35-CERT 1 final03.htm P/E 3/31/2003
File No. 70-8803

CERTIFICATE OF NOTIFICATION

(Rule 24)

SECURITIES AND EXCHANGE COMMISSION

BY

NEES Energy, Inc.



In accordance with the order of the Securities and Exchange Commission dated May 23, 1996 and the order dated August 28, 1996, the following is a report for the fourth quarter of fiscal year 2003:


  1. NEES Energy, Inc. (NEES Energy), a Massachusetts corporation, was formed on June 14, 1996. NEES Energy was capitalized on August 9, 1996 when one thousand shares of NEES Energy common stock were issued and sold to New England Electric System (NEES). On March 22, 2000, NEES was acquired by National Grid Group plc (now National Grid Transco plc), reorganized as a Delaware corporation and renamed National Grid USA. In conjunction with the merger, NEES Energy’s accounting year changed from a calendar year to a fiscal year beginning April 1 and ending March 31.


  2. In connection with the merger of NEES and National Grid Group plc (now National Grid Transco plc), as of March 22, 2000, the estimated fair value of AllEnergy Marketing Company, L.L.C. (a wholly owned subsidiary of NEES Energy) was recorded as an asset held for sale. This estimate changed due to intercompany borrowings and repayments. Also, the estimate was revised to reflect the net realizable value of the company as well as estimated operating losses incurred during the holding period. The amount remaining at March 31, 2001 was reclassified to consolidated National Grid USA goodwill.


  3. Effective August 24, 2001, AllEnergy Marketing Company, L.L.C. changed its name to AEMC, L.L.C.


  4. As of December 31, 2000, AEMC, L.L.C. had sold its two subsidiaries (Texas Liquids, LLC and Texas Ohio Gas, Inc.). As of January of 2001 AEMC, L.L.C. completed the last in a series of sales, comprising substantially all of its business operations to independent third parties. AEMC, L.L.C. is presently inactive.


  5. As of March 31, 2003, National Grid USA had purchased 1,000 shares of NEES Energy common stock and made subordinated loans and other paid-in capital contributions to NEES Energy totaling $4,891,115 and $10,655,000, respectively.


  6. As of March 31, 2003, NEES Energy had no permanent personnel and during the fourth quarter of fiscal year 2003 there were no individuals assigned on a substantially full-time basis.


  7. During the fourth quarter of fiscal year 2003, NEES Energy had no kilowatthours sold or marketed.


  8. Attached in Exhibits A through C are a consolidated balance sheet as of March 31, 2003, consolidated statements of income and retained earnings and statements of cash flows for the quarter and twelve months ended March 31, 2003.


Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this certificate of notification (Commission's File No. 70-8803) to be signed on its behalf by the undersigned officer thereunto duly authorized.
NEES Energy, Inc.

s/ John G. Cochrane

______________________________

John G. Cochrane
President and Treasurer


Date: June 24, 2003



EXHIBIT INDEX



Exhibit
Description
Page
A
Balance Sheet at March 31, 2003
(Unaudited, Subject to Adjustment)
Filed herewith
B
Statement of Income and Accumulated Deficit
For the Quarter and Twelve Months Ended March 31, 2003
(Unaudited, Subject to Adjustment)
Filed herewith
C
Statement of Cash Flows For the Quarter
and Twelve Months Ended March 31, 2003
(Unaudited, Subject to Adjustment)
Filed herewith


Exhibit A

NEES Energy, Inc.
Balance Sheet
(Thousands of Dollars)
At March 31, 2003
(Unaudited, Subject to Adjustment)


ASSETS
Current assets:
    Cash
$     59
    Miscellaneous current assets
6
    Tax benefits receivable
411
       Total current assets
$ 476


Total assets
$   476


LIABILITIES AND CAPITALIZATION
Current liabilities:
    Accrued expenses
$ 2,091
       Total current liabilities
2,091
Parent company's investment:
    Subordinated notes payable to parent
4,891
    Common stock, par value $1 per share
1
    Other paid-in capital
(6,527)
    Accumulated retained earnings
   20
       Total parent company's investment
(1,615)


Total liabilities and parent company’s investment
$    476


Exhibit B


NEES Energy, Inc.
Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Periods Ended March 31, 2003
(Unaudited, Subject to Adjustment)
Twelve

Quarter
Months
INCOME

    Revenue
$    0
$    0
       Total income
    0
    0
EXPENSES

    Operating expenses

       General and administrative expenses
55
(37)
       Taxes other than income taxes
(15)
(13)
       Income tax benefit
(32)
1
    Total operating expenses
8
(49)
    Operating loss
(8)
49
    Other expense, net
(6)
(14)
    Operating and other income (loss)
(14)
35
    Interest expense
32
34
Net income (loss)
(46)
1
Accumulated retained earnings at beginning of period
66
19
Accumulated retained earnings at end of period
$    20
$    20


Exhibit C

NEES Energy, Inc.
Statement of Cash Flows
(Thousands of Dollars)
For the Periods Ended March 31, 2003
(Unaudited, Subject to Adjustment)
Twelve

Quarter
Months
Operating activities:

    Net income (loss)
$   (46)
$    1
    Adjustments to reconcile net income (loss) to
       net cash provided by operating activities:

          Decrease in tax benefits receivable
555
1,474
          Increase in prepaid and other current assets
(4)
(6)
          (Increase) decrease in accounts payable
62
(492)
Net cash provided by operating activities
567
977
Financing activities:

    Change in subordinated notes payable to parent
(525)
(925)
Net cash used in investing activities
(525)
(925)
Net increase in cash and cash equivalents
42
52
Cash and cash equivalents at beginning of period
17
7
Cash and cash equivalents at end of period
$    59
$    59