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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000072741-01-000032.txt : 20010224
<SEC-HEADER>0000072741-01-000032.hdr.sgml : 20010224
ACCESSION NUMBER:		0000072741-01-000032
CONFORMED SUBMISSION TYPE:	U-1
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20010220

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NORTHEAST UTILITIES SYSTEM
		CENTRAL INDEX KEY:			0000072741
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC SERVICES [4911]
		IRS NUMBER:				042147929
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		U-1
		SEC ACT:		
		SEC FILE NUMBER:	070-09853
		FILM NUMBER:		1550395

	BUSINESS ADDRESS:	
		STREET 1:		174 BRUSH HILL AVE
		CITY:			WEST SPRINGFIELD
		STATE:			MA
		ZIP:			01090-0010
		BUSINESS PHONE:		4137855871

	MAIL ADDRESS:	
		STREET 1:		107 SELDON ST
		CITY:			BERLIN
		STATE:			CT
		ZIP:			06037-1616
</SEC-HEADER>
<DOCUMENT>
<TYPE>U-1
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM U-1
<TEXT>



                                                     File No 70-

                    SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C. 20549

                         APPLICATION/DECLARATION
                                ON FORM U-1
                                 UNDER THE
                PUBLIC UTILITY HOLDING COMPANY ACT OF 1935


                          Northeast Utilities
                          174 Brush Hill Road
                      West Springfield, MA  01089

(Names of companies filing this statement and addresses of principal
executive offices)

                           NORTHEAST UTILITIES
                  (Name of top registered holding company)

                            Cheryl W. Grise
            Senior Vice President, Secretary and General Counsel
                   Northeast Utilities Service Company
                           107 Selden Street
                           Berlin, CT 06037
                 (Name and address of agent for service)

The Commission is requested to mail signed  copies of all orders, notices
and communications to:

Jeffrey C. Miller                           David R. McHale
Assistant General Counsel                   Vice President and Treasurer
Northeast Utilities                         Northeast Utilities
Service Company                             Service Company
P.O. Box 270                                P.O. Box 270
Hartford, CT 06141-0270                     Hartford, CT 06141-0270

ITEM 1
Description of Proposed Transaction

     1.  The purpose of this Application/Declaration is to seek the
Commission's authorization for Northeast Utilities ("NU"), a public utility
holding company registered under the Public Utility Holding Company Act of
1935 (the "Act"), to issue guarantees and other forms of credit support
(collectively, the "Guarantee") to or for the benefit of its utility
subsidiary, Holyoke Water Power Company (HWP") in an aggregate amount not to
exceed $45 million through June 30, 2004 to support HWP's obligations under
certain Reimbursement Agreements described herein.

Background

     2.  HWP, a Massachusetts corporation formed in 1859 and located in
Holyoke, Massachusetts, is a public utility under the Act, but is considered
a manufacturing company under Massachusetts law.  HWP furnishes retail
electric service to approximately 32 retail customers in and around Holyoke
under contracts at negotiated rates and sells power to its wholly-owned
subsidiary, Holyoke Power and Electric Company, at rates accepted by FERC.
HWP owns 200 Mw of generating assets, 13.3 pole miles (14.5 circuit miles) of
overhead transmission lines, 18.47 pole miles of overhead distribution lines
and 2.24 bank miles (4.3 cable miles) of underground distribution lines.

     3.  In 1988, the City of Holyoke, Massachusetts, acting by and through
its Industrial Development Financing Authority ("IDFA") issued $8,000,000
aggregate principal amount of its Pollution Control Revenue Refunding Bonds
(Holyoke Water Power Company Project) Series 1988 (the "1988 Bonds") pursuant
to an Indenture of Trust dated as of November 1, 1988 (the "1988 Indenture"),
between IDFA and Baybank Middlesex, as trustee, and lent the proceeds of the
sale of the 1988 Bonds to HWP pursuant to a Loan Agreement between IDFA and
HWP, dated as of November 1, 1988.  In order to provide security for the
payment when due of the principal of, and interest on, the 1988 Bonds, HWP
requested Toronto Dominion Bank ("TD") to issue an irrevocable letter of
credit (the "1988 TD LOC") initially in the amount of $8,666,667 pursuant to
a Reimbursement and Security Agreement (the "1988 Reimbursement Agreement").

