FORM U-13-60
ANNUAL REPORT
For the Period
Beginning January 1, 2003 and Ending December 31, 2003
to the
U.S. SECURITIES AND EXCHANGE COMMISSION
of
Energy East Management Corporation
A Subsidiary Service Company
Date of Incorporation: March 11, 1999
State or Sovereign Power under which Incorporated or Organized: Delaware
Location of Principal Executive Offices of Reporting Company:
P.O. Box 12904
Albany, NY 12212-2904
Name, title, and address of officer to whom
correspondence concerning this report should be addressed:
Robert E. Rude
Energy East Management Corporation
Vice President and Controller
52 Farm View Drive
New Gloucester, ME 04260
Name of Principal Holding Company Whose Subsidiaries are served by Reporting Company:
Energy East Corporation
INSTRUCTIONS FOR USE OF FORM U-13-60
1. |
Time of Filing. |
2. |
Number of Copies. |
3. |
Period Covered by Report. |
4. |
Report Format. |
5. |
Money Amounts Displayed. |
6. |
Deficits Displayed. |
7. |
Major Amendments or Corrections. |
8. |
Definitions. |
9. |
Organization Chart. |
10. |
Methods of Allocation. |
11. |
Annual Statement of Compensation for Use of Capital Billed. |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
DESCRIPTION OF REPORTS OR STATEMENTS |
PAGE NO. |
21 |
|
22 |
|
23 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE I - COMPARATIVE BALANCE SHEET
(thousands of dollars)
Give balance sheet of the Company as of December 31 of the current and prior year.
ACCOUNT |
ASSETS AND OTHER DEBITS |
REF |
AS OF DECEMBER 31 |
|
2003 |
2002 |
|||
SERVICE COMPANY PROPERTY |
||||
101 |
Service company property, at cost |
II |
$2,065 |
$505 |
107 |
Construction work in progress |
II |
- |
- |
Total Property |
2,065 |
505 |
||
108 |
Less accumulated provision for depreciation and amortization of service company property |
|||
III |
316 |
223 |
||
Net Service Company Property |
1,749 |
282 |
||
INVESTMENTS |
||||
123 |
Investments in associate companies |
IV |
- |
- |
124 |
Other investments |
IV |
- |
- |
Total Investments |
- |
- |
||
CURRENT AND ACCRUED ASSETS |
||||
131 |
Cash |
13,907 |
11,195 |
|
134 |
Special deposits |
- |
- |
|
135 |
Working funds |
- |
- |
|
136 |
Temporary cash investments |
IV |
- |
- |
141 |
Notes receivable |
- |
- |
|
143 |
Accounts receivable |
- |
- |
|
144 |
Accumulated provision for uncollectible accounts |
- |
- |
|
146 |
Accounts receivable from associate companies |
V |
37,020 |
19,408 |
152 |
Fuel stock expenses undistributed |
VI |
- |
- |
154 |
Materials and supplies |
- |
- |
|
163 |
Stores expense undistributed |
VII |
- |
- |
165 |
Prepayments |
221 |
- |
|
174 |
Miscellaneous current and accrued assets |
VIII |
2,292 |
- |
Total Current and Accrued Assets |
53,440 |
30,603 |
||
DEFERRED DEBITS |
||||
181 |
Unamortized debt expense |
- |
- |
|
184 |
Clearing accounts |
- |
- |
|
186 |
Miscellaneous deferred debits |
IX |
2,112 |
2,112 |
188 |
Research, development, or demonstration expenditures |
|||
X |
- |
- |
||
190 |
Accumulated deferred income taxes |
7,616 |
4,522 |
|
Total Deferred Debits |
9,728 |
6,634 |
||
TOTAL ASSETS AND OTHER DEBITS |
$64,917 |
$37,519 |
||
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE I - COMPARATIVE BALANCE SHEET (Continued)
(thousands of dollars)
REF |
||||
ACCOUNT |
LIABILITIES AND PROPRIETARY CAPITAL |
SCHED |
AS OF DECEMBER 31 |
|
2003 |
2002 |
|||
Current |
Prior |
|||
PROPRIETARY CAPITAL |
||||
201 |
Common stock issued |
XI |
- |
- |
211 |
Miscellaneous paid-in-capital |
XI |
$28,902 |
$11,481 |
215 |
Appropriated retained earnings |
XI |
- |
- |
216 |
Unappropriated retained earnings |
XI |
- |
- |
Total Proprietary Capital |
28,902 |
11,481 |
||
LONG-TERM DEBT |
||||
223 |
Advances from associate companies |
XII |
- |
- |
224 |
Other long-term debt |
XII |
- |
- |
225 |
Unamortized premium on long-term debt |
- |
- |
|
226 |
Unamortized discount on long-term debt - debit |
- |
- |
|
Total Long-Term Debt |
- |
- |
||
CURRENT AND ACCRUED LIABILITIES |
||||
231 |
Notes payable |
- |
- |
|
232 |
Accounts payable |
3,182 |
1,199 |
|
233 |
Notes payable to associate companies |
XIII |
- |
- |
234 |
Accounts payable to associate companies |
XIII |
14,942 |
4,971 |
236 |
Taxes accrued |
- |
3,387 |
|
237 |
Interest accrued |
- |
- |
|
238 |
Dividends declared |
- |
- |
|
241 |
Tax collections payable |
- |
- |
|
242 |
Miscellaneous current and accrued liabilities |
XIII |
9,842 |
10,058 |
Total Current and Accrued Liabilities |
27,966 |
19,615 |
||
DEFERRED CREDITS |
||||
253 |
Other deferred credits |
8,049 |
6,423 |
|
255 |
Accumulated deferred investment tax credits |
- |
- |
|
Total Deferred Credits |
8,049 |
6,423 |
||
282 |
ACCUMULATED DEFERRED INCOME TAXES |
