These costs are normally recoverable in revenues under
various cost recovery mechanisms.
The status of the electric purchased power contracts at December 31,
1995, was as follows:
Unit 1995 Est. Annual Min.
Fuel Energy Purchased Contract Payments Which
Type [1] MW (MWH's) End-Date Cover Future Debt
Entitlement Service Regs. ($000)
Non-Utility Purchases
Unitil Power
Refuse 6.0 [2] 45,546 2003 None
System 9.5 [7] 2,368 1995 None
System 9.5 [7] 2,047 1995 None
Gas 1.5 7,558 2012 None
Coal 20.0 68,156 2009 None
System 18.3 [8] 804 2002 None
FG&E
Wood 14.0 99,659 2012 None
Hydro 3.0 18,328 2012 None
Utility Purchases
Unitil Power
Nuclear 25.5 185,505 1998 None
Oil/Gas 23.0 52,797 1998 None
Hydro 8.9 2001 $1,080 [3]
Various 16.0 [2] 44,426 1999 None
Coal/Oil 15.0 [2] 65,837 2005 None
Oil/Gas 25.0 86,309 1996 None
Gas 12.0 [2] 56,750 2010 $2,776 [4]
Nuclear 3.0 [2] 7,092 2005 None
Nuclear 2.0 [2] 4,307 2005 None
Coal/Oil 9.3 [2] 23,362 2005 None
Nuclear 1.9 [2] 18,035 2013 None
Nuclear 10.0 72,881 2010 None
Oil 5.0 [2] 11,994 2005 None
Oil 5.0 [2] 12,766 2005 None
System 8.0 12,777 1996 None
Oil/Gas 10.0 [2] 8,607 2008 None
Various [5] 66,959 None
Various [6] 171,770 None
FG&E
Nuclear 10.0 74,780 1996 None
Hydro 2.1 1996 $73 [3]
Hydro 3.2 2001 $426 [3]
Oil/Gas 20.0 69,445 2015 None
System 15.0 [2] 27,582 2001 None
Various [5] 86,048 None
Various [6] 108,967 None
Notes:
[1] Total Annual Cost of Purchase Power Contracts are
included on Consolidated Statement of Earnings.
[2] Capacity amounts vary over time. Represents maximum
capacity purchased under the contract.
[3] Total support charges including debt service requirements.
[4] Total estimated 1995 annualized capacity payments, including
debt service requirements.
[5] Short-term purchases of a month or less in duration.
[6] Net energy purchases from NEPOOL.
[7] Contract Ended 6/30/95 and was replacted by [8].
[8] Replacement for [7].
Note 11: Segment Information
The following additional information is presented about the
electric and gas operations of the Company:
1995 1994 1993
Operating Revenues $138,099,371 $134,096,627 $132,754,707
Operating Income Before Income Taxes $16,781,348 $15,884,879 $15,248,660
Identifiable Assets as of December 31 $174,269,584 $171,757,678 $169,360,726
Depreciation $5,504,701 $5,359,212 $5,215,489
Construction Expenditures $11,846,778 $7,364,344 $6,849,060
Gas Operations 1995 1994 1993
Operating Revenues $17,629,879 $18,694,703 $18,486,105
Operating Income Before Income Taxes $1,578,103 $2,026,055 $2,512,287
Identifiable Assets as of December 31 $30,013,418 $28,181,365 $27,168,106
Depreciation $810,912 $770,405 $733,583
Construction Expenditures $2,007,922 $1,816,390 $1,070,984
Total Company 1995 1994 1993
Electric and Gas Operating Revenues $155,729,250 $152,791,330 $151,240,812
Other Revenue 940,954 624,560 368,010
Total Operating Revenues $156,670,204 $153,415,890 $151,608,822
Operating Income Before Income Taxes $18,359,451 $17,910,934 $17,760,947
Income Tax Expense (4,097,161) (4,137,430) (3,687,538)
Non-Operating Income 171,089 62,887 50,145
Net Interest and Other Expenses (6,064,583) (5,798,192) (6,523,487)
Net Income $8,368,796 8,038,199 7,600,067
Dividend Requirements on Preferred Stock 283,749 291,543 297,577
Net Income Applicable to Common Stock $8,085,047 $7,746,656 $7,302,490
Identifiable Assets as of December 31 $204,283,002 $199,939,043 $196,528,832
Unallocated Assets 7,419,282 4,582,418 4,979,923
Total Assets as of December 31 $211,702,284 $204,521,461 $201,508,755
Depreciation $6,315,613 $6,129,617 $5,949,072
Construction Expenditures $14,644,963 $8,943,491 $7,713,542
Expenses used to determine operating income before taxes are
charged directly to either segment or are allocated in accordance with
factors contained in cost of service studies which were included in
rate applications approved by the NHPUC and MDPU. Assets allocated to
each segment are based upon specific identification of such assets
provided by Company records. Assets not so identified represent
primarily working capital items and real property.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this Item is set forth in Exhibit 99.1
on pages 2 through 6 of the 1996 Proxy Statement.
Item 11. EXECUTIVE COMPENSATION
Information required by this Item is set forth in Exhibit 99.1
on pages 8 through 12 of the 1996 Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is set forth in
Exhibit 99.1 on pages 2 through 4 of the 1996 Proxy Statement and is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) and (2) -
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements are included herein under Part
II, Item 8, Financial Statements and Supplementary Data.
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - December 31, 1995 and 1994
Consolidated Statements of Earnings - for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Capitalization - December 31, 1995 and 1994
Consolidated Statements of Cash Flows
for the years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Common Stock Equity -
for the years ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
The following consolidated financial statement schedules of the
Company and subsidiaries are included in Item 14(d):
Report of Independent Certified Public Accountants
Schedule VIII Valuation and Qualifying Accounts for December 31,
1995; 1994 and 1993
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions, are inappropriate, or
information required is included in the financial statements or notes
thereto and, therefore, have been omitted.
(3) - List of Exhibits
Exhibit No. Description of Exhibit Reference*
3.1 Articles of Incorporation Exhibit 3.1 to Form
of the Company. S-14 Registration
Statement 2-93769
3.2 Articles of Amendment to the
Articles of Incorporation
filed on March 4, 1992 and Exhibit 3.2 to Form
April 30, 1992. 10-K for 1992
3.3 By-Laws of the Company. Exhibit 3.2 to
Form S-14
Registration
Statement 2-93769
3.4 Articles of Exchange of Concord
Electric Company (CECo),
Exeter & Hampton Exhibit 3.3 to
Electric Company (E&H) 10-K
and the Company for 1984
3.5 Articles of Exchange of CECo,
E&H, and the Company -
Stipulation of the Parties Exhibit 3.4 to
Relative to Recordation and Form 10-K
Effective Date. for 1984
3.6 The Agreement and Plan of Merger
dated March 1, 1989 among the
Company, Fitchburg Gas and Exhibit 25(b) to
Electric Light Company (FG&E) Form 8-K dated
and UMC Electric Co.,Inc.(UMC).March 1, 1989
3.7 Amendment No. 1 to The Agreement
and Plan of Merger dated March Exhibit 28(b) to
1, 1989 among the Company, Form 8-K, dated
FG&E and UMC December 14, 1989
4.1 Indenture of Mortgage and Deed
of Trust dated July 15, 1958 of
CECo relating to First
Mortgage Bonds, Series B, 4 3/8%
due September 15, 1988 and all
series unless supplemented. **
4.2 First Supplemental Indenture
dated January 15, 1968
relating to CECo's First
Mortgage Bonds, Series C,
6 3/4% due January 5, 1998
and all additional series
unless supplemented. **
4.3 Second Supplemental Indenture
dated November 15, 1971
relating to CECo's First
Mortgage Bonds, Series D,
8.70% due
November 15, 2001 and all
additional series
unless supplemented. **
4.4 Fourth Supplemental Indenture
dated March 28, 1984 amending
CECo's Original First Mortgage
Bonds Indenture, and First,
Second and Third Supplemental
Indentures and all additional
series unless supplemented. **
4.5 Fifth Supplemental Indenture
dated June 1, 1984 relating
to CECo's First Mortgage
Bonds, Series F, 14 7/8% due
June 1, 1999 and all additional
series unless supplemented. **
4.6 Sixth Supplemental Indenture
dated October 29, 1987
relating to CECo's First
Mortgage Bonds, Series G,
9.85% due October 15, 1997 Exhibit 4.6 to
and all additional series Form 10-K
unless supplemented. for 1987
4.7 Seventh Supplemental Indenture
dated August 29, 1991 relating
to CECo's First Mortgage
Bonds, Series H, 9.43% due
September 1, 2003 and all Exhibit 4.7 to
additional series Form 10-K
unless supplemented. for 1991
4.8 Eighth Supplemental Indenture
dated October 14, 1994
relating to CECo's First
Mortgage Bonds,
Series I, 8.49% due October Exhibit 4.8 to
14, 2024 and all additional Form 10-K
series unless supplemented. for 1994
4.9 Indenture of Mortgage and Deed
of Trust dated December 1,
1952 of E&H relating to all
series unless Registration Exhibit 4.5 to
supplemented. Statement 2-49218
4.10 Third Supplemental Indenture
dated June 1, 1964 relating
to E&H's First Mortgage Bonds,
Series D, 4 3/4% due June 1, Exhibit 4.5 to
1994 and all additional series Registration
unless supplemented. Statement 2-49218
4.11 Fourth Supplemental Indenture
dated January 15, 1968
relating to E&H's
First Mortgage Bonds, Series
E, 6 3/4% due January 15, Exhibit 4.6 to
1998 and all additional Registration
series unless supplemented. Statement 2-49218
4.12 Fifth Supplemental Indenture
dated November 15, 1971
relating to E&H's
First Mortgage Bonds, Series
F, 8.70% due November 15, Exhibit 4.7 to
2001 and all additional Registration
series unless supplemented. Statement 2-49218
4.13 Sixth Supplemental Indenture
dated April 1, 1974 relating
to E&H's First Mortgage Bonds,
Series G, 8 7/8%
due April 1, 2004 and all
additional series unless
supplemented. **
4.14 Seventh Supplemental Indenture
dated December 15, 1977
relating to E&H's
First Mortgage Bonds, Series Exhibit 4 to
H, 8.50% due December 15, Form 10-K
2002 andall additional for 1977
series unless supplemented. (File No. 0-7751)
4.15 Eighth Supplemental Indenture
dated October 29, 1987
relating to E&H's
First Mortgage Bonds, Series
I, 9.85% due October
15, 1997 and all additional Exhibit 4.15 to
series unless supplemented. Form 10-K for 1987
4.16 Ninth Supplemental Indenture
dated August 29, 1991 relating
to E&H's First Mortgage Bonds,
Series J, 9.43% due September Exhibit 4.18 to
1, 2003 and all additional Form 10-K
series unless supplemented. for 1991
4.17 Tenth Supplemental Indenture
dated October 14, 1994
relating to E&H's
First Mortgage Bonds, Series
K, 8.49% due October 14, 2024 Exhibit 4.17 to
and all additional series Form 10-K
unless supplemented. for 1994
4.18 Bond Purchase Agreement dated
August 29, 1991 relating to
E&H's First Mortgage Bonds,
Series J Form 10-K Exhibit 4.19 to
9.43% due September 1, 2003 for 1991
4.19 Purchase Agreement dated March
20, 1992 for the 8.55% Senior Exhibit 4.18 to
Notes due March 31, 2004 Form 10-K for 1993
4.20 Note Agreement dated November
30, 1993 for the 6.75% Exhibit 4.18 to
Notes due November 30, 2023 Form 10-K for 1993
4.21 First Mortgage Loan Agreement
dated October 24, 1988 with an
Institutional Investor in
connection with Unitil Realty
Corp.'s acquisition of the Exhibit 4.16 to
Company's facilities in Form 10-K
Exeter,New Hampshire. for 1988
10.1 Labor Agreement effective June
1, 1994 between CECo
and The International
Brotherhood of Electrical Exhibit 10.1 to
Workers, Local Union No. 1837 Form 10-K for 1994
10.2 Labor Agreement effective June
25, 1995 between E&H
and The International
Brotherhood of Electrical Workers,
Local Union No. 1837, Unit 1. Filed herewith
10.3 Labor Agreement effective May 1,
1994 between FG&E and The
Brotherhood of Utility Workers
of New England, Inc., Local Exhibit 10.3 to
Union No. 340. Form 10-K for 1994
10.4 Unitil System Agreement dated
June 19, 1986 providing that
Unitil Power will supply
wholesale requirements
electric Exhibit 10.9 to
service to CECo and E&H Form 10-K for 1986
10.5 Supplement No. 1 to Unitil
System Agreement providing that
Unitil Power will supply
wholesale Exhibit 10.8 to
requirements electric service Form 10-K for 1987
to CECo and E&H.
10.6 Transmission Agreement Between
Unitil Power Corp. and Public
Service Company of New
Hampshire, Exhibit 10.6 to
Effective November 11, 1992 Form 10-K for 1993
10.7 Form of Severance Agreement
dated February 21, 1989, Exhibit 10.55 to
between the Company and Form 8
the persons named in the dated
schedule attached thereto. April 12, 1989
10.8 Key Employee Stock Option Exhibit 10.56 to
Plan effective as of Form 8 dated
January 17, 1989. April 12, 1989
10.9 Unitil Corporation Key Employee Exhibit 10.63 to
Stock Option Plan Award Form 10-K
Agreement. for 1989
10.10 Unitil Corporation Management Exhibit 10.94 to
Performance Compensation Form 10-K/A for
Program. 1993
10.11 Unitil Corporation Supplemental
Executive Retirement Plan Exhibit 10.95 to
effective as of January 1, Form 10-K/A for
1987. 1993
11.1 Statement Re Computation in
Support of Earnings Per Share
for the Company Filed herewith
12.1 Statement Re Computation in
Support of Ratio of Earnings
to Fixed Charges for the
Company. Filed herewith
21.1 Statement Re Subsidiaries of
Registrant. Filed herewith
27.0 Financial Data Schedule Filed herewith
28.1 Form 11-K Annual Report of the
UNITIL Corporation Tax
Deferred Savings and
Investment Plan for the
year ended December 31, 1995 Filed herewith
99.1 1995 Proxy Statement Filed herewith
* The exhibits referred to in this column by specific designations
and dates have heretofore been filed with the Securities and Exchange
Commission under such designations and are hereby incorporated by
reference.