     4.  In 1990, The Massachusetts Industrial Finance Agency ("MIFA") issued
$15,300,000 aggregate principal amount of its Pollution Control Revenue Bonds
(Holyoke Water Power Company Project) Series 1990 (the "1990 Bonds") pursuant
to an Indenture of Trust dated as of December 1, 1990 (the "1990 Indenture"),
between the MIFA and Baybank Middlesex, as trustee, and lent the proceeds of
the sale of the 1990 Bonds to HWP pursuant to a Loan Agreement between MIFA
and HWP, dated as of December 1, 1990.  In order to provide security for the
payment when due of the principal of, and interest on, the 1990 Bonds, HWP
requested TD to issue an irrevocable letter of credit (the "1990 TD LOC")
initially in the amount of $16,575,000 pursuant to a Reimbursement and
Security Agreement (the "1990 Reimbursement Agreement").

     5.  In 1992, MIFA issued, pursuant to a Loan and Trust Agreement dated
as of December 1, 1992 (the "1992 Indenture") $15,000,000 aggregate principal
amount of Massachusetts Industrial Finance Agency Pollution Control Refunding
Revenue Bonds (Holyoke Water Power Company Project - 1992 Series A) (the
"1992 Bonds").  In order to provide security for the payment when due of the
principal of, and interest on, the 1992 Bonds, HWP requested Canadian
Imperial Bank of Commerce, New York Agency ("CIBC") to issue an irrevocable
letter of credit in the amount of $15,222,000 (the "CIBC LOC") pursuant to a
Letter of Credit and Reimbursement Agreement (the "1992 Reimbursement
Agreement" and, collectively with the 1988 Reimbursement Agreement and the
1990 Reimbursement Agreement, the "Reimbursement Agreements").

     6.  Pursuant to provisions in each of the Reimbursement Agreements, HWP
agreed, among other things, that, so long as the letter of credits were
outstanding, it would not allow the ratio of its common equity to total
capitalization to decline below 30%.  In addition, in connection with each of
the Reimbursement Agreements, NU entered into equity support agreements on
behalf of HWP (the "NU Support Agreements").  These agreements were in the
nature of contractual undertakings on the part of NU to maintain specified
ownership levels in HWP and to cause HWP to maintain a minimum common equity
to capitalization ratio.

     7.  In October 2000, HWP entered into a Memorandum of Understanding (the
"MOU") with the City of Holyoke Gas & Electric Department pursuant to which
the two parties are negotiating the proposed sale of certain of HWP's assets
(the "Subject Assets").  As a result of the proposed sale and as a
consequence of entering into the MOU, HWP has recognized a reduction of $33.4
million ($19.7 million after taxes) in the carrying value of the Subject
Assets and its resulting common equity ratio of 6.79% at December 31, 2000
fails the consolidated common equity maintenance covenant contained in each
of the Reimbursement Agreements.

     8.  HWP has asked TD and CIBC (collectively, the "Banks") to consent to
the decline in HWP's common equity to capitalization ratio as a result of the
sale of the Subject Assets and the Banks have agreed, conditioned upon the
issuance by NU of guarantees or other forms of credit support guaranteeing
HWP's obligations under the Reimbursement Agreements.  If such guarantees are
not issued, HWP will be in default under the Reimbursement Agreements and NU
will be in default under the NU Support Agreements.  Accordingly, NU requests
Commission authorization to issue the Guarantees to support HWP's obligations
under the Reimbursement Agreements.

     9.  The Guarantees may take the form of NU agreeing to guarantee,
undertake reimbursement obligations, assume liabilities or other obligations
with respect to, the letters of credit, evidences of  indebtedness, and other
obligations undertaken by HWP under the Reimbursement Agreements.  NU
undertakes that any Guarantees it issues will be without recourse to any
other operating company in the NU system.

ITEM 2
Fees, Commissions and Expenses

     10.  The fees, commissions and expenses paid or incurred, or to be paid
or incurred, directly or indirectly, in connection with the proposed
transactions by the Applicants are not expected to exceed $10,000 and are
expected to be comprised primarily of fees for ordinary legal and accounting
services.  None of such fees, commissions or expenses will be paid to any
associate company or affiliate of NU except for payments to Northeast
Utilities Service Company services.

