PINX:CNLTN The Connecticut Light & Power Co Pref Share Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

PINX:CNLTN Fair Value Estimate
Premium
PINX:CNLTN Consider Buying
Premium
PINX:CNLTN Consider Selling
Premium
PINX:CNLTN Fair Value Uncertainty
Premium
PINX:CNLTN Economic Moat
Premium
PINX:CNLTN Stewardship
Premium
 
Converted by EDGARwiz


________________________________________________________________________________

[march2012form10qedgar002.gif]


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the Quarterly Period Ended March 31, 2012 

 

OR     

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     
SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from ____________ to ____________


Commission
File Number

Registrant; State of Incorporation;
Address; and Telephone Number

I.R.S. Employer
Identification No.

 

 

 

1-5324

NORTHEAST UTILITIES
(a Massachusetts voluntary association)
One Federal Street
Building 111-4
Springfield, Massachusetts 01105
Telephone:  (413) 785-5871

04-2147929

 

 

 

0-00404

THE CONNECTICUT LIGHT AND POWER COMPANY
(a Connecticut corporation)
107 Selden Street
Berlin, Connecticut 06037-1616
Telephone:  (860) 665-5000

06-0303850

 

 

 

1-6392

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
(a New Hampshire corporation)
Energy Park
780 North Commercial Street
Manchester, New Hampshire 03101-1134
Telephone:  (603) 669-4000

02-0181050

 

 

 

0-7624

WESTERN MASSACHUSETTS ELECTRIC COMPANY
(a Massachusetts corporation)
One Federal Street
Building 111-4
Springfield, Massachusetts 01105
Telephone:  (413) 785-5871

04-1961130

______________________________________________________________________




























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 (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.


 

Yes

No

 

 

 

 

ü

 


Indicate by check mark whether the registrants have submitted electronically and posted on its 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 registrant was required to submit and post such files).


 

Yes

No

 

 

 

 

ü

 


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.  (Check one):


 

Large
Accelerated Filer

 

Accelerated
Filer

 

Non-accelerated
Filer

 

 

 

 

 

 

Northeast Utilities

ü

 

 

 

 

The Connecticut Light and Power Company

 

 

 

 

ü

Public Service Company of New Hampshire

 

 

 

 

ü

Western Massachusetts Electric Company

 

 

 

 

ü


Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):


 

Yes

No

 

 

 

Northeast Utilities

 

ü

The Connecticut Light and Power Company

 

ü

Public Service Company of New Hampshire

 

ü

Western Massachusetts Electric Company

 

ü


Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:


Company - Class of Stock

Outstanding as of April 30, 2012

Northeast Utilities
Common shares, $5.00 par value

313,604,078 shares

 

 

The Connecticut Light and Power Company
Common stock, $10.00 par value

6,035,205 shares

 

 

Public Service Company of New Hampshire
Common stock, $1.00 par value

301 shares

 

 

Western Massachusetts Electric Company
Common stock, $25.00 par value

434,653 shares

 

 


Northeast Utilities holds all of the 6,035,205 shares, 301 shares, and 434,653 shares of the outstanding common stock of The Connecticut Light and Power Company, Public Service Company of New Hampshire and Western Massachusetts Electric Company, respectively.  


Public Service Company of New Hampshire and Western Massachusetts Electric Company each meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q, and each is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) of Form 10-Q.



GLOSSARY OF TERMS

 

The following is a glossary of abbreviations or acronyms that are found in this report.  

 

 

CURRENT OR FORMER NU COMPANIES, SEGMENTS OR INVESTMENTS:

CL&P

The Connecticut Light and Power Company

HWP

HWP Company, formerly the Holyoke Water Power Company

NGS

Northeast Generation Services Company and subsidiaries

NSTAR LLC

NSTAR (Holding company)

NSTAR Electric

NSTAR Electric Company

NSTAR Gas

NSTAR Gas Company

NPT

Northern Pass Transmission LLC

NUTV

NU Transmission Ventures, Inc., the parent company of NPT and Renewable Properties, Inc.

NU or the Company

Northeast Utilities and subsidiaries

NU Enterprises

NU Enterprises, Inc., the parent company of Select Energy, NGS, NGS Mechanical, Select Energy Contracting, Inc. and E.S. Boulos Company

NUSCO

Northeast Utilities Service Company

NU parent and other companies

NU parent and other companies is comprised of NU parent, NUSCO and other subsidiaries, including HWP, RRR (a real estate subsidiary), and the non-energy-related subsidiaries of Yankee (Yankee Energy Services Company, and Yankee Energy Financial Services Company)

PSNH

Public Service Company of New Hampshire

Regulated companies

NU's Regulated companies, comprised of the electric distribution and transmission segments of CL&P, PSNH and WMECO, the generation activities of PSNH and WMECO, Yankee Gas, a natural gas local distribution company, and NPT

RRR

The Rocky River Realty Company

Select Energy

Select Energy, Inc.