** Copies of these debt instruments will be furnished to the
Securities and Exchange Commission upon request.
(b) Report on Form 10-K
No reports on Form 8-K were filed during the fourth quarter of
the year ended December 31, 1995.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 9, 1996, accompanying
the consolidated financial statements and schedules incorporated in
the Annual Report of Unitil Corporation and subsidiaries on Form 10-K
for the year ended December 31, 1995. We hereby consent to the
incorporation by reference of said report in the Registration
Statements of Unitil Corporation and subsidiaries on Form S-3 and on
Form S-8.
GRANT THORNTON LLP
Boston, Massachusetts
March 28, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly
caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Unitil Corporation
Date March 11, 1996 By Peter J. Stulgis
Peter J. Stulgis
Chairman of the Board of
Directors, and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature Capacity Date
Peter J. Stulgis Principal Executive March 11, 1996
Peter J. Stulgis Officer; Director
(Chairman of the Board of Directors
and Chief Executive Officer)
Michael J. Dalton Principal Operating March 11, 1996
Michael J. Dalton Officer; Director
(President and Chief
Operating Officer)
Gail A. Siart Principal Financial March 11, 1996
Gail A. Siart Officer
(Treasurer and Chief
Financial Officer)
Douglas K. MacDonald Director March 11, 1996
Douglas K. Macdonald
J. Parker Rice, Jr. Director March 11, 1996
J. Parker Rice, Jr.
Charles H. Tenney III Director March 11, 1996
Charles H. Tenney III
William W. Treat Director March 11, 1996
William W. Treat
W. William Vanderwolk, Jr. Director March 11, 1996
W. William VanderWolk, Jr.
J. D. Wheeler Director March 11, 1996
J. D. Wheeler
Franklin Wyman, Jr. Director March 11, 1996
Franklin Wyman, Jr.
SCHEDULE VIII.
UNITIL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to Deductions Balance at
Beginning Costs and Other from End of
Description of Period Expenses Accounts(A) Reserves(B) Period
Year Ended December 31, 1995
Reserves Deducted from A/R
Electric 504,790 627,197 170,563 812,278 490,272
Gas 69,059 254,387 49,271 240,393 132,324
573,849 881,584 219,834 1,052,671 622,596
Year Ended December 31, 1994
Reserves Deducted from A/R
Electric 510,853 552,905 193,202 752,170 504,790
Gas 70,402 157,098 58,714 217,155 69,059
581,255 710,003 251,916 969,325 573,849
Year Ended December 31, 1993
Reserves Deducted from A/R
Electric 461,048 654,959 154,355 759,509 510,853
Gas 95,008 152,720 54,733 232,059 70,402
556,056 807,679 209,088 991,568 581,255
(A) Collections on Accounts Previously Charged Off
(B) Bad Debts Charged Off
A three year Agreement made and entered into this 25th day of
June, 1995 by and between EXETER & HAMPTON ELECTRIC COMPANY, a New Hampshire
corporation hereinafter referred to as the "Company," and LOCAL UNION
NO. 1837, Unit #1 of the INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS,
and the EMPLOYEES OF THE COMPANY who have designated Local Union No. 1837,
Unit #1, of the International Brotherhood of Electrical Workers to act for
them as their collective bargaining agent, all hereinafter referred to as
the "Union,"
WHEREAS, the Union represents a majority of the employees of the
Company in the Line Department (including lineworkers, utility plant
inspector, stock and plant clerks),
Meter Department and meter readers and has been designated by said majority
to be the exclusive representative of all employees of the said departments
for the purpose of collective bargaining in respect to rates of pay, wages,
hours of work, and other conditions of employment and,
WHEREAS, both the Company and the Union desire to promote harmony
and efficiency in the working forces so that the employees and the Company
may obtain mutual economic advantage consistent with the duty of the Company,
as a public utility, at all times to provide an adequate and uninterrupted
supply of electric service in the territory and communities which it serves,
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is agreed as follows:
ARTICLE I: RECOGNITION OF UNION
The Company recognizes the Union to be the exclusive representative
of all the employees in the Line, Plant Records and Inspection, Meter, and
Stores Departments holding the positions set forth on the attached "Schedule
Of Wages," for the purposes of collective bargaining.
ARTICLE II
A. Union Security
1.All employees who are at present members of the Union or may
hereafter become members of the Union shall remain members in good standing
in the Union during the term of this Agreement as a condition of their
employment by the Company. New employees covered by the Agreement shall be
required to apply for membership in the Union at the end of ninety (90) days
of continuous employment and remain members in good standing in the Union as
a condition of their continued employment during the term of the Agreement
and the Union agrees to accept such new employees into membership in the
Union in accordance with its By-Laws. The term "member in good standing" is
understood to be a Union member whose dues are paid in accordance with the
By-Laws and Constitution of the Union.
2.The Company shall not use outside contractors to perform work
regularly done by its regular employees if so doing would result in any
regular employee being discharged, laid off, or transferred to another job.
B. No Discrimination
The Company and the Union agree that the operation or application of various
provisions of the Agreement shall in no way serve to discriminate against
any individual with respect to compensation, terms, conditions, or
privileges of employment or otherwise affecting status as an employee
because of such individual's age, race, color, creed, sex or national origin.
C. Safety
1.The Company will continue to make reasonable regulations for the
safety and health of its employees during their hours of employment. The
Company's Safety Program shall provide for the involvement of the Union in
its various aspects, including courses of action to avoid personal injury
and damage to equipment, the proper use of materials, review of safety
instructions, accidents, first aid measures, and to provide input through
the Company Safety Committees for modification and/or adoption of safety
instructions.
2.Whenever an Accident Investigation Report is made, as to an accident
in which an employee represented by the Union is involved, the employee and
the Chief Steward will receive a copy of the Investigation Report.
D. Payroll Deductions for Union Dues
The Company agrees to make weekly payroll deductions for Union dues upon
written authorization of employees who are Union members with their
signatures properly witnessed and to forward monthly the amounts so
deducted to the Union.
ARTICLE III: WAGES AND HOURS
A. Wages
1.The hereto attached Schedule of Wages shall be effective during the
life of this Agreement.
2.The Company may hire new employees in any job classification at any
rate of pay down to 15% below the straight-time hourly rate for such job
classification as shown on the attached Schedule of Wages; provided, however,
that if retained in service, the employee must be increased to the straight
time hourly rate of pay for the job classification within six (6) months of
the date of hire or at such earlier date that the employee becomes fully
qualified to perform the duties of the job classification.
3.An employee promoted to another job classification will be paid
during the first six (6) months in the new job classification at an hourly
rate which is the average of the rates shown on the attached Schedule of
Wages for the employee's prior job classification and the new job
classification.
4.The hourly rate for the Lead Lineworker job classification is set by
adding one ($1.00) dollar to the Lineworker-First Class hourly rate.
5.The hourly rate for Lineworkers when performing 34.5 kV rubber
gloving is set by adding one dollar ($1.00) per hour to the similar
lineworker's wage. If assigned this higher wage rate for two (2) hours or
more, the employee shall receive this rate for the normal eight (8) hours
of the day.
6.The hourly rate for Utility Lineworkers and Lineworkers temporarily
filling the position is set by adding forty ($.40) cents per hour to the
similar Lineworker's hourly rate.
7.The hourly rate for Utility Clerks or Assistant Utility Clerks is
set by adding forty ($.40) cents per hour to the similar clerks rate.
8.The hourly rate for Lead Meter Mechanic job classification is set by
adding one ($1.00) dollar to the Meter Mechanic Class I hourly rate.
B. Working Hours
1.The normal work week shall be forty (40) hours, and the normal work
day shall be eight (8) hours, 7 AM to 3:30 PM, Monday through Friday, with
one-half hour out for lunch, the normal lunch period being from 12 noon to
12:30 PM. These hours do not apply to the Utility Lineworker or to the
Utility Clerk except during training periods. Employees working off the
road while constructing, maintaining, or patrolling transmission lines may,
by mutual agreement, take a 20 minute lunch break and will be paid overtime
for the normal 30 minute lunch period at the appropriate rate.
2.Utility Lineworkers shall rotate shifts equally on a monthly cycle.
Other shift rotations may be agreed to by management, provided the cycles
are of equal duration.
a.The normal work week of the Utility Lineworker on Shift A shall be
forty (40) hours and the normal work day shall be eight (8) hours on
Tuesday, Wednesday, Thursday, and Friday from 7:00 AM to 3:30 PM with
one-half hour for lunch from 12:00 noon to 12:30 PM and, on Saturday
the normal work day shall be from 7:30 AM to 3:30 PM.
b.The normal work week of the Utility Lineworker on Shift B shall be
forty (40) hours and the normal work day shall be eight (8) hours on
Tuesday, Wednesday, Thursday, Friday, and Saturday from 3:00 PM to
11:00 PM.
3.The normal work week of the Utility Clerk shall be forty (40) hours
and the normal work day shall be eight (8) hours on Monday through Friday,
from 2:00 PM to 10:00 PM. The normal work week of the Assistant Utility Clerk
shall be the regular 7:00 AM to 3:30 PM work day, Monday through Friday.
C. Standby Clause
One qualified lineworker will be assigned to standby duty each week during
the year. Standby duty consists of a qualified lineworker remaining within
reach of a telephone or pager so that an employee on standby duty may be
notified to report for work in cases of emergency outside of regularly
scheduled working hours. Standby duty does not require any interruption of
employee's normal life except to the extent of making arrangements so that
the employee can be reached by telephone or pager within a reasonable driving
time from the place the employee normally reports for work.
1.Standby duty shall be for the hours beginning at 3:30 PM Friday
extending through the following Friday and ending at 7:00 AM Monday.
Employees assigned to standby duty shall be paid fourteen (14) hours
straight-time pay, plus three (3) hours straight-time pay for a week in which
a holiday falls and the Lineworker is on standby the full twenty-four (24)
hours of that holiday. The hours beginning 7:00 AM Friday and ending
11:00 PM Saturday will be excluded from the second Lineworkers standby.
D. Overtime
1.Double time shall be paid for all hours worked on Sunday and holidays
and time and one-half paid for all other hours worked outside of the normal
work day or week.
2.When called out from their homes at time other than regular working
hours employees shall receive an amount not less than that equal to four (4)
hours straight-time pay when called out before midnight, and an amount not
less than that equal to six (6) hours straight-time pay when called out
after midnight. However, these call out minimums shall not apply when the
hours worked are concurrent or connects with the employees beginning or end
of their normal working hours.
Time will begin immediately upon traveling to report to work and end
upon returning home or their first stop upon being released from work not to
exceed thirty (30) minutes each way unless such time is continuous with the
regular work day or employee takes meal time while in route. Employees are
expected to be fair and reasonable when charging for travel time.
3.When practicable, overtime work will be distributed equally among
all employees of the department concerned. All overtime shall be included
for the purposes of tracking employee unscheduled and scheduled overtime
work. The Company shall not, however, be required to schedule overtime or
to modify overtime schedules to accommodate employees whose normal work week
is other than 7:00 AM to 3:30 PM, Monday through Friday.
4.Employees assigned to work on planned weekend overtime will be
notified as to the hours to be worked on the immediately preceding Friday
by 3:30 PM, but only after being alerted on the immediately preceding
Thursday of the anticipated Saturday work. The above mentioned Saturday
planned weekend overtime relates to normal Company work and not customer
related requests or other unforeseen circumstances.
In the event of inclement weather, employees shall be dismissed
immediately and if this dismissal occurs before or at the first half hour
of work, employees shall be paid four (4) hours at straight time pay. If
dismissal due to weather should take place after the first half hour of
work the employees shall receive the greater of, four hours at straight pay
or time and one half for hours worked.
5.The Company reserves the right to limit and assign the number of
employees to any planned and scheduled overtime provided the current
overtime list is followed.
6.If a holiday falls on one (1) of the first five (5) days that an
employee is regularly scheduled to work during a payroll week, in addition
to holiday pay he will receive double time for each hour worked.
7.If an employee is required to work sixteen (16) or more consecutive
hours, a period of eight (8) hours off will be allowed before returning
to work unless an emergency arises which makes it necessary for the Company
to call the employee back to work before the expiration of the eight-hour (8)
period. Employees working over sixteen (16) consecutive hours will be paid
double time for the consecutive hours worked beyond sixteen (16). Any part
of the eight-hour (8) period which extends into the employee's normal work
schedule will be paid for at normal straight-time rates.
Time allowed off for meals will not prevent the hours worked from
being considered as consecutive. If an employee is called and reports for
work within two (2) hours of the time the employee went off duty or in the
case where prior consecutive hours worked were sixteen (16) or greater,
within eight (8) hours of the time of going off-duty, the time off will not
prevent the hours worked thereafter from being considered as consecutive
with the previous hours worked.
8.Unless an emergency arises, an employee who is required to work
during unscheduled hours between midnight and the beginning of the normal
work schedule, the employee will be entitled to a minimum aggregate of
seven (7) hours of rest time between midnight and the beginning of the
normal work schedule. If such rest time extends into the employee's normal
workday, no reduction in pay will be made for the hours overlapping the
normal workday. Rest time extending into the normal work schedule and having
a duration of three (3) hours or less may be taken at the end of, rather
than the beginning of, the normal work day, provided 50% of time worked
occurred after 3:30 AM. If more than 50% of time worked occurred before
3:30 AM, rest time must be taken at the beginning of the workday. For the
purposes of this overtime section, unscheduled is defined as unanticipated
call outs from an employees home, otherwise, overtime is considered planned
and scheduled.
