Item 1. Business - -----------------
General Connecticut Energy is a public utility holding company primarily engaged in the retail distribution of natural gas for residential, commercial and industrial uses through its principal subsidiary, The Southern Connecticut Gas Company ("Southern"), a Connecticut public service company. Southern's predecessor companies, New Haven Gas Company and The Bridgeport Gas Company, were originally incorporated in Connecticut in 1847 and 1849, respectively. The Company is exempt from registration under the Public Utility Holding Company Act of 1935.
Southern serves approximately 157,000 customers in Connecticut, primarily in twenty-two towns along the southern Connecticut coast from Westport to Old Saybrook, which include the urban communities of Bridgeport and New Haven. Southern is also authorized to lay mains and sell gas in an additional ten towns in its service area, but does not currently provide any service to these towns.
The percentage of Southern's revenues contributed by each class of customers for the last three fiscal years was as follows:
Years ended September 30, 					 1997 1996 1995 - ----------------------------------------------------------------------- Residential						 57.9% 58.0% 58.2% Commercial firm		 					 19.5 21.4 20.5 Industrial firm							 4.3 6.5 7.8 Firm transportation						 2.4	 0.3	 --- Interruptible and other 	 15.9 13.8 13.5 ----- ----- ----- 						 100.0% 100.0% 100.0% ===== ===== ===== Southern is the sole distributor of natural gas, other than bottled gas, in its service area. Oil and electricity compete with gas in most industrial and commercial markets and for residential space and water heating. In general, Southern's firm rates are currently lower than electric rates for heating and, on average, are generally competitive with fuel oil. Southern's gas sales are affected by seasonal factors, and it experiences higher revenues during the winter months.
In fiscal 1995, the Company formed two nonutility subsidiaries, CNE Development Corporation ("CNE Development") and CNE Energy Services Group, Inc. ("CNE Energy"). CNE Development is an equity holder in an entity formed to purchase and market natural gas and may potentially participate in other nonregulated activities; CNE Energy engages in activities relating to the selling, planning, purchasing and management of various energy services to commercial and industrial end users. In September 1997, CNE Energy formed a joint venture with Delmarva Power & Light Company's bulk energy group. The alliance was formed to sell natural gas, electricity, fuel oil and other services in New York and New England. The new energy marketing and sales company will operate under the name Conectiv/CNE Energy Services, LLC ("Conectiv/CNE"). In addition to selling energy products, Conectiv/CNE will market a full range of energy-related planning, financial, operational and maintenance services to commercial, industrial and municipal customers located in New York and New England. This alliance replaces the joint venture between CNE Energy and Louis Dreyfus Energy Corp. which was terminated in August 1997.
In October 1996, the Company formed another nonutility subsidiary, CNE Venture-Tech, Inc. ("CNE Venture-Tech"). CNE Venture-Tech focuses on investing in technology companies and participating in ventures with technology partners serving the utility industry. In August 1997, CNE Venture-Tech made an initial investment in the Nth Power Technologies Fund I ("Nth Power") as a limited partner. Nth Power's venture capital fund invests in companies that produce or market technologically advanced, innovative energy- related products. Participation in the fund may provide business opportunities to its limited partners.
As of September 30, 1997, the Company, through its subsidiaries, had 501 full-time employees, the majority of whom were employees of Southern.
Customers
General From 1992 through 1997, the average number of on-system customers served by Southern grew from approximately 152,100 to 156,600. Southern provides three types of gas service to its on-system customers: firm sales, firm transportation and interruptible. Firm service is provided to residential, commercial and industrial customers who require a continuous gas supply throughout the year. Southern serves approximately 181,000 firm residential units. Interruptible service is available to those customers that have dual fuel capabilities which allow them to alternate between natural gas and another fuel source. Firm service for residential use includes service to multi-family units. Firm transportation is available to commercial, industrial and multi-family customers who have secured their own gas supply and require that Southern transport this supply on its distribution system. Southern also provides transportation service to certain commercial and industrial customers on an interruptible basis, where the gas transported is owned by those customers.
Additionally, Southern has the approval of the Connecticut Department of Public Utility Control ("DPUC") to participate in the off-system sales market. If gas supplies are available after meeting on-system loads, Southern can sell to customers within Connecticut or in out-of-state markets. The customers to whom these sales are made are not permanent customers of Southern.	
Firm Sales and Transportation In 1997, firm services represented approximately 84% of operating revenues and approximately 47% of total gas throughput. Firm sales to industrial customers are likely to constitute a smaller percentage of Southern's future total sales due to the changing character of the local economy and continuing regulatory developments affecting the natural gas industry. See section entitled "Rates and Regulation" for further detail.
Southern concentrates on customer additions that are the most cost-effective to achieve. Over the past several years, Southern has focused on adding load along its existing mains, which generally requires a lower capital outlay. Approximately 59% of the residences along Southern's mains heat with natural gas. The conversion of these homes from an alternate fuel to natural gas heat has been a major factor in increased load growth.
Interruptible Sales, Transportation and Special Contract Services Interruptible sales, which include off-system sales, and transportation services are priced flexibly and competitively compared to the price paid for alternate fuels by larger commercial and industrial customers. Southern's interruptible sales fluctuate primarily due to the relative price differentials between alternate fuels and natural gas as well as the availability of gas not needed to serve firm customers.
In addition to interruptible sales, Southern transports gas, on an interruptible basis, for delivery to certain large commercial and industrial consumers. Because of recent regulatory developments, end users can contract more easily than in the past for transportation service on interstate pipelines to transport natural gas supplies purchased from producers/ suppliers, rather than purchase gas solely from the local gas distribution company ("LDCs"). In Southern's service area, gas is transported to customers using interstate pipeline transportation and Southern's distribution system.
Interruptible transportation revenues are considerably less than revenues from gas sales because customers pay only a fee for the transportation service. Gas sales revenues include the cost of gas sold.
Southern provides service to The Connecticut Light and Power Company's Devon electric generating station in accordance with rates specified in a Special Contract for the Transportation of Gas.
