UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number

Exact name of registrants as specified in their charters, State of organization, address of principal executive offices and registrants' telephone number

IRS Employer Identification Number

333-52397

ESI TRACTEBEL ACQUISITION CORP. (a Delaware corporation)

65-0827005

333-52397-01

NORTHEAST ENERGY, LP (a Delaware limited partnership)

65-0811248

c/o NextEra Energy Resources, LLC 700 Universe Boulevard Juno Beach, Florida 33408 (561) 691-7171

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act of 1933. Yes [ ] No [X]

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes [X] No [ ]

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) have been subject to such filing requirements for the past 90 days. Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):

Large accelerated filers [ ]

Accelerated files [ ]

Non-accelerated filers [X]

Smaller reporting companies [ ]

(Do not check if a smaller reporting company)

As of February 28, 2009, there were issued and outstanding 20 shares of ESI Tractebel Acquisition Corp.'s common stock, par value $0.10 per share, none of which were held by non-affiliates.

This combined Form 10-K represents separate filings by ESI Tractebel Acquisition Corp. and Northeast Energy, LP. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes representations only as to itself and makes no representations whatsoever as to the other registrant. The registrants make no representations whatsoever as to ESI Tractebel Funding Corp., and ESI Tractebel Acquisition Corp. makes no representations whatsoever as to Northeast Energy Associates, a limited partnership or North Jersey Energy Associates, a limited partnership.

WASHINGTON, D.C. 20549

DEFINITIONS
Acronyms and defined terms used in the text include the following:
Term			Meaning
Acquisition Corp.			ESI Tractebel Acquisition Corp.
Act			Securities Act of 1933, as amended
avoided cost			the incremental cost to an electric utility of electric energy and/or capacity that, but for the purchase from a qualifying facility, such utility would generate itself or purchase from another source
Boston Edison			Boston Edison Company, now NSTAR
Broad Street			Broad Street Contract Services, Inc.
Btu			British thermal units, a unit of energy
cogeneration			power production technology that provides for the sequential generation of two or more useful forms of energy from a single primary fuel source
Commonwealth			Commonwealth Electric Company, now NSTAR
EPA			U.S. Environmental Protection Agency
ESI Energy			ESI Energy, LLC
ESI GP			ESI Northeast Energy GP, Inc.
ESI LP			ESI Northeast Energy LP, Inc.
ESI Northeast Acquisition			ESI Northeast Energy Acquisition Funding, Inc.
ESI Northeast Funding			ESI Northeast Energy Funding, Inc.
ESI Northeast Fuel			ESI Northeast Fuel Management, Inc.
ETURC			ESI Tractebel Urban Renewal Corporation, previously IEC Urban Renewal Corporation
Exchange Act			Securities Exchange Act of 1934, as amended
FAS			Statement of Financial Accounting Standards No.
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
FPL Group			FPL Group, Inc.
FPL Group Capital			FPL Group Capital Inc
Funding Corp.			ESI Tractebel Funding Corp., previously IEC Funding Corp.
JCP&L			Jersey Central Power & Light Company
kwh			kilowatt-hour(s)
Management's Discussion			Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Montaup			Montaup Electric Company
MMBtu			millions of Btu
mw			megawatt(s)
NE LLC			Northeast Energy, LLC
NE LP			Northeast Energy, LP
NEA			Northeast Energy Associates, a limited partnership
NJEA			North Jersey Energy Associates, a limited partnership
NEPOOL			New England Power Pool
NextEra Energy Resources			NextEra Energy Resources, LLC, formerly known as FPL Energy, LLC
NextEra Operating Services			NextEra Energy Operating Services, LLC, formerly known as FPL Energy Operating Services, Inc.
Note _			Note _ to Consolidated and Combined Financial Statements or Note _ to Financial Statements, as the case may be
NSTAR			NSTAR Electric Company (formerly Boston Edison Company and Commonwealth Electric Company)
O&M			operations and maintenance
Partners			ESI GP and ESI LP together with SUEZ GP and SUEZ LP
Partnerships			NEA together with NJEA
PMI			FPL Energy Power Marketing, LLC
PJM			PJM Interconnection L.L.C. (Pennsylvania-New Jersey-Maryland power pool)
ProGas			ProGas Limited of Alberta, Canada
PSE&G			Public Service Electric & Gas Company of Newark, New Jersey
PURPA			Public Utility Regulatory Policies Act of 1978, as amended
qualifying facilities or QFs			Non-utility power production facilities meeting the requirements of a qualifying facility under PURPA
registrants			Acquisition Corp. and NE LP
Rule 144A			Rule 144A promulgated under the Act
SEMNA			SUEZ Energy Marketing NA, Inc. (previously known as Tractebel Energy Marketing, Inc.)
SUEZ			GDF SUEZ Energy North America, Inc. (previously known as Tractebel, Inc.)
SUEZ GP			Tractebel Northeast Generation GP, Inc.
SUEZ LP			Tractebel Associates Northeast LP, Inc.
SUEZ Power			SUEZ Energy Generation North America, Inc. (previously known as Tractebel Power, Inc.)
Trustee			U.S. Bancorp, a Delaware corporation
Westinghouse			Siemens Westinghouse Operating Services Company
Westinghouse Power			Siemens Westinghouse Power Corporation
NE LP and NextEra Energy Resources each have subsidiaries and affiliates with names that include Northeast Energy, NE LP, NextEra Energy Resources, FPL Energy, FPLE, and ESI Energy and similar references. For convenience and simplicity, in this report the terms NextEra Energy Resources, FPL Energy, FPLE, Northeast Energy, NE LP and ESI Energy are sometimes used as abbreviated references to specific subsidiaries, affiliates or groups of subsidiaries or affiliates. The precise meaning depends on the context.

FORM 10-K

~~FORWARD-LOOKING~~[X] ANNUAL ~~STATEMENTS~~REPORT ~~This~~PURSUANT ~~report~~TO ~~includes~~SECTION ~~forward-looking~~13 ~~statements~~OR within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions, future events, performance, climate change strategy or growth strategies 15(often, but not always, through the use of words or phrases such as "will," "will likely result," "are expected to," "will continue," "is anticipated," "aim," "believe," "could," "should," "would," "estimated," "may," "plan," "potential," "projection," "target," "outlook," "predict" and "intend" or words of similar meaningd) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to important factors included in Part I, Item 1A. Risk Factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on the Acquisition Corp.'s and/or NE LP's operations and financial results, and that could cause the Acquisition Corp.'s and/or NE LP's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of either or both of the registrants in this combined Form 10-K, in presentations, in response to questions or otherwise. Any forward-looking statement speaks only as of the date on which such statement is made, and the registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.

~~PART~~OF ITHE ~~Item~~SECURITIES 1.EXCHANGE ~~Business~~ACT ~~General.~~OF NE LP, a Delaware limited partnership, was formed in 1997 for the purpose of acquiring ownership interests in two partnerships, NEA, a Massachusetts limited partnership, and NJEA, a New Jersey limited partnership, each of which owns an electric power generation station in the northeastern United States. NE LP is jointly owned by ESI GP and ESI LP (indirect wholly-owned subsidiaries of NextEra Energy Resources (formerly known as FPL Energy, LLC), which is an indirect wholly-owned subsidiary of FPL Group, a company listed on the New York Stock Exchange) and SUEZ GP and SUEZ LP (indirect wholly-owned subsidiaries, through SUEZ Power and SUEZ, which are wholly-owned subsidiaries of GDF Suez, a worldwide energy provider). NE LP also formed a wholly-owned entity, NE LLC, to assist in such acquisitions. The Partnerships were formed in 1986 to develop, construct, own, operate and manage the power generation stations. NEA's facility commenced commercial operation in 1991 and is located in Bellingham, Massachusetts. NJEA's facility commenced commercial operation in 1991 and is located in Sayreville, New Jersey. In connection with the acquisitions of the Partnerships' interests, the Funding Corp., a Delaware corporation, was acquired by a subsidiary of ESI Energy, SUEZ Power and Broad Street from Intercontinental Energy Corporation, a Massachusetts corporation. The Funding Corp. was established in 1994 solely for the purpose of issuing debt. This debt was privately issued under Rule 144A to acquire outstanding bank debt and to lend funds to the Partnerships and was subsequently exchanged for publicly-issued debt. The Acquisition Corp., a Delaware corporation, was formed in 1997. The Acquisition Corp.'s common stock is jointly owned by a subsidiary of ESI Energy and SUEZ Power. In 1998, the Acquisition Corp. issued $220 million of debt under Rule 144A which was also subsequently exchanged for publicly-issued debt. The proceeds were loaned to NE LP and then distributed by NE LP to direct subsidiaries of NextEra Energy Resources and SUEZ Power. Repayment of the Funding Corp. and Acquisition Corp. debt is expected to be made from distributions from the Partnerships. None of the registrants, Partnerships or Funding Corp. have any employees. Partnerships' Operations. The Partnerships operate in the independent power industry. In the United States, rate-regulated electric utilities have been the dominant producers and suppliers of electric energy since the early 1900s. In 1978, PURPA removed regulatory constraints relating to the production and sale of electric energy by certain non-utility power producers and required electric utilities to buy electricity from certain types of non-utility power producers under certain conditions, thereby encouraging companies other than electric utilities to enter the electric power production market. The Partnerships were created as a result of the PURPA legislation. NEA owns, and prior to February 28, 2005, derived substantially all of its revenues from, a nominal 290 mw combined-cycle cogeneration facility. NJEA owns, and prior to 2004, derived substantially all of its revenue from, a combined-cycle generation facility with a summer output of 275 mw. However, in December 2003, an agreement between NJEA and a New Jersey utility became effective to amend and restate their power purchase agreement, and in February 2005, an agreement between NEA and two Massachusetts utilities (now combined into one utility) became effective to amend and restate their power purchase agreements. These agreements provide for, among other things, the ability to deliver electricity to the utilities from sources other than NJEA's and NEA's cogeneration facilities. The Partnerships' facilities were constructed by Westinghouse Power and use natural gas to produce electrical energy. The Partnerships were developed and operated as qualifying facilities under PURPA and the regulations promulgated thereunder by the FERC. As a result of the amended and restated power purchase agreements, NJEA and NEA no longer operate as QFs. NJEA and NEA now have exempt wholesale generator (EWG) status and market based rate authority which allows NJEA and NEA to sell power at market rates. NJEA and NEA received approval from the FERC to operate as EWGs with market based rate authority in December 2003 and February 2005, respectively. However, the Partnerships are not exempt from state regulatory commission general supervisory powers relating to environmental and safety matters and must still comply with other federal, state and local laws, including those regarding siting, construction, operation, licensing, pollution abatement and other environmental laws. NEA and NJEA sell substantially all of their output capability to regulated utilities under the amended and restated power purchase agreements, described above, as follows:1934

For the fiscal year ended December 31, 2009

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission

File Number

Exact name of registrants as specified in their charters,

State of organization, address of principal executive offices

and registrants' telephone number

IRS Employer

Identification

Number

333-52397		ESI TRACTEBEL ACQUISITION CORP. (a Delaware corporation)		65-0827005
333-52397-01		NORTHEAST ENERGY, LP (a Delaware limited partnership)		65-0811248

c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408

(561) 691-7171

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act of 1933.

Yes ¨ No þ

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.

Yes þ No ¨

Yes ¨ No þ

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Large accelerated filers [ ]

Accelerated filers [ ]

Non-accelerated filers þ

(Do not check if a smaller reporting company)

Smaller reporting companies [ ]

Indicate by check mark whether the registrants are shell companies as defined in Rule 12b-2 of the Securities Exchange Act of 1934.

Yes ¨ No þ

As of February 28, 2010, there were issued and outstanding 20 shares of ESI Tractebel Acquisition Corp.'s common stock, par value $0.10 per share, none of which were held by non-affiliates.

——————————————————————

This combined Form 10-K represents separate filings by ESI Tractebel Acquisition Corp. (Acquisition Corp.) and Northeast Energy, LP (NE LP). Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes representations only as to itself and makes no representations whatsoever as to the other registrant. The registrants make no representations whatsoever as to ESI Tractebel Funding Corp. (Funding Corp.), and Acquisition Corp. makes no representations whatsoever as to Northeast Energy Associates, a limited partnership (NEA) or North Jersey Energy Associates, a limited partnership (NJEA, and collectively with NEA, the Partnerships).

DEFINITIONS

Acronyms and defined terms used in the text include the following:

Term		Meaning

Acquisition Corp.		ESI Tractebel Acquisition Corp.
Act		Securities Act of 1933, as amended
avoided cost		the incremental cost to an electric utility of electric energy and/or capacity that, but for the purchase from a qualifying facility, such utility would generate itself or purchase from another source
Boston Edison		Boston Edison Company, now NSTAR
Broad Street		Broad Street Contract Services, Inc.
Btu		British thermal units, a unit of energy
cogeneration		power production technology that provides for the sequential generation of two or more useful forms of energy from a single primary fuel source
Commonwealth		Commonwealth Electric Company, now NSTAR
EPA		U.S. Environmental Protection Agency
ESI Energy		ESI Energy, LLC
ESI GP		ESI Northeast Energy GP, Inc.
ESI LP		ESI Northeast Energy LP, Inc.
ESI Northeast Acquisition		ESI Northeast Energy Acquisition Funding, Inc.
ESI Northeast Funding		ESI Northeast Energy Funding, Inc.
ESI Northeast Fuel		ESI Northeast Fuel Management, Inc.
ETURC		ESI Tractebel Urban Renewal Corporation, previously IEC Urban Renewal Corporation
Exchange Act		Securities Exchange Act of 1934, as amended
FERC		Federal Energy Regulatory Commission
FPL Group		FPL Group, Inc.
FPL Group Capital		FPL Group Capital Inc
Funding Corp.		ESI Tractebel Funding Corp., previously IEC Funding Corp.
GHG		Greenhouse gas(es)
JCP&L		Jersey Central Power & Light Company
kwh		kilowatt-hour(s)
Management's Discussion		Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Montaup		Montaup Electric Company
MMBtu		millions of Btu
mw		megawatt(s)
NE LLC		Northeast Energy, LLC
NE LP		Northeast Energy, LP
NEA		Northeast Energy Associates, a limited partnership
NJEA		North Jersey Energy Associates, a limited partnership
NEPOOL		New England Power Pool
NextEra Energy Resources		NextEra Energy Resources, LLC, formerly known as FPL Energy, LLC
NextEra Operating Services		NextEra Energy Operating Services, LLC, formerly known as FPL Energy Operating Services, Inc.
Note _		Note _ to Consolidated and Combined Financial Statements or Note _ to Financial Statements, as the case may be
NSTAR		NSTAR Electric Company (formerly Boston Edison Company and Commonwealth Electric Company)
O&M		operations and maintenance
Partners		ESI GP and ESI LP together with SUEZ GP and SUEZ LP
Partnerships		NEA together with NJEA
PMI		NextEra Energy Power Marketing, LLC
PJM		PJM Interconnection L.L.C. (Pennsylvania-New Jersey-Maryland power pool)
ProGas		ProGas Limited of Alberta, Canada
PSE&G		Public Service Electric & Gas Company of Newark, New Jersey
PURPA		Public Utility Regulatory Policies Act of 1978, as amended
qualifying facilities or QFs		Non-utility power production facilities meeting the requirements of a qualifying facility under PURPA
registrants		Acquisition Corp. and NE LP
Rule 144A		Rule 144A promulgated under the Act
SEMNA		GDF SUEZ Energy Marketing NA, Inc. (previously known as Tractebel Energy Marketing, Inc.)
SUEZ		GDF SUEZ Energy North America, Inc. (previously known as Tractebel, Inc.)
SUEZ GP		Tractebel Northeast Generation GP, Inc.
SUEZ LP		Tractebel Associates Northeast LP, Inc.
SUEZ Power		GDFSUEZ Energy Generation North America, Inc. (previously known as Tractebel Power, Inc.)
Trustee		U.S. Bancorp, a Delaware corporation
Westinghouse		Siemens Westinghouse Operating Services Company
Westinghouse Power		Siemens Westinghouse Power Corporation

NE LP and NextEra Energy Resources each have subsidiaries and affiliates with names that include Northeast Energy, NE LP, NextEra Energy Resources, FPL Energy, FPLE, and ESI Energy and similar references. For convenience and simplicity, in this report the terms NextEra Energy Resources, FPL Energy, FPLE, Northeast Energy, NE LP and ESI Energy are sometimes used as abbreviated references to specific subsidiaries, affiliates or groups of subsidiaries or affiliates. The precise meaning depends on the context.

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance, climate change strategy or growth strategies (often, but not always, through the use of words or phrases such as "will," "will likely result," "are expected to," "will continue," "is anticipated," "aim," "believe," "could," "should," "would," "estimated," "may," "plan," "potential," "projection," "target," "outlook," "predict" and "intend" or words of similar meaning) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference, and are accompanied by, to important factors included in Part I, Item 1A. Risk Factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on the Acquisition Corp.'s and/or NE LP's operations and financial results, and that could cause the Acquisition Corp.'s and/or NE LP's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of either or both of the registrants in this combined Form 10-K, in presentations, in response to questions or otherwise.

Any forward-looking statement speaks only as of the date on which such statement is made, and the registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.

PART I

Item 1. Business

General. NE LP, a Delaware limited partnership, was formed in 1997 for the purpose of acquiring ownership interests in two partnerships, NEA, a Massachusetts limited partnership, and NJEA, a New Jersey limited partnership, each of which owns an electric power generation station in the northeastern United States. NE LP is jointly owned by ESI GP and ESI LP (indirect wholly-owned subsidiaries of NextEra Energy Resources, which is an indirect wholly-owned subsidiary of FPL Group, a company listed on the New York Stock Exchange) and SUEZ GP and SUEZ LP (indirect wholly-owned subsidiaries, through SUEZ Power and SUEZ, which are wholly-owned subsidiaries of GDF SUEZ, SA, a worldwide energy provider). NE LP also formed a wholly-owned entity, NE LLC, to assist in such acquisitions.

The Partnerships were formed in 1986 to develop, construct, own, operate and manage the power generation stations. NEA's facility commenced commercial operation in 1991 and is located in Bellingham, Massachusetts. NJEA's facility commenced commercial operation in 1991 and is located in Sayreville, New Jersey.

In connection with the acquisitions of the Partnerships' interests, the Funding Corp., a Delaware corporation, was acquired by a subsidiary of ESI Energy, SUEZ Power and Broad Street from Intercontinental Energy Corporation, a Massachusetts corporation. The Funding Corp. was established in 1994 solely for the purpose of issuing debt. This debt was privately issued under Rule 144A to acquire outstanding bank debt and to lend funds to the Partnerships and was subsequently exchanged for publicly-issued debt.

The Acquisition Corp., a Delaware corporation, was formed in 1997. The Acquisition Corp.'s common stock is jointly owned by a subsidiary of ESI Energy and SUEZ Power. In 1998, the Acquisition Corp. issued $220 million of debt under Rule 144A which was also subsequently exchanged for publicly-issued debt. The proceeds were loaned to NE LP and then distributed by NE LP to direct subsidiaries of NextEra Energy Resources and SUEZ Power. Repayment of the Funding Corp. and Acquisition Corp. debt is expected to be made from distributions from the Partnerships.

None of the registrants, Partnerships or Funding Corp. have any employees.

Partnerships' Operations. The Partnerships operate in the independent power industry. In the United States, rate-regulated electric utilities have been the dominant producers and suppliers of electric energy since the early 1900s. In 1978, PURPA removed regulatory constraints relating to the production and sale of electric energy by certain non-utility power producers and required electric utilities to buy electricity from certain types of non-utility power producers under certain conditions, thereby encouraging companies other than electric utilities to enter the electric power production market. The Partnerships were created as a result of the PURPA legislation.

NEA owns, and prior to February 28, 2005, derived substantially all of its revenues from, a nominal 290 mw combined-cycle cogeneration facility. NJEA owns, and prior to 2004, derived substantially all of its revenue from, a combined-cycle cogeneration facility with a summer output of 275 mw. However, in December 2003, an agreement between NJEA and a New Jersey utility, JCP&L, became effective to amend and restate their power purchase agreement, and in February 2005, an agreement between NEA and two Massachusetts utilities, Boston Edison and Commonwealth (combined in 2007 into one utility, NSTAR) became effective to amend and restate their power purchase agreements. These agreements provide for, among other things, the ability to deliver electricity to the utilities from sources other than NJEA's and NEA's facilities. The Partnerships' facilities were constructed by Westinghouse Power and use natural gas to produce electrical energy. The Partnerships were developed and operated as qualifying facilities under PURPA and the regulations promulgated thereunder by the FERC. As a result of the amended and restated power purchase agreements, NJEA and NEA no longer operate as QFs and no longer operate as cogeneration facilities. NJEA and NEA now have exempt wholesale generator (EWG) status and market based rate authority which allows NJEA and NEA to sell power at market rates. NJEA and NEA received approval from the FERC to operate as EWGs with market based rate authority in December 2003 and February 2005, respectively. However, the Partnerships are not exempt from state regulatory commission general supervisory powers relating to environmental and safety matters and must still comply with other federal, state and local laws, including those regarding siting, construction, operation, licensing, pollution abatement and other environmental laws.

NEA and NJEA sell substantially all of their output capability to regulated utilities under the amended and restated power purchase agreements described above, as follows:

Power Purchaser	MW	Power Purchase Agreement Expiration

NEA:
NSTAR (formerly Boston Edison)	100	September 15, 2016
NSTAR (formerly Boston Edison)	60	September 15, 2011
NSTAR (formerly Commonwealth)	20	September 15, 2016
NSTAR (formerly Commonwealth)	20	September 15, 2016
NEA Total	200