E. Holidays
1.Unless assigned to work, employees shall not be required to work on
holidays set forth herein when such days come, or are celebrated, in their
scheduled work week, and if not assigned to work, shall be paid for each
such day an amount equal to eight (8) hours straight-time. Holidays shall
be considered to be the following days: New Year's Day, Washington's
Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day, and Christmas Day.
2.Two (2) additional days each year will be designated as "Floating
Holidays", one of which shall be taken between January 1 and June 30,
subject to the same provisions of this Agreement as any other designated
holiday. The date of the floating holidays for each individual employee may
be taken upon such day as the employee may elect upon a minimum of two (2)
weeks notice in writing provided that, in the judgment of the Company, the
absence on such day will not impair the Company's operation and further
provided that the floating holidays will not be granted during the
employee's scheduled vacation.
3.If a holiday falls on a day on which an employee is not regularly
scheduled to work and the employee does not work on such a holiday, the
employee shall receive holiday pay (an amount equal to eight [8] hours
straight-time pay) or at the discretion of the Company, a day off in lieu
of such holiday pay; provided, however, that the Company shall have no
obligation to grant a particular day off if the granting of such day off
would require the Company to pay a premium rate of pay to another employee
to fill in for the employee taking the day off.
F. Friday After Thanksgiving
The Friday after Thanksgiving will be a day off with pay (an amount equal
to eight [8] hours straight-time pay) and will be treated as a Saturday for
all other provisions of the Agreement.
G. Vacations
Vacation is an accrued time off from work with pay benefit. Individual
vacation time is accrued within the same calendar year that the vacation is
taken and accrues only during the full-pay periods. The rate of accrual is
based upon length of employment. Vacation time can only be converted into
dollars when an employee terminates or retires and has not taken accrued
vacation time. Vacation pay will be equal to the amount the employee would
have received if regular hours had been worked during the same time period
(does not include overtime).
Vacation time: (Subject to the provisions above)
A new employee hired prior to June 1, upon completion of six (6)
months of employment, is entitled to one (1) week of vacation
within the calendar year hired.
An employee who is expected to complete one (1) full year of
employment by December 31 of any calendar year will be entitled
to two (2) weeks of vacation during the calendar year until the
fifth (5th) year of employment.
An employee who is expected to complete at least five (5) years
of employment by December 31 of any calendar year will be entitled
to three (3) weeks of vacation during the calendar year until the
tenth (10th) year of employment.
An employee who is expected to complete at least ten (10) years
of employment by December 31 of any calendar year will be entitled
to four (4) weeks of vacation during the calendar
year until the eighteenth (18th) year of employment.
An employee who is expected to complete at least eighteen (18)
years of employment by December 31 of any calendar year will
be entitled to five (5) weeks of vacation during the calendar year.
An employee who terminates is entitled only to that percentage of
vacation that is equivalent to the percentage of the calendar year in which
the person was an employee and receiving full pay.
Employees retiring from active employment under a Company retirement
plan during any calendar year shall be entitled to receive the same vacation
benefit as that which would have been allowed if active employment had
continued for the full calendar year in which retirement takes place.
Vacation time has to be scheduled in advance with the employee's
immediate supervisor. Because of scheduling difficulties and work load
requirements, the Company reserves the right to schedule any vacation time
in excess of two (2) weeks.
In the event an employee is unable to take earned vacation because
of sickness, injury (work or non-work related), or Company work requirements,
such earned unused vacation shall be carried over into the next calendar
year. Except for those situations, vacation time cannot be carried over
into the following year.
In the event that an employee suffers a serious illness or injury
(verified by a physician) during their scheduled vacation and notifies their
supervisor of such as soon as possible, that portion of vacation period
during which the employee is incapacitated may be rescheduled at the option
of the Company to another time during the same calendar year. Vacation will
continue to accrue during jury duty and two-week (2) military reserve duty.
H. Classification Changes
1. Reclassification
a. When an employee is temporarily assigned to a higher wage
classification for a period of two (2) hours, or more, the employee
shall receive the rate for such classification under Schedule of Wages
attached.
b. When a line crew composed of two or more employees is performing
work during other than normal working hours which requires employee
supervision at the work site, the senior qualified employee on the crew
shall be the employee in charge of the other employee or employees unless
otherwise designated and shall receive the premium as set forth in the
temporary foreman mutual working agreement.
2. Retrogression Pay
a. If a regular full-time employee becomes partially incapacitated by
reason of age or disability (provided that such disability [1] did not
arise during the course of or as a result of employment by an employer
other than the Company who is subject to Worker's Compensation statutes,
or [2] did not arise during the course of or as a result of the employee's
activity as an independent contractor on a regular basis, or [3] was not
deliberately caused by or contributed to by the voluntary act of the
employee) and thus is unable to perform fully the duties of the job
classification, the Company will endeavor to give other work by placing
the employee in the highest classification in which the employee is able
to perform the work assigned and in which there is an available opening.
The employee shall be given a reasonable opportunity for training to fill
an available job which carries a rate of pay more nearly equal to the
original rate, and if the employee becomes qualified for such available
job, shall be placed in the classification.
An assignment made under this Article shall continue until the
employee's normal retirement date, provided that the employee remains
qualified to perform the duties required of the job classification.
During the period of assignment under this Article, employees shall be
paid at the maximum rate for the classifications to which they are
assigned, except those employees who have completed ten (10) or more
years of continuous service at the time of assignment shall be paid
not less than the percentage of their former rates indicated below,
such percentage to remain the same for the balance of each employee's
active employment. When rates of pay are adjusted by a general wage
adjustment, employees so classified will receive an adjustment in pay
in the amount by which the employee's retrogressed classification is
adjusted.
b. Subject to the restrictions imposed by this Article relating to the
availability of a job opening and the ability of the employee to perform
the job, an employee suffering an occupational disability resulting from
sickness or injury contracted in the course of Company employment, shall
have the option of receiving a rate determined in accordance with the
following table or such compensation as may be determined by the operation
of the applicable Worker's Compensation law.
Years of Service at
Time of Assignment Percentages
25 or more 100%
20 - 24 95%
15 - 19 85%
10 - 14 75%
c. The provisions of the foregoing Article shall not impair the right of
the Company to require an employee to retire under the Company's
Pension Plan.
3. Termination Pay
a. If an employee's employment with the Company is terminated due to a
reduction in work force resulting from automation or the closing of an
operation, the employee shall, unless retired with pension benefits under
the Pension Plan, be entitled to receive one-week's (1) pay for each
six (6) months (calculated to the nearest six-month (6) period) of
service with the Company; provided, however, that an employee receiving
termination pay shall not be entitled to be rehired under the provisions
of ARTICLE VII of this contract. The employee may have the option to
take termination pay for up to one (1) full year.
I. Temporary Assignments Outside the Company's Service Area
Work assignments with utilities outside the Company's service area are
voluntary except when the utility is an affiliate of UNITIL Corporation.
If adequate volunteers cannot be obtained for work assignments at UNITIL
affiliates, personnel will be assigned.
Employees will be paid for travel time, and transportation will be provided
if requested. The rate of pay shall be in accordance with this agreement
or the prevailing wage where they are assigned, which ever is higher.
If an employee works outside the service area and is required to stay
overnight, out-of-town pay will be paid. The employee will be paid the
same as when working within the service area except that straight time
rates will be paid for rest time.
This provision does not apply to assignments classed as nonworking
(examples: training, schools, meetings, etc.).
J. Working Conditions
1. Except when heat, cold, rain, snow, humidity, or other severe weather
conditions make such work unsafe, or as defined in "a" or "b" below,
employees are expected to perform outdoor work during inclement weather.
As the severity of inclement weather varies and whether or not work can
begin or continue depends, on part, upon the job involved. The manager, or a
representative designated by the manager, will determine if weather
conditions are such that it warrants cessation of work, consistent with
safety. The Employer's representative on the job site will be instructed
as to what constitutes inclement weather. Employees shall not lose any
regular pay because of failure to work outdoors due to inclement weather,
except in cases of disciplinary reasons.
a. Except in cases of necessity, emergency, or as set forth herein,
Lineworkers shall not be required to do outdoor line work, which exposes
them to inclement weather. For the purpose of this section, inclement
weather will include extreme cold which shall be considered 12 degrees
Fahrenheit or minus 10 degrees Fahrenheit wind-chill which will be
determined by the thermometer at the Company's Drinkwater Road facility.
i. Maintenance and replacement of street/flood lights (excluding new
installations) shall be performed during all inclement weather conditions
except when the conditions are such that it would be unsafe to perform
the work.
ii. Light precipitation assignments shall include the following
1) Maintenance and replacement of street/flood light fixtures and/or
accessories (excluding new installations).
iii. Fog and mist assignments shall include, but not limited to the
following
1) Maintenance, replacements and installation of street/flood light
fixtures and/or accessories.
2) Substation work on de-energized or isolated equipment, excluding
climbing steel.
3) Permanent connections
4) Motorized patrols.
5) Dead line work.
6) Material handling, stocking, delivery, loading, and unloading.
iv. Lineworkers will not be required to work on energized primaries or
secondaries, during wet weather, except in emergencies or necessities
and while maintaining, or repairing street/flood lights.
v. When the temperature reaches 90 degree Fahrenheit, normal line work
requiring the use of rubber gloves and/or sleeves will cease.
b. Meter Readers/Meter Workers/Meter Mechanics will not be required to
read meters during heavy snow or sleet or in any severe weather conditions
which would be considered detrimental to the safety of the employees. In
making this determination, the supervisor along with the employee will
consider factors which include driving/road conditions, walking conditions,
location of routes to be read, a review of local weather conditions and
forecasts and any relevant source of information. The supervisor will be
responsible for making the final decision.
K. Tools and Equipment
1.The Company shall provide lineworker's equipment, consisting of
climbing spurs, pads and straps, body belts and safety straps, pliers,
connectors, skinning knives, leather gloves, adjustable wrenches, rules and
screwdrivers, and replacements and renewals of them. All lineworker's
equipment shall be and remain the property of the Company. When renewals
or replacements are requested, the old equipment must be turned in or
its loss satisfactorily explained. All lineworker's equipment shall be
left on the property of the Company when not in use.
2.The Company shall provide all reasonably necessary tools for meter
department employees.
3.The Company shall provide protective clothing for employees engaged
in painting equipment.
L. Supervisors Working
Full time supervisors above the rank of Working Foreperson will not
customarily perform the same work which is performed by the employees whom
they supervise, provided, however, that supervisors may perform such work
for the purpose of instruction, training, and in cases of emergency.
Emergencies, for the purpose of this section, shall be defined as including
the following two descriptions: (1) customer outages or (2) an unexpected
occurence or set of circumstances demanding immediate action which
threatens life, limb, property or the continuity of service.
M. Rubber Gloving
As of June 25, 1995, the Company may adopt the practice of rubber gloving
voltages up to and including 34.5 kV in line work. Any employee classified
as Lineworker I, II, or III as of June 25, 1995, shall not be required to
rubber glove voltages in excess of 15 kV. To the extent the Company requires
rubber gloving of voltages between 15 kV and 34.5 kV, the work shall be
carried out by volunteers within the Company who have achieved Lineworker I
status or by a Lineworker I who is hired after June 25, 1995.
Lineworkers who were employees of the Company as of June 25, 1995, who
volunteer for the 34.5 kV rubber gloving program shall have the option of
leaving the program within one year from the day they volunteer, after the
program goes online. The Company, upon receipt of written notice that
employee's intent to leave the 34.5kV rubber gloving program, will
immediately remove them from the program. It has been further agreed that
the Company will confer with the Union with respect to appropriate safety
rules for rubber gloving voltages up to and including 34.5 kV in line work.
ARTICLE IV: CREDIT UNION & 401(k) PLAN
A. Credit Union
Company agrees to make payroll deductions for payments to one duly-
established Credit Union upon written authorization by regular employees
and to forward the amounts so deducted to the Credit Union in accordance
with such authority.
B. 401(k) Plan
Unit #1 members may participate in the Company's 401(k) Plan. The Company
agrees to make payroll deductions for payments to the duly-established
401(k) Plan upon written authorization by regular employees and to forward
the amounts so deducted to the 401(k) Plan in accordance with such authority.
ARTICLE V: PENSIONS
During the effective period of this Agreement, the Company will pay
retirement benefits in accordance with Statement of Retirement Plan dated
June 25th, 1995, attached hereto.
ARTICLE VI: GROUP INSURANCE
During the effective period of this Agreement, the Company will
maintain Group Insurance as follows: Life, Accidental Death and
Dismemberment, and Comprehensive Medical and Dental Plan in accordance
with terms of statement dated June 25th, 1995, attached hereto. In the
event that there shall be enacted after June 25th, 1995, state or federal
legislation in addition to that now enacted which provides benefits in the
field of health, medical, hospitalization and nursing care, the parties
agree at the request of either one to confer to consider revising the
benefits provided under this Agreement in said field in order to prevent
duplication or overlapping.
ARTICLE VII: PROMOTIONS, DEMOTIONS, AND FURLOUGHS
A. Promotions & Demotions
Selection of regular employees for promotion within the bargaining unit,
for demotion or furloughing because of a reduction in forces, shall be
based upon qualifications and seniority. If the employee is qualified for
the job in cases of promotion and demotion, seniority shall govern. In
cases of furloughing, seniority shall govern. The Union and the Company
recognize that it may be necessary to make exceptions in the application
of the foregoing seniority provisions by mutual agreement in order to
insure efficient operation of the Company's business. The determination
by the Company as to qualifications for promotions to foremen and
supervisors shall not be subject to arbitration under Article X. For the
purposes of promotions to certain positions having defined progression steps,
employees shall be required to successfully complete a training program
prior to being promoted to higher classifications. Successful completion
shall be determined by passing written tests and the ability to demonstrate
proper working techniques and practices.