- |
- |
|
TOTAL LIABILITIES AND PROPRIETARY |
||||
$64,917 |
$37,519 |
|||
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE II - SERVICE COMPANY PROPERTY
(thousands of dollars)
|
|
BALANCE AT BEGINNING |
|
|
OTHER CHANGES |
BALANCE AT CLOSE |
SERVICE COMPANY PROPERTY |
||||||
301 |
Organization |
- |
- |
- |
- |
- |
303 |
Miscellaneous intangible plant |
- |
- |
- |
- |
- |
304 |
Land and land rights |
- |
- |
- |
- |
- |
305 |
Structures and improvements |
- |
- |
- |
- |
- |
306 |
Leasehold improvements |
- |
$622 |
- |
- |
$622 |
307 |
Equipment (2) |
- |
- |
- |
- |
- |
308 |
Office furniture and equipment |
$505 |
977 |
$39 |
- |
1,443 |
309 |
Automobiles, other vehicles and |
|||||
- |
- |
- |
- |
- |
||
310 |
Aircraft and airport equipment |
- |
- |
- |
- |
- |
311 |
Other service company property (3) |
- |
- |
- |
- |
- |
Subtotal |
505 |
1,599 |
39 |
- |
2,065 |
|
107 |
Construction work in progress (4) |
- |
- |
- |
- |
- |
Total |
$505 |
$1,599 |
$39 |
- |
$2,065 |
|
NOTES:
(1) Provide an explanation of those changes considered material:
None
(2) Subaccounts are required for each class of equipment owned. The Service Company shall provide a listing by subaccount of equipment additions during the year and the balance at the close of the year:
None
(3) Describe Other Service Company Property:
None
(4) Describe Construction Work in Progress:
None
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE III - ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF
SERVICE COMPANY PROPERTY
(thousands of dollars)
BALANCE AT BEGINNING |
|
|
OTHER CHANGES |
BALANCE AT CLOSE |
||||||||
ACCOUNT |
DESCRIPTION |
OF YEAR |
ACCOUNT 403 |
OR SALES |
(1) |
OF YEAR |
||||||
301 |
Organization |
- |
- |
- |
- |
- |
||||||
303 |
Miscellaneous intangible plant |
- |
- |
- |
- |
- |
||||||
304 |
Land and land rights |
- |
- |
- |
- |
- |
||||||
305 |
Structures and improvements |
- |
- |
- |
- |
- |
||||||
306 |
Leasehold improvements |
- |
- |
- |
- |
- |
||||||
307 |
Equipment |
- |
- |
- |
- |
- |
||||||
308 |
Office furniture and equipment |
$223 |
$93 |
- |
- |
$316 |
||||||
309 |
Automobiles, other vehicles and |
|||||||||||
- |
- |
- |
- |
- |
||||||||
310 |
Aircraft and airport equipment |
- |
- |
- |
- |
- |
||||||
311 |
Other service company property |
- |
- |
- |
- |
- |
||||||
Total |
$223 |
$93 |
- |
- |
$316 |
|||||||
NOTES:
(1) Provide an explanation of those changes considered material:
None
SCHEDULE IV - INVESTMENTS
(thousands of dollars)
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments", state each investment separately, with description, including name of issuing company, number of shares or principal amount, etc.
Under Account 136, "Temporary Cash Investments", list each investment separately.
|
|
BALANCE AT |
BALANCE AT |
123 |
Investment in associate companies |
- |
- |
124 |
Other investments |
- |
- |
136 |
Temporary cash investments |
- |
- |
Total |
- |
- |
|
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
(thousands of dollars)
INSTRUCTIONS: Complete the following schedule listing accounts receivable from each associate company. Where the service company has provided accommodation or convenience payments for associate companies, a separate listing of total payments for each associate company by subaccount should be provided.
BALANCE AT BEGINNING |
BALANCE AT CLOSE |
|
OF YEAR |
OF YEAR |
|
DESCRIPTION |
||
Account 146 - Accounts Receivable from Associate Companies: |
||
Operations |
||
Energy East Corporation |
$3,849 |
$4,811 |
New York State Electric & Gas Corporation |
7,143 |
13,263 |
Rochester Gas and Electric Corporation |
1,279 |
5,877 |
Energetix, Inc. |
38 |
59 |
Griffith Oil Co., Inc. |
110 |
- |
The Southern Connecticut Gas Company |
896 |
1,555 |
CNE Energy Services Group |
9 |
8 |
CNE Venture Tech, Inc. |
2 |
- |
Central Maine Power Company |
2,300 |
6,064 |
The Union Water-Power Company |
102 |
99 |
MaineCom Services |
28 |
25 |
Connecticut Natural Gas Corporation |
994 |
2,526 |
TEN Companies, Inc. |
186 |
127 |
The Berkshire Gas Company |
220 |
187 |
Berkshire Propane, Inc. |
13 |
- |
Berkshire Service Solutions, Inc. |
- |
- |
The Energy Network, Inc. |
508 |
453 |
Energy East Solutions, Inc. |
10 |
11 |
Cayuga Energy, Inc. |
4 |
4 |
Energy East Telecom |
- |
1 |
Energy East Enterprises, Inc. |
55 |
27 |
New Hampshire Gas Corporation |
2 |
- |
Maine Natural Gas Corporation |
3 |
6 |
Seneca Lake Storage |
- |
2 |
Benefit Plans |
||
Energy East Management Corporation |
5 |
17 |
New York State Electric & Gas Corporation |
879 |
890 |
The Southern Connecticut Gas Company |
154 |
101 |
CNE Energy Services Group |
7 |
1 |
