Form 11-K NYSEG Hourly

 

 

 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
__________

FORM 11-K

(Mark one)

 X  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the fiscal year ended December 31, 2005

OR

    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from             to
             

Commission file number 1-14766


Full title of the plan and the address of the plan, if different from
that of the issuer named below:

New York State Electric & Gas Corporation
  Tax Deferred Savings Plan for Hourly Paid Employees
P.O. Box 3287
Ithaca, New York 14852-3287


Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:

Energy East Corporation
52 Farm View Drive
New Gloucester, Maine 04260-5116

 

 

 

REQUIRED INFORMATION

The New York State Electric & Gas Corporation Tax Deferred Savings Plan for Hourly Paid Employees (Plan) is subject to the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the financial statements of the Plan for the two fiscal years ended December 31, 2005 and 2004 and supplemental schedule, which have been prepared in accordance with the financial reporting requirements of ERISA, are attached hereto as Appendix 1 and incorporated herein by reference.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee to administer the Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees

 

Date:  June 29, 2006

By    /s/Richard R. Benson                                  
            Richard R. Benson
            Committee Member


Date:  June 29, 2006

By    /s/Robert D. Kump                                     
            Robert D. Kump
            Committee Member


Date:  June 29, 2006

By    /s/Joseph Syta                                          
            Joseph Syta      
            Committee Member


Date:  June 29, 2006

By    /s/F. Michael McClain                                   
            F. Michael McClain
            Committee Member


 

 

APPENDIX 1

NEW YORK STATE ELECTRIC & GAS CORPORATION
TAX DEFERRED SAVINGS PLAN FOR HOURLY PAID EMPLOYEES


FINANCIAL STATEMENTS AS OF AND
FOR THE YEARS ENDED DECEMBER 31, 2005 and 2004
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2005
AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

 

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Index to Financial Statements and Supplemental Schedule


Report of Independent Registered Public Accounting Firm - Baker Newman &    Noyes, LLC

1

   
   
   

Financial Statements:

     Statements of Net Assets Available for Benefits -
       December 31, 2005 and 2004




2

   

     Statements of Changes in Net Assets Available for Benefits -
       Years ended December 31, 2005 and 2004


3

   

     Notes to Financial Statements

4

   

Supplemental Schedule*

 
   

     Schedule H, line 4i - Schedule of Assets (Held at End of Year)

9

   
   
   

Consent of Independent Registered Public Accounting Firm - Baker Newman &    Noyes, LLC

Exhibit 23

   

 



*Other supplemental schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and Administrative Committee of the
New York State Electric & Gas Corporation
   Tax Deferred Savings Plan for Hourly Paid Employees

We have audited the accompanying statements of net assets available for benefits of the New York State Electric & Gas Corporation Tax Deferred Savings Plan for Hourly Paid Employees (the Plan) as of December 31, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years ended December 31, 2005 and 2004. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the New York State Electric & Gas Corporation Tax Deferred Savings Plan for Hourly Paid Employees as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the years ended December 31, 2005 and 2004, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2005, is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the United States Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

 

/s/ Baker Newman & Noyes      
Limited Liability Company

Portland, Maine
June 21, 2006

 

 

 

 

 

 

 

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004


 

2005    

2004     

Assets:

   

  Investments:

   

    Registered Investment Companies

$  128,191,810

$  114,811,752

    Stable Value Fund

14,898,513

12,056,949

    Energy East Corporation Stock Fund

43,391,116

55,804,717

    Participant loans

3,718,774

3,353,065

 

190,200,213

186,026,483

    Cash and Cash Equivalents


28,514


-  


  Receivables:

   

    Contributions Receivable

172,393

299,486

 

172,393

299,486

Net assets available for benefits

$  190,401,120

$  186,325,969


See notes to financial statements.