B. Furloughs
If and when there is an addition in forces in any department covered by
this Agreement, employees who have been furloughed from such department
shall be given preference over other persons, and employees who have been
furloughed from any other department covered by this Agreement shall be
given preference over persons not formerly in the employ of the Company,
if in either case they are qualified in this Article.
C. New Positions
1. When a vacancy or the creation of a new position necessitates
promotion of any employee, or hiring a new employee, the Company shall
post notices at locations accessible to the employees, such notices to
remain posted for one week, within which time employees may apply in
writing to the supervisor or official of the Company designated in the
notice. The notices shall set forth the classification of the position to
be filled, an outline of the duties, the hours and days of work, and wage
rate, the date on which the notice is posted and the last day for filing
applications. Applicants who have special qualifications may describe
such qualifications briefly in their applications.
2. The Company may assign anyone to fill a vacancy or new position
temporarily pending the posting of notices and the consideration of
applications.
3. The Company may also assign anyone to perform temporary work or to
replace an absent employee without regard to the foregoing provisions of
this Article.
4. When an employee is promoted or transferred to another position but
fails to qualify within six (6) months, the employee shall be reassigned to
the class from which the employee was promoted or transferred. If the
Company determines that the employee is qualified to perform the work in
the class to which the employee was promoted or transferred, but the
employee desires to return to the previous class of work, the Company shall
not reassign the employee until there is a vacancy in such previous class.
D. Leave of Absences
1. The Company may grant leaves of absence for causes which it, in its
discretion, deems justifiable, for periods not in excess of one (1) year.
Time spent on leave of absence shall be included in determining length of
service for seniority purposes.
2. Leave of Absence for Union Officials - Time off without pay shall
be granted upon the request of the Union to Union officials and/or duly
elected delegates to the International Convention for the purpose of
attending Conventions of the IBEW or to attend other conferences involving
the Local Union, provided that (a) the absence of the employee shall not,
in the opinion of the Company, interfere with the Company's operations or
cause undue hardships to other employees, and (b) provided that the request
for such time off shall be made as far in advance as possible, but in no
case less than two (2) weeks in advance, and (c) the current Company's
vacation policy and procedure will be used to establish the number of
employees within a department that can be off at any one time. Maximum
duration per occurrence would be one (1) week.
3. Leave of Absences to Attend Funerals - In the event of the death of
a member of the immediate family of an employee, the Company will grant
reasonable time off without loss of pay, up to three (3) workdays, for
scheduled straight-time workdays falling within the period from the date
of the death through the date of the funeral. The immediate family is
defined as wife, husband, children, parents, sister, brother, father-in-law,
mother-in-law and step-parents. For other members of the family
(grandparents, grandchildren, aunts and uncles), one (1) day without loss
of pay will be granted if the funeral is held on a scheduled straight-time
workday. It is understood that this paragraph applies only when the time
off is used for the purpose intended.
4. Leave of Absences for Birth of Child - For the birth of an employee's
child, eight (8) hours within a twenty-four (24) hour period will be allowed
off with pay provided time off is not covered by a separate Company policy.
If the birth occurs after 3:30 pm Friday or any time on a Saturday, time
off would not be allowed.
ARTICLE VIII: MILITARY SERVICE
1. The Company will abide by the laws of the United States with respect
to the re-employment of those of its employees who have left or will leave
their employment with the Company to enter upon service with the armed
forces of the United States. When such absence from their duties is
compulsory, or results from enlistment in anticipation of compulsory service,
the period of absence from their duties with this Company of those
re-employed under this Article, within ninety (90) days of discharge provided
employee does not re-enlist after compulsory military requirements have
terminated or no longer exist, shall be computed as part of their total
term of service with the Company in determining their seniority, vacation,
sickness disability benefits, termination pay, and the amount of
retirement pension. The parties interpret said laws as applying with
equal force to all members of said armed forces, including the Merchant
Marine regardless of the manner by which they may have become members
thereof.
2. The Company agrees to pay to a regular employee, while on National
Guard or Reserve annual two-week (2) tour of duty, the difference between
the pay from National Guard or Reserves and the regular pay while at work
for the Company for two (2) weeks of the tour of duty, provided the
employee takes only one (1) week of vacation between May 1 and November 1,
in addition to the tour of duty.
ARTICLE IX: SUSPENSIONS AND DISCHARGES
1.Upon written request of the Union made within seven (7) days
from the date upon which an employee has been suspended or discharged, the
Company shall grant a hearing to the employee involved. Upon receipt of
the foregoing request in writing, the Company will inform the Union of the
reason for the suspension or discharge. The hearing will be conducted by
the department head or superior officer of the Company, and if exonerated,
the employee will be reinstated without prejudice and compensated for loss
in wages. The hearing shall be conducted in accordance with the method of
adjusting grievances as provided in Article X herein.
ARTICLE X: ADJUSTMENT OF DISPUTES OR GRIEVANCES
1. The Union agrees that it will not authorize a strike or work stoppage
and the Company agrees that it will not engage in a lockout, because of
disputes over matters relating to this Agreement. The Union further agrees
that it will take every reasonable means which are within its powers to
induce employees engaged in a strike or work stoppage in violation of this
Agreement to return to work. There shall be no responsibility on the part
of the Union, its officers, representatives or affiliates, for any strike
or other interruption of work unless specifically provided in this paragraph.
2. Any dispute or grievance arising during the term of this Agreement,
relating to the meaning, interpretation, construction or application of
this Agreement shall be settled in the following manner:
Step 1. The grievance shall be submitted, in writing, to the other party
within fifteen (15) working days after the occurrence of the facts
giving rise to the grievance.
Step 2. By agreement between the Department Head of the Department in which
the grievance arises or the designated representative and Chief
Steward of said Local Union No. 1837. Their agreement or failure
to agree shall be stated in writing and rendered within fifteen (15)
working days of the date the grievance was submitted.
Step 3. If the grievance is not settled in Step 2, either party may, within
thirty (30) working days of the decision rendered in Step 2, appeal
in writing for a decision by the President of the Company and the
Business Agent of the Union, or representative designated by them.
An international representative of IBEW may be present at this step
of the grievance procedure only to assist the local union. They
shall render their agreement or failure to agree in writing within
fifteen (15) working days of the date of the appeal to them.
Step 4. Any grievance not presented in accordance with applicable time
limits or other requirements in the steps listed above shall be
considered defaulted and settled. The time limits in any of the
steps above may be extended by a written mutual agreement of both
parties.
Step 5.ARBITRATION: If the Company and the Union are unable to settle a
dispute or grievance as above provided, the dispute or grievance may
be referred to arbitration by either party as follows: The Union and
Company shall agree upon an arbitrator, but if they are unable to
agree upon an arbitrator within ten (10) days, the arbitrator shall
be appointed by the American Arbitration Association. The decision
of the Arbitrator shall be final and conclusively binding upon the
parties. The services and expenses of the arbitrator shall be
shared equally by the Company and the Union.
3. It is agreed that there shall be no obligation to arbitrate a renewal
of this Agreement or a change in, or supplement to, this Agreement or to
arbitrate any matter not covered by this Agreement or some provision thereof.
No arbitration decision shall be binding beyond the life of this Agreement.
4. It is understood and agreed that to be considered under this Article
a grievance must be filed promptly after the occurrence thereof, provided
further that there shall be no obligation to consider any grievance based
upon facts which occurred more than six (6) months prior to the filing of
said grievance under "First" of this Article.
5. The Company President and the Chief Steward of the said Local Union
shall meet from time to time at the request of either party for the purpose
of discussing any matter coming within the scope of this Agreement.
6. All meetings between the Company President and the Chief Steward of
the Union shall be held at the Company office at the convenience of both
parties, if possible.
ARTICLE XI: SUCCESSORS
This Agreement shall be binding on the Company and its successors
and assigns.
ARTICLE XII: NOTICES AND REQUESTS
1. Except where specifically provided otherwise herein, all notices
and requests shall be deemed to have been fully and completely served or
made by the Company when sent by certified mail addressed to Chief Steward,
Local Union No. 1837, Unit #1, International Brotherhood of Electrical
Workers, and by the Union when sent by certified mail to Exeter & Hampton
Electric Company at 114 Drinkwater Rd., Kensington, N.H. 03833-5602, unless
either party hereto shall give notice of a different address at least
five (5) days before any such notice or request is mailed.
2. The Company shall permit the reasonable use of bulletin boards for
posting officially signed Union bulletins.
ARTICLE XIII: UNION AGREEMENT
The Union agrees that its members employed by the Company will work
for the Company upon the terms and conditions set forth in the Agreement
during its life.
ARTICLE XIV: SICKNESS - INDUSTRIAL ACCIDENTS
A. Sickness
1. The Company agrees not to make deductions from the pay of the
employees when absent from work on account of sickness or injury contracted
while not working for the Company or some other employer for each unrelated
occurrence up to the following limits:
a. Two (2) weeks of FULL PAY for each full year of continuous service
of such employee with a minimum of two (2) weeks and a maximum of
twenty-six (26) weeks plus,
b. Two (2) weeks of THREE QUARTER PAY, each full year of continuous
service of such employee with a minimum of two (2) weeks and a maximum of
twenty-six (26) weeks.
2. If a holiday occurs during the full-pay period, while an employee
is sick, extend the full-pay period eight (8) hours or one (1) day, if the
employee is still out sick.
3. If a holiday occurs during the three-quarter pay period the employee
will receive an extra three-quarter day's pay at the end of the three-quarter
pay period if the employee is still out sick.
4. The Company shall have the right, in each instance in which an
employee claims sick pay under any of the provisions of the Article, to
satisfy itself of the fact of sickness requiring absence by the certificate
of a competent physician, examination, or otherwise.
B. Accidents
1. Time lost on account of industrial accidents will not be regarded
as sickness.
2. The Company agrees to pay during disability due to industrial
accidents the difference between the amount of compensation from Worker's
Compensation Insurance and full pay for a period not to exceed twenty-six
(26) weeks.
3. If any employee's sickness and/or injury is the result of an action
of a third party the employee shall assist the employer in recovering sick
pay and other associated costs from the third party.
ARTICLE XV: TERMINATION
1. This Agreement when signed by the Company and the Local Union or
their authorized representatives and approved by the International Office
of the Union, shall take effect June 25, 1995, and shall remain in effect
through May 30, 1998. It shall continue in effect from year to year
thereafter, from May 31, 1998 through May 31st of each year, unless
changed or terminated in the way provided herein.
2. Either party desiring to change or terminate this Agreement must
notify the other in writing at least sixty (60) days prior to May 30 of any
year after 1997. When notice for changes only is given, the nature of the
changes desired shall be specified in the notice; however, the listing of
changes shall not preclude submission of other changes desired during
negotiations. If the parties cannot agree upon changes, either party shall
have a right to terminate the contract.
3. This Agreement shall be subject to amendment at any time by mutual
consent of the parties hereto. Any such amendment agreed upon shall be
reduced to writing, signed by the parties hereto and approved by the
International Office of the Union.
ARTICLE XVI: SPECIAL PROVISIONS
1. In the event State or Federal legislation is enacted that would
mandate a change that conflicts with this agreement or benefits program,
the State or Federal legislation will govern.
2. In the event of any conflict between acts of past practice and
specific items covered in this agreement, the agreement will govern.
IN TESTIMONY WHEREOF the parties hereto have executed this Agreement this
day and year first written above.
For the For the
EMPLOYEES OF EXETER & HAMPTON
ELECTRIC CO. covered by this
EXETER & HAMPTON Agreement and INTERNATIONAL
ELECTRIC COMPANY BROTHERHOOD OF ELECTRICAL WORKERS
AND LOCAL UNION NO. 1837, UNIT #1
By: By:
Anthony Smoker Kerry R. Guptill Assistant
Vice President/General Manager Business Manager Local Union
No. 1837-1
By:
Richard C. Davis, Chief Steward
Local Union No. 1837-1
By:
Alan Bowering, Assistant Steward
Local Union No. 1837-1
Approved: _________________________
International President
International Brotherhood of
Electrical Workers
SCHEDULE OF WAGES
EXETER & HAMPTON ELECTRIC COMPANY
Hourly Rates Effective
1995 1996 1997
June 25th June 2nd June 1st
Utility Lineworker-First Class 20.28 20.93 21.65
Utility Lineworker-Second Class (2 yr. tr.)* 17.71 18.28 18.91
Utility Lineworker-Third Class (1 yr. tr.)* 15.19 15.68 16.22
Lead Lineworker 20.88 21.53 22.25
Lineworker-First Class 19.88 20.53 21.25
Lineworker-Second Class (2 yr. tr.)* 17.31 17.88 18.51
Lineworker-Third Class (1 yr. tr.)* 14.79 15.28 15.82
Lead Line Technician 20.88 21.53 22.25
Line Technician I 19.88 20.53 21.25
Line Technician II (2 yr. tr.)* 17.31 17.88 18.51
Line Technician III(1 yr. tr.)* 14.79 15.28 15.82
Utility Technician I 18.69 19.30 19.98
Utility Technician II (2 yr. tr.)* 17.26 17.83 18.46
Utility Technician III (1 yr. tr.)* 15.72 16.24 16.81
Lead Meter Mechanic 18.43 19.00 19.63
Meter Mechanic Class I 17.43 18.00 18.63
Meter Mechanic Class II (2 yr. tr.)* 15.36 15.86 16.42
Meter Mechanic Class III (1 yr. tr.)* 14.42 14.89 15.42
Meter Worker 14.83 15.32 15.86
Utility Plant Inspector 16.18 16.71 17.30
Secretary, Records/Communications 10.88 11.24 11.64
Plant Clerk 15.36 15.86 16.42
Assistant Plant Clerk 12.72 13.14 13.60
Utility Clerk 15.76 16.26 16.82
Assistant Utility Clerk (18 mo. tr.)* 13.12 13.54 14.00
Stock Clerk 14.08 14.54 15.05
Assistant Stock Clerk 12.72 13.14 13.60
Meter Reader Class I 14.01 14.47 14.98
Meter Reader Class II (1 yr. tr.)* 13.46 13.90 14.39
For Temporary Foremen see Mutual Working Agreement - Temporary Foreman
*Training positions for progression to next classification. Must
successfully complete an approved training program before progressing to
the next step.