Central Maine Power Company |
323 |
535 |
The Union Water-Power Company |
24 |
35 |
Connecticut Natural Gas Corporation |
247 |
316 |
TEN Companies, Inc. |
2 |
2 |
The Berkshire Gas Company |
8 |
9 |
Berkshire Propane, Inc. |
1 |
- |
The Energy Network, Inc. |
- |
2 |
Maine Natural Gas Corporation |
7 |
7 |
TOTAL |
$19,408 |
$37,020 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES (Continued)
(thousands of dollars)
The Berkshire Gas Company |
Central Maine |
CNE Energy |
Connecticut |
Energy East |
Energy East |
|
|
Griffith Oil |
|
Type of Billing |
|||||||||
Capital Equipment-EE Wan |
- |
$93 |
- |
$93 |
- |
- |
- |
- |
- |
Insurance-Auto |
$79 |
- |
- |
- |
- |
- |
$1 |
- |
- |
Insurance-Broker Fees-Fiduciary |
1 |
15 |
- |
5 |
- |
- |
- |
- |
- |
Insurance-Brokerage Fees-Consulting |
7 |
123 |
$20 |
39 |
- |
$2 |
- |
$23 |
$5 |
Insurance-Crime Policy |
- |
19 |
- |
6 |
- |
- |
- |
- |
- |
Insurance-D&O |
- |
- |
- |
- |
$16 |
- |
- |
- |
- |
Insurance-Excess Liability |
3 |
40 |
- |
14 |
- |
- |
- |
- |
- |
Insurance-Fiduciary Premiums |
7 |
38 |
- |
23 |
- |
- |
- |
- |
- |
Insurance-General Liability |
145 |
782 |
43 |
409 |
- |
9 |
155 |
150 |
- |
Insurance-Property |
101 |
344 |
100 |
139 |
10 |
6 |
- |
447 |
17 |
Insurance-Railroad |
- |
8 |
- |
- |
- |
- |
- |
- |
- |
Insurance-Terrorism Property |
7 |
31 |
10 |
22 |
- |
- |
- |
27 |
- |
Membership-AGA |
16 |
- |
- |
110 |
- |
- |
- |
- |
- |
Membership-USWAG |
- |
3 |
- |
- |
- |
- |
- |
- |
- |
PWC-Audit Fees |
71 |
242 |
- |
177 |
- |
- |
83 |
30 |
33 |
PWC-Audit of 2002 Financial Statements |
- |
- |
- |
- |
- |
- |
57 |
- |
- |
PWC-Audit Testing Procedures |
11 |
11 |
- |
11 |
- |
- |
- |
- |
- |
PWC-Benefit Plan Audit |
9 |
21 |
- |
15 |
- |
- |
- |
- |
1 |
PWC-Filing-Form S-8 |
- |
- |
- |
- |
6 |
- |
- |
- |
- |
PWC-Griffith EPA CFR part 80 |
- |
- |
- |
- |
- |
- |
- |
- |
5 |
PWC-NYSEG Issuance $200M Med. |
|
|
|
|
|
|
|
|
|
PWC-Registration-Form S-3 |
- |
- |
- |
- |
16 |
- |
- |
- |
- |
PWC-Retirement Benefits Plan |
1 |
6 |
- |
6 |
- |
- |
- |
- |
- |
SAP-Licensing Fee |
50 |
515 |
- |
211 |
- |
- |
- |
- |
- |
SAP-Maintenance for 2003 |
- |
87 |
- |
35 |
- |
- |
- |
- |
- |
Other |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Total |
$508 |
$2,378 |
$173 |
$1,315 |
$48 |
$17 |
$296 |
$677 |
$61 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES (Continued)
(thousands of dollars)
|
MaineCom Services |
New York |
Rochester Gas |
The Southern |
|
|
New |
|
|
Type of Billing |
|||||||||
Capital Equipment-EE Wan |
- |
$93 |
$93 |
$93 |
- |
- |
- |
- |
$465 |
Insurance-Auto |
- |
1 |
- |
- |
$12 |
- |
- |
$7 |
100 |
Insurance-Broker Fees-Fiduciary |
- |
44 |
- |
5 |
- |
- |
- |
- |
70 |
Insurance-Brokerage Fees-Consulting |
- |
159 |
247 |
- |
- |
- |
- |
- |
625 |
Insurance-Crime Policy |
- |
43 |
1,234 |
6 |
- |
- |
- |
- |
1,308 |
Insurance-D&O |
- |
- |
- |
- |
- |
- |
- |
- |
16 |
Insurance-Excess Liability |
- |
112 |
- |
13 |
- |
- |
- |
- |
182 |
Insurance-Fiduciary Premiums |
- |
340 |
141 |
28 |
- |
- |
- |
- |
577 |
Insurance-General Liability |
$10 |
2,377 |
1,248 |
380 |
219 |
$167 |
$4 |
32 |
6,130 |
Insurance-Property |
- |
694 |
- |
67 |
160 |
- |
- |
- |
2,085 |
Insurance-Railroad |
- |
21 |
- |
- |
- |
- |
- |
- |
29 |
Insurance-Terrorism Property |
- |
75 |
66 |
4 |
- |
- |
- |
- |
242 |
Membership-AGA |
- |
117 |
125 |
132 |
- |
- |
- |
- |
500 |
Membership-USWAG |
- |
10 |
17 |
- |
- |
- |
- |
- |
30 |
PWC-Audit Fees |
- |
275 |
180 |
157 |
- |
13 |
- |
- |
1,261 |
PWC-Audit of 2002 Financial |
- |
- |
- |
- |
|
- |
- |
|
|
PWC-Audit testing Procedures |
- |
11 |
11 |
11 |
- |
- |
- |
- |
66 |
PWC-Benefit Plan Audit |
- |
12 |
6 |
15 |
- |
- |
- |
- |
79 |
PWC-Filing-Form S-8 |
- |
- |
- |
- |
- |
- |
- |
- |
6 |
PWC-Griffith EPA CFR part 80 |
- |
- |
- |
- |
- |
- |
- |
- |
5 |
PWC-NYSEG Issuance $200M Med. |
|
|
|
|
|
|
|
|
|
PWC-Registration-Form S-3 |
- |
8 |
18 |
- |
- |
- |
- |
- |
42 |
PWC-Retirement Benefits Plan |
- |
5 |
3 |
1 |
- |
- |
- |
- |
22 |
SAP-Licensing Fee |
- |
1,406 |
143 |
210 |
- |
- |
- |
- |
2,535 |
SAP-Maintenance for 2003 |
- |
244 |
168 |
35 |
- |
- |
- |
- |
569 |
Other |
- |
6 |
- |
- |
- |
- |
- |
- |
6 |
Total |
$10 |
$6,077 |
$3,700 |
$1,157 |
$391 |
$180 |
$4 |
$39 |
$17,031 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE VI - FUEL STOCK EXPENSES UNDISTRIBUTED
(thousands of dollars)
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to fuel stock expenses during the year and indicate amount attributable to each associate company. Under the section headed "Summary" listed below give an overall report of the fuel functions performed by the service company.