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2005 and 2004


 

2005     

2004     

Additions:

   

  Investment income:

   

    Net appreciation (depreciation) in fair value of investments

$   (2,552,827)

$   17,627,831

    Interest and dividends

6,598,114 

3,715,883

 

4,045,287 

21,343,714


  Contributions:

   

    Participant

11,562,994 

10,345,439

    Employer

1,228,900 

1,291,972

 

12,791,894 

11,637,411


           Total additions


16,837,181 


32,981,125


Deductions:

   

  Benefits paid to participants

12,593,548 

15,399,043

  Transfers to other qualified plans

168,482 

98,772


           Total deductions


12,762,030 


15,497,815


Net increase


4,075,151 


17,483,310


Net assets available for benefits:
  Beginning of year



186,325,969 



168,842,659

  
  End of year


$  190,401,120 


$  186,325,969


See notes to financial statements.

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 2005 and 2004

1.   DESCRIPTION OF THE PLAN

The following description of the New York State Electric & Gas Corporation (Company) Tax Deferred Savings Plan for Hourly Paid Employees (Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions.

General

The Plan was established effective January 1, 1986, by the Company under the provisions of Section 401(a) of the Internal Revenue Code (Code), and it includes a qualified cash or deferred arrangement as described in Section 401(k) of the Code for the benefit of eligible employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. The Plan Administrator is the Company and an Administrative Committee has been appointed to serve as manager of the Plan.

The Plan is a defined contribution plan covering hourly paid employees of the Company as well as hourly paid employees of Energy East Corporation's (Energy East) family of companies that elect to participate under the Plan provisions. Energy East, the parent corporation of the Company, through its subsidiaries, delivers electricity and natural gas to retail customers and provides electricity, natural gas, energy management and other services to retail and wholesale customers in the Northeast.

Eligibility

An hourly paid employee may become a participant in the Plan as of the first day of any calendar month that commences after the completion of the employee's first 30 days of employment.

Contributions

Contributions to the Plan are allocated to participant accounts. Participants can direct the investment of their contributions into various investment options offered by the Plan.

Participant contributions range from 1% to 50% of the participant's base compensation and may include overtime pay and are subject to limitations stipulated by the Code. As of January 1, 2002, participants age 50 or over by the end of the Plan year can make an additional contribution to the Plan in accordance with and subject to the limitations of Section 414(v) of the Code. The maximum additional contribution in 2003 was $2,000 and increases by $1,000 a year reaching a maximum of $5,000 in 2006.

As of April 1, 2002, the Plan accepts rollovers from other qualified plans, as well as 403(b) and government 457 plans, traditional Individual Retirement Accounts (IRAs), conduit IRAs (but not Roth IRAs), after tax distributions from employer retirement plans and spousal death benefit payments.

The Company contributes solely to the Energy East Corporation Stock Fund an amount equivalent to 25% of the participant's contributions to any investment option (up to 1.5% of the participant's annual base compensation as of the first day of the year). (See Note 4.)

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 2005 and 2004

1.   DESCRIPTION OF THE PLAN (Continued)

The Energy East Corporation Stock Fund is an Employee Stock Ownership Plan (ESOP). Dividends from the ESOP may be reinvested or taken in cash. The participant can transfer the Company's matching contribution in the Energy East Corporation Stock Fund to other available investment options.

Benefit Payments

Upon termination of service a participant may elect either a lump sum amount equal to the value of the participant's interest in the participant's account, or installments over a period permissible under the Code. Distributions from all investment options, except the Energy East Corporation Stock Fund, are made in cash. Distributions from the Energy East Corporation Stock Fund are made in either whole shares of Energy East common stock or in cash, as specified by the participant, except as may otherwise be determined by the Plan's administrative committee and except that the value of any fractional share shall be paid in cash.

Vesting

Participants have full and immediate vesting rights in participant and employer contributions, investment earnings and other amounts allocated to their accounts.