In 1997, interruptible sales, transportation and Special Contract services represented approximately 15% of operating revenues and approximately 51% of total gas throughput.
Southern's average margins on interruptible transportation service are less than its average margins on firm sales and are usually less than its average margins on interruptible sales. To the extent Southern negotiates its monthly prices for interruptible services below its monthly standard offering price, lower margins may result.
The Company does not believe that the loss of any single customer or a few customers would have a long-term, material, adverse effect upon Southern's business.
Marketing	
General Southern focuses its marketing efforts on three objectives: (1) to increase the number of households using natural gas for heating and hot water, (2) to improve system load factor by promoting additional interruptible sales and (3) to add new sales and retain existing sales to commercial and industrial customers through the use of both traditional and interruptible applications for natural gas.
Marketing programs emphasize growth from within the existing distribution system and the addition of high load factor usage of natural gas such as water heating, air conditioning and electric power generation.
Residential Market In the residential heating market, 2,641 customers were added in 1997 compared to 1,866 customers in 1996 and 2,366 in 1995. Residential conversions accounted for 60% of these additions in 1997 compared to 52% in 1996 and 68% in 1995. Southern's residential marketing programs include (1) a conversion burner program, (2) a high-efficiency heating program, (3) a trade ally program and (4) service contracts for natural gas heating equipment. Southern also uses employee incentives to promote heating conversions.
Commercial and Industrial Markets In the commercial and industrial markets, emphasis is on adding new firm and interruptible sales while retaining existing load. Marketing programs for commercial and industrial customers include (1) a program to promote the use of high efficiency equipment, (2) a program offering customers the option of financing new equipment through Southern, (3) a conversion burner leasing program which provides customers with a low cost opportunity to switch to natural gas and (4) a major customer retention program.
Effective April 1, 1996, firm transportation service became available to commercial and industrial customers. As of September 30, 1997, there were 682 firm transportation customers purchasing natural gas directly from marketers. In these cases, Southern offers customers the opportunity to purchase additional services such as balancing or stand-by services.
Sales to cooling and cogeneration markets represent the potential for increasing natural gas usage. Advances in natural gas cooling technology, along with environmental and operational advantages, continue to increase the competitiveness of natural gas cooling in commercial buildings and for industrial process applications. Southern has added 9,912 tons of natural gas cooling since 1991. With the continuing deregulation of energy markets and advancements in natural gas turbine technologies, cogeneration is a viable economic solution for many industrial customers. For example, Yale University is installing a 13.5 megawatt cogeneration system that will provide both electricity and steam for many of its facilities.
Natural Gas Vehicles	
Natural gas vehicles ("NGV") represent a significant opportunity to increase the base load usage of natural gas. Southern has been active in this market and has more than 130 natural gas vehicles operating in its service area. Customers include the U.S. Postal Service, The Southern New England Telephone Company, R. R. Donnelley and Sons, South Central Regional Water Authority, Bridgeport Hydraulic Company, the city of New Haven and the town of Westport.
More fleets are expected to add natural gas vehicles during the next five years as federal legislation requires fleets to "phase-in" the use of cleaner alternate fuel vehicles. Natural gas is the leading alternate fuel for vehicle use.
Southern's NGV marketing approach is designed to complement the federal phase-in of alternate fuels. This approach emphasizes developing NGV projects that serve multiple customers from central multi-fleet off-site stations. This approach allows fleets to buy fuel at off-site facilities and avoid investment and maintenance required for on-site NGV facilities. Station developers can pool volumes from multiple customers and take advantage of economies of scale for better profitability.
As a method to increase demand for natural gas fuel, Southern is also assisting fleets to obtain state and federal grants whenever possible. In New Haven for instance, Southern helped the city and Yale to obtain more than $200,000 in federal and state grants to offset incremental natural gas vehicle costs.
Gas Supply
General Southern's long-term supply sources include (1) Canadian supplies purchased from Alberta Northeast Gas Limited ("Alberta Northeast") with transportation on Iroquois Gas Transmission System, L.P. ("Iroquois"), (2) transportation and storage services from Tennessee Gas Pipeline Company ("Tennessee") with direct purchase of supply from producers and marketers, (3) transportation and storage services from Texas Eastern Transmission Corporation ("Texas Eastern") with direct purchase of supply from producers and marketers, (4) transportation services from Algonquin Gas Transmission Company ("Algonquin"), (5) transportation and storage services from CNG Transmission Corporation ("CNG Transmission"), (6) transportation service from Transcontinental Gas Pipeline Corporation ("Transco"), (7) transportation service from National Fuel Gas Supply Corporation ("National Fuel") and (8) liquid and vapor supplies from Distrigas of Massachusetts Corporation ("Distrigas"). These arrangements result in gas deliveries into Southern's service territory through interconnections with three interstate pipelines: Algonquin, Iroquois and Tennessee.
In addition to Southern's long-term firm supply arrangements, Southern purchases spot supplies and utilizes interruptible transportation services from interstate pipeline companies.
Southern's supply, transportation and storage agreements require Southern to pay a fixed demand charge regardless of the amount of gas transported or stored. The Federal Energy Regulatory Commission ("FERC") regulates interstate pipeline companies in connection with the rates charged to Southern for transportation and storage of natural gas.
Domestic Supply Southern's domestic supply arrangements consist mainly of purchasing storage and transportation services from interstate pipelines. Producers and marketers provide the gas supply to support these services.
Southern has firm transportation and firm storage contracts with Tennessee. Under the transportation contract, Southern has 13,336,000 Mcf of pipeline capacity available on an annual basis. Southern's storage contract with Tennessee provides 1,195,000 Mcf of storage capacity. These contracts expire in the year 2000. Two other transportation contracts with Tennessee provide 516,000 Mcf of firm transportation service annually and expire in the year 2000.