DESCRIPTION |
LABOR |
EXPENSES |
TOTAL |
Account 152 - Fuel Stock Expenses Undistributed |
- |
- |
- |
Total |
- |
- |
- |
Summary:
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
(thousands of dollars)
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to stores expense during the year and indicate amount attributable to each associate company.
DESCRIPTION |
LABOR |
EXPENSES |
TOTAL |
|
Account 163 - Stores Expense Undistributed |
- |
- |
- |
|
Total |
- |
- |
- |
|
SCHEDULE VIII - MISCELLANEOUS CURRENT AND ACCRUED ASSETS
(thousands of dollars)
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each group.
|
|
BALANCE AT |
BALANCE AT |
174 |
Miscellaneous current and accrued assets and |
||
accrued taxes |
- |
$2,292 |
|
Total |
- |
$2,292 |
|
SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS
(thousands of dollars)
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped by class showing the number of items in each class.
|
|
BALANCE AT |
BALANCE AT |
186 |
Intangible asset associated with nonqualified pension plans |
|
|
Total |
$2,112 |
$2,112 |
|
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE X - RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES
(thousands of dollars)
INSTRUCTIONS: Provide a description of each material research, development, or demonstration project which incurred costs by the service corporation during the year.
|
|
BALANCE AT |
BALANCE AT |
|
188 |
Research, development, or demonstration expenditures |
- |
- |
|
Total |
- |
- |
||
SCHEDULE XI - PROPRIETARY CAPITAL
|
|
NUMBER |
PAR OR |
|
CLOSE OF |
201 |
Common Stock Issued |
200 |
$.01 |
10 |
- |
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of transactions which gave rise to the reported amounts.
ACCOUNT NUMBER |
|
|
211 |
Miscellaneous Paid-In-Capital |
$28,902 |
215 |
Appropriated Retained Earnings |
- |
TOTAL |
$28,902 |
|
|
|
BALANCE AT |
|
|
BALANCE AT |
216 |
Unappropriated Retained Earnings |
- |
- |
||
TOTAL |
- |
- |
|||
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE XII - LONG-TERM DEBT
(thousands of dollars)
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes and advances on open accounts. Names of associated companies from which advances were received shall be shown under the class and series of obligation column. For Account 224 - Other Long-Term Debt, provide the name of creditor company or organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding.
CREDITOR |
TERM OF |
|
|
|
|
|
|
|
Account 223 - Advances from Associate Companies: |
|
|
||||||
Account 224 - |
|
|
||||||
TOTAL |
- |
- |
||||||
(1) Give an explanation of deductions.
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
(thousands of dollars)
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate company. Give description and amounts of miscellaneous current and accrued liabilities. Items less than $10,000 may be grouped, showing the number of items in each group.
DESCRIPTION |
BALANCE AT |
BALANCE AT |
Account 233 - Notes Payable to Associate Companies |
- |
- |
Total |
- |
- |
Account 234 - Accounts Payable to Associate Companies |
||
Energy East Corporation |
$44 |
$145 |
New York State Electric & Gas Corporation |
2,425 |
4,558 |
Rochester Gas and Electric Corporation |
2,359 |
9,819 |
The Energy Network, Inc. |
- |
- |
The Southern Connecticut Gas Company |
26 |
13 |
Central Maine Power Company |
16 |
357 |
Connecticut Natural Gas Corporation |
49 |
29 |
Energy East Telecommunications, Inc. |
46 |
- |
Berkshire Gas Company |
1 |
3 |
Energy East Management Company Benefit Plan |
5 |
18 |
Total |
$4,971 |
$14,942 |
Account 242 - Miscellaneous Current and Accrued Liabilities |
$10,058 |
$9,842 |
Accrued Employee Expenses |
||
Total |
$10,058 |
$9,842 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEPRECIATION
EE Management determines depreciation expense using the straight-line method. EE Management's depreciation accruals were equivalent to 16.9% of average depreciable property for 2003.
INCOME TAXES
Deferred income taxes reflect the effect of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and the amount recognized for tax purposes.
2. COMMITMENTS
LEASES
EE Management has entered into operating lease agreements for various facilities including office space and computer equipment. Total payments on operating leases for 2003 were approximately $696,000. Estimated future minimum lease payments are $1,225,000 in 2004.
3. EMPLOYEE PENSIONS AND BENEFITS
In 2002 EE Management employees were covered by New York State Electric and Gas Corporation's (NYSEG) (a wholly owned subsidiary of Energy East) pension, retiree health care and 401(k) plans and by other health and welfare plans and a supplemental executive retirement plan sponsored by EE Management Corporation. NYSEG, as the pension and retiree health care plans' sponsor, has overall responsibility for directly allocating such costs to each of the participating affiliate companies. This allocation is determined by the plans' actuary based on benefit obligations for active participants.
Beginning in 2003 EE Management employees transferring from other Energy East affiliate companies are covered by the pension and retiree health care plans of their originating company. The allocation of such costs to EE Management is determined in a manner consistent with 2002. EE Management has also established a Cash Balance Retirement Benefit Plan for employees hired from outside of the Energy East affiliate companies. EE Management employees continue to be covered by health and welfare plans and a supplemental executive retirement plan sponsored by EE Management Corporation.