NJEA:
JCP&L	250	August 13, 2011

The remainder of the net electrical energy produced by the Partnerships, if any, is available for sale to the marketplace either directly to third parties or via NextEra Energy Resources' power marketing subsidiary. The NEA and NJEA power purchase agreements provide for fixed annual quantities with allowances for certain operational issues.
One of the NEA power purchase agreements was required to have an energy bank to record cumulative payments made by the utility in excess of avoided cost rates scheduled or specified in that agreement. The energy bank balance bore interest at a rate specified in the agreement, and was partially secured by a letter of credit. In accordance with the agreement, in January 2007 NEA fulfilled its obligations to the utility related to the energy bank, and the energy bank requirement no longer applies.
In December 2003, an agreement between NJEA and a New Jersey utility became effective to amend and restate the power purchase agreement in order to realize cost savings by sourcing power from the wholesale market rather than NJEA's facility during periods when market prices are lower than generation costs. The agreement provides for, among other things, the delivery of electricity to the New Jersey utility from sources other than NJEA's facility when NJEA decides to do so. In connection with this restructuring, NJEA amended its long-term natural gas supply agreement with PSE&G. Under the terms of the amended long-term natural gas supply agreement, the supplier provides all of the fuel required to run the facility when it is operating.
In connection with the NJEA amended and restated power purchase agreement, in March 2004, NJEA exercised its option to terminate its steam sales contract since the NJEA facility no longer operates as a base load facility. Under the terms of the termination agreement, NJEA no longer supplies steam to the steam offtaker and NJEA was obligated to pay the offtaker a monthly fee of approximately $0.4 million through December 2007.
In February 2005, the amended and restated power purchase agreements among NEA as seller and NSTAR as utility purchaser became effective. The amended and restated agreements provide for, among other things, NEA obtaining the right to source power from the wholesale market in addition to sourcing power from NEA's facility. Affiliates of NE LP's partners paid approximately $29.9 million to the utility purchasers in the form of loans to NE LP in the same amount due on December 31, 2005. This payment was capitalized as part of the power purchase agreements' intangible asset on the balance sheet at December 31, 2005. These loans were repaid with interest in April 2005 from funds otherwise available for NE LP partnership distributions.
As a result of the amended and restated power purchase agreements, NE LP and the Partnerships adopted Emerging Issues Task Force Issue No. (EITF) 91-6, "Revenue Recognition of Long-Term Power Sales Contracts", which requires NE LP and the Partnerships to recognize revenue as the lesser of the amount billable under the agreement or the estimated average revenue over the term of the agreements.
NEA entered into two long-term natural gas supply agreements with PMI and SEMNA effective March 31, 2005 that enable NEA to purchase sufficient fuel for production.
The Partnerships will continue to receive the natural gas that fuels the Partnerships' facilities through long-term natural gas supply agreements with PMI and SEMNA and, in the case of NJEA, with PSE&G. Natural gas is transported to, or stored for later use by, the Partnerships pursuant to long-term natural gas transportation and storage agreements. The remainder of the daily fuel requirement is satisfied by open-market purchases.
ESI Northeast Fuel, an indirect wholly-owned subsidiary of NextEra Energy Resources, is the fuel manager for the Partnerships and provides fuel management and administrative services by contracting with PMI. In 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power purchase agreements.
NextEra Operating Services, a wholly-owned indirect subsidiary of NextEra Energy Resources, provides O&M services for the Partnerships. See Management's Discussion - Related Party Information.
Seasonality. Revenues recognized and payments due to NJEA under the JCP&L power purchase agreement during the winter and summer seasons are substantially higher than those in spring and fall. Otherwise, the business of the Partnerships is not materially subject to seasonal factors.
Environmental. Federal, state and local environmental laws and regulations cover air and water quality, land use, power plant and transmission line siting, lead paint, asbestos, noise and aesthetics, solid waste, natural resources, wildlife mortality and other environmental matters. Compliance with these laws and regulations could increase the cost of electric service by requiring, among other things, changes in the design and operation of the facilities. Environmental laws and regulations are subject to change. The following is a discussion of emerging federal and state initiatives and rules that could potentially affect NE LP and the Partnerships.
Climate Change - The U.S. Congress and certain states and regions are considering several legislative and regulatory proposals that would establish new regulatory requirements and reduction targets for greenhouse gases. These legislative and regulatory proposals have differing methods of implementation and the impact on NE LP's and the Partnerships' facilities and/or the financial impact (either positive or negative) to NE LP and the Partnerships could be material, depending on the eventual structure of any legislation enacted or specific implementation rules adopted.
The Regional Greenhouse Gas Initiative (RGGI) is a greenhouse gas reduction initiative whereby ten Northeast and Mid-Atlantic member states, including Massachusetts and New Jersey, have established a cap and trade program (a system by which affected generators buy and trade allowances under a set cap) for covered electric generating units. RGGI members have agreed to stabilize power plant carbon dioxide (CO2) emissions at 2009 levels through the end of 2014 and to further reduce the sector's emissions another 10% by the end of 2018. The RGGI greenhouse gas reduction requirements will affect NE LP's and the Partnerships' two facilities, requiring those facilities to acquire CO2 allowances for emissions of CO2 beginning in 2009. All RGGI states have enacted legislation and regulations and NE LP and the Partnerships, through PMI, began participating in quarterly CO2 emissions allowance auctions in 2008. While NE LP and the Partnerships anticipate additional variable costs as a result of RGGI, they do not expect such costs to have a materially adverse affect on their financial condition or future operating results.
During 2008, 2007 and 2006, the registrants were not required to make capital additions to comply with environmental laws and do not anticipate incurring such costs in 2009, 2010 or 2011.
Competition. Competitive wholesale markets in the United States continue to evolve and vary by geographic region. Revenues from electricity sales in these markets vary based on the prices obtainable for energy, capacity and other ancillary services. Some of the factors affecting success in these markets include the ability to operate generating assets efficiently and reliably, the price and supply of fuel, transmission constraints, competition from new sources of generation, effective risk management, demand growth and exposure to legal and regulatory changes. Although substantially all of the Partnerships' output is committed under the power purchase agreements described above, these factors may adversely affect energy prices under certain power purchase agreements that are tied to the wholesale electric market prices. NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to prices under the Partnerships' power purchase agreements.
The Partnerships operate in two power pools. NEA operates in NEPOOL and NJEA operates in PJM, each of which has an independent system operator that manages the wholesale electricity market and the transmission of electricity. While legislators and state regulatory commissions will decide what impact, if any, competitive forces will have on retail transactions, the FERC has jurisdiction over potential changes which could affect competition in wholesale transactions. The FERC has approved various filings submitted by NEPOOL and PJM regarding electric industry deregulation initiatives.
In 2006, the FERC approved a settlement agreement that established a new forward capacity market in the NEPOOL region. The parties to the settlement agreement include wholesale power generators in New England, including NEA and four of the six New England states. Under the settlement agreement, capacity payments to generators will be established competitively through annual auctions, the first of which was conducted in February 2008 to purchase capacity for the twelve months starting June 1, 2010. The settlement agreement also provides for a transition period that began on December 1, 2006 and continues through May 31, 2010, during which capacity suppliers will receive fixed capacity payments, subject to penalties for forced outages during peak demand periods. The settlement agreement, as approved by the FERC, is expected to continue to result in increased gross margins for the NEA facility during the transition period. Total fixed capacity payments received under the settlement agreement were $13.1 million, $11.3 million, and $0.9 million for the periods ended December 31, 2008, 2007, and 2006, respectively.
Item 1A. Risk Factors
Risks Relating to Registrants' Business
The following are some important factors that could have a significant impact on the Acquisition Corp.'s and/or NE LP's operations and financial results, including the operations and results of the Partnerships, and could cause the Acquisition Corp.'s and/or NE LP's actual results or outcomes, including those of the Partnerships, to differ materially from those discussed in forward-looking statements made by or on behalf of the Acquisition Corp. and/or NE LP in this combined Form 10-K, in response to questions or otherwise:
·	The registrants are subject to complex laws and regulations and to changes in laws or regulations, as well as changing governmental policies and regulatory actions, with respect to, among other things, initiatives regarding deregulation and restructuring of the energy industry and environmental matters, including matters related to the effects of climate change, operation of generation facilities, and present or prospective competition. This substantial and complex framework exposes the registrants to increased compliance costs and potentially significant monetary penalties for non-compliance.
·	The registrants are subject to extensive federal, state and local environmental statutes, rules and regulations as well as the effect of changes in or additions to applicable statutes, rules and regulations that relate to, or in the future may relate to, for example, air quality, water quality, climate change, greenhouse gas emissions, CO2 emissions, waste management, marine and wildlife mortality, natural resources, health, safety and renewable portfolio standards that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or require additional pollution control equipment and otherwise increase costs. There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations, and those costs could be even more significant in the future.
·	The registrants operate in a changing market environment influenced by various legislative and regulatory initiatives regarding regulation, deregulation or restructuring of the energy industry, including, for example, deregulation or restructuring of the production and sale of electricity, as well as increased focus on renewable and clean energy sources and reduction of carbon emissions. The registrants and the Partnerships will need to adapt to these changes and may face increasing costs and competitive pressure in doing so.
·	A substantial portion of the output from the Partnerships' power generation facilities is sold to two regulated utilities under five power purchase agreements, two of which terminate in 2011 and the other three in 2016. The limited number of power purchasers creates a concentration of counterparty risk. The remaining output from the power generation facilities is sold, from time to time, in the merchant markets. In addition, it is expected that upon expiration of the power purchase agreements, the residual portion of the electrical output of the generation facilities will be sold in the merchant markets. The sale of power in the merchant markets is based on market conditions at the time of sale. The amount and timing of revenues to be received from the merchant markets in the future is uncertain. Economic factors, such as the current downturn, could adversely affect energy consumption and could adversely affect the results of operations of the registrants.
·	The operation and maintenance of power generation facilities involve many risks, including, for example, start up risks, breakdown or failure of equipment, transmission lines or pipelines, the inability to properly manage or mitigate known equipment defects in the Partnerships' generation facilities unless and until such defects are remediated, use of new or unproven technology, the dependence on a specific fuel source, such as natural gas, failure or delay in the supply or transportation of fuel, or the impact of unusual or adverse weather conditions (including natural disasters), and the risk of performance below expected or contracted levels of output or efficiency. This could result in lost revenues and/or increased expenses, including, for example, the requirement to purchase power in the market at potentially higher prices to meet contractual obligations, or lost revenues due to prolonged outages. Insurance, warranties or performance guarantees may not cover any or all of the lost revenues or increased expenses, including, for example, the cost of replacement power. Breakdown or failure of an operating facility may prevent the facility from performing under applicable power sales agreements which, in certain situations, could result in termination of the agreement or incurring a liability for liquidated damages.
·	NE LP and the Partnerships use derivative instruments, such as swaps, futures, and forwards, some of which are traded in the over-the-counter markets or on exchanges, to manage their commodity and financial market risks. The registrants could recognize financial losses as a result of volatility in the market values of these derivative instruments, or if a counterparty fails to perform or make payments under these derivative instruments. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these derivative instruments involves management's judgment or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these derivative instruments.
·	In addition to risks discussed elsewhere, risk factors specifically affecting the registrants' success in competitive wholesale markets include, for example, the ability to efficiently operate generating assets, the successful and timely completion of project restructuring activities, the price and supply of fuel (including transportation) and equipment, transmission constraints, competition from other and new sources of generation, excess generation capacity and shifting demand for power. There can be significant volatility in market prices for fuel, electricity and renewable and other energy commodities, and there are other financial, counterparty and market risks that are beyond the control of the registrants. The registrants' inability or failure to effectively hedge their assets or positions against changes in commodity prices, interest rates, counterparty credit risk or other risk measures could significantly impair their future financial results. In addition, the registrants' business depends upon power transmission and natural gas transportation facilities owned and operated by others; if transmission or fuel transportation is disrupted or capacity is inadequate or unavailable, the registrants' ability to sell and deliver their wholesale power may be limited or their costs may increase.
·	The registrants' rely on contracts with vendors for the supply of fuel and equipment required for the operation of their facilities. If vendors fail to fulfill their contractual obligations, the registrants may need to make arrangements with other suppliers, which could result in higher costs and/or a disruption to their operations.
·	The registrants' results of operations are affected by changes in the weather. Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities, and can affect the production of electricity at power generation facilities. The registrants' results of operations can be affected by the impact of severe weather which can be destructive, causing outages and/or property damage, may affect fuel supply, and could require additional costs to be incurred.
·	The registrants are subject to costs and other potentially adverse effects of legal and regulatory proceedings, settlements, investigations and claims, as well as regulatory compliance and the effect of new, or changes in, tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements.
·	The Partnerships are subject to mandatory reliability standards promulgated by the North American Electric Reliability Corporation and enforced by the FERC. These standards, which previously were being applied on a voluntary basis, became mandatory in June 2007. Noncompliance with these mandatory reliability standards could result in sanctions, including substantial monetary penalties.
·	The registrants are subject to direct and indirect effects of terrorist threats and activities, as well as cyber attacks and disruptive activities of individuals and/or groups. Infrastructure facilities and systems, including, for example, generation, transmission and distribution facilities, physical assets and information systems, in general, have been identified as potential targets. The effects of these threats and activities include, but are not limited to, the inability to generate, purchase or transmit power, the risk of a significant slowdown in growth or a decline in the United States economy, delay in economic recovery in the United States, and the increased cost and adequacy of security and insurance.
·	The registrants' ability to obtain insurance, and the cost of and coverage provided by such insurance, could be adversely affected by international, national, state or local events as well as registrant-specific events.
·	The registrants, the Partnerships and the Funding Corp. are substantially leveraged. The ability of the registrants, the Partnerships and the Funding Corp. to make interest and principal payments and fund capital expenditures is dependent on the future performance of the Partnerships. Future performance is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the control of the registrants. The registrants, the Partnerships and the Funding Corp. are also subject to restrictive covenants under their debt agreements that will limit their ability to borrow or otherwise have access to additional funds.
·	All obligations of the Partnerships are non-recourse to the direct and indirect owners of the registrants. Following any default by the Partnerships, security is limited to the owners' economic interests in the Partnerships. The owners have no meaningful revenues other than the distributions they receive from the Partnerships. In the event of default, the ability of the owners to satisfy any obligations will be limited to amounts payable by the Partnerships as distributions.
The risks described herein are not the only risks facing the registrants. Additional risks and uncertainties also may materially adversely affect the Acquisition Corp.'s and/or NE LP's business, financial condition and/or future operating results.
Item 1B. Unresolved Staff Comments None.
Item 2. Properties Management of each of the registrants believes that the properties of the registrants and their subsidiaries are adequate for their operations. As of December 31, 2008, the Partnerships had the following properties:

As noted in the table above, two of the purchase power agreements, for a total of 310 MW, or approximately 69% of the plant capacity associated with those agreements, will terminate in 2011.

Facility Type		Location	Principal Use
NEA cogeneration facility (a)		Bellingham, MA	Power production
NEA residential properties (b)		Bellingham, MA	Private residences
NJEA cogeneration facility (c)		Sayreville, NJ	Power production
(a)	Subject to the liens of a first and second mortgage.
(b)	NEA owns 12 properties, most with single-family dwellings, located on land immediately adjacent to the facility site. These properties are subject to the lien of a mortgage.
(c)	Subject to the lien of a first mortgage.

The limited number of power purchasers creates a concentration of counterparty risk. It is expected that upon expiration of the power purchase agreements, the residual portion of the electrical output of the generation facilities will be sold in the merchant markets. The sale of power in the merchant markets is based on market conditions at the time of sale. The amount and timing of revenues to be received from the merchant markets in the future is uncertain.

~~Item~~The 3.remainder ~~Legal~~of ~~Proceedings~~the ~~None.~~net ~~Item~~electrical 4.energy ~~Submission~~produced ofby ~~Matters~~the Partnerships, if any, is available for sale to athe ~~Vote~~marketplace ofeither ~~Security~~directly ~~Holders~~to ~~None~~third parties or via PMI. The NEA and NJEA power purchase agreements provide for fixed annual quantities with allowances for certain operational issues.

~~PART~~One IIof ~~Item~~the 5NEA power purchase agreements was required to have an energy bank to record cumulative payments made by the utility in excess of avoided cost rates scheduled or specified in that agreement. The ~~Market~~energy ~~for~~bank ~~Registrants'~~balance ~~Common~~bore ~~Equity,~~interest ~~Related~~at ~~Stockholder~~a ~~Matters~~rate specified in the agreement, and ~~Issuer~~was ~~Purchases~~partially secured by a letter of ~~Equity~~credit. In ~~Securities~~accordance ~~This~~with ~~item~~the isagreement, ~~not~~in ~~applicable~~January 2007 NEA fulfilled its obligations to ~~either~~the ofutility related to the ~~registrants~~energy bank, and the energy bank requirement no longer applies.

Item 6. Selected Financial Data
	Years Ended December 31,
	2008		2007		2006		2005		2004
	(Thousands of Dollars)
SELECTED CONSOLIDATED DATA OF NE LP AND SUBSIDIARIES:
Operating revenues	$	407,737	$	331,269	$	358,815	$	355,249	$	419,828
Net income	$	133,249	$	90,397	$	167,159	$	132,990	$	193,199
Total assets	$	724,311	$	820,894	$	975,058	$	1,052,493	$	1,077,994
Long-term debt, excluding current maturities	$	173,018	$	258,005	$	335,467	$	414,863	$	483,816
Energy bank and other liabilities	$	151	$	151	$	1,621	$	42,816	$	83,116
SELECTED COMBINED DATA OF THE PARTNERSHIPS:
Operating revenues	$	407,737	$	331,269	$	358,815	$	355,238	$	420,208
Net income	$	146,243	$	105,443	$	183,809	$	150,783	$	212,239
Total assets	$	723,539	$	819,694	$	959,670	$	1,050,305	$	1,075,235
Long-term debt, excluding current maturities	$	65,223	$	119,839	$	171,640	$	225,661	$	278,302
Energy bank and other liabilities	$	-	$	-	$	1,471	$	42,664	$	82,964
SELECTED DATA OF THE FUNDING CORP.:
Operating revenues	$	-	$	-	$	-	$	-	$	-
Net income	$	-	$	-	$	-	$	-	$	-
Total assets	$	119,840	$	171,641	$	264,112	$	278,303	$	323,651
Long-term debt, excluding current maturities	$	65,223	$	119,839	$	171,640	$	225,661	$	278,302
SELECTED DATA OF THE ACQUISITION CORP.:
Operating revenues	$	-	$	-	$	-	$	-	$	-
Net income	$	5	$	6	$	7	$	7	$	9
Total assets	$	127,752	$	149,752	$	185,471	$	184,952	$	193,752
Long-term debt, excluding current maturities	$	101,200	$	127,600	$	149,600	$	171,600	$	184,800

In December 2003, an agreement between NJEA and JCP&L became effective to amend and restate the power purchase agreement that permitted NJEA to realize cost savings by giving it the option to source power from the wholesale market rather than NJEA's facility during periods when market prices are lower than generation costs. The agreement provides for, among other things, the delivery of electricity to JCP&L from sources other than NJEA's facility when NJEA decides to do so. In connection with this restructuring, NJEA amended its long-term natural gas supply agreement with PSE&G. Under the terms of the amended long-term natural gas supply agreement, the supplier provides all of the fuel required to run the facility when it is operating.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion should be read in conjunction with the Notes to Consolidated and Combined Financial Statements and Notes to Financial Statements contained herein. In the discussion of Results of Operations below, all comparisons are with the corresponding items in the prior year. Results of Operations NE LP Consolidated NE LP's net income for 2008, 2007 and 2006 was $133.2 million, $90.4 million and $167.2 million, respectively. Net income for 2008 increased due to favorable pricing of $68.5 million which is reflected in revenues, partially offset by increased fuel costs of $41.4 million. Net income for 2007 was affected by increased fuel costs of $55.4 million, net unrealized mark-to-market losses of $2.3 million on derivatives and favorable pricing, primarily on purchased power, of $0.4 million which is reflected in revenues. Net income for 2006 included fuel savings of $49.0 million, net unrealized mark-to-market gains of $6.1 million on derivatives and unfavorable pricing, primarily on purchased power, of $35.3 million which is reflected in revenues. NE LP Consolidated - 2008 compared to 2007 In 2008, 2007 and 2006, NE LP's revenues were derived from five power purchase agreements with regulated utilities in Massachusetts and New Jersey. Under the terms of these contracts, power from the wholesale market or generated from the Partnerships' facilities was sold to these utilities at prices specified in the contracts. The pricing under the four Massachusetts amended and restated power purchase agreements is comprised of a fixed payment based on specified contract rates and a variable portion indexed to the power market. The pricing under the New Jersey amended and restated power purchase agreement is indexed to fuel indices. NE LP's revenues for 2008 and 2007 were comprised of $407.7 million and $331.3 million of power sales to utilities, net of purchased power, respectively. Revenue increased in 2008 compared to 2007 primarily due to favorable pricing of $68.5 million and increased volume of $8.0 million due to increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility. Fuel expense, net of fuel sales, increased in 2008 by $41.4 million primarily due to increased fuel prices and increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility. O&M expense increased by $1.7 million in 2008 compared to 2007 primarily as a result of increased generation of power at the NJEA facility and scheduled maintenance outages at NJEA and NEA, partially offset by decreased generation of power at the NEA facility. Depreciation and amortization expense increased by $2.3 million in 2008 compared to 2007 due primarily to increased depreciation of assets, measured on a unit of production basis, mainly resulting from increased generation at the NJEA facility, as well as increased amortization of the intangible assets associated with the power purchase agreements. NE LP makes scheduled interest and principal payments on its outstanding debt semiannually on June 30 and December 30. Interest expense for NE LP decreased in 2008 by $7.6 million due to decreasing principal balances on its outstanding debt. Interest income decreased in 2008 compared to 2007 by $1.0 million due primarily to decreased rates of return on cash balances. In February 2007, NEA incurred costs related to damage to one of NEA's combustion turbines. In October 2008, a settlement agreement was reached with the insurance companies, net of NEA's deductible, for $1.9 million, of which $1.7 million was received in 2008. As a result, in 2008, NEA recorded a gain of $1.2 million, reduced O&M expenses by $0.4 million and reduced the carrying value of certain turbine parts by $0.3 million. In connection with repair work performed on one of NEA's combustion turbines in November 2007, NEA recognized a loss on disposal of assets of $2.8 million in 2007. In March 2008 NEA entered into an agreement with a supplier (the Replacement Parts Agreement) under which NEA would recover up to $2.1 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts. In March 2008, NEA placed orders with the supplier for $3.6 million of replacement turbine parts, which used all of the credits under the Replacement Parts Agreement, and a $1.8 million recovery under that agreement was recorded in other income in 2008. In connection with repair work performed on one of NEA's combustion turbines during 2007, NEA recognized a net loss on disposal of assets of $0.6 million. In connection with an inspection of one of NEA's combustion turbines in October 2008, damage was discovered. NEA filed a warranty claim, and the manufacturer has agreed to cover substantially all related costs for parts and labor, and accordingly, no loss on disposal of assets was recognized. The Partnerships' parts on-hand were used to replace the damaged parts. Transcontinental Gas Pipeline Corporation (Transco) filed a new general rate case in August 2006 with the FERC. The rate case proposed rate increases for most services, fueled largely by a proposed increase of approximately $250 million in the cost of service. NEA currently holds 50,508 MMBtu/day of capacity on Transco's system, and the proposed rates would have resulted in an annual increase of approximately $0.7 million in transportation costs for NEA. NextEra Energy Resources on behalf of NEA and other plants operated by NextEra Energy Resources, filed a protest of the rate increase with the FERC in September 2006. The filed rates went into effect on March 1, 2007. In August 2007, an agreement in principal was reached by the parties whereby the settled rates will result in an annual savings of $0.3 million in transportation costs for NEA from the filed rates, with the difference between any amounts paid on the filed rates and the settled rates through the date of the final settlement to be refunded to NEA. The proposed settlement agreement was submitted to the FERC for review and approval and in March 2008 the FERC accepted the settlement agreement. NEA received a refund of $0.3 million under the settlement in July 2008 which was recorded to fuel expense. NE LP Consolidated - 2007 compared to 2006 NE LP's revenues for 2007 and 2006 were comprised of $331.3 million and $358.8 million of power sales to utilities, net of purchased power. Power sales to utilities reflect energy bank amortization of $1.5 million and $41.5 million in 2007 and 2006, respectively. Power sales to utilities include $0 and $1.8 million of revenue from the sale of emission allowances in 2007 and 2006, respectively. Revenue decreased in 2007 compared to 2006 primarily due to lower energy bank amortization of $40.0 million resulting from NEA's satisfaction of the energy bank liability balance in January 2007, and unfavorable pricing under the restructured power purchase agreements of $59.1 million, offset by lower purchased power costs of $59.5 million due to increased generation of power from the NEA and NJEA facilities to fulfill the Partnerships' obligations under the power purchase agreements, increases in capacity revenues of $9.8 million, and increases in ancillary operating revenues of $2.3 million. Fuel expense increased in 2007 compared to 2006 by $55.4 million due primarily to increased generation of power from the NJEA and NEA facilities and higher unrealized mark-to-market losses on derivatives of $8.3 million primarily associated with natural gas storage supply, partially offset by higher margin on natural gas sales of $1.5 million. O&M expense decreased in 2007 compared to 2006 primarily as a result of scheduled maintenance outages at the NJEA and NEA facilities that occurred in 2006, partially offset in 2007 by repair work performed on one of NEA's combustion turbines. Depreciation and amortization expense increased in 2007 compared to 2006 due primarily to additional amortization of the 2005 addition of an intangible asset of $29.9 million related to the NEA amended and restated power purchase agreements. General and administrative expenditures decreased in 2007 compared to 2006 primarily due to lower municipal property tax payments on the NEA and NJEA facilities. NE LP makes scheduled interest and principal payments on its outstanding debt semiannually on June 30 and December 30. Interest expense for NE LP decreased in each of 2007 and 2006 as a result of decreasing principal balances on its outstanding debt and energy bank liability. Interest income increased in 2007 compared to 2006 due to higher average cash balances and interest rates. In connection with repair work performed on one of NEA's combustion turbines, NE LP and the Partnerships recognized a loss on disposal of assets of $2.8 million in 2007, partially offset by a gain on the sale of certain NEA assets of $0.4 million. In March 2008, NEA entered into an agreement with a supplier under which NEA recovered $1.8 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts. The Partnerships The Partnerships' net income for 2008, 2007 and 2006 was $146.2 million, $105.4 million and $183.8 million, respectively. Net income for 2008 increased due to favorable pricing of $68.5 million which is reflected in revenues, partially offset by increased fuel costs of $41.4 million. Net income for 2007 reflected increased fuel costs of $55.4 million, net unrealized mark-to-market losses of $2.3 million on derivatives and favorable pricing primarily on purchased power of $0.4 million which is reflected in revenues. Net income for 2006 included fuel savings of $49.0 million, net unrealized mark-to-market gains of $6.1 million on derivatives and unfavorable pricing primarily on purchased power of $35.3 million which is reflected in revenues. The Partnerships - 2008 compared to 2007 In 2008, 2007 and 2006, the Partnerships' revenues were derived from five power purchase agreements with regulated utilities in Massachusetts and New Jersey. Under the terms of these contracts, power from the wholesale market or generated from the Partnerships' facilities was sold to these utilities at prices specified in the contracts. The pricing under the four Massachusetts amended and restated power purchase agreements is comprised of a fixed payment based on specified contract rates and a variable portion indexed to the power market. The pricing under the New Jersey amended and restated power purchase agreement is indexed to fuel indices. The Partnerships' revenues for 2008 and 2007 were comprised of $407.7 million and $331.3 million of power sales to utilities, net of purchased power, respectively. Revenue increased in 2008 compared to 2007 primarily due to favorable pricing of $68.5 million and increased volume of $8.0 million due to increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility. Fuel expense, net of fuel sales, increased in 2008 by $41.4 million primarily due to increased fuel prices and increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility. O&M expense increased by $1.7 million in 2008 compared to 2007 primarily as a result of increased generation of power at the NJEA facility and scheduled maintenance outages, partially offset by decreased generation of power at the NEA facility. Depreciation and amortization expense increased by $2.3 million in 2008 compared to 2007 due primarily to increased depreciation of assets, measured on a unit of production basis, mainly resulting from increased generation at the NJEA facility, as well as increased amortization of the intangible assets associated with the power purchase agreements. The Partnerships make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30. Interest expense for the Partnerships decreased in 2008 by $5.5 million due to decreasing principal balances on their outstanding debt. Interest income decreased in 2008 compared to 2007 by $0.9 million due primarily to decreased rates of return on cash balances. In February 2007, NEA incurred costs related to damage to one of NEA's combustion turbines. In October 2008, a settlement agreement was reached with the insurance companies, net of NEA's deductible, for $1.9 million, of which $1.7 million was received in 2008. As a result, in 2008, NEA recorded a gain of $1.2 million, reduced O&M expenses by $0.4 million and reduced the carrying value of certain turbine parts by $0.3 million. In connection with repair work performed on one of NEA's combustion turbines in November 2007, NEA recognized a loss on disposal of assets of $2.8 million in 2007. In March 2008 NEA entered into the Replacement Parts Agreement under which NEA would recover up to $2.1 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts. In March 2008, NEA placed orders with the supplier for $3.6 million of replacement turbine parts, which used all of the credits under the Replacement Parts Agreement, and a $1.8 million recovery under that agreement was recorded in other income in 2008. In connection with repair work performed on one of NEA's combustion turbines during 2007, NEA recognized a net loss on disposal of assets of $0.6 million. In connection with an inspection of one of NEA's combustion turbines in October 2008, damage was discovered. NEA has filed a warranty claim, and the manufacturer has agreed to cover substantially all related costs for parts and labor, and accordingly, no loss on disposal of assets was recognized. The Partnerships' parts on-hand were used to replace the damaged parts. Transco filed a new general rate case in August 2006 with the FERC. The rate case proposed rate increases for most services, fueled largely by a proposed increase of approximately $250 million in the cost of service. NEA currently holds 50,508 MMBtu/day of capacity on Transco's system, and the proposed rates would have resulted in an annual increase of approximately $0.7 million in transportation costs for NEA. NextEra Energy Resources on behalf of NEA and other plants operated by NextEra Energy Resources, filed a protest of the rate increase with the FERC in September 2006. The filed rates went into effect on March 1, 2007. In August 2007, an agreement in principal was reached by the parties whereby the settled rates will result in an annual savings of $0.3 million in transportation costs for NEA from the filed rates, with the difference between any amounts paid on the filed rates and the settled rates through the date of the final settlement to be refunded to NEA. The proposed settlement agreement was submitted to the FERC for review and approval and in March 2008 the FERC accepted the settlement agreement. NEA received a refund of $0.3 million under the settlement in July 2008 which was recorded to fuel expense. The Partnerships - 2007 compared to 2006 The Partnerships' revenues for 2007 and 2006 were comprised of $331.3 million and $358.8 million of power sales to utilities, net of purchased power. Power sales to utilities reflect energy bank amortization of $1.5 million and $41.5 million in 2007 and 2006, respectively. Power sales to utilities include $0 and $1.8 million of revenue from the sale of emission allowances in 2007 and 2006, respectively. Revenue decreased in 2007 compared to 2006 primarily due to lower energy bank amortization of $40.0 million resulting from NEA's satisfaction of the energy bank liability balance in January 2007, and unfavorable pricing under the restructured power purchase agreements of $59.1 million, offset by lower purchased power costs of $59.5 million due to increased generation of power from the NEA and NJEA facilities to fulfill the Partnerships' obligations under the power purchase agreements, increases in capacity revenues of $9.8 million, and increases in ancillary operating revenues of $2.3 million. Fuel expense increased in 2007 compared to 2006 by $55.4 million due primarily to increased generation of power from the NJEA and NEA facilities and higher unrealized mark-to-market losses on derivatives of $8.3 million primarily associated with natural gas storage supply, partially offset by higher margin on natural gas sales of $1.5 million. O&M expense decreased in 2007 compared to 2006 primarily as a result of scheduled maintenance outages at the NJEA and NEA facilities that occurred in 2006, partially offset in 2007 by repair work performed on one of NEA's combustion turbines. Depreciation and amortization expense increased in 2007 compared to 2006 due primarily to additional amortization of the 2005 addition of an intangible asset of $29.9 million related to the NEA amended and restated power purchase agreements. General and administrative expenditures decreased in 2007 compared to 2006 primarily due to lower municipal property tax payments on the NEA and NJEA facilities. The Partnerships make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30. Interest expense for the Partnerships decreased in each of 2007 and 2006 as a result of decreasing principal balances on their outstanding debt and energy bank liability. Interest income increased in 2007 compared to 2006 due to higher average cash balances and interest rates. In connection with repair work performed on one of NEA's combustion turbines, the Partnerships recognized a loss on disposal of assets of $2.8 million in 2007, offset by a gain on the sale of certain NEA assets of $0.4 million. In March 2008, NEA entered into an agreement with a supplier under which NEA recovered $1.8 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts. The Funding Corp. and the Acquisition Corp. Both the Funding Corp. and the Acquisition Corp. use interest income and principal payments received from the notes receivable from the Partnerships and NE LP, respectively, to make scheduled interest and principal payments on their outstanding debt. Both are scheduled to make semiannual principal and interest payments on June 30 and December 30. Interest expense for the Funding Corp. and the Acquisition Corp. decreased in each of 2008 and 2007 as a result of decreasing principal balances on their outstanding debt. Related Party Information NE LP and the Partnerships receive O&M, fuel management and administrative services from entities related to NextEra Energy Resources. Payments to these entities for these services were $5.3 million, $4.9 million, and $4.9 million in 2008, 2007 and 2006, respectively. For additional information see Note 5 to the Consolidated and Combined Financial Statements. In 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power purchase agreements. Payments to PMI under that agreement are included in the payments described in the preceding paragraph. For additional information see Note 5 to the Consolidated and Combined Financial Statements. The Partnerships receive fuel pursuant to fuel supply agreements with entities related to NextEra Energy Resources and SUEZ. For additional information see Note 3 to the Consolidated and Combined Financial Statements - Fuel Supply, Transportation and Storage Agreements. In 2003, an affiliate of NE LP issued a $26.2 million note to NE LP to fund the payment to the New Jersey utility in accordance with the NJEA amended and restated power purchase agreement. The related interest expense was $1.1 million, $1.4 million and $1.7 million in 2008, 2007 and 2006, respectively. See Note 4 to the Consolidated and Combined Financial Statements. As discussed in Note 4 to the Consolidated and Combined Financial Statements, the proceeds from the issuance in 1994 of the Funding Corp.'s secured notes (Funding Corp. Securities) were used to make loans to the Partnerships, and notes of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. The related interest expense was $15.5 million, $20.5 million and $25.5 million in 2008, 2007 and 2006, respectively. As discussed in Note 4 to the Consolidated and Combined Financial Statements, the proceeds from the issuance in 1998 of the Acquisition Corp.'s secured notes (Acquisition Corp. Securities) were loaned to NE LP and evidenced by a promissory note. The related interest expense was $11.5 million, $13.3 million and $14.5 million in 2008, 2007 and 2006, respectively. Liquidity and Capital Resources The Funding Corp. and the Partnerships - Cash flow generated by the Partnerships during 2008 was sufficient to fund operating expenses as well as the debt service requirements of the Funding Corp. Debt maturities of the Funding Corp. will require cash outflows of approximately $135.0 million in principal and interest through 2010, including approximately $65.0 million in 2009. It is anticipated that cash requirements for principal and interest payments in 2009 will be satisfied with the Partnerships' cash flows from operating activities. Operational cash flow may be affected by, among other things, changes in laws or regulations, including the PURPA, weather conditions, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, and market demand for energy. See Note 3 to Funding Corp.'s Financial Statements, and Note 4 to Consolidated and Combined Financial Statements - Funding Corp. The trust indenture governing the Funding Corp. Securities contains certain restrictions on certain activities of the Partnerships, including incurring additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements and the execution of mergers, consolidations and sales of assets. Capital expenditures for the Partnerships were $9.1 million, $7.5 million and $3.0 million in 2008, 2007 and 2006, respectively. The increases in 2008 and 2007 relate primarily to capital spare parts used in maintenance outages and various equipment upgrades for the two generating facilities. Letters of credit were established to satisfy requirements in certain power purchase agreements. As of December 31, 2006, one letter of credit related to an NEA power purchase agreement remained. In January 2007, NEA fulfilled its obligations under the power purchase agreement that had required the letter of credit, and the letter of credit was not renewed upon its expiration. The Acquisition Corp. and NE LP - Cash flow generated by NE LP during 2008 was sufficient to fund operating expenses as well as fund the debt service requirements of the Acquisition Corp. and the Funding Corp. and NE LP's note payable-affiliate. Debt maturities of the Acquisition Corp. and the Funding Corp. will require cash outflows of approximately $283.6 million in principal and interest through 2011, including approximately $101.1 million in 2009. Debt maturities of NE LP's note payable-affiliate will require NE LP cash outflows of approximately $11.9 million in principal and interest through 2011, including approximately $4.8 million in 2009. It is anticipated that cash requirements for principal and interest payments in 2009 will be satisfied with NE LP's cash flows from operations. Operational cash flow may be affected by, among other things, changes in laws or regulations, including the PURPA, weather conditions, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, and market demand for energy. See Note 3 to Acquisition Corp.'s Financial Statements, and Note 4 to Consolidated and Combined Financial Statements - Acquisition Corp. NE LP's capital expenditures were $9.1 million, $7.5 million and $3.0 million in 2008, 2007 and 2006, respectively. The increases in 2008 and 2007 relate primarily to capital spare parts used in maintenance outages and various equipment upgrades for the two generating facilities. Letters of credit were established to satisfy requirements in certain power purchase agreements. As of December 31, 2006, one letter of credit related to an NEA power purchase agreement remained. In January 2007, NEA fulfilled its obligations under the power purchase agreement that had required the letter of credit, and the letter of credit was not renewed upon its expiration. The long-term contractual obligations of NE LP and the Partnerships at December 31, 2008 were as follows: NE LP AND THE PARTNERSHIPS December 31, 2008 (Thousands of Dollars)

In connection with the NJEA amended and restated power purchase agreement, in March 2004, NJEA exercised its option to terminate its steam sales contract since the NJEA facility no longer operates as a base load facility. Under the terms of the termination agreement, NJEA no longer supplies steam to the steam offtaker and NJEA was obligated to pay the offtaker a monthly fee of approximately $0.4 million through December 2007.