A transportation contract with Texas Eastern provides 5,972,000 Mcf of capacity on an annual basis. Additional contracts with Texas Eastern provide 1,383,000 Mcf of storage service and 12,108,000 Mcf of transportation service on an annual basis. Contracts with Texas Eastern expire in the year 2012.
Southern has storage service contracts with CNG Transmission. One contract provides one hundred days of storage service with 648,000 Mcf of annual delivery. The remaining term of this contract is fifteen years. Under other contracts which have remaining terms of six to ten years, CNG Transmission provides 773,000 Mcf of annual firm storage service and 1,028,000 Mcf of annual transportation service. The gas is stored by CNG Transmission and delivered to Southern under transportation contracts with Texas Eastern and Algonquin.
Algonquin furnishes only transportation services to Southern. The deliveries that Algonquin makes to Southern are gas supplies transported by other interstate pipelines interconnected to Algonquin.
Southern has multiple, diverse purchase agreements with producers and marketers for firm supply behind its storage and transportation agreements. These agreements vary in terms of delivery obligations and the contract terms range from one month to five years. Southern pays a monthly reservation charge, but has no monthly purchase obligation under these agreements. Commodity prices are based on price indexes by supply area or are negotiated.
Canadian Supply Southern receives Canadian supply under its long-term contracts with Alberta Northeast with firm transportation provided by Iroquois. These supply contracts with Alberta Northeast provide Southern with 12,775,000 Mcf of firm Canadian supply annually. Supply agreements with Alberta Northeast have remaining terms of five to nine years, and the transportation agreement with Iroquois has a remaining term of fourteen years.
Supplemental Supply Southern has an agreement with Distrigas to purchase 328,000 Mcf annually on a firm basis. This contract continues for five years and includes a provision for either vapor or liquid delivery, with an option to increase maximum daily delivery over the term of the contract. Additionally, Southern has interruptible purchase contracts with Distrigas.
Supplemental gas supplies from on-site liquefied natural gas ("LNG") and liquefied propane air storage facilities are available to meet peak and winter demand requirements. See section entitled "Connecticut Regulation" for the Decision in Docket No. 96-04-30.
FERC Order No. 636
FERC Order No. 636 resulted in costs being incurred by Southern's interstate pipeline suppliers as they unbundled their services. FERC has allowed transition costs to be recovered by pipelines from their customers. Southern has recovered transition costs through the various recovery mechanisms authorized by the DPUC in Docket No. 94-01-12. Included in the recovery are Tennessee transition costs, the final amount of which was approved as part of a settlement by the FERC in Tennessee Gas Pipeline Co., 79 FERC Par. 61, 031 (1997).
Straight-fixed-variable rates are in effect on the pipelines serving Southern as a result of FERC Order No. 636. Pipeline demand charges increased under the straight-fixed-variable rate design, while pipeline usage charges decreased. The change in gas costs due to straight-fixed-variable rates were incorporated in Southern's base cost of gas approved by the DPUC.
On July 16, 1996, the U.S. Court of Appeals for the District of Columbia Circuit in United Distribution Companies v. FERC, 88 F.3d 1105 (D.C. Cir. 1996), upheld FERC Order No. 636 "in its broad contours and in most of its specifics." The Court remanded a number of issues to FERC for further explanation.
On February 27, 1997 the FERC issued its order on remand, Order No. 636-C, 78 FERC Par. 61, 186 (1997). Of the major issues, the FERC reaffirmed its decision to allow natural gas pipelines to recover 100% of gas supply realignment costs caused by industry restructuring and modified its right of first refusal mechanism. The order directed pipelines to shorten from twenty to five years the period existing customers must agree to extend their contract in order to retain the right to continue service, a key ruling.
FERC Order No. 636 continues to have an effect on how Southern conducts its business, moving Southern to the next phase of unbundling behind its city gates. See section entitled "Rates and Regulation" for further detail.
Off-System Sales
Southern's off-system sales program maximizes the use of its gas supply contracts, improves the usage of Southern's capacity on pipeline systems and lowers gas costs to firm customers through established margin sharing mechanisms. Pursuant to the DPUC Decision regarding FERC Order No. 636, Southern is allowed to enter into off-system sales under flexible terms and pricing for periods of less than one year without prior approval of the DPUC. In fiscal 1997, Southern dispatched approximately 5,123,000 Mcf of volume as part of its off-system sales program.
Off-system sales are performed by Southern through an effective trading operation established over the last three years. Southern has established a recognized trading function in various natural gas markets in the United States. Southern's customers include other LDCs, marketers, electric generation and wholesale customers. Southern has pooling agreements and a unique asset base enabling it to deliver reliably and competitively along a significant portion of the Eastern pipeline grid under the full range of operating and marketing conditions.
Capacity release programs are available on all interstate pipelines serving Southern, and Southern actively participates in these programs. Demand charges recovered from a replacement shipper flow back as a reduction on the pipeline's monthly invoice. These demand reductions are used to lower gas costs to firm customers through established margin sharing mechanisms approved by the DPUC.
CNE Development has joined six other major eastern U.S. natural gas distribution companies or their affiliates to form the East Coast Natural Gas Cooperative, L.L.C. to access competitively priced gas supplies. Southern has experienced reduced gas costs and increased operational flexibility as a result of the activities of this cooperative.
Rates and Regulation
Connecticut Regulation Southern is subject to the jurisdiction of the DPUC as to accounting, rates, charges, operating matters and the issuance of securities, both equity and debt, other than borrowings maturing in twelve months or less. Southern's firm sales rates change monthly pursuant to a DPUC-approved Purchased Gas Adjustment clause, under which purchased gas costs above or below a specified base cost are charged or credited to customers.
In setting authorized rates for Southern, the DPUC allows prospective adjustments to a historical test year. Forward-looking adjustments to the mid-point of the rate year (the first year that rates will be in effect) for rate base, revenues, expenses and capital structure are allowed. The DPUC has found that these refinements provide for better synchronization of the ratemaking components. Costs used by the DPUC in determining Southern's rates may not be the same as actual costs incurred by Southern during the period rates are in effect. The sales used in establishing rates are based on "normal" weather patterns. Actual rates of return realized may not necessarily equal the authorized rates of return.