EE Management's pension and benefit costs for 2003 is reflected in Schedule XVII
.Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE XV - STATEMENT OF INCOME
(thousands of dollars)
|
|
CURRENT |
PRIOR |
INCOME |
|||
457 |
Services Rendered to Associate Companies |
$70,045 |
$34,814 |
458 |
Services Rendered to Nonassociate Companies |
- |
- |
419 |
Other Interest Income |
24 |
54 |
421 |
Miscellaneous Income or Loss |
- |
- |
TOTAL INCOME |
$70,069 |
$34,868 |
|
|
|||
920 |
Salaries and Wages |
$19,499 |
$16,824 |
921 |
Office Supplies and Expenses |
9,593 |
1,837 |
922 |
Administrative Expenses Transferred - Credit |
- |
- |
923 |
Outside Services Employed |
33,656 |
11,473 |
924 |
Property Insurance |
- |
- |
925 |
Injuries and Damages |
24 |
18 |
926 |
Employee Pensions and Benefits |
3,982 |
2,577 |
928 |
Regulatory Commission Expense |
- |
- |
930.1 |
General Advertising Expenses |
35 |
33 |
930.2 |
Miscellaneous General Expenses |
863 |
957 |
931 |
Rents |
767 |
305 |
932 |
Maintenance of Structures and Equipment |
- |
- |
403, 404 |
Depreciation and Amortization Expense |
93 |
86 |
408 |
Taxes Other Than Income Taxes |
1,080 |
411 |
409 |
Income Taxes |
2,730 |
3,966 |
410 |
Provision for Deferred Income Taxes |
- |
230 |
411 |
Provision for Deferred Income Taxes - Credit |
(2,708) |
(4,218) |
411.5 |
Investment Tax Credit |
- |
- |
426.1 |
Donations |
15 |
10 |
426.5 |
Other Deductions |
6 |
64 |
427 |
Interest on Long-Term Debt |
- |
- |
430 |
Interest on Debt to Associate Companies |
415 |
283 |
431 |
Other Interest Expense |
19 |
12 |
TOTAL EXPENSE |
$70,069 |
$34,868 |
|
NET INCOME OR (LOSS) |
$ - |
$ - |
|
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
ANALYSIS OF BILLING
ASSOCIATE COMPANIES - ACCOUNT 457
(thousands of dollars)
|
DIRECT |
INDIRECT |
COMPENSATION |
|
||||
Energy East Corporation |
$5,252 |
$238 |
- |
$5,490 |
||||
Rochester Gas and Electric Corporation |
3,321 |
12,467 |
$50 |
15,838 |
||||
Energetix, Inc. |
35 |
225 |
3 |
263 |
||||
Griffith Oil Co., Inc. |
6 |
530 |
6 |
542 |
||||
New York State Electric & Gas Corporation |
5,276 |
20,229 |
72 |
25,577 |
||||
The Southern Connecticut Gas Company |
1,847 |
3,175 |
10 |
5,032 |
||||
CNE Energy Services Group |
17 |
36 |
1 |
54 |
||||
CNE Development Corporation |
- |
- |
- |
- |
||||
CNE Venture Tech, Inc. |
4 |
1 |
- |
5 |
||||
Central Maine Power Company |
3,093 |
7,623 |
26 |
10,742 |
||||
The Union Water-Power Company |
100 |
312 |
2 |
414 |
||||
MaineCom Services |
6 |
1 |
- |
7 |
||||
Connecticut Natural Gas Corporation |
1,850 |
3,312 |
10 |
5,172 |
||||
TEN Companies, Inc. |
22 |
54 |
1 |
77 |
||||
The Berkshire Gas Company |
73 |
362 |
2 |
437 |
||||
Berkshire Propane, Inc. |
118 |
19 |
- |
137 |
||||
Berkshire Service Solutions, Inc. |
- |
- |
- |
- |
||||
The Energy Network, Inc. |
245 |
(330) |
- |
(85) |
||||
Energy East Solutions, Inc. |
16 |
124 |
2 |
142 |
||||
Energy East Telecommunications, Inc. |
3 |
1 |
- |
4 |
||||
Cayuga Energy, Inc. |
12 |
39 |
1 |
52 |
||||
Energy East Enterprises, Inc. |
67 |
(23) |
- |
44 |
||||
New Hampshire Gas Corporation |
20 |
6 |
- |
26 |
||||
Maine Natural Gas Corporation |
25 |
18 |
- |
43 |
||||
Seneca Lake Storage, Inc. |
31 |
1 |
- |
32 |
||||
TOTAL |
$21,439 |
$48,420 |
$186 |
$70,045 |
||||
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES - ACCOUNT 458
(thousands of dollars)
INSTRUCTION: Provide a brief description of the services rendered to each nonassociate company:
NONASSOCIATE COMPANY |
DIRECT |
INDIRECT |
COMPENSATION |
|
EXCESS |
|
- |
- |
|||||
TOTAL |
- |
- |
||||
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND
NONASSOCIATE COMPANIES
(thousands of dollars)
INSTRUCTIONS: Total cost of service will equal for associate and nonassociate companies the total amount billed under their separate analysis of billing schedules.