				Total		2009		2010-11		2012-13		Thereafter
CONTRACTUAL OBLIGATIONS
	The Partnerships:
		Funding Corp debt(a)		$	134,993	$	64,990	$	70,003	$	-	$	-
		Operating leases			1,086		321		678		87		-
		Other long-term obligations:
			Administrative agreement(b)		5,400		600		1,200		1,200		2,400
			O&M agreement(b)		10,500		1,500		3,000		3,000		3,000
			Fuel management agreement(b)		12,600		900		1,800		1,800		8,100
			Natural gas, including transportation and storage		32,139		9,445		17,253		2,503		2,938
	Total Partnerships				196,718		77,756		93,934		8,590		16,438
	NE LP:
		Acquisition Corp debt(a)			148,606		36,068		112,538		-		-
		Affiliate debt(a)			11,912		4,765		7,147		-		-
	Total NE LP				160,518		40,833		119,685		-		-
Total contractual obligations				$	357,236	$	118,589	$	213,619	$	8,590	$	16,438

In February 2005, the amended and restated power purchase agreements among NEA as seller and NSTAR as utility purchaser became effective. The amended and restated agreements provide for, among other things, NEA obtaining the right to source power from the wholesale market in addition to sourcing power from NEA's facility. Affiliates of NE LP's partners paid approximately $29.9 million to the utility purchaser in the form of loans to NE LP in the same amount due on December 31, 2005. This payment was capitalized as part of the power purchase agreements' intangible asset on the balance sheet at December 31, 2005. These loans were repaid with interest in April 2005 from funds otherwise available for NE LP partnership distributions.

(As a) ~~Includes~~result ~~principal~~of the amended and ~~interest.~~restated ~~(b)~~power ~~Represents~~purchase agreements, NE LP and the ~~minimum~~Partnerships ~~obligation~~adopted ~~under~~recognition ~~the~~and ~~terms~~disclosure provisions regarding revenue recognition of ~~the~~long-term ~~agreement.~~power ~~The~~sales ~~minimum~~contracts, ~~obligation~~which isrequires ~~subject~~NE LP and the Partnerships to anrecognize ~~annual~~revenue ~~inflation~~as ~~factor~~the ~~adjustment,~~lesser ~~which~~of isthe ~~excluded~~amount ~~from~~billable under the ~~minimum~~agreement ~~obligation~~or ~~included~~the inestimated average revenue over the ~~table~~term of the agreements.

~~Critical~~NEA ~~Accounting~~entered ~~Policies~~into ~~and~~two Estimates NE LP's and the Partnerships' significant accounting policies are described in Note 2 to the Consolidated and Combined Financial Statements, which were prepared in accordance with accounting principles generally accepted in the United States. Critical accounting policies are those that NE LP and the Partnerships believe are both most important to the portrayal of their financial condition and results of operations, and require complex, subjective judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. NE LP and the Partnerships consider the following policies to be the most critical in understanding the judgments that are involved in preparing their consolidated and combined financial statements. Accounting for Derivatives and Hedging Activities long- NE LP and the Partnerships use derivative instruments (primarily swaps, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity and to optimize the value of power generation assets. To a lesser extent, NE LP and the Partnerships also engage in limited energy trading activities to take advantage of expected future favorable price movements. Accounting pronouncements, which require the use of fair value accounting if certain conditions are met, apply not only to traditional financial derivative instruments, but to any contract having the accounting characteristics of a derivative. Derivative instruments, when required to be marked to market under FAS 133, as amended, are recorded on NE LP's and the Partnerships' Consolidated and Combined Balance Sheets at fair value as either an asset or liability (in prepaid expenses and other current assets, other assets and other accrued expenses). Fair values for some of the longer-term ~~contracts~~natural ~~where~~gas liquid markets are not available are based on internally developed models based on the forward prices for electricity and fuel. Forward prices represent the price at which a buyer or seller could contract today to purchase or sell a commodity at a future date. In general, the models estimate the fair value of a contract by calculating the present value of the difference between the contract price and the forward prices. The near term forward market for electricity is generally liquid and therefore the prices in the early years of the forward curves reflect observable market quotes. However, in the later years, the market is much less liquid and forward price curves must be developed using factors including the forward prices for the commodities used as fuel to generate electricity, the expected system heat rate (which measures the efficiency of power plants in converting fuel to electricity) in the region where the purchase or sale takes place, and a fundamental forecast of expected spot prices based on modeled supply ~~and~~agreements ~~demand~~with inPMI the region. The assumptions in these models are critical since any changes therein could have a significant impact on the fair value of the contract. Changes in derivative fair values for power purchase and ~~sales~~SEMNA ~~are~~effective recognized net in revenues and fuel purchases and sales are recognized net in fuel expense unless the criteria for hedge accounting are met and the company elects to account for the derivative as a hedge. For those transactions accounted for as cash flow hedges, much of the effects of changes in fair value are reflected in other comprehensive income (OCI), a component of partners' equity, rather than being recognized in current earnings. For those transactions accounted for as fair value hedges, the effects of changes in fair value are reflected in current earnings offset by changes in the fair value of the item being hedged. At December March 31, ~~2008,~~2005 no cash flow hedges existed at NE LP or the Partnerships. Since FAS 133 became effective in 2001, the FASB has discussed and, from time to time, issued implementation guidance related to FAS 133. In particular, much of the interpretive guidance affects when certain contracts for the purchase and sale of power and certain fuel supply contracts can be excluded from the provisions of FAS 133. Despite the large volume of implementation guidance, FAS 133 and the supplemental guidance do not provide specific guidance on all contract issues. As a result, significant judgment must be used in applying FAS 133 and its interpretations. A result of changes in interpretation could be that ~~contracts~~enable ~~that~~NEA ~~currently are excluded from the provisions of FAS 133 would have~~ to be recorded on the balance sheet at fair value, with changes in fair value recorded in the statement of operations. See Note 2 to the Consolidated and Combined Financial Statements - Accounting for Derivative Instruments and Hedging Activities. Major Maintenance - Major maintenance costs for combustion turbines are capitalized and amortized on a unit of production basis based upon estimated total starts over the period from the end of the last outage to the beginning of the next planned outage. NE LP and the Partnerships deferred major maintenance costs totaled approximately $3.5 million and $4.8 million at December 31, 2008 and 2007, respectively, and are included in other assets. For the years ended December 31, 2008, 2007 and 2006, NE LP and the Partnerships recorded major maintenance expenses of approximately $2.0 million, $1.9 million and $3.5 million, respectively. See Note 2 to the Consolidated and Combined Financial Statements - Major Maintenance Costs. Contract Restructurings - In prior years, NE LP and the Partnerships restructured power purchase ~~agreements~~sufficient ~~and~~ fuel ~~supply contracts~~ to ~~maximize~~run ~~the~~its ~~profitability~~facility ~~of the Partnerships. Due to the lack of specific accounting guidance,~~ when ait ~~contract~~ is restructured, NE LP and the Partnerships analogize to EITF 96-19, "Debtor's Accounting for a Modification or Exchange of Debt Instruments" and EITF 01-07, "Creditor's Accounting for a Modification or Exchange of Debt Instruments" to account for the transactionsoperating. NE LP and the Partnerships focus on changes in volume, prices and cash flows to determine whether a contract is accounted for as a termination or modification. The calculation of changes in volume, prices and cash flows, as well as the fair value of any new contract, involves the use of estimates and judgments about future events. If a contract is to be accounted for as a termination, the remaining net book value of the asset or liability is removed from the balance sheet, the cash that is exchanged between the parties is recognized as either income or expense, the fair value of the new contract is recorded on the balance sheet and a gain or loss is recognized on the statement of operations. If a contract is to be accounted for as a modification, cash that is exchanged between the parties is added or subtracted to the basis of the asset or liability. Energy Revenues and Purchased Power - NE LP and the Partnerships believe that where offsetting positions exist in the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has not occurred. In these situations, NE LP and the Partnerships report energy revenues on a net basis.

~~Item~~The ~~7A.~~Partnerships ~~Quantitative~~will ~~and~~continue ~~Qualitative~~to ~~Disclosures~~receive ~~About~~the ~~Market~~natural ~~Risk~~gas ~~All~~that ~~financial~~fuels ~~instruments~~the ~~and~~Partnerships' ~~positions~~facilities ~~held~~through bylong-term NEnatural LPgas ~~and~~supply ~~the~~agreements ~~Partnerships~~with ~~described~~PMI ~~below~~and ~~are~~SEMNA ~~held~~and, ~~for~~in ~~purposes~~the ~~other~~case ~~than~~of ~~trading~~NJEA, with PSE&G. Natural ~~Interest~~gas ~~Rate~~is ~~Risk~~transported -to, ~~The~~or ~~fair~~stored ~~value~~for oflater ~~the~~use ~~registrants'~~by, the Partnerships' ~~and~~pursuant ~~Funding~~to ~~Corp.'s~~ long-term ~~debt~~natural isgas ~~affected~~transportation byand ~~changes~~storage ~~in interest rates~~agreements. The ~~following~~remainder ~~presents the sensitivity~~ of the ~~fair~~daily ~~value~~fuel ofrequirement ~~debt to a hypothetical 10% decrease in interest rates which~~ is asatisfied ~~reasonable~~by ~~near~~open-~~term~~ market ~~change:~~purchases.

		December 31, 2008						December 31, 2007
		Carrying Value(b)		Estimated Fair Value(d)		Hypothetical Increased Estimated Fair Value(e)		Carrying Value(b)		Estimated Fair Value(c)		Hypothetical Increased Estimated Fair Value(e)
		(Thousands of Dollars)
Long-term debt, including current maturities, of NE LP / Acquisition Corp. (a)		$	138,166	$	138,682	$	140,540	$	163,827	$	167,567	$	169,109
Long-term debt, including current maturities, of Partnerships / Funding Corp.		$	119,839	$	125,396	$	126,306	$	171,640	$	181,338	$	183,971
(a)	Includes affiliate note for NE LP and Acquisition Corp. Securities.
(b)	Based on the book value of the Acquisition Corp. Securities ($127,600 and $149,600) and the affiliate note ($10,566 and $14,227) as of December 31, 2008 and 2007, respectively. Based on the book value of the Funding Corp. Securities as of December 31, 2008 and 2007, respectively.
(c)	Based on the bid price of the Acquisition Corp. Securities ($153,340) and the book value of the affiliate note ($14,227) as of December 31, 2007. Based on the bid price of the Funding Corp. Securities as of December 31, 2007.
(d)	Based on an internally developed model for the Acquisition Corp. Securities ($128,116) and the book value of the affiliate note ($10,566) as of December 31, 2008. Based on an internally developed model for the Funding Corp. Securities as of December 31, 2008. Bid prices were not available for 2008 due to recent changes in the market.
(e)	Based on the benchmark yield and basis spread for the Acquisition Corp. Securities ($129,974 and $154,882) and the book value of the affiliate note ($10,566 and $14,227) as of December 31, 2008 and 2007, respectively. Based on the benchmark yield and basis spread for the Funding Corp. Securities as of December 31, 2008 and 2007, respectively.

ESI Northeast Fuel, an indirect wholly-owned subsidiary of NextEra Energy Resources, is the fuel manager for the Partnerships and provides fuel management and administrative services by contracting with PMI. In 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the utility purchasers under the NEA amended and restated power purchase agreements.

~~Commodity~~NextEra ~~Price~~Operating ~~Risk~~Services, -a ~~The prices received by the Partnerships for power sales under their long~~wholly-~~term~~owned ~~contracts~~indirect dosubsidiary ~~not move precisely in tandem with the prices paid by the Partnerships for natural gas. To manage the price risk associated with purchases~~ of ~~natural~~NextEra ~~gas~~Energy ~~and purchases of power~~Resources, ~~the~~provides ~~Partnerships~~O&M ~~may,~~services ~~from~~for ~~time to time, enter into certain transactions either through public exchanges or by means of over-~~the~~-counter~~ ~~transactions with specific counterparties. The~~ Partnerships ~~manage their risk associated with purchases of natural gas and power through the use of natural gas and power swap agreements~~. See ~~The~~Management's ~~swap~~Discussion ~~agreements~~– ~~require~~Related ~~the~~Party ~~Partnerships~~Information ~~to pay a fixed price (absolutely or within a specified range) in return for a variable price on specified notional quantities of natural gas~~ and ~~power.~~Note 5 ~~NE LP and the Partnerships use a value-at-risk (VaR) model~~ to ~~measure~~Consolidated ~~market risk in their trading~~ and ~~mark-to-market~~Combined ~~portfolios.~~Financial ~~The~~Statements ~~VaR~~– isRelated ~~the~~Party ~~estimated nominal loss of market value based on a one-day holding period at a 95% confidence level using historical simulation methodology~~Information. ~~As of December 31, 2008 and 2007, the VaR figures (in thousands) are as follows:~~

	Trading and Managed Hedges(a)		Non-Qualifying Hedges and Hedges in OCI(b)		Total
December 31, 2007	$	-	$	27	$	27
December 31, 2008	$	-	$	3	$	3
Average for the period ended December 31, 2008	$	-	$	21	$	21

Seasonality. Revenues recognized and payments due to NJEA under the JCP&L power purchase agreement during the winter and summer seasons are substantially higher than those in spring and fall. Otherwise, the business of the Partnerships is not materially subject to seasonal factors.

~~(a)~~Environmental. Federal, ~~Trading~~state and ~~managed~~local ~~hedges~~environmental ~~are~~laws ~~essentially~~and ~~all~~regulations ~~changes~~cover inair ~~the~~and ~~derivatives'~~water ~~fair~~quality, ~~value~~land ~~for~~use, power ~~purchases~~plant and ~~sales~~transmission ~~and~~line ~~trading~~siting, ~~activities~~lead paint, ~~which~~asbestos, ~~are~~noise ~~recognized~~and onaesthetics, asolid ~~net~~waste, ~~basis~~natural inresources, ~~operating~~wildlife ~~revenues~~mortality and ~~for~~other ~~fuel~~environmental ~~purchases~~matters. Compliance ~~and~~with ~~sales~~these ~~which~~laws ~~are~~and ~~recognized~~regulations oncould aincrease ~~net~~the ~~basis~~cost inof ~~fuel~~electric ~~expense.~~service ~~(b)~~by ~~Non-qualifying~~requiring, ~~hedges~~among ~~are~~other ~~employed~~things, tochanges ~~reduce~~in the ~~market~~design ~~risk~~and ~~exposure~~operation toof ~~physical~~the ~~assets~~facilities. Environmental ~~which~~laws ~~are~~and ~~not~~regulations ~~marked~~are subject to ~~market~~change. The ~~VaR~~following ~~figures~~is ~~for~~a ~~the~~discussion ~~non-qualifying~~of ~~hedges~~emerging federal and ~~hedges~~state ininitiatives ~~OCI~~and ~~category~~rules dothat ~~not~~could ~~represent~~potentially ~~the~~affect ~~economic~~NE LP ~~exposure~~and tothe ~~commodity price movements~~Partnerships.

~~Concentration~~Climate ofChange ~~Credit~~– ~~Risk~~The -U.S. AtCongress ~~December~~and 31certain states and regions are considering several legislative and regulatory proposals that would establish new regulatory requirements and reduction targets for GHG emissions. In June 2009, ~~2008~~the U.S. House of Representatives passed the American Clean Energy and ~~2007~~Security Act of 2009 (ACESA) to encourage the development of clean energy sources and reduce GHG emissions. ACESA would establish, among other things, provisions for federal renewable energy standards for electric suppliers and a ~~majority~~national cap and trade program (a system by which affected generators buy and trade allowances under a set cap) to reduce GHG emissions. The U.S. Senate is considering similar proposals. It is not clear whether and when this or similar legislation may be enacted. The economic and operational impact of this or any similar legislation on NE LP's and the Partnerships' ~~trade~~depends ~~receivables~~on ~~were~~a ~~derived~~variety ~~from~~of ~~electricity~~factors, ~~sales~~including, but not limited to, ~~two~~the ~~utilities~~allowed ~~under~~emissions, ~~long-term~~whether ~~power~~the ~~purchase~~permitted ~~agreements~~emissions will be allocated or auctioned, ~~NSTAR~~the ~~(formerly~~cost ~~Boston~~to ~~Edison~~reduce emissions or buy allowances in the marketplace, and ~~Commonwealth)~~the availability of offsets and ~~JCP&L.~~mitigating Iffactors ~~one~~to ormoderate ~~both~~the costs of ~~these~~compliance. If ~~customers'~~and ~~receivable~~until ~~balances~~legislation ~~should~~is beenacted ~~deemed~~and ~~uncollectible~~implementing regulations are adopted, itthe ~~could~~economic ~~have~~and aoperational ~~material~~impact ~~adverse~~(either ~~effect~~positive or negative) on NE LP's and the Partnerships' ~~results~~cannot ofbe ~~operations~~determined ~~and~~but ~~financial~~could ~~condition~~be material.

~~Item~~Meanwhile, 8.the ~~Financial~~EPA ~~Statements~~is ~~and~~implementing ~~Supplementary~~regulatory ~~Data~~action ~~REPORT~~under OFthe ~~INDEPENDENT~~Clean ~~REGISTERED~~Air ~~PUBLIC~~Act ~~ACCOUNTING~~to ~~FIRM~~address ~~NORTHEAST~~climate ~~ENERGY,~~change. In LPApril ~~NORTHEAST ENERGY ASSOCIATES~~2009, ~~A LIMITED PARTNERSHIP NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP: We have audited~~ the ~~accompanying~~EPA ~~consolidated~~released ~~balance~~a ~~sheets~~proposed ofendangerment ~~Northeast~~finding ~~Energy,~~under LP Section 202(a ~~partnership~~) ~~and subsidiaries as~~ of ~~December~~the ~~31,~~Clean ~~2008~~Air ~~and~~Act ~~2007,~~that ~~and~~ the ~~related~~current ~~consolidated statements of operations, partners' equity,~~ and ~~cash~~projected ~~flows~~concentrations ~~for each~~ of ~~the~~GHG ~~three years~~ in the ~~period~~atmosphere ~~ended~~threaten ~~December~~the ~~31,~~public ~~2008,~~health and ~~the~~welfare ~~combined balance sheets~~ of ~~Northeast~~current ~~Energy~~and ~~Associates~~future (agenerations, ~~limited partnership)~~ and ~~North~~issued ~~Jersey Energy Associates (~~a ~~limited~~final ~~partnership),~~finding ~~two~~in ofDecember ~~the~~2009. The ~~subsidiaries~~final offinding ~~Northeast~~noted ~~Energy~~that, LPamong ~~(collectively,~~other ~~with Northeast Energy~~things, ~~LP,~~climate ~~"the~~change ~~Partnerships"),~~is asexpected ofto ~~December~~result ~~31,~~in ~~2008~~an ~~and~~increase ~~2007,~~in ~~and~~electricity ~~the related combined statements of operations~~production, ~~partners'~~especially ~~equity,~~supply ~~and cash flows~~ for ~~each~~peak ofdemand, ~~the~~as ~~three~~well ~~years~~as in the ~~period~~potential ~~ended~~risk ~~December~~of ~~31,~~serious ~~2008.~~adverse ~~These~~effects ~~Partnerships~~on ~~are~~energy ~~under~~infrastructure ~~common~~from ~~ownership~~extreme ~~and~~weather ~~common management~~events. In ~~These~~September ~~financial~~2009, ~~statements are~~ the ~~responsibility~~EPA ofand the ~~respective Partnership's management~~U. ~~Our responsibility is to express an opinion on these financial statements based on our audits~~S. WeDepartment ~~conducted~~of ~~our~~Transportation ~~audits~~issued ina ~~accordance~~proposed ~~with~~rule ~~the~~under ~~standards of~~ the ~~Public~~Clean ~~Company~~Air ~~Accounting~~Act ~~Oversight Board (United States). Those standards require that we plan and perform the audit~~ to ~~obtain~~regulate ~~reasonable~~GHG ~~assurance~~emissions ~~about~~from ~~whether~~light ~~the~~duty ~~financial statements are free of material misstatement~~vehicles. The ~~Partnerships~~EPA's ~~are~~proposed ~~not~~rule ~~required~~is expected to ~~have,~~be ~~nor~~finalized ~~were~~in ~~we engaged to perform~~March, anwhich ~~audit~~will ofthen ~~their~~trigger ~~internal~~certain ~~controls~~permitting ~~over~~requirements ~~financial~~under ~~reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in~~ the ~~circumstances,~~Clean ~~but~~Air ~~not~~Act for ~~the~~any ~~purpose~~new ofor ~~expressing~~modified anstationary ~~opinion~~sources ~~on the effectiveness~~ of ~~the~~GHG, ~~Partnerships'~~including ~~internal~~power ~~control over financial reporting. Accordingly~~plants, wethat ~~express~~exceed nocertain ~~such~~GHG ~~opinion.~~emissions ~~An audit also includes examining~~levels. Also, onin aSeptember ~~test basis~~2009, ~~evidence supporting~~ the ~~amounts~~EPA ~~and~~released ~~disclosures~~a inproposed ~~the~~rule ~~financial~~under ~~statements, assessing~~ the ~~accounting~~Clean ~~principles~~Air ~~used~~Act ~~and~~to ~~significant~~tailor ~~estimates~~requirements ~~made~~for byGHG ~~management,~~emissions aswhich ~~well~~would asincrease ~~evaluating~~applicability ~~the~~thresholds ~~overall~~for ~~financial~~major ~~statement~~sources ~~presentation.~~from We100 ~~believe~~or ~~that~~250 ~~our~~tons ~~audits~~per ~~provide~~year a(tpy) ~~reasonable~~to ~~basis~~25,000 ~~for our opinion~~tpy. In ~~our~~September ~~opinion~~2009, ~~such~~the ~~consolidated~~EPA ~~and~~issued ~~combined~~a ~~financial~~final ~~statements~~rule ~~present~~for ~~fairly,~~mandatory inreporting ~~all~~of ~~material~~GHG ~~respects,~~emissions ~~the~~from ~~financial~~facilities ~~position~~with emissions of ~~Northeast Energy~~25,000 LPtpy ~~and~~or ~~its~~more. Affected ~~subsidiaries~~facilities ~~and~~must ~~the~~begin ~~financial~~collecting ~~position~~data ofin ~~Northeast~~January ~~Energy~~2010 ~~Associates~~ and ~~North~~the ~~Jersey~~first ~~Energy~~emissions ~~Associates~~report asis ofdue ~~December~~on March 31, ~~2008~~2011 ~~and~~for ~~2007, and~~ the ~~results~~2010 ofperiod. NE LP ~~their respective operations~~ and ~~their~~the ~~respective~~Partnerships ~~cash~~do ~~flows~~not ~~for~~expect ~~each of~~ the ~~three~~proposed ~~years in the period ended December 31~~rules, ~~2008,~~if inenacted ~~conformity with accounting principles generally accepted~~ in ~~the~~their ~~United~~present ~~States~~form, ofto ~~America.~~have ~~DELOITTE~~a &material ~~TOUCHE~~adverse ~~LLP~~effect ~~Certified~~on ~~Public~~their ~~Accountants~~financial ~~Boca~~condition ~~Raton,~~or ~~Florida~~future ~~March~~operating ~~19, 2009~~results

~~NORTHEAST~~The ~~ENERGY~~Regional Greenhouse Gas Initiative (RGGI) is a GHG reduction initiative whereby ten Northeast and Mid-Atlantic member states, including Massachusetts and New Jersey, have established a cap and trade program for covered electric generating units. RGGI members have agreed to stabilize power plant CO2 emissions at 2009 levels through the end of 2014 and to further reduce the sector's emissions another 10% by the end of 2018. The RGGI GHG reduction requirements will affect NE LP's (Aand ~~PARTNERSHIP)~~the ~~AND~~Partnerships' ~~SUBSIDIARIES~~two ~~CONSOLIDATED~~facilities, ~~BALANCE~~requiring ~~SHEETS~~those ~~(Thousands~~facilities to reduce emissions or acquire CO2 allowances for emissions of ~~Dollars)~~CO2 beginning in 2009. All RGGI states have enacted legislation and regulations and NE LP and the Partnerships, through PMI, began participating in quarterly CO2 emissions allowance auctions in 2008. While NE LP and the Partnerships anticipate additional variable costs as a result of RGGI, they do not expect such costs to have a materially adverse affect on their financial condition or future operating results.

			December 31,
			2008		2007
ASSETS
Current assets:
	Cash and cash equivalents		$	48,186	$	45,257
	Accounts receivable			85,495		87,210
	Spare parts inventories			5,943		4,769
	Fuel inventories			10,877		8,830
	Prepaid expenses and other current assets			1,299		3,689
		Total current assets		151,800		149,755
Non-current assets:
	Deferred debt issuance costs (net of accumulated amortization of $6,191 and $5,781, respectively)			769		1,179
	Land			4,712		4,712
	Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $201,140 and $180,912, respectively)			319,420		333,548
	Power purchase agreements (net of accumulated amortization of $697,324 and $614,636, respectively)			244,032		326,720
	Other assets			3,578		4,980
		Total non-current assets		572,511		671,139
TOTAL ASSETS			$	724,311	$	820,894
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
	Current portion of notes payable - the Funding Corp.		$	54,616	$	51,801
	Current portion of notes payable - the Acquisition Corp.			26,400		22,000
	Current portion of notes payable - affiliate			3,971		3,661
	Accounts payable			1,100		11,335
	Due to related parties			30,616		26,639
	Other accrued expenses			17,025		10,841
		Total current liabilities		133,728		126,277
Non-current liabilities:
	Deferred revenue			66,944		45,479
	Notes payable - the Funding Corp.			65,223		119,839
	Note payable - the Acquisition Corp.			101,200		127,600
	Note payable - affiliate			6,595		10,566
	Other liabilities			151		151
	Lease payable			319		443
		Total non-current liabilities		240,432		304,078
COMMITMENTS AND CONTINGENCIES
Partners' equity:
	General partners			7,003		7,810
	Limited partners			343,148		382,729
		Total partners' equity		350,151		390,539
TOTAL LIABILITIES AND PARTNERS' EQUITY			$	724,311	$	820,894

During 2009, 2008 and 2007, the registrants were not required to make capital additions to comply with environmental laws and do not anticipate incurring such costs in 2010.