In April 1993, Southern filed an application with the DPUC for an increase in rates designed to produce additional revenues of approximately $27,900,000, or 13.67%, over test year revenues. Southern's base rates had not been increased since April 1990.
On December 1, 1993, the DPUC issued a final Decision on Southern's latest rate request. The Decision incorporated the Partial Settlement of Certain Issues ("Partial Settlement"), which was previously approved by the DPUC in September 1993, and resolved most of the significant financial aspects of Southern's original rate request, including an increase in base rates of $13,400,000 based upon Southern's sales forecast as originally filed, an allowed return on equity of 11.45% and the implementation of a Weather Normalization Adjustment. In addition, Southern was permitted to recover previously deferred costs over amortization periods from three to five years associated with shortfalls in energy assistance, its certified hardship arrearage forgiveness program, environmental remediation expenditures, economic development programs and undepreciated gas holder costs.
The Partial Settlement also provided for current recovery of postretirement health care expenses accrued under Statement of Financial Accounting Standards No. 106 and the establishment of a target margin, net of gross earnings tax, for on-system sales and transportation to Southern's interruptible customers with excess margins shared between firm customers and shareholders on an 80%/20% split.
As part of the Partial Settlement, Southern agreed that, except for certain adverse events, it would not file a general application to increase rates which would become effective on or before November 30, 1995.
In January 1996, Southern requested a reopening of the 1993 rate proceeding to propose a plan to redirect excess on-system interruptible margins to be returned to ratepayers for calendar years 1996, 1997 and 1998 to two programs to fund certain economic development initiatives in Bridgeport and to provide grants to customers to reduce Southern's current hardship assistance balances. Southern estimated that margins to be collected over the proposed three-year period would be approximately $14,000,000, which would be divided equally between the programs. Southern's proposal related to the economic development initiatives in Bridgeport included job training and services, certain loan subsidies and health promotion outreach services. Redirection of ratepayer margins for hardship assistance balances would benefit Southern's hardship customers by reducing their accounts receivable arrearages and would benefit Southern by reducing its provision for uncollectibles for such accounts.
On April 26, 1996, the DPUC issued a final Decision regarding Southern's proposal. The DPUC effectively approved Southern's proposal with certain modifications in the direction of the Bridgeport economic development funding initiatives, the imposition of a cap of $6,000,000 per year of ratepayer margins to be split equally between the programs and certain implementation and status reporting requirements.
In August 1995, the DPUC issued a final Decision in Docket No. 94-11-12, DPUC Review of Connecticut Local Distribution Companies' Cost of Service Study Methodologies. In this docket, the DPUC investigated the issues surrounding the development of firm transportation rates at the state level in response to FERC Order No. 636. Effective April 1, 1996, commercial and industrial gas customers in Connecticut can contract for their gas supplies from sources other than the LDCs and pay the LDCs only for the transportation of that gas through their distribution systems at DPUC approved rates. The new firm transportation rates are designed to provide Southern with the same margins provided by bundled services.
In August 1997, the DPUC instituted Docket 97-07-11, DPUC Generic Investigation into Issues Associated with Unbundling of Natural Gas Services by Connecticut Local Distribution Companies. The purpose of this docket will be to review issues relative to firm transportation service in its present form and to consider prospective changes to the existing LDC tariffs. On September 22, 1997, Southern submitted testimony which addressed the issues identified by the DPUC as Phase I items. The Company also submitted a "Vision Statement" which generally described the Company's near-term plan to offer firm transportation service to all customers while simultaneously structuring the Company in order to phase out of providing the merchant service function. The Company is currently awaiting a schedule in this docket.
In August 1996, the DPUC issued a final Decision in Docket No. 96-04-30, Application of The Southern Connecticut Gas Company to Dispose of a Portion of Its Plant and Equipment. The DPUC approved certain proposals made by Southern regarding the operation of its LNG tank and related facilities, which include the sublease of the LNG tank and related facilities from Southern to its nonregulated affiliate, CNE Energy, which would, in turn, sublease the LNG facility to Total Peaking Services, L.L.C. The DPUC granted approval to move the LNG facility out of Southern and into an unregulated venture. However, federal approval necessary to finalize this venture and commence interstate operations is still pending.
In February 1997, the Company and Southern requested a reopening of a DPUC Decision dated December 13, 1978, Docket No. 77-08-28, Application of The Southern Connecticut Gas Company for Approval of Corporate Reorganization and Merger and Formation of a Holding Company, for the purpose of addressing changed conditions in the Company's operations since 1978, which include the dissolution of certain subsidiaries and deregulation of the natural gas marketplace. On May 21, 1997, the DPUC issued a Decision in the reopened docket. The Decision modified or eliminated several conditions relating to the Company's nonregulated subsidiaries. The Company believes those subsidiaries will now have more flexibility to compete in the rapidly changing energy market on both a financial and operational basis.
Southern, in accordance with Connecticut statutes, will undergo a periodic review of rates and services by the DPUC commencing in or after December 1997 if it does not file for a rate increase. A periodic review entails a complete review by the DPUC of Southern's financial and operating records. Public hearings will be held to determine whether the current rates are unreasonably discriminatory or more or less than just, reasonable and adequate. If Southern determines that a rate increase is required, a general rate case will be filed in lieu of a rate review.
Federal Regulation Southern is affected by various federal regulations, including regulations which (1) provide for emergency authority and curtailment allocations under the Natural Gas Policy Act of 1978 when pipeline supplies are limited and (2) establish certain retail policies for natural gas utilities under the Public Utility Regulatory Policies Act of 1978. Southern is also subject to the Natural Gas Pipeline Safety Act of 1968 with respect to the construction, operation and maintenance of its mains, services and LNG facilities as well as other federal regulations pertaining to safety standards concerning such facilities. Currently, these federal regulations have a minimal impact on Southern's day-to-day operations. Southern must comply with various federal, state and local regulations with respect to environmental matters (including hazardous waste regulation), local zoning and other regulations. To date, such regulations have not materially impacted Southern's capital expenditures, earnings or operations.