EXETER & HAMPTON ELECTRIC COMPANY
GROUP INSURANCE
There shall be maintained a Group Life Insurance and Group Accident
and Sickness program with the following benefits:
Group Life Insurance
Employees are eligible for group life insurance coverage in the
amount of the lesser of two times their basic annual earnings reduced to
the next lower full thousand or $100,000.
Exeter & Hampton Electric Company pays insurance premium cost.
Accidental Death and Dismemberment
Employees are eligible for accidental Death and Dismemberment
coverage equal to the total of their Group Life Coverage up to a maximum
of $5,000.
Exeter & Hampton Electric Company pays insurance premium cost.
Insurance After Retirement
Employees retired on a pension may continue Group Life Insurance up
to one-half of the amount carried at the time of retirement with the
maximum being $10,000.
Exeter & Hampton Electric Company pays for the retiree's group life
insurance. Current employees shall have a maximum of $15,000 for a period
of three (3) years from the date of this Agreement (June 25, 1995).
Group Comprehensive Medical Insurance
Group Comprehensive Medical Services Insurance is provided for
employees and their eligible dependents and is briefly outlined as follows:
A. Deductible: $100 of "Covered Medical Expenses" for each member,
each calendar year with a maximum of three deductibles per family
per calendar year.
B. Co-insurance: Program pays 80% of first $2,000 of "Covered Medical
Expenses" in excess of deductible for each member each year.
C. Paid-In-Full: Program pays in full "Covered Medical Expenses" in
excess of the coinsured amount and the deductible for the
remainder of the calendar year.
Maximum lifetime benefit per member is $1,000,000 (benefit for the
treatment of certain mental and nervous disorders is limited to $5,000 per
calendar year, lifetime maximum $10,000). Maximum out-of-pocket for
"Covered Medical Expenses" is $500 per member each calendar year. "Covered
Medical Expenses" include charges which are usual, customary and reasonable
for medically necessary service, (hospital, physicians, psychiatric,
chiropractic and other required services and supplies).
GROUP INSURANCE (cont.')
Retirees under sixty-five (65) and their dependents will be covered by the
Group Comprehensive Medical Insurance Plan, and the Company will pay the
premium for Retirees and their dependents for the first year following
retirement. After this first year, retirees and their dependents will be
eligible to receive medical insurance benefits from the UNITIL Retiree Trust.
Active employees and retirees sixty-five (65) years or over will be covered
by a supplement to Medicare Plan paid for by the Company. The eligible
dependents (age 65 or over) of these active employees and retirees sixty-five
(65) or over will also be covered by the Supplemental to Medical Plan with
full premium paid for by the Company. The Company will pay the premium for
the retirees and their dependents for the first year following retirement.
After this first year, retirees and their dependents will be eligible to
receive medical insurance benefits from the UNITIL Retiree Trust.
Group Dental Plan
Group Dental Care Insurance is provided for employees and their
eligible dependents and is briefly outlined as follows:
Deductible
There is one $25.00 deductible per person per Calendar Year
with a maximum of $75.00 per family each calendar year.
This deductible does not apply to Coverage I and IV benefits, but
does apply to Coverage II and III benefits.
Coverage I - Diagnostic and Preventative, 100% Payment.
Diagnostic
Initial Examination;
Examinations to determine the required dental treatment
two times in a calendar year; Full Mouth/Panorex
X-Rays once in a three (3) year period;
Bitewing X-Rays twice in a calendar year;
X-Rays of individual teeth as necessary.
Preventative
Cleanings two (2) times in a calendar year;
Fluoride - twice in a calendar year (age limit 19)
Space Maintainers.
Coverage II - Restorative, after deductible, 80% paid by insurance,
20% paid by patient.
Amalgam, Silicate and Acrylic restorations;
Oral Surgery - Extraction's;
Endodontics - Pupal therapy; root canal therapy;
Periodontics - Treatment of gum disease, includes periodontal
cleanings;
Denture Repair - Repair of removable denture to its original
condition;
Emergency Treatment - Palliative.
Coverage III - After deductible, 50% paid by insurance, 50% by patient.
Crowns and buildups for crowns;
First placement of inlays and bridges;
First placement of partial or full dentures.
Coverage IV - Orthodontia, 50% paid by insurance, 50% paid by patient.
Maximum Contract Year Benefit -
The maximum amount which the plan will pay is $750 per person
per Calendar Year. Orthodontia lifetime maximum is $1,000
per person.
This benefit summary is for informational purposes only. The benefits are
described more fully in the applicable master group insurance policy. The
extent of coverage for each individual is governed at all times by that
document. In the event of any conflict between this summary and the plan
documents, the plan document will govern.
While the Company expects to continue indefinitely the benefits provided
under these plans, it agrees to continue them only for the term of the
Contract with employees of Exeter & Hampton Electric Company covered by the
Agreement and International Brotherhood of Electrical Workers and Local
Union NO. 1837, dated June 25, 1995.
EXETER & HAMPTON ELECTRIC COMPANY
RETIREMENT PLAN
A retirement plan is provided for employees and is briefly outlined
below.
The word "wages" as hereinafter used, shall mean straight-time wages,
and shall include no daily or weekly overtime.
Eligibility
Any employee of the Company shall or may retire on a retirement
benefit subject to the provisions and conditions hereinafter set
forth:
1. An employee who has attained the Normal Retirement Date (first day
of the month in which occurs and employee's 65th birthday) and
ceases active service with the Company shall be entitled to a
pension.
2. An employee shall be entitled to retire before attaining the age
of sixty-five (65) years if the employee becomes unable to perform
such employee's work for the Company because of a permanent
disability. In order to be eligible for a disability pension the
employee must:
a. Be totally disabled.
b. The disability must continue for at least six (6) months.
c. The employee must have completed at least fifteen (15) years
of Credited Service (excluding Credited Service completed
prior to age 18).
d. He must qualify for disability benefits under the Social
Security Act in effect at the time.
e. The disability must not have been incurred while the employee
was engaged in:
(1) criminal act
(2) service in the armed forces
(3) habitual drunkenness or addiction to a narcotic
(4) intentional self-inflicted injury
(5) act or disease resulting during the course of
employment with an employer other than the Company.
RETIREMENT PLAN (cont.')
Further, that the disability pension may be discontinued should the
employee refuse to be examined by a physician designated by the plan.
The pension would be computed on the basis of the accrual to date of
such retirement with no actuarial reduction.
3. An employee with fifteen (15) years of Credited Service and who
has attained age fifty-five (55) may elect to retire on an Early
Retirement Date, which may be the first day of any month thereafter
prior to the employee's Normal Retirement Date. The Company
requests that the employee notify the Company in writing at least
ninety (90) days prior to such date of intention to retire early.
Determination of Amount of Normal Retirement Benefit
A. Basis:
The basis for the computation of the amount of the retirement
benefit shall be the employee's average monthly wage for the
last five (5) years of Credited Service or the employee's
average monthly wages for any consecutive five-year period
during the employee's last twenty (20) years of Credited
Service, whichever amount is larger.
B. Amount:
Based upon average monthly wages determined as above stated,
the employee shall be eligible for a monthly retirement
benefit payable in advance, computed as follows:
1. For each of the first twenty full years of Credited
Service - 2% of said average monthly wages, plus
2. For each full year of Credited Service in excess of twenty
full years and not in excess of thirty full years - an
additional 1% (one percent) of said average monthly wages,
plus
3. For each full year of Credited Service in excess of
thirty years - an additional 1/2 of 1% (one-half percent)
of said average monthly wages, such sum to be reduced by:
4. Fifty (50%) percent of such employee's Primary Social
Security Benefit payable under the Federal Social Security
Act in effect on December 31, 1970: such reduced sum to be
further reduced by:
The amount of monthly retirement benefit, if any, to which
the employee is entitled under any retirement plan
maintained by a former employer for which credit is given
under the Plan (i.e. another UNITIL System Company).
RETIREMENT PLAN (cont.')
Determination of Amount of Early Retirement Benefit
The monthly amount of Early Retirement Benefit payable to an employee
retiring on his Early Retirement Date shall be equal to the employee's Normal
Retirement Benefit based on Credited Service to his Early Retirement Date,
reduced on the basis of the following schedule:
Early Retire- Percent Reduction of Early Retirement Benefit Expressed
ment Age Normal Retirement Benefit as a % of Normal Retirement Benefit
64 0% 100%
63 0% 100%
62 0% 100%
61 0% 100%
60 0% 100%
59 13% 87%
58 16% 84%
57 19% 81%
56 22% 78%
55 25% 75%
Normal Form of Benefits
A. Monthly Annuity for Life
An employee who is unmarried at retirement will receive a
retirement benefit as a monthly annuity for as long as the
employee lives. Upon death, no death benefits will be
payable to any beneficiary.
B. Joint and Survivor Annuity with Spouse
An employee who is married at retirement and who does not
elect to receive the retirement benefit as a monthly annuity
for life will receive an actuarially reduced benefit for as
long as the employee lives with fifty (50%) percent of such
reduced benefit payable after death to the employee's spouse
for as long as such spouse lives. The reduction is based
upon the life expectancies of the employee and spouse on the
employee's retirement date.
RETIREMENT PLAN (cont.')
Optional Form of Benefits
A. Contingent Annuitant Option
An employee may elect, instead of his retirement benefit as
heretofore provided, to have reduced retirement benefits made
commencing on the employee's retirement date and after death
such reduced payments, or any lesser amount selected by the
employee, will be continued to the designated beneficiary, if
living after the employee's death, for the beneficiary's
lifetime.
B. Ten (10) Year Certain and Life Annuity
An employee may elect that the retirement benefit, payable
on the retirement date, be reduced with the guarantee that
not less than one hundred and twenty (120) monthly payments
will be made either to the employee or the named surviving
beneficiary who survives him.
C. Five (5) Year Certain and Life Annuity
An employee may elect that the retirement benefit, payable on
the retirement date, be reduced with the guarantee that not
less than sixty (60) monthly payments will be made either to
the employee or the named surviving beneficiary.
If any of the above options are elected, the provisions for
a minimum annual retirement benefit shall only apply prior
to any reductions under the above options.
Minimum Company Contribution to Retirement Benefit
In no event will the Company pay any employee who retires with
fifteen years of Credited service an annual normal retirement benefit of
less than $1,200 in addition to such sums, if any, as the employee may
receive as "Primary Insurance Benefits" under the Federal Social Security
Act.
Spouse's Benefit
A Spouse's Benefit shall be payable to an employee's spouse in the
event of the employee's death prior to the Normal Retirement Date, provided
at least fifteen (15) years of Credited Service was completed and the
employee has been married to the surviving spouse for at least one (1) year.
RETIREMENT PLAN (cont.')
The monthly amount of the Spouse's Benefit shall be one-half of the
amount of Retirement Benefit which would have been payable had the deceased
employee retired, rather than died, on the day before death, reduced,
however, by one (1%) percent for each full year in excess of two (2) by which
the deceased employee's age exceeds his Spouse's age.
A minimum of fifty ($50.00) dollars per month shall be payable.
Spouse's Benefit payments shall terminate with the last payment
due preceding death.
Deferred Termination Benefit
An employee who terminated his employment after five (5) or more
years of Credited Service shall be entitled to a Deferred Termination Benefit
equal to that portion of his Normal Retirement Benefit accrued to the date
employment terminates.
A Deferred Termination Benefit shall commence on an employee's Normal
Retirement Date, provided, however, that a terminated employee who has
attained age fifty-five (55) and completed fifteen (15) years of Credited
Service may elect to have his benefit commence as of the date such age is
attained and completes such years of Credited Service.
The specific details of the retirement plan will be as described in
the retirement plan documents. While the Company expects to continue
indefinitely the benefits provided for under the retirement plan, it agrees
to continue them only for the term of the Contract with the employees of the
Exeter & Hampton Electric Company covered by the Agreement and the
International Brotherhood of Electrical Workers and Local Union No. 1837,
Unit #1, dated June 25, 1995.
Michael J. Dalton
President
MUTUAL WORKING AGREEMENTS
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
IBEW LOCAL UNION NO. 1837-1
MUTUAL WORKING AGREEMENT
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
IBEW LOCAL UNION NO. 1837-1
MEAL ALLOWANCES
The purpose of this agreement is to set guidelines to provide meals and/or
meal allowances for employees.
A. The Company will provide employees with meals if the employee is
required to work through meal times on other than normal work hours
or scheduled overtime.
B. Employees will not be required to make their own arrangements for
more than one (1) meal during any continuous work period.
C. Employees are entitled to a hot (if available), nutritious and
substantial meal at a reasonable cost to the Company. The
guidelines to be used for the cost of meals will be as follows:
1. Morning Meal $ 5.00
2. Noon Meal 6.50
3. Evening Meal 13.00
(Tax and tip included.)
The Company shall furnish a meal under the following conditions:
A. During days employees are scheduled to work -
1. The employee is called in for work one (1) or more hours before
his or her scheduled work day begins.