Competition. Competitive wholesale markets in the United States continue to evolve and vary by geographic region. Revenues from electricity sales in these markets vary based on the prices obtainable for energy, capacity and other ancillary services. Some of the factors affecting success in these markets include the ability to operate generating assets efficiently and reliably, the price and supply of fuel, transmission constraints, competition from new sources of generation, effective risk management, demand growth and exposure to legal and regulatory changes. Although substantially all of the Partnerships' output is committed under the power purchase agreements described above, these factors may adversely affect energy prices under certain power purchase agreements that are tied to the wholesale electric market prices. NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to prices under the Partnerships' power purchase agreements.

The Partnerships operate in two power pools. NEA operates in NEPOOL and NJEA operates in PJM, each of which has an independent system operator that manages the wholesale electricity market and the transmission of electricity. While legislators and state regulatory commissions will decide what impact, if any, competitive forces will have on retail transactions, the FERC has jurisdiction over potential changes which could affect competition in wholesale transactions. The FERC has approved various filings submitted by NEPOOL and PJM regarding electric industry deregulation initiatives.

In 2006, the FERC approved a settlement agreement that established a new forward capacity market in the NEPOOL region. The parties to the settlement agreement include wholesale power generators in New England, including NEA and four of the six New England states. Under the settlement agreement, capacity payments to generators will be established competitively through annual auctions, the first of which was conducted in February 2008 to purchase capacity for the twelve months starting June 1, 2010. The settlement agreement also provides for a transition period that began on December 1, 2006 and continues through May 31, 2010, during which capacity suppliers will receive fixed capacity payments, subject to penalties for forced outages during peak demand periods. The settlement agreement, as approved by the FERC, is expected to continue to result in increased gross margins for the NEA facility during the transition period. Total fixed capacity payments received under the settlement agreement were $15.0 million, $13.1 million, and $11.3 million for the periods ended December 31, 2009, 2008, and 2007, respectively.

Item 1A. Risk Factors

Risks Relating to Registrants' Business

The following are some important factors that could have a significant impact on the Acquisition Corp.'s and/or NE LP's operations and financial results, including the operations and results of the Partnerships, and could cause the Acquisition Corp.'s and/or NE LP's actual results or outcomes, including those of the Partnerships, to differ materially from those discussed in forward-looking statements made by or on behalf of the Acquisition Corp. and/or NE LP in this combined Form 10-K, in response to questions or otherwise:

The registrants are subject to complex laws and regulations and to changes in laws or regulations, as well as changing governmental policies and regulatory actions, with respect to, among other things, initiatives regarding deregulation and restructuring of the energy industry and environmental matters, including matters related to the effects of climate change, operation of generation facilities, and present or prospective competition. This substantial and complex framework exposes the registrants to increased compliance costs and potentially significant monetary penalties for non-compliance.

The registrants are subject to extensive federal, state and local environmental statutes, rules and regulations as well as the effect of changes in or additions to applicable statutes, rules and regulations that relate to, or in the future may relate to, for example, air quality, water quality, climate change, CO2 and other GHG emissions, waste management, marine and wildlife mortality, natural resources, health, safety and renewable portfolio standards that could, among other things, restrict or limit the output of the Partnerships’ facilities or the use of certain fuels required for the production of electricity and/or require additional pollution control equipment and otherwise increase costs. There are significant operating and other costs associated with compliance with these environmental statutes, rules and regulations, and those costs could be even more significant in the future. Violations of certain of these statutes, rules, and regulations could expose the registrants to third-party disputes and potentially significant monetary penalties for non-compliance.

The registrants operate in a changing market environment influenced by various legislative and regulatory initiatives regarding regulation, deregulation or restructuring of the energy industry, including, for example, deregulation or restructuring of the production and sale of electricity, as well as increased focus on renewable and clean energy sources and reduction of carbon and other GHG emissions. The registrants and the Partnerships will need to adapt to these changes and may face increasing costs and competitive pressure in doing so.

A substantial portion of the output from the Partnerships' power generation facilities is sold to two regulated utilities under five power purchase agreements, two of which terminate in 2011 and the other three in 2016. The limited number of power purchasers creates a concentration of counterparty risk. The remaining output from the power generation facilities is sold, from time to time, in the merchant markets. In addition, it is expected that upon expiration of the power purchase agreements, the residual portion of the electrical output of the generation facilities will be sold in the merchant markets. The sale of power in the merchant markets is based on market conditions at the time of sale. The amount and timing of revenues to be received from the merchant markets in the future is uncertain. Economic factors, such as the current downturn, could adversely affect energy consumption and could adversely affect the results of operations of the registrants.

The operation and maintenance of power generation facilities involve many risks, including, for example, start up risks, breakdown or failure of equipment, transmission lines or pipelines and the availability of replacement equipment, the inability to properly manage or mitigate known equipment defects in the Partnerships' generation facilities unless and until such defects are remediated, use of new or unproven technology, the dependence on a specific fuel source, such as natural gas, failure or delay in the supply or transportation of fuel, or the impact of unusual or adverse weather conditions (including natural disasters), and the risk of performance below expected or contracted levels of output or efficiency. This could result in lost revenues and/or increased expenses, including, for example, the requirement to purchase power in the market at potentially higher prices to meet contractual obligations, or lost revenues due to prolonged outages. Insurance, warranties or performance guarantees may not cover any or all of the lost revenues or increased expenses, including, for example, the cost of replacement power. Breakdown or failure of an operating facility may prevent the facility from performing under applicable power sales agreements which, in certain situations, could result in termination of the agreement or incurring a liability for liquidated damages.

NE LP and the Partnerships use derivative instruments, such as swaps, futures, and forwards, some of which are traded in the over-the-counter markets or on exchanges, to manage their commodity and financial market risks. The registrants could recognize financial losses as a result of volatility in the market values of these derivative instruments, or if a counterparty fails to perform or make payments under these derivative instruments. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these derivative instruments involves management's judgment or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these derivative instruments.

NE LP and the Partnerships have hedging procedures and associated risk management tools that may not work as planned. Risk management tools and metrics such as daily value at risk, earnings at risk, stop loss limits and liquidity guidelines are based on historical price movements. If price movements significantly or persistently deviate from historical behavior, the risk management tools may not protect against significant losses. As a result of these and other factors, the registrants cannot predict with precision the impact that risk management decisions may have on financial results.

In addition to risks discussed elsewhere, risk factors specifically affecting the registrants' success in competitive wholesale markets include, for example, the ability to efficiently operate the Partnerships’ generating facilities, the successful and timely completion of project restructuring activities, the price and supply of fuel (including transportation) and equipment, transmission constraints, competition from other and new sources of generation, excess generation capacity and shifting demand for power. There can be significant volatility in market prices for fuel, electricity and renewable and other energy commodities, and there are other financial, counterparty and market risks that are beyond the control of the registrants. The registrants' inability or failure to effectively hedge their assets or positions against changes in commodity prices, interest rates, counterparty credit risk or other risk measures could significantly impair their future financial results. In addition, the registrants' business depends upon power transmission and natural gas transportation facilities owned and operated by others; if transmission or fuel transportation is disrupted or capacity is inadequate or unavailable, the registrants' ability to sell and deliver their wholesale power may be limited or their costs may increase.

The Partnerships rely on contracts with vendors for the supply of fuel and equipment required for the operation of their facilities. If vendors fail to fulfill their contractual obligations, the registrants may need to make arrangements with other suppliers, which could result in higher costs and/or a disruption to their operations.

The registrants' results of operations are affected by changes in the weather. Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities, and can affect the production of electricity at power generation facilities. The registrants' results of operations can be affected by the impact of severe weather which can be destructive, causing outages and/or property damage, may affect fuel supply, and could require additional costs to be incurred.

The registrants are subject to costs and other potentially adverse effects of legal and regulatory proceedings, settlements, investigations and claims, as well as regulatory compliance and the effect of new, or changes in, tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements.

·	The Partnerships are subject to mandatory reliability standards promulgated by the North American Electric Reliability Corporation. Noncompliance with these mandatory reliability standards could result in sanctions, including substantial monetary penalties.

The registrants are subject to direct and indirect effects of terrorist threats and activities, as well as cyber attacks and disruptive activities of individuals and/or groups. Infrastructure facilities and systems, including, for example, generation, transmission and distribution facilities, physical assets and information systems, in general, have been identified as potential targets. The effects of these threats and activities include, but are not limited to, the inability to generate, purchase or transmit power, the risk of a significant slowdown in growth or a decline in the United States economy, delay in economic recovery in the United States, and the increased cost and adequacy of security and insurance.

·	The registrants' ability to obtain insurance, and the cost of and coverage provided by such insurance, could be adversely affected by international, national, state or local events as well as registrant-specific events.

The registrants, the Partnerships and the Funding Corp. are substantially leveraged. The ability of the registrants, the Partnerships and the Funding Corp. to make interest and principal payments and fund capital expenditures is dependent on the future performance of the Partnerships. Future performance is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the control of the registrants. The registrants, the Partnerships and the Funding Corp. are also subject to restrictive covenants under their debt agreements that will limit their ability to borrow or otherwise have access to additional funds.

All obligations of the Partnerships are non-recourse to the direct and indirect owners of the registrants. Following any default by the Partnerships, security is limited to the owners' economic interests in the Partnerships. The owners have no meaningful revenues other than the distributions they receive from the Partnerships. In the event of default, the ability of the owners to satisfy any obligations will be limited to amounts payable by the Partnerships as distributions.

The risks described herein are not the only risks facing the registrants. Additional risks and uncertainties also may materially adversely affect the Acquisition Corp.'s and/or NE LP's business, financial condition and/or future operating results.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Management of each of the registrants believes that the properties of the registrants and their subsidiaries are adequate for their operations. As of December 31, 2009, the Partnerships had the following properties:

Facility Type	Location	Principal Use

NEA facility (a)	Bellingham, MA	Power production
NEA residential properties (b)	Bellingham, MA	Private residences
NJEA facility (c)	Sayreville, NJ	Power production

——————————

(a)	Subject to the liens of a first and second mortgage.

(b)	NEA owns 12 properties, most with single-family dwellings, located on land immediately adjacent to the facility site. These properties are subject to the lien of a mortgage.

(c)	Subject to the lien of a first mortgage.

Item 3. Legal Proceedings

For information regarding legal proceedings that could have a material effect on the registrants, see Note 8 – Commitments and Contingencies – Legal Proceedings.

Item 4.

Reserved

PART II

Item 5. Market for Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

This item is not applicable to either of the registrants.

Item 6. Selected Financial Data

	Years Ended December 31,
	2009		2008		2007		2006		2005
	(Thousands of Dollars)

SELECTED CONSOLIDATED DATA OF NE LP AND SUBSIDIARIES:
Operating revenues	$	258,522	$	407,737	$	331,269	$	358,815	$	355,249
Net income	$	68,358	$	133,249	$	90,397	$	167,159	$	132,990
Total assets	$	614,956	$	724,311	$	820,894	$	975,058	$	1,052,493
Long-term debt, excluding current maturities	$	68,288	$	173,018	$	258,005	$	335,467	$	414,863
Energy bank and other liabilities	$	153	$	151	$	151	$	1,621	$	42,816

SELECTED COMBINED DATA OF THE PARTNERSHIPS:
Operating revenues	$	258,522	$	407,737	$	331,269	$	358,815	$	355,238
Net income	$	79,156	$	146,243	$	105,443	$	183,809	$	150,783
Total assets	$	614,527	$	723,539	$	819,694	$	959,670	$	1,050,305
Long-term debt, excluding current maturities	$	-	$	65,223	$	119,839	$	171,640	$	225,661
Energy bank and other liabilities	$	-	$	-	$	-	$	1,471	$	42,664

SELECTED DATA OF THE FUNDING CORP.:
Operating revenues	$	-	$	-	$	-	$	-	$	-
Net income	$	-	$	-	$	-	$	-	$	-
Total assets	$	65,224	$	119,840	$	171,641	$	264,112	$	278,303
Long-term debt, excluding current maturities	$	-	$	65,223	$	119,839	$	171,640	$	225,661

SELECTED DATA OF THE ACQUISITION CORP.:
Operating revenues	$	-	$	-	$	-	$	-	$	-
Net income	$	5	$	5	$	6	$	7	$	7
Total assets	$	101,352	$	127,752	$	149,752	$	185,471	$	184,952
Long-term debt, excluding current maturities	$	66,000	$	101,200	$	127,600	$	149,600	$	171,600

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the Notes to Consolidated and Combined Financial Statements and Notes to Financial Statements contained herein. In the discussion of Results of Operations below, all comparisons are with the corresponding items in the prior year.

Results of Operations

NE LP Consolidated

NE LP's net income for 2009, 2008 and 2007 was $68.4 million, $133.2 million and $90.4 million, respectively. Net income for 2009 decreased due to unfavorable pricing of $137.6 million due to market conditions and decreased generation of $12.5 million both of which are reflected in revenues, partially offset by decreased fuel costs, net of fuel sales, of $85.3 million primarily driven by decreased fuel prices. Net income for 2008 increased due to favorable pricing of $68.5 million which is reflected in revenues, partially offset by increased fuel costs, net of fuel sales, of $41.4 million. Net income for 2007 was affected by increased fuel costs, net of fuel sales, of $55.4 million, net unrealized mark-to-market losses of $2.3 million on derivatives and favorable pricing, primarily on purchased power, of $0.4 million which is reflected in revenues.

NE LP Consolidated – 2009 compared to 2008

In 2009, 2008 and 2007, NE LP's revenues were derived from five power purchase agreements with two regulated utilities in Massachusetts and New Jersey. Under the terms of these agreements, power from the wholesale market or generated from the Partnerships' facilities was sold to these utilities at prices specified in the contracts. The pricing under the four Massachusetts power purchase agreements is comprised of a fixed payment based on specified contract rates and a variable portion indexed to the power market. The pricing under the New Jersey power purchase agreement is indexed to fuel indices.

NE LP’s revenues for 2009 and 2008 were comprised of $258.5 million and $407.7 million of power sales to utilities, net of purchased power, respectively. Revenues decreased in 2009 compared to 2008 primarily due to unfavorable pricing of $137.6 million due to market conditions and decreased volume of $12.5 million due to decreased generation at both the NEA and NJEA facilities and a decrease of $1.3 million of other operating revenues, partially offset by an increase in capacity revenues of $2.1 million.

Fuel expense, net of fuel sales, decreased in 2009 by $85.3 million primarily due to decreased fuel prices of $77.4 million, $6.7 million due to decreased generation of power at both the NEA and NJEA facilities and $5.1 million due to increased fuel hedging activities, partially offset by $3.9 million due to decreased fuel sales.

O&M expense increased $3.2 million in 2009 compared to 2008 primarily as a result of scheduled maintenance outages at the NEA facility during the second and third quarters of 2009 coupled with the cost of compliance with the RGGI GHG reduction program. See Item 1. Environmental.

Depreciation and amortization expense increased by $1.2 million in 2009 compared to 2008 due primarily to depreciation of new assets placed in service in 2009 as well as increased amortization of the intangible assets associated with power purchase agreements.

NE LP makes scheduled interest and principal payments on its outstanding debt semiannually on June 30 and December 30. Interest expense decreased by $7.3 million due to decreasing principal balances on its outstanding debt.

Interest income decreased in 2009 compared to 2008 by $1.4 million due primarily to decreased rates of return on lower cash balances.

NE LP Consolidated – 2008 compared to 2007

NE LP's revenues for 2008 and 2007 were comprised of $407.7 million and $331.3 million of power sales to utilities, net of purchased power, respectively. Revenue increased in 2008 compared to 2007 primarily due to favorable pricing of $68.5 million and increased volume of $8.0 million due to increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility.

Fuel expense, net of fuel sales, increased in 2008 by $41.4 million primarily due to increased fuel prices and increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility.

O&M expense increased by $1.7 million in 2008 compared to 2007 primarily as a result of increased generation of power at the NJEA facility and scheduled maintenance outages at NJEA and NEA, partially offset by decreased generation of power at the NEA facility.

Depreciation and amortization expense increased by $2.3 million in 2008 compared to 2007 due primarily to increased depreciation of assets, measured on a unit of production basis, mainly resulting from increased generation at the NJEA facility, as well as increased amortization of the intangible assets associated with the power purchase agreements.

NE LP makes scheduled interest and principal payments on its outstanding debt semiannually on June 30 and December 30. Interest expense for NE LP decreased in 2008 by $7.6 million due to decreasing principal balances on its outstanding debt.

Interest income decreased in 2008 compared to 2007 by $1.0 million due primarily to decreased rates of return on lower cash balances.

In February 2007, NEA incurred costs related to damage to one of NEA's combustion turbines. In October 2008, a settlement agreement was reached with the insurance companies, net of NEA's deductible, for $1.9 million, of which $1.7 million was received in 2008. As a result, in 2008, NEA recorded a gain of $1.2 million, reduced O&M expenses by $0.4 million and reduced the carrying value of certain turbine parts by $0.3 million.

In connection with repair work performed on one of NEA's combustion turbines in November 2007, NEA recognized a loss on disposal of assets of $2.8 million in 2007. In March 2008 NEA entered into an agreement with a supplier (the Replacement Parts Agreement) under which NEA would recover up to $2.1 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts. In March 2008, NEA placed orders with the supplier for $3.6 million of replacement turbine parts, which used all of the credits under the Replacement Parts Agreement, and a $1.8 million recovery under that agreement was recorded in other income in 2008.

In connection with repair work performed on one of NEA's combustion turbines during 2007, NEA recognized a net loss on disposal of assets of $0.6 million.

In connection with an inspection of one of NEA's combustion turbines in October 2008, damage was discovered. NEA has filed a warranty claim, and the manufacturer has agreed to cover substantially all related costs for parts and labor, and accordingly, no loss on disposal of assets was recognized. The Partnerships' parts on-hand were used to replace the damaged parts.

Transcontinental Gas Pipeline Corporation (Transco) filed a new general rate case in August 2006 with the FERC. The rate case proposed rate increases for most services, fueled largely by a proposed increase of approximately $250 million in the cost of service. NEA currently holds 50,508 MMBtu/day of capacity on Transco's system, and the proposed rates would have resulted in an annual increase of approximately $0.7 million in transportation costs for NEA. NextEra Energy Resources on behalf of NEA and other plants operated by NextEra Energy Resources, filed a protest of the proposed rate increase with the FERC in September 2006. The filed rates went into effect on March 1, 2007. In August 2007, an agreement in principal was reached by the parties whereby the settled rates will result in an annual savings of $0.3 million in transportation costs for NEA from the filed rates, with the difference between any amounts paid on the filed rates and the settled rates through the date of the final settlement to be refunded to NEA. A proposed settlement agreement was submitted to the FERC which accepted the settlement agreement in March 2008, and in July 2008 NEA received a refund of $0.3 million which was recorded to fuel expense.

The Partnerships

The Partnerships' net income for 2009, 2008 and 2007 was $79.2 million, $146.2 million and $105.4 million, respectively. Net income for 2009 decreased due to unfavorable pricing of $137.6 million due to market conditions and decreased generation of $12.5 million both of which are reflected in revenues partially offset by decreased fuel costs, net of fuel sales, of $85.3 million primarily driven by decreased fuel prices. Net income for 2008 increased due to favorable pricing of $68.5 million which is reflected in revenues, partially offset by increased fuel costs, net of fuel sales, of $41.4 million. Net income for 2007 reflected increased fuel costs, net of fuel sales, of $55.4 million, net unrealized mark-to-market losses of $2.3 million on derivatives and favorable pricing primarily on purchased power of $0.4 million which is reflected in revenues.

The Partnerships – 2009 compared to 2008

In 2009, 2008 and 2007, the Partnerships' revenues were derived from five power purchase agreements with regulated utilities in Massachusetts and New Jersey. Under the terms of these agreements, power from the wholesale market or generated from the Partnerships' facilities was sold to these utilities at prices specified in the contracts. The pricing under the four Massachusetts power purchase agreements is comprised of a fixed payment based on specified contract rates and a variable portion indexed to the power market. The pricing under the New Jersey power purchase agreement is indexed to fuel indices.

The Partnership’s revenues for 2009 and 2008 were comprised of $258.5 million and $407.7 million of power sales to utilities, net of purchased power, respectively. Revenues decreased in 2009 compared to 2008 primarily due to unfavorable pricing of $137.6 million due to market conditions, and decreased volume of $12.5 million due to decreased generation at both the NEA and NJEA facilities and a decrease of $1.3 million of other operating revenues, partially offset by an increase in capacity revenues of $2.1 million.

The Partnerships make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30. Interest expense decreased by $5.2 million due to decreasing principal balances on their outstanding debt.

Interest income decreased in 2009 compared to 2008 by $1.4 million due primarily to decreased rates of return on lower cash balances.

The Partnerships – 2008 compared to 2007

The Partnerships' revenues for 2008 and 2007 were comprised of $407.7 million and $331.3 million of power sales to utilities, net of purchased power, respectively. Revenue increased in 2008 compared to 2007 primarily due to favorable pricing of $68.5 million and increased volume of $8.0 million due to increased generation of power at the NJEA facility, partially offset by decreased generation of power at the NEA facility.

The Partnerships make scheduled interest and principal payments on their outstanding debt semiannually on June 30 and December 30. Interest expense for the Partnerships decreased in 2008 by $5.5 million due to decreasing principal balances on their outstanding debt.

Interest income decreased in 2008 compared to 2007 by $0.9 million due primarily to decreased rates of return on lower cash balances.

In connection with repair work performed on one of NEA's combustion turbines in November 2007, NEA recognized a loss on disposal of assets of $2.8 million in 2007. In March 2008 NEA entered into the Replacement Parts Agreement under which NEA would recover up to $2.1 million of the losses recognized on the disposed assets as credits against the future purchase of replacement turbine parts. In March 2008, NEA placed orders with the supplier for $3.6 million of replacement turbine parts, which used all of the credits under the Replacement Parts Agreement, and a $1.8 million recovery under that agreement was recorded in other income in 2008.

In connection with repair work performed on one of NEA's combustion turbines during 2007, NEA recognized a net loss on disposal of assets of $0.6 million.

Transco filed a new general rate case in August 2006 with the FERC. The rate case proposed rate increases for most services, fueled largely by a proposed increase of approximately $250 million in the cost of service. NEA currently holds 50,508 MMBtu/day of capacity on Transco's system, and the proposed rates would have resulted in an annual increase of approximately $0.7 million in transportation costs for NEA. NextEra Energy Resources on behalf of NEA and other plants operated by NextEra Energy Resources, filed a protest of the proposed rate increase with the FERC in September 2006. The filed rates went into effect on March 1, 2007. In August 2007, an agreement in principal was reached by the parties whereby the settled rates result in an annual savings of $0.3 million in transportation costs for NEA from the filed rates, with the difference between any amounts paid on the filed rates and the settled rates through the date of the final settlement to be refunded to NEA. A proposed settlement agreement was submitted to the FERC which accepted the settlement agreement in March 2008, and in July 2008 NEA received a refund of $0.3 million which was recorded to fuel expense.

The Funding Corp. and the Acquisition Corp.

Both the Funding Corp. and the Acquisition Corp. use interest income and principal payments received from the notes receivable from the Partnerships and NE LP, respectively, to make scheduled interest and principal payments on their outstanding debt. Both are scheduled to make semiannual principal and interest payments on June 30 and December 30. Interest expense for the Funding Corp. and the Acquisition Corp. decreased in each of 2009 and 2008 as a result of decreasing principal balances on their outstanding debt.

Related Party Information

NE LP and the Partnerships receive O&M, fuel management and administrative services from entities related to NextEra Energy Resources. Payments to these entities for these services were $5.2 million, $5.3 million and $4.9 million in 2009, 2008 and 2007, respectively. For additional information see Note 5 to the Consolidated and Combined Financial Statements.

In 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power purchase agreements. Payments to PMI under that agreement are included in the payments described in the preceding paragraph. For additional information see Note 5 to the Consolidated and Combined Financial Statements.

The Partnerships receive fuel pursuant to fuel supply agreements with entities related to NextEra Energy Resources and SUEZ. For additional information see Note 3 to the Consolidated and Combined Financial Statements – Fuel Supply, Transportation and Storage Agreements.

In 2003, an affiliate of NE LP issued a $26.2 million note to NE LP to fund the payment to JCP&L in accordance with the NJEA amended and restated power purchase agreement. The related interest expense was $0.8 million, $1.1 million and $1.4 million in 2009, 2008 and 2007, respectively. See Note 4 to the Consolidated and Combined Financial Statements and Note 5 – Affiliate Debt.

As discussed in Note 4 to the Consolidated and Combined Financial Statements, the proceeds from the issuance in 1994 of the Funding Corp.'s secured notes (Funding Corp. Securities) were used to make loans to the Partnerships, and notes of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the aggregate principal amount of the Funding Corp. Securities. The related interest expense was $10.4 million, $15.5 million and $20.5 million in 2009, 2008 and 2007, respectively.

As discussed in Note 4 to the Consolidated and Combined Financial Statements, the proceeds from the issuance in 1998 of the Acquisition Corp.'s secured notes (Acquisition Corp. Securities) were loaned to NE LP and evidenced by a promissory note. The related interest expense was $9.7 million, $11.5 million and $13.3 million in 2009, 2008 and 2007, respectively.

Liquidity and Capital Resources

The Acquisition Corp. and NE LP – Cash flow generated by NE LP during 2009 was sufficient to fund operating expenses as well as fund the debt service requirements of the Acquisition Corp. and the Funding Corp. and NE LP's note payable-affiliate. Debt maturities of the Acquisition Corp. Securities and the Funding Corp. Securities will require cash outflows of approximately $182.5 million in principal and interest through 2011, including approximately $112.6 million in 2010. Debt maturity of NE LP's note payable-affiliate will require NE LP cash outflows of approximately $7.1 million in principal and interest through 2011, including approximately $4.8 million in 2010. It is anticipated that cash requirements for principal and interest payments in 2010 will be satisfied with NE LP's cash flows from operations. Operational cash flow may be affected by, among other things, changes in laws or regulations, including the PURPA, weather conditions, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, and market demand for energy. See Note 3 to Acquisition Corp.'s Financial Statements, and Note 4 to Consolidated and Combined Financial Statements – Acquisition Corp.

NE LP's capital expenditures were $18.9 million, $9.1 million and $7.5 million in 2009, 2008 and 2007, respectively. The increases in 2009 and 2008 relate primarily to capital spare parts used in maintenance outages and various equipment upgrades for the two generating facilities. Noncash additions to the facilities were $5.8 million and $2.1 million for 2009 and 2008, respectively, and NE LP anticipates making cash payments of $2.5 million in 2010, and has utilized credits from the equipment manufacturer for the remaining amounts to fund for these additions in 2009.

Letters of credit were established to satisfy requirements in certain power purchase agreements. As of December 31, 2006, one letter of credit related to an NEA power purchase agreement remained. In January 2007, NEA fulfilled its obligations under the power purchase agreement that had required the letter of credit, and the letter of credit was not renewed upon its expiration.

The Funding Corp. and the Partnerships – Cash flow generated by the Partnerships during 2009 was sufficient to fund operating expenses as well as fund the debt service requirements of the Funding Corp. Maturity of the Funding Corp. Securities will require cash outflows of approximately $70.0 million in principal and interest through December 2010 when the Funding Corp. Securities mature. It is anticipated that cash requirements for principal and interest payments in 2010 will be satisfied with the Partnerships' cash flows from operating activities. Operational cash flow may be affected by, among other things, changes in laws or regulations, including the PURPA, weather conditions, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, and market demand for energy. See Note 3 to Funding Corp.'s Financial Statements, and Note 4 to Consolidated and Combined Financial Statements – Funding Corp.

The trust indenture governing the Funding Corp. Securities contains certain restrictions on certain activities of the Partnerships, including incurring additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements and the execution of mergers, consolidations and sales of assets.

Capital expenditures for the Partnerships were $18.9 million, $9.1 million and $7.5 million in 2009, 2008 and 2007, respectively. The increases in 2009 and 2008 relate primarily to capital spare parts used in maintenance outages and various equipment upgrades for the two generating facilities. Noncash additions to the facilities were $5.8 million and $2.1 million for 2009 and 2008, respectively, and the Partnerships anticipate making cash payments of $2.5 million in 2010, and have utilized credits from the equipment manufacturer for the remaining amounts to fund for these additions in 2009.

The long-term contractual obligations of NE LP and the Partnerships at December 31, 2009 (in thousands) were as follows:

		Total		2010		2011-2012		2013-2014		Thereafter

CONTRACTUAL OBLIGATIONS
The Partnerships:
Funding Corp debt(a)		$	70,002	$	70,002	$	-	$	-	$	-
Operating leases			765		333		432		-		-
Other long-term obligations:
Administrative agreement(b)			4,800		600		1,200		1,200		1,800
O&M agreement(b)			9,000		1,500		3,000		3,000		1,500
Fuel management agreement(b)			11,700		900		1,800		1,800		7,200
Natural gas, including transportation and storage			17,169		9,353		7,816		-		-
Total Partnerships			113,436		82,688		14,248		6,000		10,500

NE LP:
Acquisition Corp debt(a)			112,538		42,583		69,955		-		-
Affiliate debt(a)			7,147		4,765		2,382		-		-
	Total NE LP		119,685		47,348		72,337		-		-
Total contractual obligations		$	233,121	$	130,036	$	86,585	$	6,000	$	10,500

——————————

(a)	Includes principal and interest.