ITEM 3
Applicable Statutory Provisions

11.  The sections of the Act and the related regulations of the  Commission
which are or may be applicable to the transactions as herein  proposed are
set forth below:

Loan guarantees or other forms of Sections 9(a), 10 and 12(b), guarantees by
NU of HWP Rule 45

To the extent any other sections of the Act or rules thereunder may be
applicable to the proposed transactions, the Applicants request appropriate
orders thereunder.

Other Matters

     12.  Except in accordance with the Act, neither NU nor any subsidiary
thereof (a) has acquired an ownership interest in an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a
service, sales, or construction contract with an EWG or a FUCO.  None of the
proceeds from the transactions proposed herein will be used by NU and its
subsidiaries to acquire any securities of, or any interest in, an EWG or a
FUCO.

     13.  NU currently meets all of the conditions of Rule 53(a), except for
clause (1).  At September 30, 2000, NU's "aggregate investment," as defined
in Rule 53(a)(1), in EWGs and FUCOs was approximately $469.5 million, or
approximately 74% of NU's average "consolidated retained earnings," also as
defined in Rule 53(a)(1), for the four quarters ended September 30, 2000
($638.8 million).  With respect to Rule 53(a)(1), however, the Commission has
determined that NU's financing of its investment in Northeast Generation
Company ("NGC"), NU's only current EWG or FUCO, in an amount not to exceed
$481 million or 83% of "average consolidated retained earnings" would not
have either of the adverse effects set forth in Rule 53(c).  See Northeast
Utilities, HCAR No. 27148 (March 7, 2000).  NU continues to assert that its
EWG investment in NGC will not adversely affect the NU system.

     14.  In addition, NU and its subsidiaries are in compliance with the
other provisions of Rule 53(a) and (b), as demonstrated by the following
determinations:

(i)  NGC maintains books and records, and prepares financial
statements in accordance with Rule 53(a)(2).  Furthermore, NU has
undertaken to provide the Commission access to such books and records
and financial statements, as it may request.

(ii)  No employees of NU's public utility subsidiaries have
rendered services to NGC.

(iii) NU has submitted (a) a copy of each Form U-1 and Rule 24
certificate that has been filed with the Commission under Rule 53 and
(b) a copy of Item 9 of the Form U5S and Exhibits G and H thereof to
each state regulator having jurisdiction over the retail rates of NU's
public utility subsidiaries.

(iv) Neither NU nor any subsidiary has been the subject of a
bankruptcy or similar proceeding unless a plan of reorganization has
been confirmed in such proceeding.

(v) NU's average consolidated retained earnings for the four most
recent quarterly periods have not decreased by 10% or more from the
average for the previous four quarterly periods.

(vi) In the previous fiscal year, NU did not report operating
losses attributable to its investment in EWGs/FUCOs exceeding 3 percent
of NU's consolidated retained earnings.

15.  The proposed transactions, considered in conjunction with the
effect of the capitalization and earnings of NU's EWGs and FUCOs, would not
have a material adverse effect on the financial integrity of the NU system,
or an adverse impact on NU's public-utility subsidiaries, their customers, or
the ability of State commissions to protect such public-utility customers.

16.  The Rule 53(c) Order was predicated, in part, upon an assessment of
NU's overall financial condition which took into account, among other
factors, NU's consolidated capitalization ratio and its retained earnings,
both of which have improved since the date of the order. NU's EWG investment
(it has no FUCO investment) has been profitable for the periods beginning
March 7, 2000 and ending March 31, 2000, June 30, 2000 and September 30, 2000
respectively.  As of December 31, 1999, the most recent period for which
financial statement information was evaluated in the Rule 53(c) Order, NU's
consolidated capitalization consisted of 35.3% common equity and 64.7% debt
(including long and short-term debt, preferred stock, capital leases and
guarantees). As of June 30, 2000, the end of the first quarter after the
issuance of the Rule 53(c) Order, the consolidated capitalization ratios of
NU, with consolidated debt including all short-term debt and non-recourse
debt of the EWG was as follows:





                                 As of June 30, 2000
                                (thousands
                                 of dollars)       %

Common shareholders' equity      2,365,854       36.9
Preferred stock                    277,700        4.3
Long-term and short-term debt    3,768,353       58.8
                         \       6,411,907      100.0