Regulations promulgated under the Clean Air Act Amendments of 1990 and the Energy Policy Act of 1992, which require reduced pollution levels and certain energy efficiency standards, have begun to affect Southern. Among other things, the Clean Air Act Amendments (1) impose stringent vehicle emissions standards beginning in 1994, (2) mandate the gradual phase-in of alternate fuel vehicles for fleets of more than ten vehicles beginning in 1998 and (3) require power plants to phase-in significant emission reductions of sulfur dioxide and nitrogen oxide by the year 2000. Similarly, the Energy Policy Act of 1992 (1) requires that federal agencies begin phasing-in the use of alternate fuels in vehicles in 1993, (2) offers tax incentives to private parties who use or facilitate the use of alternate fuel vehicles and (3) requires a lessening reliance on foreign fuels. In 1996, the FERC also issued Order No. 888, mandating that electric utilities provide open access transmission at wholesale. This Order has expanded opportunities for the sale of power from gas fired generating units. Over time, these regulations will likely lead to an increasing demand for natural gas. Southern already has begun to participate in the expanded markets for natural gas emerging due to these regulatory mandates.
Since 1986, FERC has effected major changes in the regulations governing the natural gas industry, especially FERC Order No. 636 which mandated the unbundling of interstate pipeline services. Although the Company is not subject to FERC jurisdiction, FERC's actions increase competition in the natural gas industry by requiring interstate pipeline companies to provide gas transportation to others on a nondiscriminatory basis.
Environmental Matters Southern has identified coal tar residue at three sites in Connecticut resulting from coal gasification operations conducted at those sites by Southern's predecessors from the late 1800s through the first part of this century. Many gas distribution companies throughout the country carried on such gas manufacturing operations during the same period. The coal tar residue is not designated a hazardous material by any federal or Connecticut agency, but some of its constituents are classified as hazardous.
On April 27, 1992, Southern notified the Connecticut Department of Environmental Protection ("DEP") and the United States Environmental Protection Agency of the presence of coal tar residue at the sites. On November 9, 1994, the DEP informed Southern that it had performed a preliminary review of the information provided to it by Southern and had determined that, based on current priorities and limited staff resources, a comprehensive review of site conditions and subsequent participation by the DEP "are not possible at this time."
On September 8, 1997, Southern received a letter from the DEP informing it that the three sites had been entered on the Connecticut Inventory of Hazardous Waste Sites. The letter states that the site located on Pine Street in Bridgeport, Connecticut may be of particular interest to the state of Connecticut because of its proximity to the Connecticut Department of Transportation expansion project of the U.S. Highway Route Number 95 Corridor. Placement of the sites on the Inventory of Hazardous Waste Sites means that the DEP may pursue remedial action pursuant to the Connecticut General Statutes.
Each site is located in an area that permits Southern to voluntarily perform any remedial action. Connecticut law also allows Southern to retain a Licensed Environmental Professional to conduct further environmental assessments and, if necessary, to develop remedial action plans in accordance with Connecticut Remediation Standard Regulations. Southern intends to confer with officials of the DEP and the Department of Transportation to establish priorities in connection with the environmental assessments.
Management cannot at this time predict the costs of any future site analysis and remediation, if any, nor can it estimate when any such costs, if any, would be incurred. While such future analytical and cleanup costs could possibly be significant, management believes, based upon the provisions of the Partial Settlement in Southern's most recent rate order and regulatory precedent with other LDCs in Connecticut, that Southern will be able to recover these costs through its customer rates. Although the method, timing and extent of any recovery remain uncertain, management currently does not expect that the incurrence of such costs will materially adversely impact the Company's financial condition or results of operations.
Item 2.
Item 2. Properties - -------------------
The Company's physical plant and properties consist primarily of Southern's gas distribution facilities. Southern had 2,133 miles of main and 123,183 service units as of September 30, 1997. It leases office space in Bridgeport, New Haven, Orange and Madison, owns properties in Bridgeport and New Haven that were formerly manufacturing sites and owns a propane air facility in Trumbull.
In 1995, the LNG plant lease agreement was renewed for two consecutive terms of twelve years. The lease contains an option to purchase the plant for a purchase price based on the then fair market sales value of the unit as defined therein.
Substantially all of Southern's utility properties and plant are subject to the lien of the indenture and supplemental indentures securing its first mortgage bonds. It is management's opinion that the physical plant and properties as described herein are suitable and adequate for the purpose of delivering gas for customer use.
Item 3.
Item 3. Legal Proceedings - --------------------------
In a class action styled Connecticut Heating & Cooling Contractors Association, Inc. v. Connecticut Natural Gas Corp., Connecticut Superior Court - Middlesex, two trade associations and two plumbing and heating contractors in November 1995 sued Southern as well as the other Connecticut LDCs for violations of the Connecticut Unfair Trade Practices Act and tortious interference with business expectancies in connection with the LDCs' provision of service and maintenance to heating, cooling and ventilating systems and appliances. An Amended Complaint was filed in response to motions filed by the defendants in which one of the two contractor plaintiffs was removed from the case. In response to the court's granting a motion to strike the Complaint on the grounds of misjoinder filed by Southern and another defendant, the plaintiffs again amended their Complaint to add causes of action in conspiracy to violate the Connecticut Unfair Trade Practices Act and conspiracy to violate the antitrust laws. All three defendants have filed new motions to strike the latest complaint. The motions have not been argued, but should be heard by the end of the year. The plaintiffs seek declaratory and injunctive relief. The plaintiffs seek treble damages in excess of $15,000, punitive damages and attorneys' fees. Southern intends to defend itself vigorously in this suit, which management believes is without merit. In the opinion of management, resolution of this lawsuit is not expected to have a material adverse impact on the Company's financial condition or results of operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None.