(b)	Represents the minimum obligation under the terms of the agreement. The minimum obligation is subject to an annual inflation factor adjustment, which is excluded from the minimum obligation included in the table.

Critical Accounting Policies and Estimates

NE LP's and the Partnerships' significant accounting policies are described in Note 2 to the Consolidated and Combined Financial Statements, which were prepared in accordance with accounting principles generally accepted in the United States of America. Critical accounting policies are those that NE LP and the Partnerships believe are both most important to the portrayal of their financial condition and results of operations, and require complex, subjective judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions.

NE LP and the Partnerships consider the following policies to be the most critical in understanding the judgments that are involved in preparing their consolidated and combined financial statements.

Accounting for Derivatives and Hedging Activities – NE LP and the Partnerships use derivative instruments (primarily swaps, options, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity and to optimize the value of power generation assets and related contracts. To a lesser extent, NE LP and the Partnerships also engage in limited trading activities to take advantage of expected future favorable price movements and changes in the expected volatility of prices in the energy markets. Accounting pronouncements, which require the use of fair value accounting if certain conditions are met, apply not only to traditional financial derivative instruments, but to any contract having the accounting characteristics of a derivative.

Derivative instruments, when required to be marked to market, are recorded on NE LP's and the Partnerships' Consolidated and Combined Balance Sheets as either an asset or liability (in prepaid expenses and other current assets, other assets and other accrued expenses and other liabilities) measured at fair value. Fair values for some of the longer-term contracts where liquid markets are not available are based on internally developed models based on the forward prices for electricity and fuel. Forward prices represent the price at which a buyer or seller could contract today to purchase or sell a commodity at a future date. In general, the models estimate the fair value of a contract by calculating the present value of the difference between the contract price and the forward prices. The near term forward market for electricity is generally liquid and therefore the prices in the early years of the forward curves reflect observable market quotes. However, in the later years, the market is much less liquid and forward price curves must be developed using factors including the forward prices for the commodities used as fuel to generate electricity, the expected system heat rate (which measures the efficiency of power plants in converting fuel to electricity) in the region where the purchase or sale takes place, and a fundamental forecast of expected spot prices based on modeled supply and demand in the region. The assumptions in these models are critical since any changes therein could have a significant impact on the fair value of the contract.

Essentially all changes in the derivatives' fair value (unrealized mark-to-market gains and losses) for power purchases and sales and trading activities are recognized on a net basis in revenues, and fuel purchases and sales are recognized on a net basis in fuel expense unless hedge accounting is applied. While substantially all of NE LP's and the Partnerships' derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective in offsetting the hedged risk. Additionally, for hedges of commodity price risk, physical delivery for forecasted commodity transactions must be probable. NE LP and the Partnerships believe that where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery is deemed not to have occurred for financial reporting purposes. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis. Generally, the hedging instrument's effectiveness is assessed using regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. At December 31, 2009 and 2008, no cash flow hedges existed at NE LP and the Partnerships. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income (OCI) and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings. The ineffective portion of net unrealized gains (losses) on these hedges is reported in earnings in the current period. Settlement gains and losses are included within the line items in the statements of operations to which they relate. There were no net gains/losses on cash flow hedges in comprehensive income for the years ended December 31, 2009, 2008 and 2007. As a result, there were no differences between comprehensive income and net income for the periods presented.

Much of the existing accounting guidance related to derivatives focuses on when certain contracts for the purchase and sale of power and certain fuel supply contracts can be excluded from derivative accounting rules, however the guidance does not address all contract issues. As a result, significant judgment must be used in applying derivatives accounting guidance to contracts. In the event changes in interpretation occur, it is possible that contracts that currently are excluded from derivatives accounting rules would have to be recorded on the balance sheet at fair value, with changes in the fair value recorded in the statement of income.

See Note 2 to the Consolidated and Combined Financial Statements – Accounting for Derivatives and Hedging Activities.

Major Maintenance – Major maintenance costs for combustion turbines are capitalized and amortized on a unit of production basis based upon estimated total starts over the period from the end of the last outage to the beginning of the next planned outage. NE LP and the Partnerships capitalized major maintenance costs totaled approximately $2.6 million and $3.5 million at December 31, 2009 and 2008, respectively, and are included in other assets. For the years ended December 31, 2009, 2008 and 2007, NE LP and the Partnerships recorded major maintenance expenses of approximately $1.7 million, $2.0 million and $1.9 million, respectively.

See Note 2 to the Consolidated and Combined Financial Statements – Major Maintenance Costs.

Contract Restructurings – In prior years, NE LP and the Partnerships restructured power purchase agreements and fuel supply contracts to maximize the profitability of the Partnerships. Due to the lack of specific accounting guidance, when a contract is restructured, NE LP and the Partnerships apply accounting principles analogous to debtor’s and creditor’s accounting for a modification or exchange of debt instruments, which requires NE LP and the Partnerships to focus on changes in volume, prices and cash flows to determine whether a contract is accounted for as a termination or modification. The calculation of changes in volume, prices and cash flows, as well as the fair value of any new contract, involves the use of estimates and judgments about future events. If a contract is to be accounted for as a termination, the remaining net book value of the asset or liability is removed from the balance sheet, the cash that is exchanged between the parties is recognized as either income or expense, the fair value of the new contract is recorded on the balance sheet and a gain or loss is recognized on the statement of operations. If a contract is to be accounted for as a modification, cash that is exchanged between the parties is added to or subtracted from the basis of the asset or liability.

Energy Revenues and Purchased Power – NE LP and the Partnerships believe that where offsetting positions exist in the same location for the same time, the transactions are considered to have been netted and therefore physical delivery is deemed not to have occurred for financial reporting purposes. In these situations, NE LP and the Partnerships report energy revenues on a net basis.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

All financial instruments and positions held by NE LP and the Partnerships described below are held for purposes other than trading.

Interest Rate Risk – The fair value of the registrants', the Partnerships' and Funding Corp.'s long-term debt is affected by changes in interest rates. The following presents the sensitivity of the fair value of debt to a hypothetical 10% decrease in interest rates which is a reasonable near-term market change:

	December 31, 2009						December 31, 2008
	Carrying Value(b)		Estimated Fair Value(c)		Hypothetical Increased Estimated Fair Value(d)		Carrying Value(b)		Estimated Fair Value(c)		Hypothetical Increased Estimated Fair Value(d)
	(Thousands of Dollars)

Long-term debt, including current maturities, of NE LP / Acquisition Corp.(a)	$	107,795	$	109,584	$	110,482	$	138,166	$	138,682	$	140,540
Long-term debt, including current maturities, of Partnerships / Funding Corp.	$	65,223	$	67,253	$	67,519	$	119,839	$	125,396	$	126,306

——————————

(a)	Includes affiliate note for NE LP and Acquisition Corp. Securities.

(b)	Based on the book value of the Acquisition Corp. Securities ($101,200 and $127,600) and the affiliate note ($6,595 and $10,566) as of December 31, 2009 and 2008, respectively. Based on the book value of the Funding Corp. Securities as of December 31, 2009 and 2008, respectively.

(c)

Based on an internally developed model for the Acquisition Corp. Securities ($102,989 and $128,116) and the book value of the affiliate note ($6,595 and $10,566) as of December 31, 2009 and 2008, respectively. Based on an internally developed model for the Funding Corp. Securities as of December 31, 2009 and 2008. Bid prices were not available for 2008 and 2009 due to changes in the market.

(d)

Based on the benchmark yield and basis spread for the Acquisition Corp. Securities ($103,887 and $129,974) and the book value of the affiliate note ($6,595 and $10,566) as of December 31, 2009 and 2008, respectively. Based on the benchmark yield and basis spread for the Funding Corp. Securities as of December 31, 2009 and 2008, respectively.

Commodity Price Risk – The prices received by the Partnerships for power sales under their long-term contracts do not move precisely in tandem with the prices paid by the Partnerships for natural gas. To manage the price risk associated with purchases of natural gas and purchases of power, the Partnerships may, from time to time, enter into certain transactions either through public exchanges or by means of over-the-counter transactions with specific counterparties. The Partnerships manage their risk associated with purchases of natural gas and power through the use of natural gas and power swap agreements. The swap agreements require the Partnerships to pay a fixed price (absolutely or within a specified range) in return for a variable price on specified notional quantities of natural gas and power.

NE LP and the Partnerships use a value-at-risk (VaR) model to measure market risk in their trading and mark-to-market portfolios. The VaR is the estimated nominal loss of market value based on a one-day holding period at a 95% confidence level using historical simulation methodology. As of December 31, 2009 and 2008, the VaR figures (in thousands) are as follows:

	Trading and Managed Hedges(a)			Non-Qualifying Hedges (b)			Total

December 31, 2008		$	-		$	3		$	3
December 31, 2009		$	-		$	22		$	22
Average for the period ended December 31, 2009		$	-		$	33		$	33

——————————

(a)	Trading and managed hedges are essentially all changes in the derivatives' fair value for power purchases and sales and trading activities, which are recognized on a net basis in operating revenues and for fuel purchases and sales which are recognized on a net basis in fuel expense.

(b)	Non-qualifying hedges are employed to reduce the market risk exposure to physical assets which are not marked to market. The VaR figures for the non-qualifying hedges do not represent the economic exposure to commodity price movements.

Concentration of Credit Risk – At December 31, 2009 and 2008, a majority of NE LP's and the Partnerships' trade receivables were derived from electricity sales to two utilities under long-term power purchase agreements, NSTAR (formerly Boston Edison and Commonwealth) and JCP&L. If one or both of these customers' receivable balances should be deemed uncollectible, it could have a material adverse effect on NE LP's and the Partnerships' results of operations and financial condition.

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

NORTHEAST ENERGY, LP

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP:

We have audited the accompanying consolidated balance sheets of Northeast Energy, LP (a partnership) and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations, partners' equity, and cash flows for each of the three years in the period ended December 31, 2009, and the combined balance sheets of Northeast Energy Associates (a limited partnership) and North Jersey Energy Associates (a limited partnership), two of the subsidiaries of Northeast Energy, LP (collectively, with Northeast Energy, LP, "the Partnerships"), as of December 31, 2009 and 2008, and the related combined statements of operations, partners' equity, and cash flows for each of the three years in the period ended December 31, 2009. These Partnerships are under common ownership and common management. These financial statements are the responsibility of the respective Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the 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. The Partnerships are not required to have, nor were we engaged to perform, an audit of their internal controls over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnerships' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such consolidated and combined financial statements present fairly, in all material respects, the financial position of Northeast Energy, LP and its subsidiaries and the financial position of Northeast Energy Associates and North Jersey Energy Associates as of December 31, 2009 and 2008, and the results of their respective operations and their respective cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Certified Public Accountants

Boca Raton, Florida

March 26, 2010

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars)

	December 31,
	2009		2008

ASSETS
Current assets:
Cash and cash equivalents	$	40,454	$	48,186
Accounts receivable		66,591		85,495
Spare parts inventories		10,073		5,943
Fuel inventories		7,060		10,877
Prepaid expenses and other current assets		2,762		1,299
Total current assets		126,940		151,800

Non-current assets:
Deferred debt issuance costs (net of accumulated amortization of $6,535 and $6,191, respectively)		425		769
Land		4,712		4,712
Property, plant and equipment (net of accumulated depreciation of $221,619 and $201,140, respectively)		319,412		319,420
Power purchase agreements (net of accumulated amortization of $780,710 and $697,324, respectively)		160,646		244,032
Other assets		2,821		3,578
Total non-current assets		488,016		572,511

TOTAL ASSETS	$	614,956	$	724,311

LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable – the Funding Corp.	$	65,223	$	54,616
Current portion of notes payable – the Acquisition Corp.		35,200		26,400
Current portion of note payable – affiliate		4,307		3,971
Accounts payable		1,418		1,100
Due to related parties		25,609		30,616
Other accrued expenses		14,031		17,025
Total current liabilities		145,788		133,728

Non-current liabilities:
Deferred revenue		88,013		66,944
Notes payable – the Funding Corp.		-		65,223
Note payable – the Acquisition Corp.		66,000		101,200
Note payable – affiliate		2,288		6,595
Other liabilities		153		151
Lease payable		184		319
Total non-current liabilities		156,638		240,432

COMMITMENTS AND CONTINGENCIES

Partners' equity:
General partners		6,250		7,003
Limited partners		306,280		343,148
Total partners' equity		312,530		350,151

TOTAL LIABILITIES AND PARTNERS' EQUITY	$	614,956	$	724,311

The accompanying notes are an integral part of these consolidated financial statements.

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES ~~CONSOLIDATED STATEMENTS OF OPERATIONS (Thousands of Dollars)~~

			Years Ended December 31,
			2008			2007			2006
REVENUES			$	407,737		$	331,269		$	358,815
COSTS AND EXPENSES:
	Fuel			121,645			80,226			24,799
	Operations and maintenance			15,229			13,573			14,911
	Depreciation and amortization			103,957			101,665			98,770
	General and administrative			9,798			9,316			10,102
		Total costs and expenses		250,629			204,780			148,582
OPERATING INCOME				157,108			126,489			210,233
OTHER EXPENSE (INCOME):
	Amortization of debt issuance costs			410			474			519
	Interest expense			28,173			35,746			44,703
	Interest income			(1,553	)		(2,507	)		(2,198	)
	Other (income) expense			(3,171	)		2,379			50
		Total other expense, net		23,859			36,092			43,074
NET INCOME			$	133,249		$	90,397		$	167,159

CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of Dollars)

	Years Ended December 31,
	2009			2008			2007

REVENUES	$	258,522		$	407,737		$	331,269

COSTS AND EXPENSES:
Fuel (net of fuel sales)		36,349			121,645			80,226
Operations and maintenance		18,468			15,229			13,573
Depreciation and amortization		105,154			103,957			101,665
General and administrative		9,137			9,798			9,316
Total costs and expenses		169,108			250,629			204,780

OPERATING INCOME		89,414			157,108			126,489

OTHER EXPENSE (INCOME):
Amortization of debt issuance costs		343			410			474
Interest expense		20,836			28,173			35,746
Interest income		(123	)		(1,553	)		(2,507	)
Other (income) expense		-			(3,171	)		2,379
Total other expense, net		21,056			23,859			36,092

NET INCOME	$	68,358		$	133,249		$	90,397

The accompanying notes are an integral part of these consolidated financial statements.

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES ~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of Dollars)~~

					Years Ended December 31,
					2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	133,249		$	90,397		$	167,159
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization			104,367			102,139			99,289
			(Gain) loss on disposals of assets, net			(3,171	)		2,379			-
			Unrealized mark to market loss (gain) on derivatives			3,221			2,283			(6,058	)
			Changes in assets and liabilities:
				Accounts receivable		4,852			13,426			(24,253	)
				Prepaid expenses and other assets		(1,214	)		2,249			(3,873	)
				Accounts payable and accrued expenses		(5,202	)		(4,295	)		12,118
				Accrued interest payable		-			(19,247	)		19,247
				Deferred revenue		21,465			21,379			14,871
				Energy bank and other liabilities		-			(1,470	)		(41,195	)
				Due to related parties		3,977			3,167			(40,222	)
				Lease payable		(124	)		(111	)		(99	)
		Net cash provided by operating activities				261,420			212,296			196,984
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures					(9,126	)		(7,546	)		(2,956	)
	Proceeds from sales of assets					-			366			-
	Proceeds from insurance claim					1,734			-			-
		Net cash used in investing activities				(7,392	)		(7,180	)		(2,956	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Principal payments on notes payable - affiliate					(3,661	)		(3,375	)		(3,112	)
	Principal payments on the Acquisition Corp. notes					(22,000	)		(28,600	)		(6,600	)
	Principal payments on the Funding Corp. notes					(51,801	)		(80,342	)		(26,320	)
	Distributions to partners					(173,637	)		(131,667	)		(169,926	)
		Net cash used in financing activities				(251,099	)		(243,984	)		(205,958	)
Net increase (decrease) in cash and cash equivalents						2,929			(38,868	)		(11,930	)
Cash and cash equivalents at beginning of period						45,257			84,125			96,055
Cash and cash equivalents at end of period					$	48,186		$	45,257		$	84,125
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest				$	28,122		$	54,454		$	22,435
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
	Additions to cogeneration facilities				$	2,076		$	-		$	-
	Reclassification of cogeneration facilities to accounts receivable under warranty claim				$	3,128		$	-		$	-

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

	Years Ended December 31,
	2009			2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	68,358		$	133,249		$	90,397
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		105,498			104,367			102,139
(Gain) loss on disposals of assets, net		-			(3,171	)		2,379
Unrealized mark to market (gain) loss on derivatives		(1,845	)		3,221			2,283
Changes in assets and liabilities:
Accounts receivable		15,810			4,852			13,426
Prepaid expenses and other assets		2,688			(1,214	)		2,249
Accounts payable and accrued expenses		(4,494	)		(5,202	)		(4,295	)
Accrued interest payable		-			-			(19,247	)
Deferred revenue		21,069			21,465			21,379
Energy bank and other liabilities		-			-			(1,470	)
Due to related parties		(5,007	)		3,977			3,167
Lease payable		(135	)		(124	)		(111	)
Net cash provided by operating activities		201,942			261,420			212,296

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(18,919	)		(9,126	)		(7,546	)
Proceeds from sales of assets		-			-			366
Proceeds from insurance claim		211			1,734			-
Net cash used in investing activities		(18,708	)		(7,392	)		(7,180	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on note payable – affiliate		(3,971	)		(3,661	)		(3,375	)
Principal payments on the Acquisition Corp. notes		(26,400	)		(22,000	)		(28,600	)
Principal payments on the Funding Corp. notes		(54,616	)		(51,801	)		(80,342	)
Distributions to partners		(105,979	)		(173,637	)		(131,667	)
Net cash used in financing activities		(190,966	)		(251,099	)		(243,984	)

Net (decrease) increase in cash and cash equivalents		(7,732	)		2,929			(38,868	)
Cash and cash equivalents at beginning of period		48,186			45,257			84,125
Cash and cash equivalents at end of period	$	40,454		$	48,186		$	45,257

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	20,836		$	28,122		$	54,454

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Additions to property, plant and equipment	$	5,808		$	2,076		$	-
Transfer of property, plant and equipment to spare parts inventories	$	2,400		$	-		$	-
Transfer of property, plant and equipment to accounts receivable under warranty claim	$	443		$	3,128		$	-

The accompanying notes are an integral part of these consolidated financial statements.

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES ~~CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY Years Ended December 31, 2008, 2007 and 2006 (Thousands of Dollars)~~

		General Partners			Limited Partners			Partners' Equity
Balances, December 31, 2005		$	8,692		$	425,884		$	434,576
	Net income		3,342			163,817			167,159
	Distributions to partners		(3,398	)		(166,528	)		(169,926	)
Balances, December 31, 2006			8,636			423,173			431,809
	Net income		1,807			88,590			90,397
	Distributions to partners		(2,633	)		(129,034	)		(131,667	)
Balances, December 31, 2007			7,810			382,729			390,539
	Net income		2,665			130,584			133,249
	Distributions to partners		(3,472	)		(170,165	)		(173,637	)
Balances, December 31, 2008		$	7,003		$	343,148		$	350,151

CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY

Years Ended December 31, 2009, 2008 and 2007

(Thousands of Dollars)

	General Partners			Limited Partners			Partners' Equity

Balances, December 31, 2006	$	8,636		$	423,173		$	431,809
Net income		1,807			88,590			90,397
Distributions to partners		(2,633	)		(129,034	)		(131,667	)
Balances, December 31, 2007		7,810			382,729			390,539
Net income		2,665			130,584			133,249
Distributions to partners		(3,472	)		(170,165	)		(173,637	)
Balances, December 31, 2008		7,003			343,148			350,151
Net income		1,367			66,991			68,358
Distributions to partners		(2,120	)		(103,859	)		(105,979	)
Balances, December 31, 2009	$	6,250		$	306,280		$	312,530

The accompanying notes are an integral part of these consolidated financial statements.

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND ~~NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED BALANCE SHEETS (Thousands of Dollars)~~

			December 31,
			2008		2007
ASSETS
Current assets:
	Cash and cash equivalents		$	48,184	$	45,246
	Accounts receivable			85,495		87,210
	Spare parts inventories			5,943		4,769
	Fuel inventories			10,877		8,830
	Prepaid expenses and other current assets			1,298		3,679
		Total current assets		151,797		149,734
Non-current assets:
	Land			4,712		4,712
	Cogeneration facilities and carbon dioxide facility (net of accumulated depreciation of $201,140 and $180,912, respectively)			319,420		333,548
	Power purchase agreements (net of accumulated amortization of $697,324 and $614,636, respectively)			244,032		326,720
	Other assets			3,578		4,980
		Total non-current assets		571,742		669,960
TOTAL ASSETS			$	723,539	$	819,694
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
	Current portion of notes payable - the Funding Corp.		$	54,616	$	51,801
	Accounts payable			1,100		11,335
	Due to related parties			30,616		26,639
	Other accrued expenses			17,025		10,841
		Total current liabilities		103,357		100,616
Non-current liabilities:
	Deferred revenue			66,944		45,479
	Notes payable - the Funding Corp.			65,223		119,839
	Lease payable			319		443
		Total non-current liabilities		132,486		165,761
COMMITMENTS AND CONTINGENCIES
Partners' equity:
	General partners			4,877		5,533
	Limited partners			482,819		547,784
		Total partners' equity		487,696		553,317
TOTAL LIABILITIES AND PARTNERS' EQUITY			$	723,539	$	819,694

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

COMBINED BALANCE SHEETS

(Thousands of Dollars)

	December 31,
	2009		2008
ASSETS
Current assets:
Cash and cash equivalents	$	40,452	$	48,184
Accounts receivable		66,591		85,495
Spare parts inventories		10,073		5,943
Fuel inventories		7,060		10,877
Prepaid expenses and other current assets		2,760		1,298
Total current assets		126,936		151,797

Non-current assets:
Land		4,712		4,712
Property, plant and equipment (net of accumulated depreciation of $221,619 and $201,140, respectively)		319,412		319,420
Power purchase agreements (net of accumulated amortization of $780,710 and $697,324, respectively)		160,646		244,032
Other assets		2,821		3,578
Total non-current assets		487,591		571,742

TOTAL ASSETS	$	614,527	$	723,539

LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current portion of notes payable – the Funding Corp.	$	65,223	$	54,616
Accounts payable		1,418		1,100
Due to related parties		25,609		30,616
Other accrued expenses		14,031		17,025
Total current liabilities		106,281		103,357

Non-current liabilities:
Deferred revenue		88,013		66,944
Notes payable – the Funding Corp.		-		65,223
Lease payable		184		319
Total non-current liabilities		88,197		132,486

COMMITMENTS AND CONTINGENCIES

Partners' equity:
General partners		4,200		4,877
Limited partners		415,849		482,819
Total partners' equity		420,049		487,696

TOTAL LIABILITIES AND PARTNERS' EQUITY	$	614,527	$	723,539

The accompanying notes are an integral part of these combined financial statements.

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND ~~NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF OPERATIONS (Thousands of Dollars)~~

			Years Ended December 31,
			2008			2007			2006
REVENUES			$	407,737		$	331,269		$	358,815
COSTS AND EXPENSES:
	Fuel			121,645			80,226			24,799
	Operations and maintenance			15,229			13,573			14,911
	Depreciation and amortization			103,957			101,665			98,770
	General and administrative			9,791			9,310			10,095
		Total costs and expenses		250,622			204,774			148,575
OPERATING INCOME				157,115			126,495			210,240
OTHER EXPENSE (INCOME):
	Interest expense			15,555			21,086			28,508
	Interest income			(1,512	)		(2,413	)		(2,127	)
	Other (income) expense			(3,171	)		2,379			50
		Total other expense, net		10,872			21,052			26,431
NET INCOME			$	146,243		$	105,443		$	183,809

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

COMBINED STATEMENTS OF OPERATIONS

(Thousands of Dollars)

	Years Ended December 31,
	2009			2008			2007

REVENUES	$	258,522		$	407,737		$	331,269

COSTS AND EXPENSES:
Fuel (net of fuel sales)		36,349			121,645			80,226
Operations and maintenance		18,468			15,229			13,573
Depreciation and amortization		105,154			103,957			101,665
General and administrative		9,130			9,791			9,310
Total costs and expenses		169,101			250,622			204,774

OPERATING INCOME		89,421			157,115			126,495

OTHER EXPENSE (INCOME):
Interest expense		10,374			15,555			21,086
Interest income		(109	)		(1,512	)		(2,413	)
Other (income) expense		-			(3,171	)		2,379
Total other expense, net		10,265			10,872			21,052

NET INCOME	$	79,156		$	146,243		$	105,443

The accompanying notes are an integral part of these combined financial statements.

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND ~~NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF CASH FLOWS (Thousands of Dollars)~~

					Years Ended December 31,
					2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	146,243		$	105,443		$	183,809
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization			103,957			101,665			98,770
			(Gain) loss on disposals of assets, net			(3,171	)		2,379			-
			Unrealized mark to market loss (gain) on derivatives			3,221			2,283			(6,058	)
			Changes in assets and liabilities:
				Accounts receivable		4,852			13,426			(24,253	)
				Prepaid expenses and other assets		(1,223	)		2,251			(3,873	)
				Accounts payable and accrued expenses		(5,202	)		4,351			3,474
				Accrued interest payable		-			(12,129	)		12,129
				Deferred revenue		21,465			21,379			14,871
				Energy bank and other liabilities		-			(1,471	)		(41,193	)
				Due to related parties		3,977			3,168			(40,223	)
				Lease payable		(124	)		(111	)		(99	)
		Net cash provided by operating activities				273,995			242,634			197,354
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures					(9,126	)		(7,546	)		(2,956	)
	Proceeds from sales of assets					-			366			-
	Proceeds from insurance claim					1,734			-			-
		Net cash used in investing activities				(7,392	)		(7,180	)		(2,956	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Principal payments on notes					(51,801	)		(80,342	)		(26,320	)
	Distributions to partners					(211,864	)		(180,264	)		(193,727	)
		Net cash used in financing activities				(263,665	)		(260,606	)		(220,047	)
Net increase (decrease) in cash and cash equivalents						2,938			(25,152	)		(25,649	)
Cash and cash equivalents at beginning of period						45,246			70,398			96,047
Cash and cash equivalents at end of period					$	48,184		$	45,246		$	70,398
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest				$	15,504		$	32,674		$	13,359
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
	Additions to cogeneration facilities				$	2,076		$	-		$	-
	Reclassification of cogeneration facilities to accounts receivable under warranty claim				$	3,128		$	-		$	-

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

COMBINED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

	Years Ended December 31,
	2009			2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	79,156		$	146,243		$	105,443
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		105,154			103,957			101,665
(Gain) loss on disposals of assets, net		-			(3,171	)		2,379
Unrealized mark to market (gain) loss on derivatives		(1,845	)		3,221			2,283
Changes in assets and liabilities:
Accounts receivable		15,810			4,852			13,426
Prepaid expenses and other assets		2,689			(1,223	)		2,251
Accounts payable and accrued expenses		(4,496	)		(5,202	)		4,351
Accrued interest payable		-			-			(12,129	)
Deferred revenue		21,069			21,465			21,379
Energy bank and other liabilities		-			-			(1,471	)
Due to related parties		(5,007	)		3,977			3,168
Lease payable		(135	)		(124	)		(111	)
Net cash provided by operating activities		212,395			273,995			242,634

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(18,919	)		(9,126	)		(7,546	)
Proceeds from sales of assets		-			-			366
Proceeds from insurance claim		211			1,734			-
Net cash used in investing activities		(18,708	)		(7,392	)		(7,180	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes		(54,616	)		(51,801	)		(80,342	)
Distributions to partners		(146,803	)		(211,864	)		(180,264	)
Net cash used in financing activities		(201,419	)		(263,665	)		(260,606	)

Net (decrease) increase in cash and cash equivalents		(7,732	)		2,938			(25,152	)
Cash and cash equivalents at beginning of period		48,184			45,246			70,398
Cash and cash equivalents at end of period	$	40,452		$	48,184		$	45,246

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	10,374		$	15,504		$	32,674

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Additions to property, plant and equipment	$	5,808		$	2,076		$	-
Transfer of property, plant and equipment to spare parts inventories	$	2,400		$	-		$	-
Transfer of property, plant and equipment to accounts receivable under warranty claim	$	443		$	3,128		$	-

The accompanying notes are an integral part of these combined financial statements.