Participant Loans

Participants may, under certain circumstances, borrow against their account balances. A Plan participant may borrow a minimum of $1,000 and up to a maximum of one-half of the participant's vested account balance or $50,000, less the highest outstanding loan balance in the prior twelve months, whichever is less. The term of the loan may not exceed five years,
and the interest rate will be equal to the prime interest rate listed in the Wall Street Journal on the first day of the month in which the loan is issued plus 1%. Interest rates on loans outstanding at year end range from 5.00% to 10.50% for 2005 and 2004. This provides the Plan with a return commensurate with the interest rate charged by persons in the business of lending money for loans which would be made under similar circumstances. The loan must be repaid by payroll deductions over the term of the loan. Loan payments are credited to an applicable fund based upon the participant's current elections. If a participant's employment terminates for any reason, the loan will become immediately due and payable and must be paid within 90 days from the date of termination or will be considered a taxable distribution to the participant.

2.   SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are prepared on an accrual basis and in conformity with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.

 

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 2005 and 2004

2.   SIGNIFICANT ACCOUNTING POLICIES  (Continued)

Investment Valuation and Income Recognition

Shares of registered investment companies are valued at the net asset value of shares held by the Plan at year-end. The stable value fund is stated at contract value. The Energy East Stock Fund, comprised solely of Energy East common stock, is valued at its quoted market price at year-end. Participant loans are valued at cost, which approximates
fair value.

Purchase and sales of investments are recorded on a trade-date basis. Interest income is accrued when earned. Dividend income is recorded on the ex-dividend date.

Payments of Benefits

Benefits are recorded when paid.

Plan Termination

Although the Company has not expressed any intent to terminate the Plan, it has the right to discontinue contributions at any time and terminate the Plan subject to the provisions of the Company's collective bargaining agreement. In the event of termination of the Plan, the net assets of the Plan are set aside, first, for payment of all Plan expenses and, second, for distribution to the participants, based upon the balances in their individual accounts.

Risks and Uncertainties

The Plan provides for various investment options in any combination of stocks, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in risk in the near term could materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statements of Changes in Net Assets Available for Benefits.

3.   INVESTMENTS

The following presents investments that represent 5% or more of the Plan's net assets at December 31, 2005 and 2004:

 

2005   

2004    

PIMCO Total Return Fund

$   9,840,926

$  10,030,391

Fidelity Diversified International Fund

14,788,910

12,620,054

Energy East Corporation Stock Fund

43,391,116

55,804,717

T. Rowe Price Equity Income Fund

28,729,160

32,798,139

J. P. Morgan Stable Value Fund

14,898,513

12,056,949

T. Rowe Price Growth Stock Fund

30,771,946

34,883,581

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 2005 and 2004

3.   INVESTMENTS  (Continued)

The plan has a deposit administration contract with J.P. Morgan (JPM). JPM maintains the Plan's deposits in a synthetic guaranteed investment contract, to which it adds interest at the contract rate (adjusted quarterly, not below 0%; 5.4% at December 31, 2005). Deposits into this contract are guaranteed the contract minimum rate of return. The weighted average interest rate earned for the year ended December 31, 2005 was 4.82%. Withdrawals are permitted at any time without penalty and the contract has been determined to be fully benefit responsive as defined in SOP 94-4. The investment is carried at contract value as reported by JPM. The fair value of the investment is not materially different from its contract value at December 31, 2005.


Plan investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value during 2005 and 2004, as follows:

 

2005    

2004    

Registered Investment Companies

$     4,272,649 

$     8,118,506

Stable Value Fund

638,178 

317,353

Energy East Corporation Stock Fund

(7,463,654)

9,191,972

 

$    (2,552,827)

$     17,627,831

     

4.   NONPARTICIPANT-DIRECTED INVESTMENTS

Company contributions to the Energy East Corporation Stock Fund are nonparticipant-directed investments. Information about the net assets at December 31, 2005 and 2004, and the significant components of the changes in net assets for the years ended December 31, 2005 and 2004, relating to the nonparticipant-directed investments is as follows:

 

2005    

2004    

Net Assets:

   

  Energy East Corporation Stock Fund - nonparticipant-directed   investments

$   17,415,819   

$    23,139,571 

Changes in Net Assets:

   

  Net (depreciation) appreciation in fair value

(2,993,989) 

3,936,897 

  Interest and dividends

892,019 

962,115 

  Employer matching contributions

1,307,599 

1,239,058 

  Benefits paid to participants

(1,044,963)

(1,470,850)

  Net Transfers

(3,898,227)

(1,688,961)

  Net Loan Transactions

13,809 

(33,533)

 

$    ( 5,723,752) 

$     2,944,726 

5.   INCOME TAX STATUS

The Company has received its most recent determination letter from the Internal Revenue Service, dated March 9, 2000, that the Plan qualifies as a tax deferred savings plan under Sections 401(a) and 401(k) of the Code. The Plan has been amended since receiving the determination letter. The Plan Administrator and management believe the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code.