2. The employee is required to continue working two (2) or more
hours beyond his or her regular scheduled work day.
B. During days employees are not scheduled to work -
1. The employee will be provided with a breakfast not to exceed
five dollars ($5.00) if the employee works through the hour of
6:00 AM to 7:00 AM and has worked at least two (2) continuous
hours.
2. The employee will be provided with lunch not to exceed six
dollars and fifty cents ($6.50) if the employee works through
the hour of 12:00 noon to 1:00 PM and has worked at least two
(2) continuous hours.
MEAL ALLOWANCES (cont.')
3. The employee will be provided with a dinner not to exceed
thirteen dollars ($13.00) if the employee works at least one
full hour during the period 4:30 PM to 6:30 PM and has worked
at least two (2) continuous hours.
4. Corresponding meal provisions will be made for meal periods at
approximately five (5) hour intervals during the remainder of
the work period on either scheduled or nonscheduled work days.
5. Employees will not normally be paid for time spent eating except
when required to return to work after they have eaten, in which
case they will be paid for continuous time.
6. An employee released from work may elect to receive a payment
of $4.50 in lieu of a meal he or she is entitled to under the
conditions of this policy.
A meal allowance in the amount of two dollars and fifty cents ($2.50), will
be paid to Meter Readers and Meter Workers for each full day worked reading
meters.
This mutual working agreement will be effective from the date of
execution until May 30, 1998.
For the For the
EXETER & HAMPTON INTERNATIONAL BROTHERHOOD
ELECTRIC COMPANY OF ELECTRICAL WORKERS AND
LOCAL UNION NO. 1837, UNIT #1
By: By:
Scott D. Wade Kerry R. Guptill
Manager of Operations Assistant Business Manager
By:
Richard C. Davis,
Chief Steward
By:
Alan Bowering,
Assistant Steward
MUTUAL WORKING AGREEMENT
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
IBEW LOCAL UNION NO. 1837-1
RESIDENCY REQUIREMENTS
Employees in the following job positions are required to maintain residency
within a geographical area, defined as being and including a circle drawn
with a fifteen (15) mile radius having a fixed point at the Kensington
service building, as a condition of remaining qualified within the specified
job positions.
1. Utility Line Worker - First Class
2. Utility Line Worker - Second Class
3. Utility Line Worker - Third Class
4. Lead Line Worker
5. Line Worker - First Class
6. Line Worker - Second Class
7. Line Worker - Third Class
8. Lead Line Technician
9. Line Technician I
10. Line Technician II
11. Line Technician III
12. Utility Technician I
13. Utility Technician II
14. Utility Technician III
15. Lead Meter Mechanic
16. Meter Mechanic Class I
17. Meter Mechanic Class II
18. Meter Mechanic Class III
19. Meter Worker
20. Utility Plant Inspector
This geographical agreement will apply to employees in these positions, that
change their permanent residence and persons accepting a position, after
June 4, 1989.
This mutual working agreement will be effective from the date of execution
until May 30, 1998.
For the For the
EXETER & HAMPTON INTERNATIONAL BROTHERHOOD
ELECTRIC COMPANY OF ELECTRICAL WORKERS AND
LOCAL UNION NO. 1837, UNIT #1
By: By:
Scott D. Wade Kerry R. Guptill
Manager of Operations Assistant Business Manager
By:
Richard C. Davis, Chief Steward
By:
Alan Bowering, Assistant Steward
MUTUAL WORKING AGREEMENT
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
IBEW LOCAL UNION NO. 1837-1
TEMPORARY FOREMAN
The purpose of this agreement is to set guidelines for Temporary Foreman's
pay.
A. Non-supervisory employees assigned the responsibility of performing
the duties of a Supervisor shall be designated Temporary Foreman
and paid an additional 60 cents per hour.
B. Employees designated as Temporary Foremen will continue to receive
the rate of pay through the duration of continuous work time as
long as the conditions for assignment continue to exist.
Temporary Foreman's Pay for Lineworkers
A. DURING NORMAL WORK HOURS AND SCHEDULED OVERTIME
A line crew composed of two (2) or more employees, performing work
during normal working hours or scheduled overtime shall have an
employee responsible for the vehicle and the project. This employee
will be a permanent Lead Lineworker or Temporary Lead Lineworker
(no Temporary Foreman's pay). Projects requiring two (2) or more
line crews shall have an employee responsible for the project. The
employee will either be a Permanent Foreman or a person designated
as a Temporary Foreman. If the project has four (4) or more
workers and there are two (2) or more permanent Lead Lineworker
working together, one (1) will be designated Temporary Foreman.
A line crew is two (2) or more employees performing electrical system
maintenance or construction and is working as an individual unit.
EXAMPLES of projects not requiring a temporary foreman:
1. Substation work
2. Running wire
3. Snow removal
4. Painting
5. Second vehicle used as convenience to crew
TEMPORARY FOREMAN (cont.')
B. OUTSIDE NORMAL WORK HOURS OR SCHEDULED OVERTIME
Temporary Foreman
When a line crew composed of two (2) or more employees is performing
work during other than normal working hours or scheduled overtime and
employee supervision is required at the work site, the senior
qualified employee on the crew shall be the employee in charge of the
other employee or employees unless otherwise designated and shall
receive the premium of $.60 (cents) per hour. This would normally be
when a crew is on a trouble call without direct supervision at the
plant.
EXAMPLE
Temporary
Foreman
1. Trouble call - no supervision at plant.
a) No Lead Lineworker on crew. YES
b) One or more Lead Lineworker on crew. YES
2. Trouble call - supervision at plant.
a) No Lead Lineworker on crew. YES
b) One or more Lead Lineworker on crew. NO
This mutual working agreement will be effective from the date of
execution until May 30, 1998.
For the For the
EXETER & HAMPTON INTERNATIONAL BROTHERHOOD
ELECTRIC COMPANY OF ELECTRICAL WORKERS AND
LOCAL UNION NO. 1837, UNIT #1
By: By:
Scott D. Wade Kerry R. Guptill
Manager of Operations Assistant Business Manager
By:
Richard C. Davis, Chief Steward
By:
Alan Bowering, Assistant Steward
MUTUAL WORKING AGREEMENT
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
I.B.E.W. LOCAL UNION NO. 1837-1
EQUAL SHIFT ROTATIONS
The purpose of this Agreement is to temporarily modify the provisions of
Article III, Section B, 2, concerning equal shift rotations. This temporary
change shall be in effect through May 30, 1998, the day the present contract
ends unless either party shall provide thirty (30) days written notice to
the other party that it wishes to revert to the actual contract language.
This Working Agreement shall be void on the 30th day after such notice.
The parties agree that the language of Article III, B, 2, which requires
that Utility Lineworkers rotate shifts equally, shall be modified in
accordance with this Agreement to permit an unequal rotation between
Utility Lineworkers. Specifically, unless notice as set forth above is
provided so as to cancel this Working Agreement, the parties agree that a
Utility Lineworker may be assigned to the night shift (Shift B) for nine (9)
months and to the day shift (Shift A) for three (3) months while another
Utility Lineworker be assigned the day shift (Shift A) for nine (9) months
and the night shift (Shift B) for three (3) months. The parties may continue
this assignment or other unequal assignments that may be acceptable to the
Company for so long as this Working Agreement is in effect.
The parties further agree as follows:
1. Whichever Utility Lineworker is assigned to the day shift (Shift A)
shall replace, as necessary or as directed by the Company, a night
shift (Shift B) Utility Lineworker who is on vacation or absent from
work for other reasons. The rate of pay shall be the replacement
employees regular straight time pay.
2. Whichever Utility Lineworker is assigned to the night shift (Shift B)
shall replace, as necessary or as directed by the Company, a day shift
(Shift A) Utility Lineworker who is on vacation or absent from work for
other reasons. The rate of pay shall be the replacement employees
regular straight time pay.
3. If the current employees (George Plante and Anthony Travia) filling the
position of Utility Lineworker either change positions within the
Company or leave the Company, this agreement shall be considered null
and void.
4. A schedule reflecting the unequal shifts for each current Utility
Lineworker shall be provided to the Company on a yearly basis for the
term of this Agreement.
This mutual working agreement will be effective
from the date of execution until May 30, 1998.
For the For the
EXETER & HAMPTON INTERNATIONAL BROTHERHOOD
ELECTRIC COMPANY OF ELECTRICAL WORKERS AND
LOCAL UNION NO. 1837, UNIT #1
By: By:
Scott D. Wade Kerry R. Guptill
Manager of Operations Assistant Business Manager
By:
Richard C. Davis, Chief Steward
By:
Alan Bowering, Assistant Steward
MUTUAL WORKING AGREEMENT
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
I.B.E.W. LOCAL UNION NO. 1837-1
METER READING
The purpose of this Agreement is to set guidelines for the completion of
reading assigned meter reading routes.
Employees reading meters must finish their assigned routes each day, unless
weather or other unforeseen circumstances prevent the completion, and
provided the employees have advance knowledge of the route assigned. If
completion is not feasible, the employee must notify the supervisor or their
designee that completion is not feasible and the circumstances involved. The
supervisor will consider all relevant factors in determining when work will
cease and make any special arrangements that may be necessary. With the
exception of Article III, paragraph J., B. of the Labor Agreement, assigning
routes and determining whether or not routes shall or shall not be read; in
part or whole, rests solely with the Company's supervisor or their designee.
This mutual working agreement will be effective from the date of
execution until May 30, 1998.
For the For the
EXETER & HAMPTON INTERNATIONAL BROTHERHOOD
ELECTRIC COMPANY OF ELECTRICAL WORKERS AND
LOCAL UNION NO. 1837, UNIT #1
By: By:
Scott D. Wade Kerry R. Guptill
Manager of Operations Assistant Business Manager
By:
Richard C. Davis, Chief Steward
By:
Alan Bowering, Assistant Steward
MUTUAL WORKING AGREEMENT
BETWEEN
EXETER & HAMPTON ELECTRIC COMPANY
AND
I.B.E.W. LOCAL UNION NO. 1837-1
OVERTIME
Due to the nature of the Company's business, employees who have the
requirement to be available and/or respond to emergencies are required to
work a reasonable amount of overtime.
Employees in the Line and Meter Departments who are unavailable and/or
unresponsive for a reasonable amount of unscheduled call outs and do not
work a reasonable amount of overtime on a consistent basis shall be subject
to being charged refusals and corrective actions.
Employees who have obligations out of their immediate control or have
obligations of the legal requirement nature which may affect their
availability and/or response are urged to inform their supervisor or
manager of these special circumstances in advance.
The Company shall periodically (on a minimum of a ninety (90) day period)
review calls made to employees. Consideration will be given to the number
of opportunities and calls made to employees, the total number of overtime
hours worked, and the reasons for lack of response. If, as a result of this
review, the Company considers that an employee's lack of availability or
response is excessive a formal meeting will be held with the employee (with
Union representation) in order to address the problem. A record of this
meeting shall be produced, placed in the employee's personnel file and will
be considered a verbal warning subject to progressive steps as outlined in
the Company's policy (C.03.22 (G), section 4).
The deterimination as to what is considered excessive shall be when an
employee has worked twenty-six percent (26%) less than the average amount
of overtime hours within their department and the lack of response or
availability is less than fifty percent (50%) of the total number of calls
made to the employee. Due to the fact that Utility Lineworkers are not
assigned standby duty the determination as to what is considered excessive
regarding the amount of overtime hours worked shall be less than fifty
percent (50%) of the average amount of overtime hours.
This mutual working agreement will be effective from the date of
execution until May 30, 1998.
For the For the
EXETER & HAMPTON INTERNATIONAL BROTHERHOOD
ELECTRIC COMPANY OF ELECTRICAL WORKERS AND
LOCAL UNION NO. 1837, UNIT #1
By: By:
Scott D. Wade Kerry R. Guptill
Manager of Operations Assistant Business Manager
By:
Richard C. Davis, Chief Steward
By:
Alan Bowering, Assistant Steward
UNITIL CORPORATION
Computation in Support of Earnings per Share
Year Ended
December 31,
1995 1994 1993
(000's Omitted)
PRIMARY EARNINGS PER SHARE
Net Income $8,369 $8,038 $7,600
Less: Dividend Requirements 284 291 298
on Preferred Stock
Net Income Applicable to Common $8,085 $7,747 $7,302
Stock
Average Number of Common Shares 4,299 4,234 4,181
Outstanding
Earnings per Average Common Share $1.88 $1.83 $1.75
Outstanding
FULLY-DILUTED EARNINGS PER SHARE
Net Income $8,369 $8,038 $7,600
Less: Dividend Requirements 284 291 298
on Preferred Stock
Net Income Applicable to Common $8,085 $7,747 $7,302
Stock
Average Number of Common Shares
Outstanding
and Equivalents* 4,382 4,306 4,249
Earnings per Average Common Share $1.85 $1.80 $1.72
Outstanding
* Assumes conversions of options outstanding and repurchase of
Common Shares outstanding with
proceeds.
UNITIL CORPORATION
Computation in Support of Ratio of Earnings to Fixed Charges
Year Ended December 31,
1995 1994 1993 1992 1991
(000's Omitted)
EARNINGS
Net Income, per Consolidated
Statements of Earnings $8,369 $8,038 $7,600 $6,570 $2,365
Federal Income Tax 3,924 3,480 3,627 2,482 940
Deferred Federal Income Tax (298) (186) (179) 565 589
State Income Tax 690 610 610 706 746
Deferred State Income Tax (16) 72 (154) 74 151
Amortization of Investment (202) (211) (217) (210) (212)
Tax Credit
Interest on Long-term Debt 5,193 4,825 5,692 5,803 6,147
Amortization of Debt Discount 72 64 119 143 431
and Expense
Rents (annual interest 572 561 592 610 627
component)
Other Interest 799 909 713 1,003 1,489
Total $19,103 $18,162 $18,402 $17,746 $13,273
FIXED CHARGES:
Interest on Long-term Debt $5,193 $4,825 $5,692 $5,803 $6,147
Amortization of Debt Discount 72 64 119 143 431
and Expense
Rents (annual interest 572 561 592 610 627
component)
Other Interest 799 909 713 1,003 1,489
Total $6,636 $6,359 $7,116 $7,559 $8,694
Ratio of Earnings to Fixed 2.88 2.86 2.59 2.35 1.53
Charges
* Assumes conversions of options outstanding and repurchase of
Common Shares outstanding with
proceeds.