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND ~~NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP COMBINED STATEMENTS OF PARTNERS' EQUITY Years Ended December 31, 2008, 2007 and 2006 (Thousands of Dollars)~~

		General Partners			Limited Partners			Partners' Equity
Balances, December 31, 2005		$	6,381		$	631,675		$	638,056
	Net income		1,838			181,971			183,809
	Distributions to partners		(1,937	)		(191,790	)		(193,727	)
Balances, December 31, 2006			6,282			621,856			628,138
	Net income		1,054			104,389			105,443
	Distributions to partners		(1,803	)		(178,461	)		(180,264	)
Balances, December 31, 2007			5,533			547,784			553,317
	Net income		1,462			144,781			146,243
	Distributions to partners		(2,118	)		(209,746	)		(211,864	)
Balances, December 31, 2008		$	4,877		$	482,819		$	487,696

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

COMBINED STATEMENTS OF PARTNERS' EQUITY

Years Ended December 31, 2009, 2008 and 2007

(Thousands of Dollars)

		General Partners			Limited Partners			Partners' Equity

Balances, December 31, 2006		$	6,282		$	621,856		$	628,138
	Net income		1,054			104,389			105,443
	Distributions to partners		(1,803	)		(178,461	)		(180,264	)
Balances, December 31, 2007			5,533			547,784			553,317
	Net income		1,462			144,781			146,243
	Distributions to partners		(2,118	)		(209,746	)		(211,864	)
Balances, December 31, 2008			4,877			482,819			487,696
	Net income		793			78,363			79,156
	Distributions to partners		(1,470	)		(145,333	)		(146,803	)
Balances, December 31, 2009		$	4,200		$	415,849		$	420,049

The accompanying notes are an integral part of these combined financial statements.

NORTHEAST ENERGY, LP (A PARTNERSHIP) AND SUBSIDIARIES NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS Years Ended December 31, 2008, 2007 and 2006

1. Nature of Business Northeast Energy, LP (NE LP), a Delaware limited partnership, was formed in 1997 for the purpose of acquiring ownership interests in two partnerships, each of which owns an electric power generation station in the northeastern United States (Northeast Energy Associates, a limited partnership (NEA) and North Jersey Energy Associates, a limited partnership (NJEA), collectively the Partnerships). NE LP is jointly owned by subsidiaries of ESI Energy, LLC (ESI Energy) and SUEZ Energy Generation North America, Inc. (SUEZ Power). ESI Energy is wholly-owned by NextEra Energy Resources, LLC (NextEra Energy Resources), formerly known as FPL Energy, LLC, which is an indirect wholly-owned subsidiary of FPL Group, Inc., a company listed on the New York Stock Exchange. SUEZ Power is a direct wholly-owned subsidiary of GDF SUEZ Energy North America, Inc., which is a direct wholly-owned subsidiary of GDF Suez, a worldwide energy provider. NE LP also formed a wholly-owned subsidiary, Northeast Energy, LLC (NE LLC) to assist in such acquisitions. The Partnerships were formed in 1986 to develop, construct, own, operate and manage two separate nominal 300 megawatt (mw) combined-cycle cogeneration facilities. NEA's facility is located in Bellingham, Massachusetts and NJEA's facility is located in Sayreville, New Jersey. NEA and NJEA commenced commercial operation in 1991. The Partnerships operate in the independent power industry and had been granted permission by the FERC to operate as qualifying facilities (QFs) as defined in the Public Utility Regulatory Policies Act of 1978, as amended and as defined in federal regulations. In December 2003, NJEA executed an amended and restated power purchase agreement and in February 2005, NEA executed an agreement to amend and restate certain power purchase agreements and neither facility now operates as a QF. Both NJEA and NEA now have exempt wholesale generator (EWG) status and market based rate authority which allows NEA and NJEA to sell power at market rates. The partners of NE LP and the Partnerships share profits and losses and have interests in assets and liabilities and cash flows in proportion to their tax basis capital accounts. Distributions to the partners may be made only after all funding requirements of the Partnerships have been met, as described in the trust indenture relating to the debt issued by the Acquisition Corp. 2. Summary of Significant Accounting Policies Basis of Presentation - The accompanying consolidated financial statements include the accounts of NE LP and subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. The accompanying combined financial statements include the accounts of NEA and NJEA for all periods and are combined based on common ownership. All material intercompany transactions have been eliminated in the combination. Impairment of Long-Lived Assets - NE LP and the Partnerships evaluate on an ongoing basis the recoverability of their assets and related intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable as described in Statement of Financial Accounting Standards No. (FAS) 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Each of NE LP and the Partnerships concluded there was no impairment of tangible or intangible assets in 2008, 2007, and 2006. Accounting for Asset Retirement Obligations - The registrants, the Partnerships and the Funding Corp. account for asset retirement obligations and conditional asset retirement obligations (collectively AROs) under FAS 143, "Accounting for Asset Retirement Obligations" and Financial Accounting Standards Board (FASB) Interpretation No. 47 (FIN 47), "Accounting for Conditional Asset Retirement Obligations." FAS 143 requires that a liability for the fair value of an ARO be recognized in the period in which it is incurred with the offsetting associated asset retirement cost capitalized as part of the carrying amount of the long-lived asset. The asset retirement cost is subsequently allocated to expense using a systematic and rational method over its useful life. Changes in the ARO resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense. FIN 47 clarifies a conditional ARO as a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Assets and liabilities related to FIN 47 are treated in accordance with FAS 143. Cash and Cash Equivalents - Investments purchased with an original maturity of three months or less are considered cash equivalents. Excess cash is invested in high-grade money market accounts and commercial paper and is subject to minimal credit and market risk. At December 31, 2008 and 2007, the recorded amount of cash and cash equivalents approximates its fair value. Accounts Receivable and Revenue - Accounts receivable primarily consist of receivables from one Massachusetts utility and one New Jersey utility for electricity delivered and sold under five power purchase agreements. Pricing under the four amended Massachusetts power purchase agreements is comprised of a fixed payment based on specified contract rates for power delivered and a variable component indexed to the power market. The pricing under the New Jersey amended and restated power purchase agreement is based on initial floor prices per kilowatt-hour, subject to adjustment based on actual volumes of electricity purchased, fixed escalation factors, fuel indices, and other conditions. Revenue is recognized based on power delivered at rates stipulated in the power purchase agreements, except that revenue is deferred to the extent that stipulated rates are in excess of amounts, either scheduled or specified, in the agreements to the extent the Partnerships have an obligation to repay such excess. Revenue recognized is also deferred to the extent that stipulated rates under the amended power purchase agreements are higher in early years of the agreement and exceed average rates over the term of the agreement. The amount deferred is reflected on the balance sheets in deferred revenue. Power sales to utilities includes $1.8 million of revenue from the sale of emission allowances in 2006. There was no revenue from the sale of emission allowances in 2008 and 2007. The emissions allowances have no cost basis and are recognized as revenue at the time of sale. Plant and Equipment and Other Assets - The facilities and other assets are depreciated using the straight-line method over their estimated useful lives ranging from 5 to 34 years, with the exception of certain turbine parts that are depreciated on a unit of production basis based upon estimated total starts over their useful lives. Depreciation expense was $21.1 million, $20.2 million and $19.6 million for 2008, 2007 and 2006, respectively. Major Maintenance Costs - NE LP and the Partnerships use the deferral method to account for certain planned major maintenance costs. Major maintenance costs for combustion turbines are capitalized and amortized on a unit of production basis based upon estimated total starts over the period from the end of the last outage to the beginning of the next planned outage. NE LP and the Partnerships deferred major maintenance costs totaled approximately $3.5 million and $4.8 million at December 31, 2008 and 2007, respectively, and are included in other assets. For the years ended December 31, 2008, 2007 and 2006, NE LP and the Partnerships recorded major maintenance expenses of approximately $2.0 million, $1.9 million and $3.5 million, respectively. Inventories - Fuel inventories consist of natural gas and fuel oil and are stated at the lower of cost, determined on a weighted- average cost basis, or market unless evidence indicates that the weighted-average cost (even if in excess of market) will be recovered with a normal profit upon sale in the ordinary course of business. Spare parts inventories are stated at lower of cost or market and are determined by specific identification. Power Purchase Agreements - The fair value of the power purchase agreements acquired are being amortized over the respective agreement periods, ranging from 14 to 24 years, on a straight-line basis or matched to scheduled fixed-price increases under the power purchase agreements, as applicable. Deferred Debt Issuance Costs - Deferred debt issuance costs of NE LP are being amortized over the approximate 14-year term of the Acquisition Corp.'s note payable using the effective interest method. Income Taxes - Partnerships are not taxable entities for federal and state income tax purposes. As such, no provision has been made for income taxes since such taxes, if any, are the responsibilities of the individual partners. Contract Restructurings - Due to the lack of specific accounting guidance, when a contract is restructured, NE LP and the Partnerships analogize to EITF 96-19, "Debtor's Accounting for a Modification or Exchange of Debt Instruments" and EITF 01-07, "Creditor's Accounting for a Modification or Exchange of Debt Instruments" to account for the transactions. If a contract is to be accounted for as a termination, the remaining net book value of the asset or liability is removed from the balance sheet, the cash that is exchanged between the parties is recognized as either income or expense, the fair value of the new contract is recorded on the balance sheet and a gain or loss is recognized on the statement of operations. If a contract is to be accounted for as a modification, cash that is exchanged between the parties is added or subtracted to the basis of the asset or liability. Accounting for Derivatives and Hedging Activities - Derivative instruments are recorded on NE LP's and the Partnerships' consolidated and combined balance sheets as either an asset or liability (in prepaid expenses and other current assets, other assets and other accrued expenses) measured at fair value in accordance with FAS 133 (as amended and interpreted). NE LP and the Partnerships use derivative instruments (primarily swaps, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity. In addition, NE LP and the Partnerships use derivatives to optimize the value of power generation assets. All changes in the derivatives' fair value (unrealized mark-to-market gains and losses) for power purchases and sales are recognized on a net basis in revenues, and fuel purchases and sales are recognized on a net basis in fuel expense unless hedge accounting is applied. While substantially all of NE LP's and the Partnerships' derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge at inception and it must be highly effective in offsetting the hedged risk. Additionally, for hedges of commodity price risk, physical delivery for forecasted commodity transactions must be probable. NE LP and the Partnerships believe that where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis. Generally, the hedging instrument's effectiveness is assessed using regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. At December 31, 2008 and 2007, no cash flow hedges existed at NE LP and the Partnerships. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings. The ineffective portion of the net unrealized gains (losses) on these hedges is reported in earnings in the current period. Settlement gains and losses are included within the line items in the statements of operations to which they relate. Unrealized mark-to-market losses, net, on derivative transactions were $3.2 million for the year ended December 31, 2008. The current portion of the derivative liability was $0.9 million at December 31, 2008 and is included in the combined and consolidated balance sheets under other accrued expenses. There was not a non-current component of the derivative liability at December 31, 2008. Unrealized mark-to-market losses, net, on derivative transactions were $2.3 million for the year ended December 31, 2007. The current portion of the derivative asset was $2.4 million at December 31, 2007 and is included in the combined and consolidated balance sheets under prepaid expenses and other current assets. There was not a non-current component of the derivative asset at December 31, 2007. Unrealized mark-to-market gains, net, on derivative transactions were $6.1 million for the year ended December 31, 2006. Natural Gas Hedging Instruments - Periodic settlements on natural gas swap agreements are recognized as adjustments to fuel costs at monthly settlement dates. Purchases of natural gas under forward purchase agreements are accounted for as fuel costs at their contract price at delivery. See Note 6. Fair Value Measurements - Effective January 1, 2008, NE LP and the Partnerships adopted FAS 157, "Fair Value Measurements," which clarifies how to measure fair value and requires expanded fair value measurement disclosures. The standard emphasizes that fair value is a market-based measurement not an entity-specific measurement, and sets out a fair value hierarchy intended to disclose information about the relative reliability of fair value measurements, with the highest priority being quoted prices in active markets for identical assets or liabilities. FAS 157 was effective January 1, 2008 for financial assets and liabilities, and any other fair value measurements made on a recurring basis and on January 1, 2009 for non-financial assets and liabilities that are not remeasured on a recurring basis. The adoption of the recognition provisions of FAS 157 did not have a material effect on NE LP and the Partnerships' financial statements. See Note 7. The Fair Value Option for Financial Assets and Financial Liabilities - In February 2007, the FASB issued FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities," which permits, but does not require, entities to account for financial assets and liabilities at fair value. The standard does not extend to non-financial instruments. NE LP and the Partnerships were permitted to adopt FAS 159 on January 1, 2008. NE LP and the Partnerships did not elect to account for any existing financial assets or liabilities under FAS 159 at January 1, 2008 but may elect to account for new financial assets and liabilities at fair value in the future. See Note 7. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. Cogeneration Facilities, Power Purchase Agreements and Carbon Dioxide Facility Power Purchase Agreements - In 1986, NEA entered into three power purchase agreements with three Massachusetts utilities, and in 1988, NEA entered into two power purchase agreements with two Massachusetts utilities. Under the five power purchase agreements, NEA agreed to sell approximately 290 mw per year at initial floor prices per kwh subject to adjustment based on actual volumes purchased, fixed escalation factors and other conditions. Performance under certain of these agreements is secured by a second mortgage on the NEA facility. In 1987, NJEA entered into an agreement with a New Jersey utility to sell approximately 250 mw per year at an initial fixed price per kwh subject to adjustments, as defined in the agreement. These power purchase agreements have initial terms with expiration dates ranging from 2011 to 2016. The majority of the Partnerships' power sales to utilities are generated through these agreements. As such, the Partnerships are directly affected by changes in the power generation industry. Substantially all of the Partnerships' accounts receivable are with these utilities. The Partnerships do not require collateral or other security to support these receivables. However, management does not believe significant credit risk exists at December 31, 2008. Restructuring of the NJEA power purchase agreement occurred in 2003 as discussed below. Restructuring of four of the NEA power purchase agreements, as discussed below, and termination of the remaining NEA power purchase agreement occurred in 2005. In 2003, NJEA's agreement with the New Jersey utility to amend and restate the power purchase agreement became effective. The agreement provides for, among other things, the ability to deliver electricity to the utility from sources other than NJEA's facility at NJEA's discretion. In accordance with the agreement, NJEA paid $26.2 million to the New Jersey utility through a cash contribution by NE LP. NE LP received funding through a loan to NE LP from an affiliate of NE LP which matures in June 2011. In connection with this restructuring, NJEA amended its remaining long-term natural gas supply agreement and terminated the long-term natural gas supply agreements with SEMNA and PMI in 2004. Under the terms of the amended long-term natural gas supply agreement, the supplier will provide all of the fuel required to run the facility when it is operating. In 2005, the amended and restated power purchase agreements among NEA as seller, and Boston Edison Company (Boston Edison) and Commonwealth Electric Company (Commonwealth) as utility purchasers became effective. Effective January 1, 2007, Boston Edison and Commonwealth became one utility, NSTAR Electric Company (NSTAR). The amended and restated agreements provide for, among other things, NEA obtaining the right to source power from the wholesale market in addition to sourcing power from NEA's facility. Affiliates of NE LP's partners paid approximately $29.9 million to the utility purchasers in the form of loans to NE LP in the same amount due on December 31, 2005. This payment is capitalized as part of the power purchase agreement's intangible asset on the balance sheet at December 31, 2005. These loans were repaid with interest in April 2005 from funds otherwise available for NE LP partnership distributions. As a result of the amended and restated power purchase agreements, NE LP and the Partnerships adopted EITF 91-6, "Revenue Recognition of Long-Term Power Sales Contracts", which requires NE LP and the Partnerships to recognize revenue as the lesser of the amount billable under the agreement or the estimated average revenue over the term of the agreement. Consequently, NE LP and the Partnerships recognized a reduction to revenue of $21.5 million, $21.4 million and $14.9 million for the years ended December 31, 2008, 2007 and 2006, respectively. For the years ended December 31, 2008, 2007 and 2006, power sale revenues from two different utilities accounted for approximately 38% and 40%, 37% and 40%, and 36% and 47%, respectively, of NE LP's and the Partnerships' total consolidated and combined revenues excluding energy bank revenues. Both Massachusetts and New Jersey have enacted legislation designed to deregulate the production and sale of electricity. While NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to prices under the Partnerships' power purchase agreements, the impact of electric utility industry restructuring on the companies that purchase power from the Partnerships is uncertain. Energy Bank Balance - As of December 31, 2006, one of the NEA power purchase agreements continued to have an energy bank and recorded cumulative payments made by the utility in excess of avoided cost rates scheduled or specified in such agreement. Amortization of the energy bank was based on power provided under the power purchase agreement and the avoided cost rates specified in the agreement. As of December 31, 2008 and 2007, there was no longer any energy bank balance. Amortization was $1.5 million and $37.6 million in 2007 and 2006, respectively. The energy bank balance bore interest at a rate specified in the agreement, and was partially secured by a letter of credit. In accordance with the power purchase agreement, NEA satisfied its energy bank obligations in January 2007 and the related letter of credit expired. Fuel Supply, Transportation and Storage Agreements - Natural gas is provided to the NEA and NJEA facilities primarily under long-term contracts for supply, transportation and storage. The remaining fuel requirements are provided under short-term spot arrangements. The long-term natural gas supply is provided under contracts with PSE&G, PMI and SEMNA. Various pipeline companies provide transportation of the natural gas. Natural gas storage agreements provide contractual arrangements for the storage of limited volumes of natural gas with third parties for future delivery to the Partnerships. The PSE&G contract commenced in 1991 and provided for the sale and delivery to NJEA of up to 25,000 MMBtu/day of natural gas for a term of 20 years. The contract price of the PSE&G natural gas is established monthly using a contractually specified mechanism. In connection with the amended and restated power purchase agreement mentioned above, in 2003, NJEA amended its long-term natural gas supply agreement with PSE&G. Under the terms of the amended agreement, PSE&G provides all of the fuel required to operate the facility when NJEA decides it is economically beneficial to do so. NJEA is required to pay a monthly fee of $0.2 million to PSE&G regardless of whether fuel is purchased during the month. Total charges under NJEA's contract with PSE&G, including transportation costs, during 2008, 2007 and 2006, were approximately $97.8 million, $55.6 million and $27.7 million, respectively. NEA entered into two long-term natural gas supply agreements with PMI and SEMNA in 2005 that enable NEA to purchase sufficient fuel for production. Fuel purchased under agreements between NEA and PMI and SEMNA was $273.9 million, $188.5 million and $161.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, and are included on the Consolidated and Combined Statements of Operations in fuel expense. ESI Northeast Fuel, an indirect wholly-owned subsidiary of NextEra Energy Resources, is the fuel manager for the Partnerships and provides fuel management and administrative services by contracting with PMI. In 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power purchase agreements. NEA's long-term fuel contractual arrangements call for monthly demand charge payments and are included on the Consolidated and Combined Statements of Operations in fuel expense. These demand charge payments reserve certain pipeline transportation capacity and are made regardless of NEA's specified fuel requirements in any month and regardless of whether NEA uses the capacity reserved. These demand charges totaled approximately $13.7 million, $13.1 million and $12.6 million for the years ended December 31, 2008, 2007 and 2006, respectively. NEA's facility also has the capability to burn No. 2 fuel oil which is stored on site for contingency supply. 4. Loans Payable Funding Corp. - The proceeds from the Funding Corp.'s secured notes (Funding Corp. Securities) were used to make loans to the Partnerships, and notes of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. The Funding Corp., and, thus, the Partnerships, have borrowings outstanding as follows:

NORTHEAST ENERGY ASSOCIATES, A LIMITED PARTNERSHIP AND

	December 31,
	2008		2007
	(in thousands)
9.77% Senior Secured Bonds Due 2010, Series A	$	119,839	$	171,640
Less current maturities		54,616		51,801
Long-term debt, excluding current maturities	$	65,223	$	119,839

NORTH JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP

~~Interest~~NOTES onTO ~~the~~CONSOLIDATED ~~Funding~~AND ~~Corp.~~COMBINED ~~Securities~~FINANCIAL is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture. As of December 31, 2008, future principal payments (in thousands) are as follows:STATEMENTS

Year ending December 31:
2009	$	54,616
2010		65,223
Total	$	119,839

Years Ended December 31, 2009, 2008 and 2007

The Funding Corp. Securities are not subject to optional redemption but are subject to mandatory redemption in certain limited circumstances involving the occurrence of an event of loss, as defined in the trust indenture, for which the Partnerships fail to or are unable to restore a facility. The Funding Corp. Securities are unconditionally guaranteed, jointly and severally, by the Partnerships and are secured by a lien on, and a security interest in, substantially all of the assets of the Partnerships. The Partnerships are jointly and severally required to make scheduled payments to the Funding Corp. on the notes on dates and in amounts identical to the scheduled payments of principal and interest on the Funding Corp. Securities. The Funding Corp. Securities, the guarantees thereon provided by the Partnerships and the Partnerships' notes are nonrecourse to the partners and are payable solely from the collateral pledged as security. The trust indenture governing the Funding Corp. Securities contains certain restrictions on certain activities of the Partnerships, including incurring additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements and the execution of mergers, consolidations and sales of assets. The more significant restrictions on distributions require funding of all current operating expenses, major overhaul reserves, debt service requirements, and sustaining a minimum debt service coverage ratio. Distributions also may be restricted by defined percentages in the trust indenture if minimum debt service coverage ratios are not met. Acquisition Corp. - During 1998, the Acquisition Corp. issued $220 million of 7.99% Secured Bonds Due 2011, Series B (Acquisition Corp. Securities) for the purpose of reimbursing certain partners of NE LP for a portion of the $545 million in equity contributions used to acquire the Partnerships. The proceeds from the Acquisition Corp. Securities were loaned to NE LP and evidenced by a promissory note. Interest on the Acquisition Corp. Securities is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture. The Acquisition Corp. Securities are subject to optional redemption by the Acquisition Corp. at the direction of NE LP after June 30, 2008 at the redemption prices set forth in the trust indenture and are subject to extraordinary mandatory redemption by the Acquisition Corp. at a redemption price of 100% of the principal amount thereof in certain limited circumstances as defined in the trust indenture. The Acquisition Corp. Securities are unconditionally guaranteed by NE LP and are payable solely from payments to be made by NE LP under the promissory note. NE LP's obligations to make payments under the promissory note are nonrecourse to the direct and indirect owners of NE LP. Payments with respect to the NE LP promissory note and, therefore, in respect of the Acquisition Corp. Securities are effectively subordinated to payment of all indebtedness and other liabilities and commitments of the Partnerships, including the guarantee by the Partnerships of their indebtedness. Repayment of the Acquisition Corp. Securities is guaranteed by all interests in the Partnerships. The Acquisition Corp. Securities rank senior to all subordinated indebtedness and rank evenly with all senior indebtedness that the Acquisition Corp. incurs in the future. Affiliate Debt - In December 2003, an affiliate of NE LP issued a $26.2 million note to NE LP to fund the payment to the New Jersey utility in accordance with NJEA's amended and restated power purchase agreement. NJEA paid the New Jersey utility $26.2 million through a cash contribution from NE LP. The loan has an interest rate of 8.46% and is due in June 2011 with principal and interest payments due semiannually. Interest expense was $1.1 Nature ~~million, $1.4 million and $1.7 million in 2008, 2007 and 2006, respectively. As~~ of ~~December 31, 2008, future principal payments (in thousands) by NE LP are as follows:~~Business

	Acquisition Corp. Securities		Note to Affiliate		Total
Year ending December 31:
2009	$	26,400	$	3,971	$	30,371
2010		35,200		4,307		39,507
2011		66,000		2,288		68,288
Total		127,600		10,566	$	138,166
Current portion		26,400		3,971
Long term portion	$	101,200	$	6,595

Northeast Energy, LP (NE LP), a Delaware limited partnership, was formed in 1997 for the purpose of acquiring ownership interests in two partnerships, each of which owns an electric power generation station in the northeastern United States (Northeast Energy Associates, a limited partnership (NEA) and North Jersey Energy Associates, a limited partnership (NJEA), collectively the Partnerships). NE LP is jointly owned by subsidiaries of ESI Energy, LLC (ESI Energy) and GDF SUEZ Energy Generation North America, Inc. (SUEZ Power). ESI Energy is wholly-owned by NextEra Energy Resources, LLC (NextEra Energy Resources), formerly known as FPL Energy, LLC, which is an indirect wholly-owned subsidiary of FPL Group, Inc., a company listed on the New York Stock Exchange. SUEZ Power is a direct wholly-owned subsidiary of GDF SUEZ Energy North America, Inc., which is a direct wholly-owned subsidiary of GDF SUEZ, SA, a worldwide energy provider. NE LP also formed a wholly-owned subsidiary, Northeast Energy, LLC (NE LLC) to assist in such acquisitions.

5.The Related Party Information Administrative Services Agreement - NE LP and an entity related to NextEra Energy Resources have entered into an administrative services agreement that provides for management and administrative services to the Partnerships. ~~The~~were ~~agreement,~~formed ~~which expires~~ in ~~2018,~~1986 ~~provides for fees of a minimum of $0.6 million per year, subject~~ to ~~certain adjustments~~develop, ~~and reimbursement of costs and expenses of performing services. For the years ended December 31~~construct, ~~2008~~own, ~~2007~~operate and ~~2006,~~manage ~~the~~two ~~Partnerships~~separate ~~incurred~~nominal ~~$0.9~~300 ~~million,~~megawatt ~~$0.8~~(mw) ~~million and $0.8 million, respectively, in fees and reimbursed costs and expenses under the agreement. O&M Agreements~~ combined-cycle NEcogeneration ~~LP and an entity related to NextEra Energy Resources have entered into O&M agreements that provide for the operations and maintenance of the Partnerships~~facilities. NEA's ~~The~~facility ~~agreements~~is ~~expire~~located in ~~2016~~Bellingham, ~~subject~~Massachusetts to extension by mutual agreement of the parties before six months preceding expiration. The agreements provide for fees of a minimum of $0.8 million per year, subject to certain adjustments, for each Partnership and ~~reimbursement~~NJEA's offacility ~~costs~~is ~~and~~located ~~expenses~~in ~~of performing services. For the years ended December 31~~Sayreville, ~~2008,~~New ~~2007 and 2006, the Partnerships incurred $2~~Jersey.2 NEA ~~million, $2.0 million~~ and ~~$1.8~~NJEA ~~million,~~commenced ~~respectively,~~commercial operation in ~~fees and reimbursed costs and expenses under the agreements~~1991. Fuel Management Agreements - NE LP has entered into fuel management agreements with an entity related to NextEra Energy Resources that provide for the management of all natural gas and fuel oil, transportation and storage agreements, and the location and purchase of any additional required natural gas or fuel oil for the Partnerships. The agreements, which expire in 2023, provide for fees of a minimum of $0.5 million per year, subject to certain adjustments, for each Partnership and reimbursement of costs and expenses of performing services. For the years ended December 31, 2008, 2007 and 2006, the Partnerships ~~incurred~~operate ~~$1.3 million, $1.2 million and $1.2 million, respectively,~~ in ~~fees and reimbursed costs and expenses under~~ the ~~agreements.~~independent On February 28, 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power ~~purchase~~industry ~~agreements. This agreement provides for fees for all natural gas purchased~~ and ~~sold,~~had ~~whether~~been ~~physical~~granted orpermission financial, and resulting from the purchase and sale of power, to compensate PMI for its costs of credit. Fees under the agreement were $1.0 million, $0.9 million and $1.1 million for the years ending December 31, 2008, 2007 and 2006, respectively. Power Sales - From time to time, PMI will purchase excess power produced or acquired from the wholesale market by the ~~Partnerships~~FERC ~~and resell the power~~ to ~~the~~operate ~~marketplace.~~as ~~These~~qualifying ~~purchases~~facilities ~~totaled~~(QFs) ~~$163.9~~as ~~million,~~defined ~~$106.0 million and $61.6 million~~ in 2008, 2007 and 2006, respectively. Fuel Contracts - As discussed in Note 3, in 2005, NEA entered into two long-term natural gas supply agreements with PMI and SEMNA that enabled NEA to purchase sufficient fuel for production. Fuel purchased under these agreements was $273.9 million, $188.5 million and $161.0 million in 2008, 2007 and 2006, respectively. O&M of the ~~Cogeneration~~Public ~~Facilities~~Utility -Regulatory AnPolicies ~~entity~~Act related to NextEra Energy Resources provides O&M services for the Partnerships. The Partnerships incurred $15.2 million, $13.6 million and $14.9 million for O&M expense for the years ended December 31, 2008, 2007 and 2006, respectively, of ~~which $5.4 million~~1978, ~~$4.4~~as ~~million~~amended and ~~$4.2~~as ~~million,~~defined ~~respectively, represented salaries reimbursed to the O&M provider. The Partnerships pay a management fee to NE LP~~ in anfederal ~~amount equal to the fees under the administrative services, O&M and fuel management agreements mentioned above~~regulations. Accrued expenses under the administrative services, O&M and fuel management agreements were $0.5 million, $0.6 million and $0.5 million at December 31, 2008, 2007 and 2006, respectively. Affiliate Debt - In December 2003, NENJEA LPexecuted ~~borrowed approximately $26.2 million from Northern Cross Investments, Inc.,~~ an ~~affiliate of one of the partners of NE LP, to fund the payment to a New Jersey utility in accordance with NJEA's~~ amended and restated power purchase agreement. ~~The loan, which is junior~~ and ~~subordinated to the Acquisition Corp. Securities, has an interest rate of 8.46% and is due~~ in ~~June~~February ~~2011 with principal and interest payments due semiannually on June 30 and December 30 of each year. Interest expense was $1.1 million~~2005, ~~$1.4~~NEA ~~million~~executed and $1.7 million in 2008, 2007 and 2006, respectively. The proceeds from the Funding Corp.'s Securities were used to make loans to the Partnerships, and notes of the Partnerships were issued to the Funding Corp. in an ~~aggregate~~agreement ~~principal amount equal~~ to ~~the~~amend ~~Funding Corp. Securities. Interest expense was $15.5 million, $20.5 million~~ and ~~$25.5~~restate ~~million~~certain inpower ~~2008,~~purchase ~~2007~~agreements and ~~2006,~~neither ~~respectively.~~facility ~~The~~now ~~proceeds~~operates ~~from~~as ~~the~~a ~~Acquisition~~QF ~~Corp.~~or ~~Securities~~as ~~were loaned to NE LP and evidenced by~~ a ~~promissory~~cogeneration ~~note~~facility. Both ~~Interest~~NJEA ~~expense was $11.5 million, $13.3 million~~ and ~~$14.5~~NEA ~~million~~now ~~in 2008, 2007 and 2006, respectively. 6. Financial Instruments The Partnerships~~ have ~~made~~exempt ~~use~~wholesale ofgenerator ~~derivative~~(EWG) ~~financial~~status ~~instruments to hedge their exposure to fluctuations in the price of natural gas related to the natural gas storage~~ and ~~transportation assets. In an effort to optimize the value of the natural gas storage assets, NEA typically purchases natural gas on the open~~ market ~~during~~based ~~the~~rate ~~summer~~authority ~~months when prices are generally lower and stores this natural gas in inventory. The Partnerships have entered into certain forward natural gas sales contracts~~ which ~~meet~~allows ~~the~~NEA ~~definition of a derivative under FAS 133 to hedge the exposure of price movement on the storage natural gas until the natural gas is withdrawn from storage~~ and ~~sold~~NJEA ~~physically. Unrealized mark-~~to~~-market~~ ~~losses,~~sell ~~net,~~power ~~on derivative transactions were $3.2 million for the year ended December 31, 2008. The current portion of the derivative liability is $0.9 million~~ at December 31, 2008 and is included in the combined and consolidated balance sheets under other accrued expenses. There was not a non-current component of the derivative liability at December 31, 2008. Unrealized mark-to-market ~~losses, net, on derivative transactions were $2~~rates.3 million for the year ended December 31, 2007. The current portion of the derivative asset was $2.4 million at December 31, 2007 and is included in the combined and consolidated balance sheets under prepaid expenses and other current assets. There was not a non-current component of the derivative asset at December 31, 2007. Unrealized mark-to-market gains, net, on derivative transactions were $6.1 million for the year ended December 31, 2006. The following estimates of the fair value of financial instruments have been made using available market information and other valuation methodologies. However, the use of different market assumptions or methods of valuation could result in different estimated fair values.