     17.  The consolidated capitalization ratios of NU as of September 30,
2000, with consolidated debt including all short-term debt and non-recourse
debt of the EWG was as follows:

                              As of  September 30, 2000
                              (thousands
                              of dollars)          %

Common shareholders' equity       2,413,785       37.9
Preferred stock                     277,700        4.3
Long-term and short-term debt     3,683,667       57.8
                                  6,375,152      100.0

    18. NU's consolidated retained earnings have increased from $582 million
as of December 31, 1999 to $691 million as of September 30, 2000. NU's
interest in NGC (its only EWG or FUCO) has made a positive contribution to
earnings in that time by contributing $15 million to NU's retained earnings
with revenues of $75.5 million and net income of $15.7 million. Accordingly,
since the date of the Rule 53(c) Order, the capitalization and earnings
attributable to NU's investments in EWGs and FUCOs has not had an adverse
impact on NU's financial integrity.

ITEM 4
Regulatory Approvals

     19. No state or Federal regulatory approval, other than the approval of
the Commission pursuant to this Application, is required to consummate the
transactions described herein.

ITEM 5
Procedure

     20. Northeast Utilities respectfully requests the Commission's approval,
pursuant to this Application, of all transactions described herein, whether
under the sections of the Act and Rules thereunder enumerated in Item 3 or
otherwise.  It is further requested that the Commission issue an order
authorizing the transactions proposed herein at the earliest practicable
date.  As a condition to the consent and waiver given by the Banks, NU
covenanted to file this Application and diligently seek the issuance of an
order from the Commission. Additionally, NU (i) requests that there not be
any recommended decision by a hearing officer or by any responsible officer
of the Commission, (ii) consents to the Office of Public Utility Regulation
within the Division of Investment Management assisting in the preparation of
the Commission's decision, and (iii) waives the 30-day waiting period between
the issuance of the Commission's order and on the date on which it is to
become effective, since it is desired that the Commission's order, when
issued, become effective immediately.

ITEM 6
Exhibit and Financial Statements

asterisked (*) items are to be provided by amendment to this Application)

     21. (a) Exhibits

F.  Opinion of Counsel

G.  Financial Data Schedules*

H.  Proposed Form of Notice

   (b) Financial Statements

1.1  Balance Sheet of NU and consolidated subsidiaries, as of
September 30, 2000 (incorporated by reference to the Quarterly Report on
Form 10-Q of NU for the period ended September 30, 2000) (File No. 1-
5324).

1.2  Statements of Income of NU and consolidated subsidiaries for
the period ended September 30, 2000 (incorporated by reference to the
Quarterly Report on Form 10-Q of Alliant for the period ended September
30, 2000) (File No. 1-5324).

The pro-forma effect on NU's financial statements of the issuance
of the proposed guarantees by NU is not material and therefore no pro
forma financial statements are filed

ITEM 7

INFORMATION AS TO ENVIRONMENTAL EFFECTS

27.   (a) The transactions described herein do not involve a major
Federal action significantly affecting the quality of the human
environment.

      (b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed transaction.


SIGNATURES

Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto duly
authorized.

NORTHEAST UTILITIES


By: /S/Randy A. Shoop
    Assistant Treasurer - Finance


Date: February 20, 2001

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>OPINION OF COUNSEL
<TEXT>




February 20, 2001

Securities and Exchange Commission
450 Fifth Street,
N.W. Washington, D.C.  20549

Re:  Northeast Utilities
SEC File Number 70-

Ladies and Gentlemen:

I am Assistant General Counsel of Northeast Utilities Service Company
("NUSCO"), a service company affiliate of Northeast Utilities ("NU").  I have
acted as counsel for NU in connection with Form U-1 in this File
("Declaration").  In the Declaration, NU sought the approval of the
Commission for the issuance of a guarantee or other forms of credit support
(the "Guarantee") of its wholly-owned subsidiary, Holyoke Water Power Company
(the "Proposed Transactions").

In connection with this opinion, I have examined or caused to be examined by
counsel associated with or engaged by me, including counsel who are employed
by NUSCO, originals or copies certified to my satisfaction of such corporate
records of NU, certificates of public officials and of officers of NU, and
agreements, instruments and other documents, as I have deemed necessary as a
basis for the opinions expressed below.  In my examination of such
agreements, instruments and documents, I have assumed the genuineness of all
signatures, the authenticity of all agreements, instruments and documents
submitted to me as originals, and the conformity to original agreements,
instruments and documents of all agreements, instruments and documents
submitted to me as certified, conformed or photostatic copies and the
authenticity of the originals of such copies.