|
DESCRIPTION |
ASSOCIATE COMPANY |
NONASSOCIATE COMPANY |
|
||||||
DIRECT |
INDIRECT |
|
DIRECT |
INDIRECT |
|
DIRECT |
INDIRECT |
|
||
920 |
Salaries and wages |
$3,792 |
$15,707 |
$19,499 |
- |
- |
- |
$3,792 |
$15,707 |
$19,499 |
921 |
Office supplies and |
|
|
|
|
|
|
|
|
|
922 |
Administrative expense |
|
|
|
|
|
|
|
|
|
923 |
Outside services |
|
|
|
|
|
|
|
|
|
924 |
Property insurance |
- |
- |
- |
- |
- |
- |
- |
- |
- |
925 |
Injuries and damages |
6 |
18 |
24 |
- |
- |
- |
6 |
18 |
24 |
926 |
Employee pensions and |
|
|
|
|
|
|
|
|
|
928 |
Regulatory commission |
|
|
|
|
|
|
|
|
|
930.1 |
General advertising |
|
|
|
|
|
|
|
|
|
930.2 |
Miscellaneous general |
|
|
|
|
|
|
|
|
|
931 |
Rents |
70 |
697 |
767 |
- |
- |
- |
70 |
697 |
767 |
932 |
Maintenance of structures |
|
|
|
|
|
|
|
|
|
403, 404 |
Depreciation and |
|
|
|
|
|
|
|
|
|
408 |
Taxes other than income |
|
|
|
|
|
|
|
|
|
409 |
Income taxes |
- |
2,730 |
2,730 |
- |
- |
- |
- |
2,730 |
2,730 |
410 |
Provision for deferred |
|
|
|
|
|
|
|
|
|
411 |
Provision for deferred |
|
|
|
|
|
|
|
|
|
411.5 |
Investment tax credit |
- |
- |
- |
- |
- |
- |
- |
- |
- |
426.1 |
Donations |
15 |
- |
15 |
- |
- |
- |
15 |
- |
15 |
426.5 |
Other deductions |
6 |
- |
6 |
- |
- |
- |
6 |
- |
6 |
427 |
Interest on long-term debt |
- |
- |
- |
- |
- |
- |
- |
- |
- |
430 |
Interest on debt to |
|
|
|
|
|
|
|
|
|
431 |
Other interest expense |
- |
19 |
19 |
- |
- |
- |
- |
19 |
19 |
Total |
$24,968 |
$45,101 |
$70,069 |
- |
- |
- |
$24,968 |
$45,101 |
$70,069 |
|
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR
SERVICE FUNCTION
(thousands of dollars)
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s))
ACCOUNT |
DESCRIPTION OF ITEMS |
DEPARTMENT OR SERVICE FUNCTION |
|||
TOTAL |
|
GENERAL |
|
||
920 |
Salaries and wages |
$19,499 |
$4,032 |
$227 |
$2,809 |
921 |
Office supplies and expenses |
9,593 |
1,350 |
145 |
758 |
922 |
Administrative expense transferred - credit |
- |
- |
- |
- |
923 |
Outside services employed |
33,656 |
1,515 |
128 |
1,337 |
924 |
Property insurance |
- |
- |
- |
- |
925 |
Injuries and damages |
24 |
10 |
1 |
3 |
926 |
Employee pensions and benefits |
3,982 |
1,867 |
349 |
310 |
928 |
Regulatory commission expense |
- |
- |
- |
- |
930.1 |
General advertising expenses |
35 |
35 |
- |
- |
930.2 |
Miscellaneous general expenses |
863 |
578 |
- |
- |
931 |
Rents |
767 |
196 |
- |
270 |
932 |
Maintenance of structures and equipment |
- |
- |
- |
- |
403, 404 |
Depreciation and amortization expense |
93 |
93 |
- |
- |
408 |
Taxes other than income taxes |
1,080 |
150 |
17 |
180 |
409 |
Income taxes |
2,730 |
2,730 |
- |
- |
410 |
Provision for deferred income taxes |
- |
- |
- |
- |
411 |
Provision for deferred income taxes - credit |
(2,708) |
(2,708) |
- |
- |
411.5 |
Investment tax credit |
- |
- |
- |
- |
426.1 |
Donations |
15 |
- |
- |
- |
426.5 |
Other deductions |
6 |
- |
- |
- |
427 |
Interest on long-term debt |
- |
- |
- |
- |
430 |
Interest on debt to associate companies |
415 |
- |
- |
- |
431 |
Other Interest expense |
19 |
12 |
- |
- |
TOTAL |
$70,069 |
$9,860 |
$867 |
$5,667 |
|
ACCOUNT |
DESCRIPTION OF ITEMS |
DEPARTMENT OR SERVICE FUNCTION |
|||
|
INTERNAL |
HUMAN |
TRANSMISSION & SUPPLY |
||
920 |
Salaries and wages |
$1,532 |
$292 |
$929 |
$684 |
921 |
Office supplies and expenses |
502 |
28 |
268 |
129 |
922 |
Administrative expense transferred - credit |
- |
- |
- |
- |
923 |
Outside services employed |
4,673 |
1,743 |
4,622 |
240 |
924 |
Property insurance |
- |
- |
- |
- |
925 |
Injuries and damages |
4 |
1 |
1 |
2 |
926 |
Employee pensions and benefits |
123 |
30 |
107 |
75 |
928 |
Regulatory commission expense |
- |
- |
- |
- |
930.1 |
General advertising expenses |
- |
- |
- |
- |
930.2 |
Miscellaneous general expenses |
22 |
3 |
- |
- |
931 |
Rents |
- |
- |
- |
- |
932 |
Maintenance of structures and equipment |
- |
- |
- |
- |
403, 404 |
Depreciation and amortization expense |
- |
- |
- |
- |
408 |
Taxes other than income taxes |
72 |
16 |
54 |
43 |
409 |
Income taxes |
- |
- |
- |
- |
410 |
Provision for deferred income taxes |
- |
- |
- |
- |
411 |
Provision for deferred income taxes - credit |
- |
- |
- |
- |
411.5 |
Investment tax credit |
- |
- |
- |
- |
426.1 |
Donations |
- |
- |
- |
- |
426.5 |
Other deductions |
1 |
- |
- |
- |
427 |
Interest on long-term debt |
- |
- |
- |
- |
430 |
Interest on debt to associate companies |
415 |
- |
- |
- |
431 |
Other interest expense |
7 |
- |
- |
- |
TOTAL |
$7,351 |
$2,113 |
$5,981 |
$1,173 |
|
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY DEPARTMENT OR SERVICE FUNCTION (Continued)
(thousands of dollars)
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s))
ACCOUNT |
DESCRIPTION OF ITEMS |
DEPARTMENT OR SERVICE FUNCTION |
|||||||||
|
PUBLIC |
|
|
||||||||
920 |
Salaries and wages |
$828 |
$335 |
$6,064 |
$1,767 |
||||||
921 |
Office supplies and expenses |
1,699 |
155 |
4,402 |
157 |
||||||
922 |