		December 31,
		2008				2007
		Carrying Amount(b)		Estimated Fair Value(d)		Carrying Amount(b)		Estimated Fair Value(c)
		(Thousands of Dollars)
Long-term debt, including current maturities, of NE LP/Acquisition Corp. (a)		$	138,166	$	138,682	$	163,827	$	167,567
Long-term debt, including current maturities, of Partnerships/Funding Corp.		$	119,839	$	125,396	$	171,640	$	181,338
(a)	Includes affiliate note for NE LP and Acquisition Corp. Securities.
(b)	Based on the book value of the Acquisition Corp. Securities ($127,600 and $149,600) and the affiliate note ($10,566 and $14,227) as of December 31, 2008 and 2007, respectively. Based on the book value of the Funding Corp. Securities as of December 31, 2008 and 2007, respectively.
(c)	Based on the bid price of the Acquisition Corp. Securities ($153,340) and the book value of the affiliate note ($14,227) as of December 31, 2007. Based on the bid price of the Funding Corp. Securities as of December 31, 2007.
(d)	Based on an internally developed model for the Acquisition Corp. Securities ($128,116) and the book value of the affiliate note ($10,566) as of December 31, 2008. Based on an internally developed model for the Funding Corp. Securities as of December 31, 2008. Bid prices were not available for 2008 due to recent changes in the market.

The partners of NE LP and the Partnerships share profits and losses and have interests in assets and liabilities and cash flows in proportion to their tax basis capital accounts. Distributions to the partners may be made only after all funding requirements of the Partnerships have been met, as described in the trust indenture relating to the debt issued by the Acquisition Corp.

7. Fair Value Measurements Effective January 1, 2008, NE LP and the Partnerships adopted FAS 157, "Fair Value Measurements," which clarifies how to measure fair value and requires expanded fair value measurement disclosures. The standard emphasizes that fair value is a market-based measurement not an entity-specific measurement, and sets out a fair value hierarchy intended to disclose information about the relative reliability of fair value measurements, with the highest priority being quoted prices in active markets for identical assets or liabilities. FAS 157 was effective January 1, 2008 for financial assets and liabilities, and any other fair value measurements made on a recurring basis and on January 1, 2009 for non-financial assets and liabilities that are not remeasured on a recurring basis. The adoption of the recognition provisions of FAS 157 did not have a material effect on NE LP and the Partnerships' financial statements. As of December 31, 2008 and 2007, NE LP and the Partnerships had cash equivalents with a fair value of $30 million and $45 million, respectively. The value of these assets is based upon quoted prices in active markets for identical assets. As of December 31, 2008, all other financial assets, liabilities and other fair value measurements made on a recurring basis at NE LP and the Partnerships were deemed to be immaterial. NE LP and the Partnerships were permitted to adopt FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities" on January 1, 2008. NE LP and the Partnerships did not elect to account for any existing financial assets or liabilities under FAS 159 at January 1, 2008, but may elect to account for new financial assets and liabilities at fair value in the future. 8. Commitments and Contingencies Loan Collateral - The NEA power purchase agreements are also secured by a second mortgage on the NEA cogeneration facilities. In addition, on August 31, 2007, a letter of credit for loan collateral was renewed with a face amount of $27.5 million as of December 31, 2007 and $26.2 ~~million as of December 31, 2008~~. Summary ~~This letter~~ of ~~credit~~Significant ~~expires~~Accounting on December 31, 2010 and can be drawn upon in multiple drawings in the event that insufficient funds are available in the Partnership's trust accounts to pay bond interest and principal. Contracts - NEA has entered into several long-term natural gas sales contracts. NEA is committed to sell approximately 1.5 million MMBtu of natural gas annually through 2011. A guaranty was made by a subsidiary of FPL Group in favor of the trustee under the indenture relating to the Acquisition Corp. Securities. The guarantor unconditionally and irrevocably guarantees the payment of an amount equal to 50% of the debt service reserve requirement with respect to the Acquisition Corp. Securities. The guaranty expired on December 31, 2005. However, it has been automatically extended, and will be automatically extended, for successive one-year periods unless the guarantor gives notice that it will not renew. Pursuant to a reimbursement agreement, NE LP has agreed to repay any amounts paid under such guaranty. Operating Lease - NEA entered into a 26-year operating lease in 1986 for a parcel of land. The lease may be extended for another 25 years at the option of NEA at a base rent to be agreed upon by the parties at the time of the extension. Lease payments (in thousands) under this non-cancelable operating lease through 2012 are as follows:Policies

Year ending December 31:
2009	$	321
2010		333
2011		345
2012		87
Total	$	1,086

Basis of Presentation – The accompanying consolidated financial statements include the accounts of NE LP and subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. The accompanying combined financial statements include the accounts of NEA and NJEA for all periods and are combined based on common ownership. All material intercompany transactions have been eliminated in the combination.

~~Lease~~Impairment ~~expense~~of ~~under~~Long-Lived ~~this~~Assets ~~agreement~~– isNE LP ~~recognized~~and onthe aPartnerships ~~straight~~evaluate ~~line~~on ~~levelized~~an ongoing basis the recoverability of ~~approximately~~their ~~$0.2~~assets ~~million~~and ~~annually~~related ~~over~~intangible assets for impairment whenever events or changes in circumstances indicate that the ~~lease~~carrying ~~term~~amount may not be recoverable. Under 9the applicable accounting guidance, an impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset. The ~~Quarterly~~impairment ~~Data~~loss ~~(Unaudited)~~to ~~Condensed~~be ~~consolidated~~recognized ~~quarterly~~is ~~financial~~the ~~information~~amount ~~for~~by ~~2008~~which the carrying value of the long-lived asset exceeds the asset’s fair value. Each of NE LP and ~~2007~~the isPartnerships asconcluded ~~follows:~~there was no impairment of tangible or intangible assets in 2009, 2008, and 2007.

		March 31 (a)			June 30 (a)			September 30 (a)			December 31 (a)
		(Thousands of Dollars)
NE LP:
2008
Operating revenues(b)			$	116,671		$	103,839		$	119,595		$	67,633
Operating income(b)			$	41,553		$	35,378		$	50,207		$	29,969
Net income(b)			$	36,264		$	28,209		$	43,894		$	24,880
2007
Operating revenues(b)			$	62,659		$	80,131		$	106,434		$	82,045
Operating income(b)			$	31,538		$	32,813		$	37,464		$	24,674
Net income(b)			$	22,015		$	24,052		$	29,495		$	14,865
The Partnerships:
2008
Operating revenues(b)			$	116,671		$	103,839		$	119,595		$	67,633
Operating income(b)			$	41,553		$	35,378		$	50,207		$	29,976
Net income(b)			$	39,647		$	31,568		$	47,021		$	28,006
2007
Operating revenues(b)			$	62,659		$	80,131		$	106,434		$	82,045
Operating income(b)			$	31,539		$	32,820		$	37,464		$	24,672
Net income(b)			$	25,909		$	27,937		$	33,106		$	18,491
(a)	In the opinion of NE LP and the Partnerships, all adjustments, which consist of normal recurring accruals necessary to present a fair statement of the amounts shown for such periods have been made. Results of operations for an interim period may not give a true indication of results for the year.
(b)	The sum of the quarterly amounts may not equal the total for the year due to rounding.

Accounting for Asset Retirement Obligations – The registrants, the Partnerships and the Funding Corp. account for asset retirement obligations and conditional asset retirement obligations (collectively AROs) under accounting guidance that requires a liability for the fair value of an ARO be recognized in the period in which it is incurred with the offsetting associated asset retirement cost capitalized as part of the carrying amount of the long-lived asset. The asset retirement cost is subsequently allocated to expense using a systematic and rational method over its useful life. Changes in the ARO resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense which is included in deprecation and amortization expense in the statement of income. The accounting guidance also clarifies that a conditional ARO is a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity.

~~REPORT~~Cash ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ESI TRACTEBEL FUNDING CORP.: We have audited the accompanying balance sheets of ESI Tractebel Funding Corp. (the "Company") as of December 31, 2008~~ and ~~2007,~~Cash ~~and~~Equivalents ~~the~~– ~~related~~Investments ~~statements~~purchased ofwith ~~operations~~an ~~and~~original ~~cash~~maturity ~~flows for each~~ of ~~the~~ three ~~years~~months inor ~~the~~less ~~period ended December 31, 2008. These financial statements~~ are ~~the~~considered ~~responsibility~~cash ~~of the Company's management~~equivalents. Excess ~~Our~~cash ~~responsibility~~ is toinvested ~~express an opinion on these financial statements based on our audits. We conducted our audits~~ in ~~accordance~~high-grade ~~with~~money ~~the~~market ~~standards~~accounts ofand ~~the~~commercial ~~Public~~paper ~~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. The Company~~ is ~~not~~subject ~~required~~ to ~~have,~~minimal ~~nor~~credit were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and ~~disclosures~~market ~~in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation~~risk. At We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of ESI Tractebel Funding Corp. as of December 31, ~~2008~~2009 and ~~2007~~2008, ~~and~~ the ~~results~~recorded amount of ~~its~~cash ~~operations~~ and ~~its~~ cash ~~flows~~equivalents ~~for~~approximates ~~each~~its offair ~~the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America~~value. ~~DELOITTE & TOUCHE LLP Certified Public Accountants Boca Raton, Florida March 19, 2009~~

~~ESI~~Accounts ~~TRACTEBEL~~Receivable ~~FUNDING~~and ~~CORP~~Revenue – Accounts receivable primarily consist of receivables from one Massachusetts utility and one New Jersey utility for electricity delivered and sold under five power purchase agreements. Pricing ~~BALANCE~~under ~~SHEETS~~the ~~(Thousands~~four amended Massachusetts power purchase agreements is comprised of ~~Dollars)~~a fixed payment based on specified contract rates for power delivered and a variable component indexed to the power market. The pricing under the New Jersey amended and restated power purchase agreement is based on initial floor prices per kilowatt-hour, subject to adjustment based on actual volumes of electricity purchased, fixed escalation factors, fuel indices, and other conditions. Revenue is recognized based on power delivered at rates stipulated in the power purchase agreements, except that revenue is deferred to the extent that stipulated rates are in excess of amounts, either scheduled or specified, in the agreements to the extent the Partnerships have an obligation to repay such excess. Revenue recognized is also deferred to the extent that stipulated rates under the amended power purchase agreements are higher in early years of the agreement and exceed average rates over the term of the agreement. The amount deferred is reflected on the balance sheets in deferred revenue. Power sales to utilities includes $1.8 million of revenue from the sale of emission allowances in 2006. There was no revenue from the sale of emission allowances in 2009, 2008 and 2007. The emissions allowances have no cost basis and are recognized as revenue at the time of sale.

			December 31,
			2008		2007
ASSETS
Current assets:
	Cash		$	1	$	1
	Current portion of notes receivable from the Partnerships			54,616		51,801
		Total current assets		54,617		51,802
Notes receivable from the Partnerships				65,223		119,839
TOTAL ASSETS			$	119,840	$	171,641
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Current portion of debt securities payable		$	54,616	$	51,801
		Total current liabilities		54,616		51,801
Debt securities payable				65,223		119,839
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
	Common stock, no par value, 10,000 shares authorized, issued and outstanding			1		1
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	119,840	$	171,641

Property, Plant and Equipment and Other Assets – The facilities and other assets are depreciated using the straight-line method over their estimated useful lives ranging from 5 to 34 years, with the exception of certain turbine parts that are depreciated on a unit of production basis based upon estimated total starts over their useful lives. Depreciation expense was $21.6 million, $21.1 million and $20.2 million for 2009, 2008 and 2007, respectively.

Major Maintenance Costs – NE LP and the Partnerships use the deferral method to account for certain planned major maintenance costs.

Major maintenance costs for combustion turbines are capitalized and amortized on a unit of production basis based upon estimated total starts over the period from the end of the last outage to the beginning of the next planned outage. NE LP and the Partnerships capitalized major maintenance costs, net of accumulated amortization, totaled approximately $2.6 million and $3.5 million at December 31, 2009 and 2008, respectively, and are included in other assets. For the years ended December 31, 2009, 2008 and 2007, NE LP and the Partnerships recorded major maintenance expenses of approximately $1.7 million, $2.0 million and $1.9 million, respectively.

Inventories – Fuel inventories consist of natural gas and fuel oil and are stated at the lower of cost, determined on a weighted- average cost basis, or market unless evidence indicates that the weighted-average cost (even if in excess of market) will be recovered with a normal profit upon sale in the ordinary course of business. Spare parts inventories are stated at lower of cost or market and are determined by specific identification.

Power Purchase Agreements – The fair value of the power purchase agreements acquired are being amortized over the respective agreement periods, ranging from 14 to 24 years, on a straight-line basis or matched to scheduled fixed-price increases under the power purchase agreements, as applicable.

Deferred Debt Issuance Costs – Deferred debt issuance costs of NE LP are being amortized over the approximate 14-year term of the Acquisition Corp.'s note payable using the effective interest method.

Income Taxes – Partnerships are not taxable entities for federal and state income tax purposes. As such, no provision has been made for income taxes since such taxes, if any, are the responsibilities of the individual partners.

Contract Restructurings – Due to the lack of specific accounting guidance, when a contract is restructured, NE LP and the Partnerships apply accounting principles analogous to a debtor’s and creditor’s accounting for a modification or exchange of debt instruments, which requires NE LP and the Partnerships to focus on changes in volume, prices and cash flows to determine whether a contract is accounted for as a termination or modification. If a contract is to be accounted for as a termination, the remaining net book value of the asset or liability is removed from the balance sheet, the cash that is exchanged between the parties is recognized as either income or expense, the fair value of the new contract is recorded on the balance sheet and a gain or loss is recognized on the statement of operations. If a contract is to be accounted for as a modification, cash that is exchanged between the parties is added to or subtracted from the basis of the asset or liability.

Derivative instruments when required to be marked to market, are recorded on NE LP's and the Partnerships' Consolidated and Combined Balance Sheets as either an asset or liability (in prepaid expenses and other current assets, other assets and other accrued expenses and other liabilities) measured at fair value. Fair values for some of the longer-term contracts where liquid markets are not available are based on internally developed models based on the forward prices for electricity and fuel. Forward prices represent the price at which a buyer or seller could contract today to purchase or sell a commodity at a future date. In general, the models estimate the fair value of a contract by calculating the present value of the difference between the contract price and the forward prices. The near term forward market for electricity is generally liquid and therefore the prices in the early years of the forward curves reflect observable market quotes. However, in the later years, the market is much less liquid and forward price curves must be developed using factors including the forward prices for the commodities used as fuel to generate electricity, the expected system heat rate (which measures the efficiency of power plants in converting fuel to electricity) in the region where the purchase or sale takes place, and a fundamental forecast of expected spot prices based on modeled supply and demand in the region. The assumptions in these models are critical since any changes therein could have a significant impact on the fair value of the contract.

Essentially all changes in the derivatives' fair value (unrealized mark-to-market gains and losses) for power purchases and sales and trading activities are recognized on a net basis in revenues, and fuel purchases and sales are recognized on a net basis in fuel expense unless hedge accounting is applied. While substantially all of NE LP's and the Partnerships' derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective in offsetting the hedged risk. Additionally, for hedges of commodity price risk, physical delivery for forecasted commodity transactions must be probable. NE LP and the Partnerships believe that where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis. Generally, the hedging instrument's effectiveness is assessed using regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. At December 31, 2009 and 2008, no cash flow hedges existed at NE LP and the Partnerships. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income (OCI) and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings. The ineffective portion of net unrealized gains (losses) on these hedges is reported in earnings in the current period. Settlement gains and losses are included within the line items in the statements of operations to which they relate. There were no net gains/losses on cash flow hedges in comprehensive income for the years ended December 31, 2009, 2008 and 2007. As a result, there were no differences between comprehensive income and net income for the periods presented.

Unrealized mark-to-market gains, net, on derivative transactions were $1.8 million for the year ended December 31, 2009 and is included in fuel expense (net of fuel sales). The current portion of the derivative liability was $0.2 million at December 31, 2009 and is included in the consolidated and combined balance sheets under other accrued expenses. The current portion of the derivative asset was $1.2 million at December 31, 2009 and is included in the consolidated and combined balance sheets under prepaid expenses and other current assets. There was not a non-current component of the derivative liability at December 31, 2009. Unrealized mark-to-market losses, net, on derivative transactions were $3.2 million for the year ended December 31, 2008. The current portion of the derivative liability was $0.9 million at December 31, 2008 and is included in the consolidated and combined balance sheets under other accrued expenses. There was not a non-current component of the derivative asset at December 31, 2008. Unrealized mark-to-market losses, net, on derivative transactions were $2.3 million for the year ended December 31, 2007.

Natural Gas Hedging Instruments – Periodic settlements on natural gas swap agreements are recognized as adjustments to fuel costs at monthly settlement dates. Purchases of natural gas under forward purchase agreements are accounted for as fuel costs at their contract price at delivery. See Note 6.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3. Property, Plant and Equipment and Power Purchase Agreements

Power Purchase Agreements – In 1986, NEA entered into three power purchase agreements with three Massachusetts utilities, and in 1988, NEA entered into two power purchase agreements with two Massachusetts utilities. Under the five power purchase agreements, NEA agreed to sell approximately 290 mw per year at initial floor prices per kwh subject to adjustment based on actual volumes purchased, fixed escalation factors and other conditions. Performance under certain of these agreements is secured by a second mortgage on the NEA facility. In 1987, NJEA entered into an agreement with a New Jersey utility to sell approximately 250 mw per year at an initial fixed price per kwh subject to adjustments, as defined in the agreement. These power purchase agreements have initial terms with expiration dates ranging from 2011 to 2016. The majority of the Partnerships' power sales to utilities are generated through these agreements. As such, the Partnerships are directly affected by changes in the power generation industry. Substantially all of the Partnerships' accounts receivable are with these utilities. The Partnerships do not require collateral or other security to support these receivables. However, management does not believe significant credit risk exists at December 31, 2009. Restructuring of the NJEA power purchase agreement occurred in 2003 as discussed below. Restructuring of four of the NEA power purchase agreements, as discussed below, and termination of the remaining NEA power purchase agreement occurred in 2005.

In 2003, NJEA's agreement with the New Jersey utility to amend and restate the power purchase agreement became effective. The agreement provides for, among other things, the ability to deliver electricity to the utility from sources other than NJEA's facility at NJEA's discretion. In accordance with the agreement, NJEA paid $26.2 million to the New Jersey utility through a cash contribution by NE LP. NE LP received funding through a loan to NE LP from an affiliate of NE LP which matures in June 2011. In connection with this restructuring, NJEA amended its remaining long-term natural gas supply agreement with PSE&G and terminated the long-term natural gas supply agreements with SEMNA and PMI in 2004. Under the terms of the amended long-term natural gas supply agreement, PSEG will provide all of the fuel required to run the facility when it is operating.

In 2005, the amended and restated power purchase agreements among NEA as seller, and Boston Edison Company (Boston Edison) and Commonwealth Electric Company (Commonwealth) as utility purchasers became effective. Effective January 1, 2007, Boston Edison and Commonwealth became one utility, NSTAR Electric Company (NSTAR). The amended and restated agreements provide for, among other things, NEA obtaining the right to source power from the wholesale market in addition to sourcing power from NEA's facility. Affiliates of NE LP's partners paid approximately $29.9 million to the utility purchasers in the form of loans to NE LP in the same amount due on December 31, 2005. This payment is capitalized as part of the power purchase agreement's intangible asset on the balance sheet at December 31, 2005. These loans were repaid with interest in April 2005 from funds otherwise available for NE LP partnership distributions. As a result of the amended and restated power purchase agreements, NE LP and the Partnerships adopted accounting and disclosure provisions for revenue recognition of long-term power sales contracts, which requires NE LP and the Partnerships to recognize revenue as the lesser of the amount billable under the agreement or the estimated average revenue over the term of the agreement. Consequently, NE LP and the Partnerships recognized a reduction to revenue of $21.1 million, $21.5 million and $21.4 million for the years ended December 31, 2009, 2008 and 2007, respectively.

For the years ended December 31, 2009, 2008 and 2007, power sale revenues from two different utilities accounted for approximately 47% and 40%, 38% and 40%, and 37% and 40%, respectively, of NE LP's and the Partnerships' total consolidated and combined revenues excluding energy bank revenues.

Both Massachusetts and New Jersey have enacted legislation designed to deregulate the production and sale of electricity. While NE LP and the Partnerships do not expect electric utility industry restructuring to result in any material adverse change to prices under the Partnerships' power purchase agreements, the impact of electric utility industry restructuring on the companies that purchase power from the Partnerships is uncertain.

Energy Bank Balance – As of December 31, 2006, one of the NEA power purchase agreements continued to have an energy bank and recorded cumulative payments made by the utility in excess of avoided cost rates scheduled or specified in such agreement. Amortization of the energy bank was based on power provided under the power purchase agreement and the avoided cost rates specified in the agreement. As of December 31, 2009 and 2008, there was no longer any energy bank balance. Amortization was $1.5 million in 2007. The energy bank balance bore interest at a rate specified in the agreement, and was partially secured by a letter of credit. In accordance with the power purchase agreement, NEA satisfied its energy bank obligations in January 2007 and the related letter of credit expired.

Fuel Supply, Transportation and Storage Agreements – Natural gas is provided to the NEA and NJEA facilities primarily under long-term contracts for supply, transportation and storage. The remaining fuel requirements are provided under short-term spot arrangements. The long-term natural gas supply is provided under contracts with PSE&G, PMI and SEMNA. Various pipeline companies provide transportation of the natural gas. Natural gas storage agreements provide contractual arrangements for the storage of limited volumes of natural gas with third parties for future delivery to the Partnerships.

The PSE&G contract commenced in 1991 and provided for the sale and delivery to NJEA of up to 25,000 MMBtu/day of natural gas for a term of 20 years. The contract price of the PSE&G natural gas is established monthly using a contractually specified mechanism.

In connection with the amended and restated power purchase agreement mentioned above, in 2003, NJEA amended its long-term natural gas supply agreement with PSE&G. Under the terms of the amended agreement, PSE&G provides all of the fuel required to operate the facility when NJEA decides it is economically beneficial to do so. NJEA is required to pay a monthly fee of $0.2 million to PSE&G regardless of whether fuel is purchased during the month. Total charges under NJEA's contract with PSE&G, including transportation costs, during 2009, 2008 and 2007, were approximately $33.2 million, $97.8 million and $55.6 million, respectively.

NEA entered into two long-term natural gas supply agreements with PMI and SEMNA in 2005 that enable NEA to purchase sufficient fuel for production. Fuel purchased under agreements between NEA and PMI and SEMNA was $128.1 million, $273.9 million and $188.5 million for the years ended December 31, 2009, 2008 and 2007, respectively, and are included on the Consolidated and Combined Statements of Operations in fuel expense.

ESI Northeast Fuel, an indirect wholly-owned subsidiary of NextEra Energy Resources, is the fuel manager for the Partnerships and provides fuel management and administrative services by contracting with PMI. In 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power purchase agreements.

NEA's long-term fuel contractual arrangements call for monthly demand charge payments and are included on the Consolidated and Combined Statements of Operations in fuel expense. These demand charge payments reserve certain pipeline transportation capacity and are made regardless of NEA's specified fuel requirements in any month and regardless of whether NEA uses the capacity reserved. These demand charges totaled approximately $7.4 million, $13.7 million and $13.1 million for the years ended December 31, 2009, 2008 and 2007, respectively.

NEA's facility also has the capability to burn No. 2 fuel oil which is stored on site for contingency supply.

4. Loans Payable

Funding Corp. – The proceeds from the Funding Corp.'s secured notes (Funding Corp. Securities) were used to make loans to the Partnerships, and notes of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. The Funding Corp., and, thus, the Partnerships, have borrowings outstanding as follows:

	December 31,
	2009		2008
	(in thousands)
9.77% Senior Secured Bonds Due 2010, Series A	$	65,223	$	119,839
Less current maturities		65,223		54,616
Long-term debt, excluding current maturities	$	-	$	65,223

Interest on the Funding Corp. Securities is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture. As of December 31, 2009, there were two remaining future principal payments of $32.6 million each on June 30 and December 30, 2010.

The Funding Corp. Securities are unconditionally guaranteed, jointly and severally, by the Partnerships and are secured by a lien on, and a security interest in, substantially all of the assets of the Partnerships. The Partnerships are jointly and severally required to make scheduled payments to the Funding Corp. on the notes on dates and in amounts identical to the scheduled payments of principal and interest on the Funding Corp. Securities. The Funding Corp. Securities, the guarantees thereon provided by the Partnerships and the Partnerships' notes are nonrecourse to the partners and are payable solely from the collateral pledged as security.

The more significant restrictions on distributions require funding of all current operating expenses, major overhaul reserves, debt service requirements, and sustaining a minimum debt service coverage ratio. Distributions also may be restricted by defined percentages in the trust indenture if minimum debt service coverage ratios are not met.

Acquisition Corp. – During 1998, the Acquisition Corp. issued $220 million of 7.99% Secured Bonds Due 2011, Series B (Acquisition Corp. Securities) for the purpose of reimbursing certain partners of NE LP for a portion of the $545 million in equity contributions used to acquire the Partnerships. The proceeds from the Acquisition Corp. Securities were loaned to NE LP and evidenced by a promissory note. Interest on the Acquisition Corp. Securities is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture.

The Acquisition Corp. Securities are subject to optional redemption by the Acquisition Corp. at the direction of NE LP after June 30, 2008 at the redemption prices set forth in the trust indenture and are subject to extraordinary mandatory redemption by the Acquisition Corp. at a redemption price of 100% of the principal amount thereof in certain limited circumstances as defined in the trust indenture.