	PART II -------
Item 5.
Item 5. Market for Common Stock Equity and Related Stockholder Matters - -----------------------------------------------------------------------
Common Stock Data The Company's common stock is listed for trading on the New York Stock Exchange. The Company's common stock symbol is CNE.
The following table shows the quarterly high and low price ranges of the Company's common stock and quarterly dividends paid during the years ended September 30, 1997 and 1996.
Market Price and Dividend Data
1997 Quarters ended		 High		 Low		 Dividend - ------------------- ---- --- -------- December 31, 1996		 $22 1/4		 $19 7/8		 $0.33 March 31, 1997			 $24 3/8		 $21	 	$0.33 June 30, 1997			 $24 1/4		 $22 1/4	 	$0.33 September 30, 1997		 $24 15/16	$22 3/8		 $0.33
1996 Quarters ended		 High		 Low		 Dividend - ------------------- ---- --- -------- December 31, 1995		 $22 1/2	 	$19	 $0.325 March 31, 1996			 $22 1/4	 	$18 5/8	 	$0.325 June 30, 1996			 $20 7/8	 $18 7/8 		$0.33 September 30, 1996		 $20 3/8	 	$19 	 	$0.33
As of September 1997, the Company and its predecessors have paid 351 consecutive quarterly cash dividends. Cash dividends have been paid since 1850, and the Company currently expects that dividends will continue to be paid in the future.
The major source of funds for payment of the Company's dividends are the dividends received on the shares of Southern's common stock owned by the Company. Southern's indentures relating to long-term debt contain restrictions as to the declaration or payment of cash dividends on, or the reacquisition of, capital stock. Under the most restrictive of such provisions, $29,633,000 of retained earnings at September 30, 1997 was available for such purposes.
The approximate number of shareholders of record of the Company's common stock as of November 21, 1997 was 10,398.
Item 6.
Item 6. Selected Financial Data - --------------------------------
The presentation under the "Eleven Year Financial Summary" for the five-year period ended September 30, 1997 on pages 38 and 39 of the Company's 1997 Annual Report to Shareholders is incorporated by reference herein.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition - -------------------------------------------------------------------- and Results of Operations - -------------------------
"Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 15 to 21 of the Company's 1997 Annual Report to Shareholders is incorporated by reference herein.
Item 8.
Item 8. Financial Statements and Supplementary Data - ----------------------------------------------------
The Consolidated Statements of Income, Consolidated Balance Sheets, Consolidated Statements of Changes in Common Shareholders' Equity, Consolidated Statements of Cash Flows and Notes to Consolidated Financial Statements on pages 22 to 35 and the Report of Independent Accountants on page 37 of the Company's 1997 Annual Report to Shareholders are incorporated by reference herein.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and - ------------------------------------------------------------------------ Financial Disclosure - --------------------
None.
	PART III --------
Item 10.
Item 10. Directors and Executive Officers of the Registrant - ------------------------------------------------------------
Information required in this item regarding directors is contained in the Company's definitive Proxy Statement at pages 2 to 4, which will be mailed to shareholders on or about December 12, 1997, and is incorporated by reference herein. A list of executive officers of the registrant and Southern follows:
Item 11.
Item 11. Executive Compensation - --------------------------------
Information required in this Item is contained in the Company's definitive Proxy Statement on pages 9 to 10, which will be mailed to shareholders on or about December 12, 1997, and is incorporated by reference herein.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management - ------------------------------------------------------------------------
Information required in this Item is contained in the Company's definitive Proxy Statement on pages 4 to 5, which will be mailed to shareholders on or about December 12, 1997, and is incorporated by reference herein.
Item 13.
Item 13. Certain Relationships and Related Transactions - --------------------------------------------------------
Information required in this Item is contained in the Company's definitive Proxy Statement on pages 10 to 12, which will be mailed to shareholders on or about December 12, 1997, and is incorporated by reference herein.
	 PART IV -------
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K - -------------------------------------------------------------------------
(a)	List of documents filed as part of this Report:
1.	 Financial Statements --------------------
Among the responses to this Item 14(a) are the following financial statements which are incorporated by reference herein in Item 8 above:
	(i) Consolidated Statements of Income for the years ended September 30, 1997, 1996 and 1995.
	(ii)	Consolidated Balance Sheets for the years ended September 30, 1997 and 1996.
	(iii)	Consolidated Statements of Changes in Common Shareholders' Equity for the years ended September 30, 1997, 1996 and 1995.
	(iv)	Consolidated Statements of Cash Flows for the years ended September 30, 1997, 1996 and 1995.
	(v)	Notes to Consolidated Financial Statements.
	(vi)	Report of Independent Accountants.
2. 	Financial Statements and Supplementary Data Required by Item 8 --------------------------------------------------------------
(A)	Schedule	 Description		 		Page -------- ----------- ----
			Report of Independent Accountants on	 			Financial Statement Schedules			 18
		 II	 Valuation and Qualifying Accounts		 19
All other schedules are omitted because they are not required, are inapplicable, or the information is otherwise shown in the financial statements or notes thereto.
3.	 Exhibits Required by Item 601 of Securities and Exchange Commission 	 ------------------------------------------------------------------- Regulation S-K --------------
(A) The following such exhibits are filed as a separate section of this report.
Exhibits --------
(3) Certificate of Incorporation and By-Laws ----------------------------------------
The Amended and Restated Certificate of Incorporation of Connecticut Energy Corporation is incorporated herein by reference to Item 6 of the Company's Form 10-Q filed for the quarter ended March 31, 1991 at pages 14 through 22. The Amended and Restated By-Laws of Connecticut Energy Corporation are incorporated herein by reference to Item 6 of the Company's Form 10-Q filed for the quarter ended March 31, 1995 at pages 20 through 31.
The Amended and Restated Certificate of Incorporation of The Southern Connecticut Gas Company is incorporated herein by reference to Item 6 of Form 10-Q filed for the quarter ended June 30, 1990 at pages 40 through 51. The Amended and Restated By-Laws of The Southern Connecticut Gas Company are incorporated herein by reference to Item 6 of the Company's Form 10-Q filed for the quarter ended March 31, 1995 at pages 32 through 41.