Administrative expense transferred - credit |
- |
- |
- |
- |
||||||
923 |
Outside services employed |
340 |
606 |
17,569 |
883 |
||||||
924 |
Property insurance |
- |
- |
- |
- |
||||||
925 |
Injuries and damages |
1 |
1 |
- |
- |
||||||
926 |
Employee pensions and benefits |
78 |
28 |
792 |
223 |
||||||
928 |
Regulatory commission expense |
- |
- |
- |
- |
||||||
930.1 |
General advertising expenses |
- |
- |
- |
- |
||||||
930.2 |
Miscellaneous general expenses |
181 |
- |
- |
79 |
||||||
931 |
Rents |
231 |
70 |
- |
- |
||||||
932 |
Maintenance of structures and equipment |
- |
- |
- |
- |
||||||
403, 404 |
Depreciation and amortization expense |
- |
- |
- |
- |
||||||
408 |
Taxes other than income taxes |
42 |
16 |
387 |
103 |
||||||
409 |
Income taxes |
- |
- |
- |
- |
||||||
410 |
Provision for deferred income taxes |
- |
- |
- |
- |
||||||
411 |
Provision for deferred income taxes - credit |
- |
- |
- |
- |
||||||
411.5 |
Investment tax credit |
- |
- |
- |
- |
||||||
426.1 |
Donations |
- |
15 |
- |
- |
||||||
426.5 |
Other deductions |
- |
5 |
- |
- |
||||||
427 |
Interest on long-term debt |
- |
- |
- |
- |
||||||
430 |
Interest on debt to associate companies |
- |
- |
- |
- |
||||||
431 |
Other interest expense |
- |
- |
- |
- |
||||||
TOTAL |
$3,400 |
$1,231 |
$29,214 |
$3,212 |
|||||||
DEPARTMENTAL ANALYSIS OF SALARIES - ACCOUNT 920
(thousands of dollars)
DEPARTMENTAL SALARY EXPENSE |
|||||
|
NUMBER OF PERSONNEL |
||||
|
|
|
|
|
|
Executive |
$4,032 |
$1,123 |
$2,909 |
- |
7 |
General Counsel |
227 |
7 |
220 |
- |
2 |
Controller |
2,809 |
41 |
2,768 |
- |
109 |
Treasurer |
1,532 |
53 |
1,479 |
- |
8 |
Internal Audit |
292 |
12 |
280 |
- |
2 |
Human Resources |
929 |
42 |
887 |
- |
6 |
Transmission and Energy Supply |
684 |
(3) |
687 |
- |
3 |
Finance |
828 |
302 |
526 |
- |
5 |
Public Affairs |
335 |
335 |
- |
- |
1 |
Information Technology |
6,064 |
- |
6,064 |
- |
124 |
Supply Chain Services |
1,767 |
- |
1,767 |
- |
39 |
TOTAL |
$19,499 |
$1,912 |
$17,587 |
- |
306 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service.
FROM WHOM PURCHASED |
SERVICES PROVIDED |
AMOUNT |
Legal Services |
||
Huber Lawrence and Abell |
Legal Services |
$1,332 |
Hinman, Howard & Kattell, LLP |
Legal Services |
466 |
Troutman Sanders |
Legal Services |
228 |
LeBoeuf, Lamb, Greene & MacRae |
Legal Services |
212 |
Other (10) |
153 |
|
Subtotal |
$2,391 |
|
|
||
Auditing, Tax, Consulting |
||
and Accounting Services |
||
PricewaterhouseCoopers, LLP |
Auditing, Tax and Other Services |
$533 |
Deloitte & Touche |
Consulting |
182 |
$715 |
||
Consulting Services |
||
Towers Perrin |
Employee Benefits |
$4,023 |
Research International |
Customer Service |
339 |
Park Strategies LLC |
Consulting |
240 |
Innisfree M&A Inc. |
Proxy Support & Shareholder Research |
191 |
ADP Investor Communication |
Investor Services |
156 |
The Northbridge Group |
Regulatory & Strategic Planning |
127 |
Joele Frank, Wilkinson Brimmer |
Public Relations |
121 |
Miscellaneous - 8 vendors |
Various |
309 |
Subtotal |
$5,506 |
|
|
||
Other Outside Services |
||
Rochester Gas & Electric |
Administrative |
$16,490 |
NYSEG |
Administrative |
2,208 |
Central Maine Power Company |
Administrative |
1,091 |
Morgan Stanley & Co |
Financial Advisory Services |
908 |
Sandy Alexander |
Printing |
570 |
Adecco Employment Services |
Employment Services |
449 |
Connecticut Natural Gas Corporation |
Administrative |
405 |
The Southern Connecticut Gas Company |
Administrative |
260 |
Standard & Poor's Rating Service |
Financial Advisory Services |
234 |
Moody's Investor Services |
Financial Advisory Services |
193 |
Sungard |
Information Technology |
185 |
New York Stock Exchange |
Shareholder Services |
135 |
Cendant Mobility Services |
Relocation Services |
134 |
Maximus, Inc. |
Information Technology |
115 |
Mellon Investor Services |
Shareholder Services |
105 |
Lee Hecht Harrison, LLC |
Employment Services |
104 |
Other (89) |
Various |
1,458 |
Subtotal |
$25,044 |
|
Total Outside Services Employed |
$33,656 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
EMPLOYEE PENSIONS AND BENEFITS - ACCOUNT 926
(thousands of dollars)
INSTRUCTIONS: Provide a listing of each pension plan and benefit program provided by the service company. Such listing should be limited to $25,000.
DESCRIPTION |
AMOUNT |
Pension |
$1,069 |
Supplemental Executive Retirement Plan |
1,915 |
Other Postretirement Benefits |
244 |
Medical/Dental Insurance |
684 |
401(k) Contributions |
59 |
Others |
11 |
TOTAL |
$3,982 |
GENERAL ADVERTISING EXPENSES - ACCOUNT 930.1
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Account 930.1, "General Advertising Expenses", classifying the items according to the nature of the advertising and as defined in the account definition. If a particular class includes an amount in excess of $3,000 applicable to a single payee, show separately the name of the payee and the aggregate amount applicable thereto.