 

 

 

 

New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Notes to Financial Statements
December 31, 2005 and 2004

 

 

 

6.   RELATED PARTY TRANSACTIONS

Certain Plan investments are shares of registered investment companies which were managed by Putnam Fiduciary Trust Company (Putnam) through December 30, 2004 and T. Rowe Price Retirement Plan Services (T. Rowe Price) as of December 31, 2004. Putnam was the trustee as defined by the Plan through December 30, 2004 and T. Rowe Price became the trustee as defined by the Plan effective December 31, 2004. Certain other investments are in the synthetic guaranteed investment contract managed by JPM or the Energy East Stock Fund. Transactions with these parties qualify as party-in-interest transactions and are exempt from the prohibited transaction rules.

 

7.   ADMINISTRATIVE EXPENSES

Substantially all administrative expenses are paid for by the Company.


New York State Electric & Gas Corporation
Tax Deferred Savings Plan for Hourly Paid Employees
Schedule H, line 4i - Schedule of Assets (Held at End of Year) December 31, 2005


         Identity of Issue

     Description of Investment

Current Value

*

JPMCB Intermediate Bond Fund

Commingled Fund

$    14,420,667

*

JPMCB Liquidity Fund

Commingled Fund

265,203

 

Monumental Life Insurance Co.

Fully benefit responsive wrapper contract

70,881

 

UBS AG

Fully benefit responsive wrapper contract

70,881

 

IXIS Financial Products, Inc.

Fully benefit responsive wrapper contract

70,881

 

            Subtotal Stable Value Fund

 

14,898,513

*

T. Rowe Price Settlement Account

Cash and Cash Equivalent

$         28,514

 

Pimco Total Return Fund

Registered Investment Company

9,840,926

*

T. Rowe Price Equity Income Fund

Registered Investment Company

28,729,160

 

Domini Social Equity Class R

Registered Investment Company

72,625

 

Fidelity Diversified International Fund

Registered Investment Company

14,788,910

*

T. Rowe Price Growth Stock Fund

Registered Investment Company

30,771,946

*

T. Rowe Price Retirement Income Fund

Registered Investment Company

1,039,439

*

T. Rowe Price Retirement 2005 Fund

Registered Investment Company

2,377,714

*

T. Rowe Price Retirement 2010 Fund

Registered Investment Company

6,687,479

*

T. Rowe Price Retirement 2015 Fund

Registered Investment Company

8,303,469

*

T. Rowe Price Retirement 2020 Fund

Registered Investment Company

5,663,481

*

T. Rowe Price Retirement 2025 Fund

Registered Investment Company

2,998,347

*

T. Rowe Price Retirement 2030 Fund

Registered Investment Company

2,686,406

*

T. Rowe Price Retirement 2035 Fund

Registered Investment Company

845,840

*

T. Rowe Price Retirement 2040 Fund

Registered Investment Company

642,507

*

T. Rowe Price Retirement 2045 Fund

Registered Investment Company

9,605

*

T. Rowe Price Small-Cap Value Fund

Registered Investment Company

2,501,239

 

Vanguard Explorer

Registered Investment Company

6,442,672

 

Vanguard Institutional Index Fund

Registered Investment Company

3,790,045

*

Energy East Corporation Stock

Energy East Corporation Stock Fund

43,391,116

*

Loan Fund

Participant Loans (5.00% - 10.50%)

3,718,774

 

            Total assets held at end of year

 

$     190,228,727

       

*

Party-in-interest