	 (4) Instruments Defining Rights of Security Holders, Including Indentures ---------------------------------------------------------------------
	 (i)	Indenture between The Bridgeport Gas Light Company and The Bridgeport City Trust Company, as Trustee, dated as of March 1, 1948. Incorporated herein by reference to Exhibit 4(b) (1) to Connecticut Energy Corporation Registration Statement 2-10566.
(ii)	In addition to the Indenture referred to in 4 (i) hereof, there have been twenty-seven indentures supplemental thereto, copies of all of which the Company agrees to furnish to the Commission upon request.
	(10) Material Contracts ------------------
	(i)	Gas Transportation Contract between Tennessee Gas Pipeline Company and The Southern Connecticut Gas Company, Contract No. 10783, dated June 1, 1995, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 24 to 32.
	(ii)	Interruptible Gas Transportation Contract and Amendment No. 1, thereto, among Tenngasco Corporation, The Southern Connecticut Gas Company and The United Illuminating Company, dated May 14, 1987 and August 1, 1989, respectively, incorporated by reference to Form 10-K for the fiscal year ended December 31, 1989 at pages 238 to 258.
	(iii)	Amendment No. 2 to Interruptible Gas Transportation Contract and Amendment No. 1, thereto, among Tenngasco Corporation, The Southern Connecticut Gas Company and The United Illuminating Company, dated November 1, 1990, incorporated by reference to Form 10-K for the transition period from January 1, 1990 to September 30, 1990 at pages 90 to 91.
	(iv)	Gas Transportation Contract between Iroquois Gas Transmission System, L.P. and The Southern Connecticut Gas Company, dated February 7, 1991, incorporated by reference to Exhibit 10.32 to Connecticut Energy Corporation's Registration Statement No. 33-40232.
	(v)	Gas Sales Agreement No. 1 by and between Alberta Northeast Gas Limited and The Southern Connecticut Gas Company, dated February 7, 1991, incorporated by reference to Exhibit 10.33 to Connecticut Energy Corporation's Registration Statement No. 33-40232.
	(vi)	Gas Sales Agreement No. 2 by and between Alberta Northeast Gas Limited and The Southern Connecticut Gas Company, dated February 7, 1991, incorporated by reference to Exhibit 10.34 to Connecticut Energy Corporation's Registration Statement No. 33-40232.
	(vii)	Gas Sales Agreement by and between Alberta Northeast Gas Limited and The Southern Connecticut Gas Company, dated February 7, 1991, incorporated by reference to Exhibit 10.35 to Connecticut Energy Corporation's Registration Statement No. 33-40232.
	(viii)	Gas Sales Agreement by and between Alberta Northeast Gas Limited and The Southern Connecticut Gas Company, dated February 7, 1991, incorporated by reference to Exhibit 10.36 to Connecticut Energy Corporation's Registration Statement No. 33-40232.	
	(ix)	Gas Sales Agreement by and between Alberta Northeast Gas Limited and The Southern Connecticut Gas Company, dated February 7, 1991, incorporated by reference to Exhibit 10.37 to Connecticut Energy Corporation's Registration Statement No. 33-40232.
	(x)	Storage Service Transportation Contract between Tennessee Gas Pipeline Company and The Southern Connecticut Gas Company, Contract No. 542, dated September 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 33 to 42.
	 (xi)	Storage Service Agreement (GSS) between CNG Transmission Corporation and The Southern Connecticut Gas Company, dated October 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 130 to 137.
	(xii)	Storage Service Agreement (GSS-TE) between CNG Transmission Corporation and The Southern Connecticut Gas Company, dated October 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 43 to 50.
	(xiii)	Storage Service Agreement (GSS-II) between CNG Transmission Corporation and The Southern Connecticut Gas Company, dated September 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 51 to 56.
(xiv) Gas Storage Contract and Amendment No. 1, thereto, between Tennessee Gas Pipeline Company and The Southern Connecticut Gas Company, dated December 1, 1994 and July 1, 1995, respectively, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 57 to 63.
	(xv)	Gas Transportation Agreement between Tennessee Gas Pipeline Company and The Southern Connecticut Gas Company, dated August 19, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 143 to 151.
(xvi) Gas Transportation Agreement between Tennessee Gas Pipeline Company and The Southern Connecticut Gas Company, dated August 19, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 152 to 159.
	(xvii)	Service Agreement between Texas Eastern Transmission Corporation and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 160 to 170.
(xviii) Service Agreement between Texas Eastern Transmission Corporation and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 171 to 180.
	(xix)	Service Agreement between Texas Eastern Transmission Corporation and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 181 to 192.
	(xx)	Service Agreement between Texas Eastern Transmission Corporation and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 193 to 204.
(xxi) Service Agreement between Texas Eastern Transmission Corporation and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 214 to 220.
	(xxii)	Service Agreement between Algonquin Gas Transmission Company and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 221 to 227.
(xxiii) Service Agreement between Algonquin Gas Transmission Company and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 228 to 235.
	(xxiv)	Service Agreement between Algonquin Gas Transmission Company and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 236 to 243.
	 (xxv)	Service Agreement between Algonquin Gas Transmission Company and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 244 to 251.
	(xxvi)	Service Agreement between Algonquin Gas Transmission Company and The Southern Connecticut Gas Company, dated June 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 252 to 257.
(xxvii) Service Agreement between Algonquin Gas Transmission Company and The Southern Connecticut Gas Company, dated October 1, 1993, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993 at pages 258 to 277.
	Executive Compensation Plans and Arrangements ---------------------------------------------
(xxviii) Employment Agreement between The Southern Connecticut Gas Company and J. R. Crespo, dated March 24, 1992, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1992 at pages 213 to 229.