WMECO

Western Massachusetts Electric Company

Yankee

Yankee Energy System, Inc.

Yankee Gas

Yankee Gas Services Company

 

 

REGULATORS:

 

DEEP

Connecticut Department of Energy and Environmental Protection

DOE

U.S. Department of Energy

DPU

Massachusetts Department of Public Utilities

EPA

U.S. Environmental Protection Agency

FERC

Federal Energy Regulatory Commission

MA DEP 

Massachusetts Department of Environmental Protection 

NHPUC

New Hampshire Public Utilities Commission

PURA

Connecticut Public Utilities Regulatory Authority

SEC

Securities and Exchange Commission

 

 

OTHER: 

 

2011 Form 10-K

The Northeast Utilities and Subsidiaries 2011 combined Annual Report on Form 10-K as filed with the SEC

AOCI

Accumulated Other Comprehensive Income/(Loss)

AFUDC 

Allowance For Funds Used During Construction 

C&LM 

Conservation and Load Management 

CfD

Contract for Differences

Clean Air Project

The construction of a wet flue gas desulphurization system, known as “scrubber technology,” to reduce mercury emissions of the Merrimack coal-fired generation station in Bow, New Hampshire

CTA 

Competitive Transition Assessment 

CWIP

Construction work in progress

DOER

Massachusetts Department of Energy Resources

EPS 

Earnings Per Share 

ERISA

Employee Retirement Income Security Act of 1974

ES 

Default Energy Service 

Fitch

Fitch Ratings

FMCC 

Federally Mandated Congestion Charge 

FTR 

Financial Transmission Rights 

GAAP 

Accounting principles generally accepted in the United States of America 

GSC 

Generation Service Charge 

GSRP

Greater Springfield Reliability Project

GWh 

Giga-watt Hours 

HG&E 

Holyoke Gas and Electric, a municipal department of the town of Holyoke, MA



i






HQ

Hydro-Québec, a corporation wholly owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada

HVDC

High voltage direct current

Hydro Renewable Energy

Hydro Renewable Energy, Inc., a wholly owned subsidiary of Hydro-Québec

ISO-NE 

ISO New England, Inc., the New England Independent System Operator  

ISO-NE Tariff

ISO-NE FERC Transmission, Markets and Services Tariff

KV 

Kilovolt 

LOC 

Letter of Credit 

LRS

Supplier of last resort service

MGP 

Manufactured Gas Plant 

Moody's

Moody's Investors Services, Inc.

MW 

Megawatt 

MWh 

Megawatt-Hours 

NEEWS 

New England East-West Solution

Northern Pass

The high voltage direct current transmission line project from Canada into New Hampshire

NPDES

National Pollutant Discharge Elimination System

NU Money Pool

Northeast Utilities Money Pool

NU supplemental benefit trust 

The NU Trust Under Supplemental Executive Retirement Plan 

PBOP 

Postretirement Benefits Other Than Pension 

PBOP Plan

Postretirement Benefits Other Than Pension Plan that provides certain retiree health care benefits, primarily medical and dental, and life insurance benefits

PCRBs 

Pollution Control Revenue Bonds 

Pension Plan

Single uniform noncontributory defined benefit retirement plan

PPA

Pension Protection Act

RECs

Renewable Energy Certificates

Regulatory ROE 

The average cost of capital method for calculating the return on equity related to the distribution and generation business segment excluding the wholesale transmission segment

ROE 

Return on Equity 

RRB 

Rate Reduction Bond or Rate Reduction Certificate

RSUs 

Restricted share units 

S&P

Standard & Poor's Financial Services LLC

SBC 

Systems Benefits Charge 

SCRC

Stranded Cost Recovery Charge

SERP 

Supplemental Executive Retirement Plan 

SS

Standard service

TCAM 

Transmission Cost Adjustment Mechanism 

TSA

Transmission Service Agreement

UI 

The United Illuminating Company 

Yankee Companies

Connecticut Yankee Atomic Power Company, Yankee Atomic Electric Company and Maine Yankee Atomic Power Company




ii



`NORTHEAST UTILITIES AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

TABLE OF CONTENTS



 