Exhibit 21.1
Subsidiaries of Registrant
The Company or the registrant has seven wholly-owned
subsidiaries. Six of which are corporations organized under the
laws of The State of New Hampshire: CECo, E&H, Unitil Power,
Unitil Realty, Unitil Resources and Unitil Service. The seventh,
FG&E, is organized under the laws of The State of Massachuesetts.
Exhibit 28.1
Information required by Form 11-K filed pursuant to Section
15(d) of the Securities Exchange Act of 1934 and Rule 15d-21
thereunder for the UNITIL Corporation (UNITIL) Tax Deferred
Savings and Investment Plan for the fiscal year ended December
31, 1995.
Item 1. Changes in the Plan
There were no changes to the Plan.
Item 2. Changes in Investment Policy
There were no changes to the Plan's Investment Policy.
Item 3. Contributions under the Plan
The contributions by UNITIL's four subsidiaries: UNITIL Service
Corp. (UNITIL Service), Concord Electric Company (CECo), Exeter
& Hampton Electric Company (E&H) and Fitchburg Gas and Electric
Light Company (FG&E) are nondiscretionary and are measured by
reference to employees' contributions.
Item 4. Participating Employees
There were approximately 305 active employees participating in the
Plan on December 31, 1995, and 401 total Plan participants.
Item 5. Administration of the Plan
(a) UNITIL, UNITIL Service, CECO, E&H and FG&E are the Plan
Administrators. The Plan is administered through the
Administrative Committee ("Committee") for each subsidiary.
The Present members of each Committee and the position each
holds are:
Concord Electric Company
George E. Long, Jr. Manager of Administrative
Services of UNITIL Service.
Richard M. Heath Vice President and
General Manager of CECo.
Mark H. Collin Treasurer of CECo, E&H, FG&E,
UNITIL Power Corp., UNITIL
Realty Corp. and Vice President
and Treasurer of UNITIL Service.
Exeter & Hampton Electric Company
George E. Long, Jr. Manager of Administrative
Services of UNITIL Service.
Anthony Smoker Vice President and
General Manager of E&H.
Mark H. Collin Treasurer of CECo, E&H, FG&E,
UNITIL Power Corp., UNITIL
Realty Corp. and Vice President
and Treasurer of UNITIL Service.
Fitchburg Gas And Electric Light Company
M. Mitchell Bodnarchuk Vice President and General
Manager of FG&E.
George E. Long, Jr. Manager of Administrative
Services of UNITIL Service.
Mark H. Collin Treasurer of CECo, E&H, FG&E,
UNITIL Power Corp., UNITIL
Realty Corp. and Vice President
and Treasurer of UNITIL Service.
UNITIL Service Corp.
Gail A. Siart Secretary and Treasurer of Unitil Corp.,
VP and Secretary of UNITIL Service and
Secretary of CECo, E&H, UNITIL Power and
UNITI L Realty; VP, Treasurer and
Secretary of UNITIL Resources, Inc.
Mark H. Collin Treasurer of CECo, E&H, FG&E,
UNITIL Power Corp., UNITIL
Realty Corp. and Vice President
and Treasurer of UNITIL Service.
George E. Long, Jr. Manager of Administrative
Services of UNITIL Service.
The address for Messr. Heath is One Maguire Street, Concord, NH 03302.
The address for Messrs. Collin, Long and Ms. Siart is 216 Epping Road,
Exeter, NH 03833.
The address for Mr. Smoker is 114 Drinkwater Road, Exeter, NH 03833.
The address for Mr. Bodnarchuk is 285 John Fitch Highway, Fitchburg,
MA 01420.
(b) No member of any of the Committees or UNITIL, UNITIL
Service, CECo, E&H or FG&E received any compensation from
the Plan.
Item 6. Custodian of Investments
(a) The First National Bank of Boston (a bank), 100 Federal
Street, Boston, MA 02110, is the Trustee of the Plan and
custodian of the securities/or other investments of the
Plan, except as specifically disclosed in this item.
(b) No compensation was paid to the Trustee or fund
managers by the Plan during the fiscal year 1994.
(c) The Trustee has advised that it carries no bond
relating specifically to the custody or other investments
held by the Plan. The Trustee's regular bonding
arrangements are applicable to such custody.
(d) Assets under guaranteed investment contracts are
invested in the General Account of Principal Mutual Life
Insurance Company, New York Life Insurance Company and The
Penn Mutual Life Insurance Company.
(e) Shawmut Bank of Boston, N.A. is the custodian of the
Fidelity Puritan Fund and the Fidelity Magellan Fund.
(f) The Plan is covered against losses through fraud or
dishonesty by a blanket fidelity bond in the amount of
$3,000,000 issued by The Hanover Insurance Company.
Item 7. Reports to Participating Employees
Each participant is furnished a statement of his or her Plan
account quarterly.
Item 8. Investment of Funds
(a)(1) The aggregate dollar amounts of brokerage commissions
paid by the Plan were:
1995 - $873; 1994 - $560; 1993 - $205.
(a)(2) There were no commissions paid to affiliated brokers
during 1995, 1994 and 1993.
Item 9. Financial Statements and Exhibits
(a) Report of Independent Certified Public Accountants and
Financial Statements
Report of Independent Certified Public Accountants
Statements of Assets and Liabilities as of
December 31, 1995 and 1994
Statements of Income, Expenses and Changes in Net
Assets for the three years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
Schedules:
Schedules I, II and III have been omitted because the required
information is shown in the financial statements.
(b) Consent of Independent Auditors
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed by the
undersigned, thereunto duly authorized.
UNITIL Corporation
Date: March 29, 1996
By: Gail A. Siart
Chief Financial Officer
98 North Washington Street
Boston, MA 02114-1913
617-723-7900
Grant Thornton
Accountants and
Management Consultants
Consent of Independent Certified Public Accountants
We have issued our report dated March 22, 1996, accompanying
the financial statements of The Unitil Corporation Tax Deferred
Savings and Investment Plan contained in the information required
by Form 11-K included as an exhibit to the Unitil Corporation
Annual Report on Form 10-K for the year ended December 31, 1995.
We hereby consent to the incorporation by reference of said
report in the Registration Statement of the UNITIL Corporation
Tax Deferred Savings and Investment Plan on Form S-8 (File No.
33-24436).
GRANT THORNTON LLP
Boston, Massachusetts
March 28, 1996
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
THE UNITIL CORPORATION
TAX DEFERRED
SAVINGS AND INVESTMENT PLAN
December 31, 1995, 1994 and 1993
C O N T E N T S
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS -
DECEMBER 31, 1995 AND 1994 4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS - YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993 6
NOTES TO FINANCIAL STATEMENTS 9
98 North Washington Street
Boston, MA 02114-1913
617-723-7900
Grant Thornton
Accountants and
Management Consultants
Report of Independent Certified Public Accountants
Administrator of The UNITIL Corporation
Tax Deferred Savings and Investment Plan
We have audited the accompanying statements of net
assets available for benefits of The UNITIL Corporation Tax
Deferred Savings and Investment Plan as of December 31, 1995 and
1994, and the related statements of changes in net assets
available for benefits for each of the three years in the period
ended December 31, 1995. These financial statements are the
responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the net assets
available for benefits of The UNITIL Corporation Tax Deferred
Savings and Investment Plan as of December 31, 1995 and 1994, and
the changes in net assets available for benefits for each of the
three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
GRANT THORNTON LLP
Boston, Massachusetts
March 22, 1996
The UNITIL Corporation Tax Deferred Savings and Investment Plan
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1995
Unitil
March 18, 1996
Dear Fellow Shareholder,
The Annual Meeting of Common Shareholders is scheduled to be held on
Thursday, April 18, 1996, at 10:30 a.m., at The Sheraton Portsmouth Hotel,
250 Market Street, Portsmouth, New Hampshire.
Enclosed you will find a 1995 annual report, a notice of meeting, a proxy
statement and a proxy card to be used in connection with the meeting.
This year, shareholders are being asked to vote on the election of three
Directors.
We hope that you are able to attend the Annual Meeting. Your vote is
important whether you own one share or many. Whether or not you plan to
be present, we urge you to sign and promptly return the enclosed proxy card
in the envelope provided.
Thank you for your continued interest in the Company.
Sincerely,
Peter J. Stulgis
Chairman of the Board of Directors
and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
Exeter, New Hampshire
March 18, 1996
To the Common Shareholders:
You are hereby notified that the annual meeting of common
shareholders of Unitil Corporation will be held at The Sheraton
Portsmouth Hotel, 250 Market Street, Portsmouth, New Hampshire,
on April 18, 1996, at 10:30 A.M., for the following purposes:
1. To elect three Directors.
2. To act on such other matters as may properly come
before the meeting and anyadjournments thereof.
The enclosed form of proxy has been prepared at the
direction of the Board of Directors of Unitil and is sent to you at its
request. The persons named in said proxy have been designated by
the Board of Directors.
If you do not expect to be present personally and you wish
your stock voted at the meeting, please sign, date and return the
proxy card enclosed herewith by mail in the postage-paid
envelope, also enclosed. If you later find that you can be present, or for
any other reason desire to revoke or change your proxy, you may
do so at any time before it is voted.
The Board of Directors fixed March 4, 1996 as the record
date for the determination of those shareholders entitled to notice of
and to vote at this meeting and all persons who were holders of
record of Common Stock on such date and no others are entitled to
notice of and to vote at this meeting and any adjournments
thereof.
By Order of the Board of Directors,
Gail A. Siart
Secretary
Unitil
216 Epping Road
Exeter, New Hampshire 03833-4571
March 18, 1996
Proxy Statement
ANNUAL MEETING OF COMMON SHAREHOLDERS, APRIL 18, 1996
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of proxies in the
accompanying form for use at the 1996 annual meeting of common
shareholders of Unitil Corporation ("Unitil" or "the Company").
Each proxy can be revoked at any time before it is voted by
written notification to the Secretary of Unitil at the above address
prior to the meeting, or in person at the meeting. Every properly
signed proxy will be voted unless previously revoked.
Unitil presently has seven subsidiaries, Concord Electric
Company ("CECo"), Exeter & Hampton Electric Company ("E&H"),
Fitchburg Gas and Electric Light Company ("FG&E"), Unitil Power
Corp. ("Unitil Power"), Unitil Realty Corp. ("Unitil Realty"),
Unitil Resources, Inc. ("Unitil Resources") and Unitil Service
Corp. ("Unitil Service").
The annual report of Unitil for the year 1995 is enclosed
herewith and includes financial statements which are not part of
this proxy statement.
The voting securities of Unitil issued and outstanding on
March 4, 1996 consisted of 4,338,434 shares of Common Stock, no par
value, entitling the holders thereof to one vote per share.
Holders of Common Stock of record on such date are entitled to notice of
and to vote at the annual meeting and any adjournments thereof.
A majority of the outstanding shares of Common Stock constitutes a
quorum.
Except as set forth below, no person owns of record and, to
the knowledge of Unitil, no person owns beneficially more than five
percent of the Common Stock of Unitil which may be voted at the
meeting and any adjournments thereof.
Name and Address Shares of Common Percent of
of Beneficial Owner Stock Shares
Beneficially Outstanding
Owned
Charles H. Tenney II 270,659 (1) 6.18%
300 Friberg Parkway
Westborough, MA 01581
NOTES:
(1) Based on information provided by Mr. Tenney. See notes 2,
3 and 6 to the table below under the heading "As to the Election of Directors."
The eleven Directors and the officers of Unitil as a group
have beneficial ownership as of March 1, 1996 of 312,071 (7.19%)
of Common Stock, of which they have direct beneficial ownership of
157,009 shares (3.62%), which excludes options to purchase
137,234 shares (3.16%) pursuant to the exercise of those options, and
indirect beneficial ownership of 155,062 shares (3.57%). To the
knowledge of Unitil, each of said Directors and officers has
voting and investment power with respect to the shares directly owned.
With regard to certain of the indirect beneficial ownership by
said group, see the footnotes to the table contained in the section of
this proxy statement entitled "AS TO THE ELECTION OF DIRECTORS"
setting forth certain information about the Directors of Unitil.
Assuming a quorum is present, the favorable vote of a majority
of the shares of Common Stock represented and voting will be
required for approval of all matters, including the election of
Directors, which may come before the meeting.
AS TO THE ELECTION OF DIRECTORS
The By-Laws of Unitil provide for a Board of between nine
and fifteen Directors divided into three classes, each class being as
nearly equal in number as possible, and each with their
respective terms of office arranged so that the term of office of one class
expires in each year, at which time a corresponding number of
Directors is elected for a term of three years. Unitil currently
has eleven Directors.
Information about Nominees for Directors
Each nominee has been a member of the Board of Directors
since the date indicated. Proxies will be voted for the persons
whose names are set forth below unless instructed otherwise. If
any nominee shall be unable to serve, the proxies will be voted for
such person as may be designated by management to replace such
nominee. Each of the nominees has consented to being named in
this proxy statement and to serve if elected. Unless otherwise
indicated, all shares shown represent sole voting and investment
power.