(xxix) Amended and Restated Deferred Compensation Agreement between The Southern Connecticut Gas Company and Connecticut Energy Corporation and J. R. Crespo, dated November 8, 1996, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 64 to 73.
(xxx) The Southern Connecticut Gas Company Board of Directors Retirement Plan, dated October 1, 1992, is incorporated by reference to Form 10-K for the fiscal year ended September 30, 1994 at pages 27 to 30.
	 (xxxi)	The Southern Connecticut Gas Company, Management Compensation Plan, dated October 1, 1992, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1992 at pages 251 to 253.
(xxxii) Agreement between The Southern Connecticut Gas Company and Henry Chauncey, Jr. related to deferred compensation as a director, dated December 31, 1988, incorporated by reference to Form 10-K for the fiscal year ended December 31, 1988 at pages 63 to 67.
(xxxiii) Supplemental Retirement Benefits Plan dated October 1, 1993, incorporated by reference to Form 10-Q for the quarter ended December 31, 1993 at pages 25 to 28.
	(xxxiv)	Agreement between The Southern Connecticut Gas Company and Helen B. Wasserman related to deferred compensation as a director, dated December 31, 1994, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1995 at pages 25 to 29.
	(xxxv)	Agreement between The Southern Connecticut Gas Company and Connecticut Energy Corporation and Carol A. Forest related to change in control, dated October 1, 1996, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 74 to 83.
	(xxxvi)	Agreement between The Southern Connecticut Gas Company and Connecticut Energy Corporation and Thomas A. Trotta related to change in control, dated October 1, 1996, incorporated by reference to Form 10-K for the fiscal year ended September 30, 1996 at pages 94 to 104.
(xxxvii) Connecticut Energy Corporation 1997 Restricted Stock Award Plan, dated January 28, 1997, incorporated by reference to Form 10-Q for the quarter ended March 31, 1997 at pages 23 to 35.
(xxxviii) Connecticut Energy Corporation Non-Employee Director Stock Plan, dated January 28, 1997, incorporated by reference to Form 10-Q for the quarter ended March 31, 1997 at pages 36 to 40.
	(13) Annual Report to Security Holders ---------------------------------
The Company's 1997 Annual Report to Shareholders is filed herewith at pages 22 to 45. Such exhibit includes only those portions thereof which are expressly incorporated by reference in this Form 10-K.
	(21) Subsidiaries of the Registrant ------------------------------
	A list of the Company's subsidiaries is filed herewith at page 46.
	(27) Financial Data Schedule -----------------------
Financial Data Schedule UT is submitted only in electronic format to the Securities and Exchange Commission.
(B) Reports on Form 8-K filed during the last quarter of 1997:
Form 8-K, dated April 23, 1997, concerning the Company's Form S-3 registration of 1,750,000 additional shares of common stock was filed with the Securities and Exchange Commission on July 10, 1997.
Form 8-K, dated September 8, 1997, concerning the Company's receipt of a letter from the DEP regarding the revised status of its three sites formerly used for coal gasification operations was filed with the Securities and Exchange Commission on September 10, 1997.
	REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE -----------------------------------------------------------------
To the Board of Directors and Shareholders of Connecticut Energy Corporation:
Our report on the consolidated financial statements of Connecticut Energy Corporation has been incorporated by reference in this Form 10-K from page 37 of the 1997 Annual Report to Shareholders of Connecticut Energy Corporation. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in Item 14(a)2 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P. - ---------------------------- New York, New York October 31, 1997
	CONSENT OF INDEPENDENT ACCOUNTANTS ----------------------------------
We consent to the incorporation by reference in the Prospectus constituting part of the Registration Statements on Form S-3 (No. 333-25691) and Form S-8 (No. 33-39245 and 33-51763) of Connecticut Energy Corporation of our report dated October 31, 1997, on our audits of the consolidated financial statements and financial statement schedule of Connecticut Energy Corporation as of September 30, 1997 and 1996, and for the years ended September 30, 1997, 1996 and 1995, appearing on page 37 of the 1997 Annual Report to Shareholders of Connecticut Energy Corporation which is incorporated by reference in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P. - ---------------------------- New York, New York December 4, 1997
	SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CONNECTICUT ENERGY CORPORATION 	(Registrant)
By: /s/ J. R. Crespo ------------------------------------- J. R. Crespo, Chairman, President and Chief Executive Officer Dated: November 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Henry Chauncey, Jr. 		By: /s/ Newman M. Marsilius, III ----------------------------------- ---------------------------------- Henry Chauncey, Jr., Director			 	 Newman M. Marsilius, III, Director Dated: November 25, 1997				 Dated: November 25, 1997
By: /s/ James P. Comer By: /s/ Samuel M. Sugden ----------------------------------- --------------------------------- James P. Comer, M.D., Director			 Samuel M. Sugden, Director Dated: November 25, 1997			 	 Dated: November 25, 1997
By: /s/ J. R. Crespo 		By: /s/ Christopher D. Turner ------------------------------------ -------------------------------- J. R. Crespo, Chairman, 				 Christopher D. Turner, Director President and Chief Executive Officer			 Dated: November 22, 1997 Dated: November 25, 1997
By: /s/ Richard F. Freeman By: /s/ Helen B. Wasserman ----------------------------------- -------------------------------- Richard F. Freeman, Director				 Helen B. Wasserman, Director Dated: November 25, 1997				 Dated: November 25, 1997
By: /s/ Richard M. Hoyt By: /s/ Vincent L. Ammann, Jr. ---------------------------------- -------------------------------- Richard M. Hoyt, Director		 	 	 Vincent L. Ammann, Jr. Dated: November 25, 1997		 		 Vice President and Chief Accounting Officer (Principal Accounting Officer) 							 Dated: November 25, 1997
By: /s/ Paul H. Johnson 		By: /s/ Carol A. Forest ----------------------------------- -------------------------------- Paul H. Johnson, Director 				 Carol A. Forest, Vice President, Dated: November 25, 1997				 Finance, Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial 							 Officer) 							 Dated: November 25, 1997