The Acquisition Corp. Securities are unconditionally guaranteed by NE LP and are payable solely from payments to be made by NE LP under the promissory note. NE LP's obligations to make payments under the promissory note are nonrecourse to the direct and indirect owners of NE LP. Payments with respect to the NE LP promissory note and, therefore, in respect of the Acquisition Corp. Securities are effectively subordinated to payment of all indebtedness and other liabilities and commitments of the Partnerships, including the guarantee by the Partnerships of the Funding Corp.’s indebtedness. Repayment of the Acquisition Corp. Securities is secured by all interests in the Partnerships. The Acquisition Corp. Securities rank senior to all subordinated indebtedness and rank evenly with all senior indebtedness that the Acquisition Corp. incurs in the future.

Affiliate Debt – In December 2003, an affiliate of NE LP issued a $26.2 million note to NE LP to fund the payment to JCP&L in accordance with NJEA's amended and restated power purchase agreement. NJEA paid JCP&L $26.2 million through a cash contribution from NE LP. The loan has an interest rate of 8.46% and is due in June 2011 with principal and interest payments due semiannually. Interest expense was $0.8 million, $1.1 million and $1.4 million in 2009, 2008 and 2007, respectively.

As of December 31, 2009, future principal payments (in thousands) by NE LP are as follows:

	Acquisition Corp. Securities		Note to Affiliate		Total
Year ending December 31:
2010	$	35,200	$	4,307	$	39,507
2011		66,000		2,288		68,288
Total		101,200		6,595	$	107,795
Current portion		35,200		4,307
Long term portion	$	66,000	$	2,288

5. Related Party Information

Administrative Services Agreement – NE LP and an entity related to NextEra Energy Resources have entered into an administrative services agreement that provides for management and administrative services to the Partnerships. The agreement, which expires in 2018, provides for fees of a minimum of $0.6 million per year, subject to certain adjustments, and reimbursement of costs and expenses of performing services. For the years ended December 31, 2009, 2008 and 2007, the Partnerships incurred $0.8 million, $0.9 million and $0.8 million, respectively, in fees and reimbursed costs and expenses under the agreement.

O&M Agreements – NE LP and an entity related to NextEra Energy Resources have entered into O&M agreements that provide for the operations and maintenance of the Partnerships. The agreements expire in 2016, subject to extension by mutual agreement of the parties before six months preceding expiration. The agreements provide for fees of a minimum of $0.8 million per year, subject to certain adjustments, for each Partnership and reimbursement of costs and expenses of performing services. For the years ended December 31, 2009, 2008 and 2007, the Partnerships incurred $2.1 million, $2.2 million and $2.0 million, respectively, in fees and reimbursed costs and expenses under the agreements.

Fuel Management Agreements – NE LP has entered into fuel management agreements with an entity related to NextEra Energy Resources that provide for the management of all natural gas and fuel oil, transportation and storage agreements, and the location and purchase of any additional required natural gas or fuel oil for the Partnerships. The agreements, which expire in 2023, provide for fees of a minimum of $0.5 million per year, subject to certain adjustments, for each Partnership and reimbursement of costs and expenses of performing services. For the years ended December 31, 2009, 2008 and 2007, the Partnerships incurred $1.3 million, $1.3 million and $1.2 million, respectively, in fees and expenses under the agreements.

In February 2005, a supplemental fuel management subcontract agreement was entered into to allow PMI to purchase energy, ancillary services and capacity from the NEA facility or from the marketplace and sell to the purchasers under the NEA amended and restated power purchase agreements. This agreement provides for fees for all natural gas purchased and sold, whether physical or financial, and resulting from the purchase and sale of power, to compensate PMI for its costs of credit. Fees under the agreement were $1.0 million, $1.0 million and $0.9 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Power Sales – From time to time, PMI will purchase excess power produced or acquired from the wholesale market by the Partnerships and resell the power to the marketplace. These purchases totaled $51.5 million, $163.9 million and $106.0 million in 2009, 2008 and 2007, respectively.

Fuel Contracts – As discussed in Note 3, in 2005, NEA entered into two long-term natural gas supply agreements with PMI and SEMNA that enable NEA to purchase sufficient fuel for production. Fuel purchased under these agreements was $128.1 million, $273.9 million and $188.5 million in 2009, 2008 and 2007, respectively.

O&M of the Facilities – An entity related to NextEra Energy Resources provides O&M services for the Partnerships. The Partnerships incurred $18.5 million, $15.2 million and $13.6 million for O&M expense for the years ended December 31, 2009, 2008 and 2007, respectively, of which $5.6 million, $5.4 million and $4.4 million, respectively, represented salaries reimbursed to the O&M provider.

The Partnerships pay a management fee to NE LP in an amount equal to the fees under the administrative services, O&M and fuel management agreements mentioned above.

Accrued expenses under the administrative services, O&M and fuel management agreements were $0.6 million, $0.5 million and $0.6 million at December 31, 2009, 2008 and 2007, respectively.

Affiliate Debt – In December 2003, NE LP borrowed approximately $26.2 million from Northern Cross Investments, Inc., an affiliate of one of the partners of NE LP, to fund the payment to JCP&L in accordance with NJEA's amended and restated power purchase agreement. The loan, which is junior and subordinated to the Acquisition Corp. Securities, has an interest rate of 8.46% and is due in June 2011 with principal and interest payments due semiannually on June 30 and December 30 of each year. Interest expense was $0.8 million, $1.1 million and $1.4 million in 2009, 2008 and 2007, respectively.

The proceeds from the Funding Corp. Securities were used to make loans to the Partnerships, and notes of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. Interest expense was $10.4 million, $15.5 million and $20.5 million in 2009, 2008 and 2007, respectively.

The proceeds from the Acquisition Corp. Securities were loaned to NE LP and evidenced by a promissory note. Interest expense was $9.7 million, $11.5 million and $13.3 million in 2009, 2008 and 2007, respectively.

6. Financial Instruments

The Partnerships have made use of derivative financial instruments to hedge their exposure to fluctuations in the price of natural gas related to the natural gas storage and transportation assets. In an effort to optimize the value of the natural gas storage assets, NEA typically purchases natural gas on the open market during the summer months when prices are generally lower and stores this natural gas in inventory. The Partnerships have entered into certain forward natural gas sales contracts which meet the definition of a derivative instrument under applicable accounting guidance used to hedge the exposure of price movement on the storage natural gas until the natural gas is withdrawn from storage and sold physically. See Note 2.

Unrealized mark-to-market gains, net, on derivative transactions were $1.8 million for the year ended December 31, 2009. The current portion of the derivative liability is $0.2 million at December 31, 2009 and is included in the consolidated and combined balance sheets under other accrued expenses. The current portion of the derivative asset was $1.2 million at December 31, 2009 and is included in the consolidated and combined balance sheets under prepaid expenses and other current assets. There was not a non-current component of the derivative asset or liability at December 31, 2009.

Unrealized mark-to-market losses, net, on derivative transactions were $3.2 million for the year ended December 31, 2008. The current portion of the derivative liability was $0.9 million at December 31, 2008 and is included in the consolidated and combined balance sheets under other accrued expenses. There was not a non-current component of the derivative liability at December 31, 2008. Unrealized mark-to-market losses, net, on derivative transactions were $2.3 million for the year ended December 31, 2007.

The following estimates of the fair value of financial instruments have been made using available market information and other valuation methodologies. However, the use of different market assumptions or methods of valuation could result in different estimated fair values.

The Partnerships adopted new accounting and disclosure provisions related to the fair value of financial instruments beginning April 1, 2009.

	December 31,
	2009				2008
	Carrying Amount(b)		Estimated Fair Value(c)		Carrying Amount(b)		Estimated Fair Value(c)
	(Thousands of Dollars)

Long-term debt, including current maturities, of NE LP/Acquisition Corp.(a)	$	107,795	$	109,584	$	138,166	$	138,682
Long-term debt, including current maturities, of Partnerships/Funding Corp.	$	65,223	$	67,253	$	119,839	$	125,396

——————————

(a)	Includes affiliate note for NE LP and Acquisition Corp. Securities.

(b)	Based on the book value of the Acquisition Corp. Securities ($101,200 and $127,600) and the affiliate note ($6,595 and $10,566) as of December 31, 2009 and 2008, respectively. Based on the book value of the Funding Corp. Securities as of December 31, 2009 and 2008, respectively.

(c)

Based on an internally developed model for the Acquisition Corp. Securities ($102,989 and $128,116) and the book value of the affiliate note ($6,595 and $10,566) as of December 31, 2009 and 2008, respectively. Based on an internally developed model for the Funding Corp. Securities as of December 31, 2009 and 2008, respectively. Bid prices were not available for 2008 and 2009 due to changes in the market.

7. Fair Value Measurements

As of December 31, 2009 and 2008, NE LP and the Partnerships had cash equivalents with a fair value of $39.0 million (excluding cash of $1.5 million) and $30.3 million (excluding cash of $17.9 million), respectively. The value of these assets is based upon quoted prices in active markets for identical assets and equals the carrying value which is considered a level one input. In addition, the carrying value of accounts receivable and accounts payable, accrued expenses and due to related parties approximate their fair value due to the short maturity of these instruments. As of December 31, 2009, all other financial assets, liabilities and other fair value measurements made on a recurring basis at NE LP and the Partnerships were deemed to be immaterial.

8. Commitments and Contingencies

Loan Collateral – The NEA power purchase agreements are also secured by a second mortgage on the NEA facilities. In addition, on August 31, 2007, a letter of credit for loan collateral was renewed with a face amount of $26.2 million as of December 31, 2008 and $26.6 million as of December 31, 2009. This letter of credit expires on December 31, 2010 and can be drawn upon in multiple drawings in the event that insufficient funds are available in the Partnership's trust accounts to pay bond interest and principal.

Contracts – NEA has entered into several long-term natural gas sales contracts. NEA is committed to sell approximately 1.5 million MMBtu of natural gas annually through 2011.

The proceeds from the Acquisition Corp. Securities were loaned to NE LP and evidenced by a promissory note. The Acquisition Corp. Securities are unconditionally guaranteed by NE LP and are payable solely from payments to be made by NE LP under the promissory note or guaranty. NE LP's obligations to make payments under the promissory note are nonrecourse to the direct and indirect owners of NE LP. Payments with respect to the promissory note and, therefore, in respect of the Acquisition Corp. Securities are effectively subordinated to payment of all indebtedness and other liabilities and commitments of the Partnerships, including the guarantee by the Partnerships of the Funding Corp.’s indebtedness. Repayment of the Acquisition Corp. Securities is secured by all interests in the Partnerships. The Acquisition Corp. Securities rank senior to all subordinated indebtedness and rank evenly with all senior indebtedness that the Acquisition Corp. incurs in the future.

Operating Lease – NEA entered into a 26-year operating lease in 1986 for a parcel of land. The lease may be extended for another 25 years at the option of NEA at a base rent to be agreed upon by the parties at the time of the extension. Lease payments (in thousands) under this non-cancelable operating lease through 2012 are as follows:

Year ending December 31:
2010	$	331
2011		343
2012		145
Total	$	819

Lease expense under this agreement is recognized on a straight line levelized basis of approximately $0.2 million annually over the lease term.

Regulatory Proceedings – The Northeast Power Coordinating Council, Inc. (NPCC), the regional entity responsible for compliance with the North American Electric Reliability Corporation (NERC) standards, investigated certain operating subsidiaries and affiliates of NextEra Energy Resources, LLC (NextEra Energy Resources), including NEA, operating in New England for potential noncompliance with certain NERC standards self-reported by NextEra Energy Resources. NextEra Energy Resources owns subsidiaries that own 50% of NE LP. Any penalty ultimately determined or accepted by NextEra Energy Resources pursuant to a settlement would be shared among its operating subsidiaries and affiliates in the New England region that the NPCC found to be in noncompliance with certain NERC standards. Although NEA is unable to predict with certainty the outcome of this matter, it is expected that the ultimate resolution will not have a material adverse effect on NE LP's and the Partnerships' results of operations or financial condition.

Legal Proceedings – On March 17, 2010, NEA received a Notice of Violation (“NOV”) from the U.S. Environmental Protection Agency (“EPA”) under authority of Section 113 of the Clean Air Act, regarding the facility located in Bellingham, Massachusetts for violations of State and EPA air permit limits for the emissions of oxides of nitrogen (“NOx”). The NOV alleges that on numerous days of operation from January 1997 to December 2009 (and, elsewhere, to the present), the facility’s NOx data indicated emissions in excess concentrations of the permitted amounts, specifically for pounds of NOx per MMBtu, and for pounds per hour of NOx. No specific dates were referenced, and no penalty amount was proposed. EPA stated that the maximum penalty is $37,500 per day per violation under current EPA rules, and that the EPA may issue NEA a compliance order, issue an administrative penalty order, and/or commence a civil judicial proceeding for penalties or injunctive relief. Although EPA’s allegations are vague, after initial technical and legal review, NEA believes that EPA’s allegations are unsupportable and wholly without merit.

9. Quarterly Data (Unaudited)

Condensed consolidated quarterly financial information for 2009 and 2008 is as follows:

	March 31 (a)			June 30 (a)			September 30 (a)			December 31 (a)
	(Thousands of Dollars)
NE LP:
2009
Operating revenues(b)		$	62,263		$	60,043		$	71,057		$	65,159
Operating income(b)		$	30,216		$	14,797		$	22,587		$	21,814
Net income(b)		$	24,508		$	9,045		$	17,784		$	17,021

2008
Operating revenues(b)		$	116,671		$	103,839		$	119,595		$	67,633
Operating income(b)		$	41,553		$	35,378		$	50,207		$	29,969
Net income(b)		$	36,264		$	28,209		$	43,894		$	24,880


The Partnerships:
2009
Operating revenues(b)		$	62,263		$	60,043		$	71,057		$	65,159
Operating income(b)		$	30,216		$	14,797		$	22,593		$	21,815
Net income(b)		$	27,357		$	11,892		$	20,342		$	19,565

2008
Operating revenues(b)		$	116,671		$	103,839		$	119,595		$	67,633
Operating income(b)		$	41,553		$	35,378		$	50,207		$	29,976
Net income(b)		$	39,647		$	31,568		$	47,021		$	28,006

——————————

(a)	In the opinion of NE LP and the Partnerships, all adjustments, which consist of normal recurring accruals necessary to present a fair statement of the amounts shown for such periods have been made. Results of operations for an interim period may not give a true indication of results for the year.

(b)	The sum of the quarterly amounts may not equal the total for the year due to rounding.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ESI TRACTEBEL FUNDING CORP.:

We have audited the accompanying balance sheets of ESI Tractebel Funding Corp. (the “Company”) as of December 31, 2009 and 2008, and the related statements of operations and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects, the financial position of ESI Tractebel Funding Corp. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Certified Public Accountants

Boca Raton, Florida

March 26, 2010

ESI TRACTEBEL FUNDING CORP.

BALANCE SHEETS

(Thousands of Dollars)

	December 31,
	2009		2008
ASSETS
Current assets:
Cash	$	1	$	1
Current portion of notes receivable from the Partnerships		65,223		54,616
Total current assets		65,224		54,617

Notes receivable from the Partnerships		-		65,223

TOTAL ASSETS	$	65,224	$	119,840

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt securities payable	$	65,223	$	54,616
Total current liabilities		65,223		54,616

Debt securities payable		-		65,223

COMMITMENTS AND CONTINGENCIES

Stockholders' equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding		1		1

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	65,224	$	119,840

The accompanying notes are an integral part of these financial statements.

ESI TRACTEBEL FUNDING CORP. ~~STATEMENTS OF OPERATIONS (Thousands of Dollars)~~

	Years Ended December 31,
	2008			2007			2006
Interest income - affiliate	$	15,504		$	20,545		$	25,484
Interest expense		(15,504	)		(20,545	)		(25,484	)
NET INCOME	$	-		$	-		$	-

STATEMENTS OF OPERATIONS

(Thousands of Dollars)

	Years Ended December 31,
	2009			2008			2007

Interest income – affiliate	$	10,374		$	15,504		$	20,545
Interest expense		(10,374	)		(15,504	)		(20,545	)

NET INCOME	$	-		$	-		$	-

The accompanying notes are an integral part of these financial statements.

ESI TRACTEBEL FUNDING CORP. ~~STATEMENTS OF CASH FLOWS (Thousands of Dollars)~~

				Years Ended December 31,
				2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	-		$	-		$	-
	Adjustments to reconcile net income to net cash provided by operating activities:
			Other - net		-			-			-
		Net cash provided by operating activities			-			-			-
CASH FLOWS FROM INVESTING ACTIVITIES:
	Principal payments received from the Partnerships				51,801			80,342			26,320
		Net cash provided by investing activities			51,801			80,342			26,320
CASH FLOWS FROM FINANCING ACTIVITIES:
	Principal payments on debt				(51,801	)		(80,342	)		(26,320	)
		Net cash used in financing activities			(51,801	)		(80,342	)		(26,320	)
Net change in cash					-			-			-
Cash at beginning of period					1			1			1
Cash at end of period				$	1		$	1		$	1
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest			$	15,504		$	32,674		$	13,355

STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

	Years Ended December 31,
	2009			2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	-		$	-		$	-
Adjustments to reconcile net income to net cash provided by operating activities:
Other – net		-			-			-
Net cash provided by operating activities		-			-			-

CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments received from the Partnerships		54,616			51,801			80,342
Net cash provided by investing activities		54,616			51,801			80,342

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt		(54,616	)		(51,801	)		(80,342	)
Net cash used in financing activities		(54,616	)		(51,801	)		(80,342	)

Net change in cash		-			-			-
Cash at beginning of period		1			1			1
Cash at end of period	$	1		$	1		$	1

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	10,374		$	15,504		$	32,674

The accompanying notes are an integral part of these financial statements.

ESI TRACTEBEL FUNDING CORP. ~~NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2008, 2007 and 2006~~

1.NOTES ~~Nature~~TO ofFINANCIAL Business ESI Tractebel Funding Corp. (Funding Corp.) is a Delaware corporation established in 1994 as a special purpose funding corporation for the purpose of issuing the securities described in Note 3. The Funding Corp. acts as the agent of Northeast Energy Associates, a limited partnership, and North Jersey Energy Associates, a limited partnership (combined, the Partnerships) with respect to the securities and holds itself out as the agent of the Partnerships in all dealings with third parties relating to the securities. The Partnerships, owners of electric power generation stations in the northeastern United States, are owned indirectly by subsidiaries of ESI Energy, LLC (ESI Energy) and SUEZ Energy Generation North America, Inc. (SUEZ Power) and, thus, are related parties to the Funding Corp. 2. Summary of Significant Accounting Policies Fair Value Measurements - Effective January 1, 2008, the Funding Corp. adopted Statement of Financial Accounting Standards No. (FAS) 157, "Fair Value Measurements," which clarifies how to measure fair value and requires expanded fair value measurement disclosures. The standard emphasizes that fair value is a market-based measurement not an entity-specific measurement, and sets out a fair value hierarchy intended to disclose information about the relative reliability of fair value measurements, with the highest priority being quoted prices in active markets for identical assets or liabilities. FAS 157 was effective January 1, 2008 for financial assets and liabilities, and any other fair value measurements made on a recurring basis and on January 1, 2009 for non-financial assets and liabilities that are not remeasured on a recurring basis. The adoption of the recognition provisions of FAS 157 did not have a material effect on the Funding Corp.'s financial statements. The Fair Value Option for Financial Assets and Financial Liabilities - In February 2007, the Financial Accounting Standards Board (FASB) issued FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities," which permits, but does not require, entities to account for financial assets and liabilities at fair value. The standard does not extend to non-financial assets and liabilities. The Funding Corp. was permitted to adopt FAS 159 on January 1, 2008. The Funding Corp. did not elect to account for any existing financial assets or liabilities under FAS 159 at January 1, 2008, but may elect to account for new financial assets and liabilities at fair value in the future. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. The Securities The Funding Corp. previously issued secured notes (Securities), the proceeds from which were used to make loans to the Partnerships, and notes payable of the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. Borrowings, evidenced by the Securities, outstanding are as follows:STATEMENTS

	December 31,
	2008		2007
	(in thousands)
9.77% Senior Secured Bonds Due 2010, Series A	$	119,839	$	171,640
Less current maturities		54,616		51,801
Long-term debt, excluding current maturities	$	65,223	$	119,839

Years Ended December 31, 2009, 2008 and 2007

~~Interest on the Securities is payable semiannually on each June 30 and December 30~~1. Nature ~~Principal repayments are made semiannually in amounts stipulated in the trust indenture. As~~ of ~~December 31, 2008, future principal payments (in thousands) are as follows:~~Business

Year ending December 31:
2009	$	54,616
2010		65,223
Total	$	119,839

ESI Tractebel Funding Corp. (Funding Corp.) is a Delaware corporation established in 1994 as a special purpose funding corporation for the purpose of issuing the securities described in Note 3. The Funding Corp. acts as the agent of Northeast Energy Associates, a limited partnership, and North Jersey Energy Associates, a limited partnership (combined, the Partnerships) with respect to the securities and holds itself out as the agent of the Partnerships in all dealings with third parties relating to the securities. The Partnerships, owners of electric power generation stations in the northeastern United States, are owned indirectly by subsidiaries of ESI Energy, LLC (ESI Energy) and GDF SUEZ Energy Generation North America, Inc. (SUEZ Power) and, thus, are related parties to the Funding Corp.

The Securities are not subject to optional redemption but are subject to mandatory redemption in certain limited circumstances involving the occurrence of an event of loss, as defined in the trust indenture, for which the Partnerships fail to or are unable to restore a facility2. Summary ~~The Securities are unconditionally guaranteed, jointly and severally, by the Partnerships and are secured by a lien on, and a security interest in, substantially all~~ of ~~the~~Significant ~~assets~~Accounting of the Partnerships. The Partnerships are jointly and severally required to make scheduled payments to Funding Corp. on the notes on dates and in amounts identical to the scheduled payments of principal and interest on the Securities. The Securities, the guarantees thereon provided by the Partnerships and the Partnerships' notes are nonrecourse to the partners and are payable solely from the collateral pledged as security. The trust indenture governing the Securities contains certain restrictions on certain activities of the Partnerships, including the incurrence of additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements, the use of proceeds from the issuance of the Securities and the execution of mergers, consolidations and sales of assets. 4. Financial Instruments The estimated fair value of each of the Securities and the notes receivable from the Partnerships at December 31, 2008 and 2007 was approximately $125 million and $181 million, respectively. The estimate of the fair value at December 31, 2007 has been made using available market information and other valuation methodologies. The estimate of the fair value at December 31, 2008 has been made using an internally developed model as certain market information was not available for 2008 due to recent changes in the market. However, the use of different market assumptions or methods of valuation could result in different estimated fair values. 5. Quarterly Data (Unaudited) Condensed consolidated quarterly financial information for 2008 and 2007 is as follows:Policies

	March 31			June 30			September 30			December 31
	(Thousands of Dollars)
2008
Operating revenues		$	-		$	-		$	-		$	-
Operating income		$	-		$	-		$	-		$	-
Net income		$	-		$	-		$	-		$	-
2007
Operating revenues		$	-		$	-		$	-		$	-
Operating income		$	-		$	-		$	-		$	-
Net income		$	-		$	-		$	-		$	-

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ESI TRACTEBEL ACQUISITION CORP~~3.: We have audited the accompanying balance sheets of ESI Tractebel Acquisition Corp. (the "Company") as of December 31, 2008 and 2007, and the related statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects, the financial position of ESI Tractebel Acquisition Corp. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Certified Public Accountants Boca Raton, Florida March 19, 2009Securities

~~ESI~~The ~~TRACTEBEL~~Funding ~~ACQUISITION CORP~~Corp. ~~BALANCE~~previously ~~SHEETS~~issued secured notes (~~Thousands~~Securities), the proceeds from which were used to make loans to the Partnerships, and notes payable of ~~Dollars)~~the Partnerships were issued to the Funding Corp. in an aggregate principal amount equal to the Funding Corp. Securities. Borrowings, evidenced by the Securities, outstanding are as follows:

		December 31,	~~December 31,~~
			2008				2007
		2009			2008
ASSETS
		(in thousands)
Current assets:
9.77% Senior Secured Bonds Due 2010, Series A		$	65,223		$	119,839
	Current portion of note receivable from NE LP		$	26,400			$	22,000
Less current maturities			65,223			54,616
Total current assets				26,400				22,000
Long-term debt, excluding current maturities		$	-		$	65,223
Non-current assets:
	Due from NE LP			152				152
	Note receivable from NE LP			101,200				127,600
Total non-current assets				101,352				127,752
TOTAL ASSETS			$	127,752			$	149,752
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Income taxes payable		$	48			$	44
	Accrued interest payable			-				-
	Current portion of debt securities payable			26,400				22,000
Total current liabilities				26,448				22,044
Non-current liabilities:
	Debt securities payable			101,200				127,600
	Other			17				26
Total non-current liabilities				101,217				127,626
TOTAL LIABILITIES				127,665				149,670
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
	Common stock, $.10 par value, 100 shares authorized, 20 shares issued			-				-
	Retained earnings			87				82
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	127,752			$	149,752

Interest on the Securities is payable semiannually on each June 30 and December 30. Principal repayments are made semiannually in amounts stipulated in the trust indenture. As of December 31, 2009, there were two remaining future principal payments of $32.6 million each on June 30 and December 30, 2010.

The Securities are unconditionally guaranteed, jointly and severally, by the Partnerships and are secured by a lien on, and a security interest in, substantially all of the assets of the Partnerships. The Partnerships are jointly and severally required to make scheduled payments to Funding Corp. on the notes on dates and in amounts identical to the scheduled payments of principal and interest on the Securities. The Securities, the guarantees thereon provided by the Partnerships and the Partnerships' notes are nonrecourse to the partners and are payable solely from the collateral pledged as security.

The trust indenture governing the Securities contains certain restrictions on certain activities of the Partnerships, including the incurrence of additional indebtedness or liens, distributions to the partners, the cancellation of power sale and fuel supply agreements, the use of proceeds from the issuance of the Securities and the execution of mergers, consolidations and sales of assets.

4. Financial Instruments

The estimated fair value of each of the Securities and the notes receivable from the Partnerships at December 31, 2009 and 2008 was approximately $67 million and $125 million, respectively. The estimate of the fair value at December 31, 2009 and 2008 has been made using an internally developed model as certain market information was not available for 2009 or 2008 due to changes in the market. However, the use of different market assumptions or methods of valuation could result in different estimated fair values.

5. Quarterly Data (Unaudited)

Condensed consolidated quarterly financial information for 2009 and 2008 is as follows:

	March 31			June 30			September 30			December 31
	(Thousands of Dollars)
2009
Operating revenues		$	-		$	-		$	-		$	-
Operating income		$	-		$	-		$	-		$	-
Net income		$	-		$	-		$	-		$	-

2008
Operating revenues		$	-		$	-		$	-		$	-
Operating income		$	-		$	-		$	-		$	-
Net income		$	-		$	-		$	-		$	-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ESI TRACTEBEL ACQUISITION CORP.:

We have audited the accompanying balance sheets of ESI Tractebel Acquisition Corp. (the “Company”) as of December 31, 2009 and 2008, and the related statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects, the financial position of ESI Tractebel Acquisition Corp. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Certified Public Accountants

Boca Raton, Florida

March 26, 2010

ESI TRACTEBEL ACQUISITION CORP.

BALANCE SHEETS

(Thousands of Dollars)

	December 31,
	2009		2008
ASSETS
Current assets:
Current portion of note receivable from NE LP	$	35,200	$	26,400
Total current assets		35,200		26,400

Non-current assets:
Due from NE LP		152		152
Note receivable from NE LP		66,000		101,200
Total non-current assets		66,152		101,352

TOTAL ASSETS	$	101,352	$	127,752

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Income taxes payable	$	51	$	48
Accrued interest payable		-		-
Current portion of debt securities payable		35,200		26,400
Total current liabilities		35,251		26,448

Non-current liabilities:
Debt securities payable		66,000		101,200
Other		9		17
Total non-current liabilities		66,009		101,217

TOTAL LIABILITIES		101,260		127,665

COMMITMENTS AND CONTINGENCIES

Stockholders’ equity:
Common stock, $.10 par value, 100 shares authorized, 20 shares issued		-		-
Retained earnings		92		87

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	101,352	$	127,752

The accompanying notes are an integral part of these financial statements.

ESI TRACTEBEL ACQUISITION CORP. ~~STATEMENTS OF OPERATIONS (Thousands of Dollars)~~

	Years Ended December 31,
	2008			2007			2006
Interest income - affiliate	$	11,514		$	13,271		$	14,502
Interest expense		(11,505	)		(13,261	)		(14,490	)
Income before income taxes		9			10			12
Income tax expense		(4	)		(4	)		(5	)
NET

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