Director Common Stock Owned
Since Beneficially on
March 1, 1996 (1)
Douglas K. Macdonald, Age 67 1984 924
Retired since 1998. Prior to his
retirement, Mr. Macdonald was Vice
President and Controller of Unitil
and President of Ceco.
Charles H. Tenney II, Age 77 1984 270,659(2)(3)(4)(5)(6)
Retired since 1992. Prior to his
retirement, Mr. Tenney was Chairman of
the Board and Chief Executive Officer
of Unitil and FG&E. Mr. Tenney is the
Chairman of the Board of Directors of
Bay State Gas Company, Westborough, MA
(natural gas distributor).
William W. Treat, Age 77 1984 20,345 (7)
Lawyer; sole private practice, former
Director and Chairman of the Board of D
rectors of Bank Meridian, Hampton, NH,
and a former Director of Amoskeag Bank
Shares, Inc., Manchester, NH. Mr. Treat
is also a former Director of the Colonial
Group, Inc., Boston, MA (investments).
Information about Directors Whose Terms of Office Continue
Director Term to Common Stock Owned
Since Expire Beneficially on
March 1, 1996 (1)
Michael J. Dalton, Age 55 1984 1998 56,442(2)(3)(5)(8)
President and Chief Operating Officer
of Unitil.
G. Arnold Haynes, Age 67 1992 1998 3,444
President and Principal of Haynes
Management, Inc., Wellesley Hills, MA
(real estate development and
management).
J. Parker Rice, Jr., Age 70 1992 1998 1,016
Director, former President and
Treasurer of Hyland/Rice Office
Products, Inc., Fitchburg, MA (office
products dealer).
Peter J. Stulgis, Age 45 1984 1997 48,942(2)(3)(5)(9)
Chairman of the Board and Chief
Executive Officer of Unitil.
Charles H. Tenney III, Age 48 (4) 1992 1997 2,568
Elected officer (Clerk) of Bay State
Gas Company, Westborough, MA
(natural gas distributor).
W. William VanderWolk, Jr., Age 72 1984 1997 15,140 (10)
Owner of Horizon Management,
Manchester, NH (property and
restaurant management).
Joan D. Wheeler, Age 58 1994 1998 1,000
Owner of the Russian Gallery,
Marblehead, MA (art gallery). Ms.
Wheeler is a former Director of
Shaw's Supermarkets, Inc. (1979 -
1987) and of Granite Bank (1984 -
1989), Keene, NH, and a former
Trustee of Franklin Pierce College.
Franklin Wyman, Jr., Age 74 1992 1997 5,000
Chairman of the Board and Treasurer of
Wright Wyman, Inc., Boston, MA
(corporate financial consultants).
Mr. Wyman is a Trustee and Vice
President of Brookline Savings Bank,
Brookline, MA.
NOTES:
Except as otherwise noted, each of the persons named above has
held his present position (or another executive position with the
same employer) for more than the past five (5) years.
(1)Based on information furnished to Unitil by the nominees
and continuing Directors.
(2)Included are 3,176, 3,522 and 3,918 shares which are held
in trust for Messrs. Stulgis, Dalton and Tenney,
respectively, under the terms of the Unitil Tax Deferred
Savings and Investment Plan ("401(k)"); they have voting
power only with respect to the shares credited to their
accounts. For further information regarding 401(k), see
"Other Compensation Arrangements - Tax-Qualified Savings
and Investment Plan" below.
(3)Included are 38,743, 40,532 and 38,743 shares which
Messrs. Stulgis, Dalton and Tenney, respectively, have the right to
purchase pursuant to the exercise of options under the Key
Employee Stock Option Plan. (See "Other Compensation
Arrangements - Key Employee Stock Option Plan").
(4)Charles H. Tenney II is the father of Charles H. Tenney III.
(5)With the exception of Messrs. Stulgis, Dalton and Tenney,
who own shares totaling 1.12%, 1.29% and 6.18%, respectively,
of the total outstanding shares, no Director or officer owns
more than one percent of the total outstanding shares.
(6)Included are 124,522 shares (2.87%) owned by two trusts
of which Mr. Tenney is Co-Trustee with shared voting and
investment power; he has a 1/6 beneficial interest in both
trusts and disclaims any beneficial ownership of such
shares other than such 1/6 beneficial interest.
(7)Included are 5,387 shares owned by three trusts of which
Mr. Treat is Trustee with voting and investment power; he
has no beneficial interest in such shares. Also included are
10,500 shares owned by one organization in which Mr. Treat
has shared voting and investment power and a 1/3 beneficial
interest, and also 500 shares owned by a member of Mr.
Treat's family; he has no voting or investment power with
respect to, and no beneficial interest in, such shares.
(8)Included are 12,303 shares held by Mr. Dalton jointly
with his wife with whom he shares voting and investment power.
Included are 49 shares held by Mr. Dalton as custodian for
one of his children; he has voting and investment power
with respect to such shares.
(9)Included are 6,209 shares held by Mr. Stulgis jointly
with his wife with whom he shares voting and investment power.
(10) Included are 3,254 shares owned by a member of Mr.
VanderWolk's family; he has no voting or investment power
with respect to, and no beneficial interest in, such
shares.
The Board of Directors met five times in 1995. During 1995,
Directors attended an average of 99% of all meetings of the Board
of Directors held and of all meetings held by all Committees of
the Board on which they served, if any.
Section 17(a) of the Public Utility Holding Company Act of
1935 and Section 16(a) of the Securities Exchange Act of 1934 require
the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity
securities, to file certain reports of ownership and changes in
share ownership with the Securities and Exchange Commission and
the American Stock Exchange and to furnish the Company with copies of
all Section 17(a) and Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that such
forms were not required for those persons, the Company believes
that all filing requirements applicable to its officers and
directors during 1995 and through March 1, 1996 were met, except
that G. Arnold Haynes, a director of the Company, filed a Form 4
to report the purchase of 100 shares of Common Stock of the Company
approximately 30 days after such form was required to be filed.
Compensation of Directors
Members of the Board of Directors who are not officers of
Unitil or any of its subsidiaries receive an annual retainer fee of
$7,000 and $500 for each Board meeting attended. Members of the
Executive Committee, who are not officers of Unitil or any of its
subsidiaries, receive an annual retainer fee of $2,000 and $400
for each meeting attended. Members of the Audit Committee and
Compensation Committee receive an annual retainer fee of $1,000
and $400 for each meeting attended. Those Directors of Unitil who
also serve as Directors of CECo, E&H or FG&E and who are not officers
of Unitil or any of its subsidiaries receive a meeting fee of $100
per subsidiary meeting attended and no annual retainer fee from CECo,
E&H or FG&E. All Directors are entitled to reimbursement of
expenses incurred in connection with attendance at meetings of
the Board of Directors and any Committee on which they serve.
In 1992, the Company entered into a Senior Advisory Agreement
with Charles H. Tenney II. Mr. Tenney was Chief Executive
Officer and Chairman of the Board of the Company until his retirement in
1992. The agreement, which is reviewed on an annual basis,
provides that Mr. Tenney will be compensated $105,000 per annum for his
role as Chairman of the Executive Committee of the Board of the
Company, as well as for other advisory services which he will provide. In
consideration of this Agreement, Mr. Tenney is waiving all
Board-related fees and retainers that he is otherwise entitled to
receive as a Director of the Company.
Committees of the Board of Directors
Executive
Committee
The Executive Committee of the Board of Directors held two
meetings in 1995. Its members are Charles H. Tenney II
(Chairman), Peter J. Stulgis, William W. Treat, W. William VanderWolk, Jr.
and Franklin Wyman, Jr. This Committee's responsibility is to review
and oversee corporate policies related to the Company's long-range
strategic business, financial and operating plans. In addition,
the Executive Committee also acts as a nominating committee. In
its function as a nominating committee, the committee coordinates suggestions or
searches for potentialnominees for Board members; reviews and evaluates
qualifications of potential Board members; and recommends to the Board of
Directors nominees for vacancies occurring from time to time on the Board
of Directors. The Committee will consider nominees recommended by
shareholders upon timely submission of the names of such nominees
with qualifications and biographical information forwarded to the
Executive Committee of the Board of Directors.
Audit
Committee
The Audit Committee of the Board of Directors, which held
two meetings in 1995, consists of William W. Treat (Chairman), J.
Parker Rice, Jr. and W. William VanderWolk, Jr. The duties of
this Committee encompass making recommendations on the selection of
Unitil's independent auditors; conferring with such auditors
regarding, among other things, the scope of their examination,
with particular emphasis on areas where special attention should be
directed; reviewing the accounting principles and practices being
followed by Unitil; assessing the adequacy of Unitil's interim
and annual financial statements; reviewing the internal audit
controls of Unitil and its subsidiaries; performing such other duties as
are appropriate to monitor the accounting and auditing policies and
procedures of Unitil and its subsidiaries; and reporting to the
full Unitil Board from time to time.
Compensation
Committee
The Compensation Committee of the Board of Directors, which
held three meetings in 1995, consists of Charles H. Tenney II
(Chairman), J. Parker Rice, Jr. and Joan D. Wheeler. The duties
of this Committee include studying and making recommendations to the
Board of Directors of Unitil and the appropriate Board of each of
its subsidiaries with respect to salaries and other benefits to
be paid to the officers of Unitil and such subsidiaries.
Compensation Committee Interlocks and Insider Participation
Charles H. Tenney II served as the Chairman of the
Compensation Committee during fiscal 1995. Mr. Tenney is the former
Chairman of the Board of Directors and Chief Executive Officer of the
Company, serving as such until his retirement in April 1992. He
currently has a Senior Advisory Agreement with the Company (see
"Compensation of Directors") and is also Chairman of the
Executive Committee of the Board of Directors.
Director Emeritus
The Company has a directors' advisory council composed of
retired members of the Company's Board of Directors. Each
member, known as a Director Emeritus, is appointed yearly by the Board of
Directors to render advisory services to the Board. Directors
Emeriti have no vote with respect to any matter acted upon by the
Board, nor is their presence counted for purposes of determining
a quorum. Directors Emeriti Richard L. Brickley, Philip H. Bradley,
Theodore C. Haffenreffer, Jr. and Endicott Smith were initially
appointed to their positions in 1992, 1993, 1994, and 1995,
respectively. Directors Emeriti receive an annual retainer of
$7,000 and $500 for each Board meeting attended, as well as
reimbursement for any expenses incurred in connection with
attendance at any meeting.
Report of the Compensation Committee
The overall objective of the Company's Board of Directors, and
specifically this Compensation Committee, in setting compensation
for Unitil's executive officers is to foster excellence in the
management of the assets of the Company. To help meet this
objective, the Committee believes it is important for the Company
to provide compensation to its executive officers which varies
directly with the performance of the Company and to make payment
of annual compensation with both cash and Company stock in place of
all-cash.
Accordingly, the Company pays both "base" and "variable"
compensation to its officers. The base component of compensation
is determined under the Unitil System's salary matrix which is
reviewed from time to time by outside consultants as to its
competitiveness. Variable compensation is based on factors that
measure the success of the Company for any given year and is
governed by the System's Management Performance Compensation Plan
("MPCP") and the profitability of the System's non-utility
subsidiary, Unitil Resources. The factors under the MPCP relate
to the earnings of the Company and the rate of return achieved on
shareholder-provided equity as well as cost control and the
competitiveness of the rates charged to the Unitil System's
utility customers. In addition, to further bolster ownership in the
Company by the executive officers, the Company, in 1989,
instituted a "Key Employee Stock Option Plan" with the approval of the
Company's shareholders. This plan was tailored to emphasize
dividend and stock value growth as a prerequisite to the
maximization of value to the participants.
The compensation of the Chief Executive Officer ("CEO"), Peter
J. Stulgis, is governed by these same plans and objectives. The
base compensation for Mr. Stulgis was increased by approximately
3.4% in 1995 which reflected the percentage increase in the
Unitil System's salary matrix which covers all non-bargaining unit
employees. The variable compensation paid to Mr. Stulgis in 1995
was based upon the Unitil System's operating results for 1994
under the MPCP discussed above and a distribution from a performance
pool related to the 1995 results of the System's newly formed
non-utility subsidiary, Unitil Resources. Under the MPCP, Mr.
Stulgis received a payment in cash and Company stock which
represented 25% of his total compensation. This MPCP payment is
formula-driven and reflected the achievement in 1994 of earnings
which were above target levels; a rate of return which was in the
89th percentile of peer companies; cost control results which
were at the 100th percentile of peer companies; and residential
utility rates which were at the 97th percentile of the peer group. The
distribution from the Unitil Resources 1995 performance pool was
based upon its contribution to System earnings and was equal to
9.2% of his total compensation. In setting the compensation of
Mr. Stulgis for 1995, the Committee independently reviewed the
current compensation data for over fifty companies which included all of
the companies used as the peer group in the Stock Performance
Graph shown below. Based upon this review, the Committee found that
the total compensation to be paid to the CEO fell within the same
range of compensation paid to the CEO's of companies of like size,
location and industry, and believes it was appropriately linked
to corporate performance.
The Committee also approved the compensation of Unitil's other
executive officers for 1995 following the principles and
procedures outlined in this report.
Compensation Committee Members
Charles H. Tenney II, Chairman, J. Parker Rice, Jr., and Joan D. Wheeler
Stock Performance Graph and Information
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURNS
Graph Here
The graph assumes $100 invested on December 31, 1990,
in each category and the reinvestment of all dividends during the
period. The Peer Group is comprised of the 11 investor-owned
New England electric utilities.
The results show Unitil with a $203 5-year return, the Peer Group a $181
5-year return and the S&P a $213 5-year return.
Compensation of Officers
The tabulation below shows the compensation Unitil, or any of its
subsidiaries, has paid to its Chief Executive Officer and its
most highly compensated officers whose total annual salary and bonus
were in excess of $100,000 during the year 1995.