DESCRIPTION |
NAME OF PAYEE |
AMOUNT |
Sponsorship Advertising |
National Fuel Gas Distribution Corporation |
$35 |
TOTAL |
$35 |
|
MISCELLANEOUS GENERAL EXPENSES - ACCOUNT 930.2
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Account 930.2, "Miscellaneous General Expenses", classifying such expenses according to their nature. Payments and expenses permitted by Section 321(b)(2) of the Federal Election Campaign Act, as amended by Public Law 94-283 in 1976 (2 U.S.C. 441(b)(2)) shall be separately classified.
DESCRIPTION |
AMOUNT |
Board of Directors Fees and Expenses |
$555 |
Merger Integration |
132 |
Other Miscellaneous Items |
176 |
TOTAL |
$863 |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
RENTS - ACCOUNT 931
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Account 931, "Rents", classifying such expenses by major groupings of property, as defined in the account definition of the Uniform System of Accounts.
TYPE OF PROPERTY |
AMOUNT |
Facilities Rent |
$767 |
TOTAL |
$767 |
TAXES OTHER THAN INCOME TAXES - ACCOUNT 408
(thousands of dollars)
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than Income Taxes". Separate the analysis into two groups: (1) Other than U.S. Government taxes, and (2) U.S. Government taxes. Specify each of the various kinds of taxes and show the amounts thereof. Provide a subtotal for each class of tax.
KIND OF TAX |
AMOUNT |
Other Than U.S. Government Taxes: |
|
State Unemployment |
$73 |
Property Tax |
2 |
Subtotal |
75 |
U.S. Government Taxes: |
|
Social Security Taxes |
993 |
Federal Unemployment |
12 |
Subtotal |
1,005 |
TOTAL |
$1,080 |
DONATIONS - ACCOUNT 426.1
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expense by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details.
NAME OF RECIPIENT |
PURPOSE OF DONATION |
AMOUNT |
Rebuilding Together |
Contributions to Support Activities of the Organization |
$5 |
The New England Governors' Conference |
|
|
TOTAL |
$15 |
|
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
OTHER DEDUCTIONS - ACCOUNT 426.5
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5, "Other Deductions", classifying such expenses according to their nature.
DESCRIPTION |
NAME OF PAYEE |
AMOUNT |
|
Miscellaneous |
Others |
$6 |
|
TOTAL |
$6 |
||
SCHEDULE XVIII - NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes regarding the statement of income or any account thereof. Furnish particulars as to any significant increases in services rendered or expenses incurred during the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference.
See SCHEDULE XIV - Notes to Financial Statements.
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
Service Function |
||
President and Chief Executive Officer |
General Management, Strategic Planning |
|
Executive Vice President and Chief Financial Officer |
General Management, Strategic Planning |
|
Vice President, Treasurer & Secretary |
Treasury, Corporate Finance, Risk Management, Pension Management, Investor Relations, Shareholder Services and Secretary |
|
Vice President - Finance and Chief Integration Officer |
Financial Planning, Budget Management and Merger Integration |
|
Vice President and Controller |
Accounting, Reporting and Regulatory |
|
Vice President - Human Resources |
Human Resources and Merger Integration |
|
Vice President - Supply |
Energy Commodity Management |
|
Vice President - Public Affairs |
Governmental Affairs and Corporate |
|
Vice President - Information Technology |
Information Technology |
|
Vice President - Supply Chain |
Procurement, Materials Management, and Fleet Management |
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
The allocation of expenses not directly attributable to a particular Client Company are based on the following factors:
Allocations related to Distributed Services
The following ratios are used to allocate costs for services not directly assigned but pooled and allocated based on a causal measurement:
Number of Employees Ratio - Based on the number of employees benefiting from the performance of a service. This ratio is determined annually based on actual count of applicable employees at the end of the previous calendar year and may be adjusted periodically due to a significant change.
Global Allocator Factor - This formula is determined annually based on the average of gross plant (original plant in service), gross payroll charges (salaries and wages, including overtime, shift premium and lost time, but excluding pension, payroll taxes and other employee benefits) and gross revenues during the previous calendar year and may be adjusted for any known and reasonable quantifiable events or at such time as may be required due to significant changes. This formula is commonly referred to as the Massachusetts Formula.
Regulated Global Allocator Factor - This formula is derived through utilization of the same data as the global allocator noted above, but it is limited to only the data of the regulated utility affiliates benefiting from the performance of a service.
Commodity - Global Allocator Factor - This formula is used to allocate the cost of commodity planning, procurement, and sale when the service is applicable to or benefits all Client Entities, regardless of whether they are a gas, electric, or combined company. The formula is derived through utilization of the gas and/or electric supply costs of the Client Entities and reflects the proportion of such costs occurring between these entities.
Commodity - Regulated Gas Allocator Factor - This formula is used to allocate costs for gas commodity planning, procurement and sale for regulated gas utility companies. The formula is derived through utilization of the gas supply costs of the regulated gas utility affiliates and reflects the proportion of such costs occurring between these entities.
Electric Transmission Allocator Factor - This formula is used to allocate costs for the coordination and direction of electric transmission issues for the benefit of regulated electric operating companies and departments. The formula is derived through utilization of the same data as the global allocator noted above, but it is limited to data of electric operating companies or departments.
Annual Report of Energy East Management Corporation
For the Year Ended December 31, 2003
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
The following annual statement was supplied to each associate company in support of the amount of compensation for use of capital billed during 2003:
A. Amount of interest billed to associate companies is contained on page 13, Analysis of Billing.
B. Amount of interest EE Management pays Energy East is based on Energy East's cost of short-term debt. Interest is billed to associate companies based on the global allocation factor.
Signature
Pursuant to the requirements of the Public Utility Holding Company Act of 1935 and the rules and regulations of the Securities and Exchange Commission issued thereunder, the undersigned company has duly caused this report to be signed on its behalf by the undersigned officer thereunto duly authorized.
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Energy East Management Corporation |