The opinions set forth herein are limited to the laws of the Commonwealth of
Massachusetts and the federal laws of the United States.  I am a member of
the bar of the State of New York.  I am not a member of the bar of the
Commonwealth of Massachusetts, and do not hold myself out as an expert in the
laws of such Commonwealth.  In expressing opinions about matters governed by
the laws of the Commonwealth of Massachusetts, I have consulted with counsel
who are employed by NUSCO and are members of the bar of such Commonwealth.

I have assumed that the Proposed Transactions are carried out in conformity
with the Securities Act of 1933 and the Securities Exchange Act of 1934, each
as amended, and the requisite authorizations, approvals, consents or
exemptions under the securities laws of the various States and other
jurisdictions of the United States.

Based upon and subject to the foregoing, and assuming that the Proposed
Transactions are carried out in accordance with the Declaration, and the NU
Board authorizes the guarantee, I am of the opinion that, when the Commission
shall have entered an order forthwith granting the Declaration:

(a)  all State laws applicable to the Proposed Transactions will have been
complied with;

(b)  The Guarantee will be the valid and binding obligation of NU in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and the effect of general principles of
equity;

(c) NU is validly organized and existing under the laws of the Commonwealth
of Massachusetts;

(d)  the consummation of the Proposed Transactions will not violate the legal
rights of the holders of any securities issued by NU or any associate company
thereof.

I hereby consent to the filing of this opinion as an exhibit to the
Declaration and in any proceedings before the Commission that may be held in
connection therewith.

Very truly yours,


/S/Jeffrey C. Miller
Assistant General Counsel

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>PROPOSED FORM OF NOTICE
<TEXT>


EXHIBIT H

Form Of Notice

Northeast Utilities, et al. (70-)

Northeast Utilities ("NU"), a registered public utility holding company
located at 174 Brush Hill Avenue, West Springfield, Massachusetts 01090 (the
"Applicant") has filed an application-declaration under sections 9(a), 10 and
12(b) of the Act and rule 45 under the Act.

The Applicant requests authorization, through June 30, 2004, to issue
guarantees and other forms of credit support (collectively, the "Guarantee")
to or for the benefit of its utility subsidiary, Holyoke Water Power Company
(HWP") in an aggregate amount not to exceed $45 million, to support HWP's
obligations under certain reimbursement agreements.

HWP furnishes retail electric service to approximately 32 retail customers in
and around Holyoke, Massachusetts under contracts at negotiated rates and
sells power to its wholly-owned subsidiary, Holyoke Power and Electric
Company, at rates accepted by FERC.  HWP owns 200 Mw of generating assets
along with certain transmission and distribution assets.  HWP is a party to
three separate reimbursement agreements in connection with letters of credit
issued by certain banks (the "Banks") to support pollution control revenue
bonds.

At December 31, 2000, HWP recognized a reduction in the carrying value of
certain of its assets and accordingly its resulting common equity ratio fails
certain consolidated common equity maintenance covenants contained in each of
the reimbursement agreements.

HWP has asked the Banks to consent to the decline in HWP's common equity to
capitalization ratio and the Banks have agreed, conditioned upon the issuance
by NU of guarantees or other forms of credit support guaranteeing HWP's
obligations under the reimbursement agreements.
 .
The Application is available for public inspection through the Commission's
Office of Public Reference.  Any interested persons wishing to comment or
request a hearing on the Applications should submit their views in writing
by,               2001, to the Secretary, Securities and Exchange Commission,
Washington D.C. 20549, and serve a copy on the Applicants at the addresses
specified above.  Proof of service (by affidavit or, in the case of an
attorney at law, by certificate) should be filed with the request.  Any
request for hearing shall identify specifically the issues of fact or law
that are disputed.  A person who so requests will be notified of any hearing,
if ordered, and will receive a copy of any notice or order issued in this
matter.  After said date, the Application, as filed, or as it may be amended,
may be permitted to become effective.

For the Commission, by the Division of Investment Management, pursuant to
delegated authority.


                               Secretary

</TEXT>
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