Page

 

 

PART I - FINANCIAL INFORMATION

 

 

ITEM 1 - Unaudited Condensed Consolidated Financial Statements for the Following Companies:

 

 

 

Northeast Utilities and Subsidiaries (Unaudited)

 

 

Condensed Consolidated Balance Sheets – March 31, 2012 and December 31, 2011

1

 

Condensed Consolidated Statements of Income – Three Months Ended March 31, 2012 and 2011

3

 

Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2012 and 2011

4

 

Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2012 and 2011

5

 

The Connecticut Light and Power Company and Subsidiary (Unaudited)

 

 

Condensed Consolidated Balance Sheets – March 31, 2012 and December 31, 2011

7

 

Condensed Consolidated Statements of Income – Three Months Ended March 31, 2012 and 2011

9

 

Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2012 and 2011

10

 

 

Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2012 and 2011

11

 

Public Service Company of New Hampshire and Subsidiaries (Unaudited)

 

 

Condensed Consolidated Balance Sheets – March 31, 2012 and December 31, 2011

13

 

Condensed Consolidated Statements of Income – Three Months Ended March 31, 2012 and 2011

15

 

Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2012 and 2011

16

 

 

Condensed Consolidated Statements of Cash Flows  – Three Months Ended March 31, 2012 and 2011

17

 

Western Massachusetts Electric Company and Subsidiary (Unaudited)

 

 

Condensed Consolidated Balance Sheets – March 31, 2012 and December 31, 2011

19

 

Condensed Consolidated Statements of Income – Three Months Ended March 31, 2012 and 2011

21

 

Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2012 and 2011

22

 

 

Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2012 and 2011

23

 

Combined Notes to Condensed Consolidated Financial Statements

24

 



iii




ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations for the following companies:

 

 

Northeast Utilities and Subsidiaries

44

 

 

The Connecticut Light and Power Company and Subsidiary

56

 

 

Public Service Company of New Hampshire and Subsidiaries

58

 

 

Western Massachusetts Electric Company and Subsidiary

60

 

 

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk

62

 

 

ITEM 4 – Controls and Procedures

62

 

 

PART II – OTHER INFORMATION

 

 

 

ITEM 1 – Legal Proceedings

63

 

 

ITEM 1A – Risk Factors

63

 

 

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds

63

 

 

ITEM 6 - Exhibits

64

 

 

SIGNATURES

67

 

 



iv



This Page Intentionally Left Blank




v




NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

$

 283,379 

 

$

 6,559 

 

Receivables, Net

 

 485,770 

 

 

 488,002 

 

Unbilled Revenues

 

 135,887 

 

 

 175,207 

 

Fuel, Materials and Supplies

 

 219,091 

 

 

 248,958 

 

Regulatory Assets

 

 241,902 

 

 

 255,144 

 

Marketable Securities

 

 62,700 

 

 

 70,970 

 

Prepayments and Other Current Assets

 

 94,737 

 

 

 112,632 

Total Current Assets

 

 1,523,466 

 

 

 1,357,472 

 

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

 10,613,199 

 

 

 10,403,065 

 

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

 

Regulatory Assets

 

 3,214,208 

 

 

 3,267,710 

 

Goodwill

 

 287,591 

 

 

 287,591 

 

Marketable Securities

 

 74,050 

 

 

 60,311 

 

Derivative Assets

 

 94,258 

 

 

 98,357 

 

Other Long-Term Assets

 

 171,582 

 

 

 172,560 

Total Deferred Debits and Other Assets

 

 3,841,689 

 

 

 3,886,529 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

 15,978,354 

 

$

 15,647,066 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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



























1




NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

  Notes Payable to Banks

$

 660,000 

 

$

 317,000 

  Long-Term Debt - Current Portion

 

 267,286 

 

 

 331,582 

  Accounts Payable

 

 412,884 

 

 

 633,282 

  Regulatory Liabilities

 

 149,755 

 

 

 167,844 

  Derivative Liabilities

 

 108,253 

 

 

 107,558 

  Other Current Liabilities

 

 369,503 

 

 

 390,416 

Total Current Liabilities

 

 1,967,681 

 

 

 1,947,682 

 

 

 

 

 

 

 

 

Rate Reduction Bonds

 

 94,357 

 

 

 112,260 

 

 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

  Accumulated Deferred Income Taxes

 

 1,923,266 

 

 

 1,868,316 

  Regulatory Liabilities

 

 248,314 

 

 

 266,145 

  Derivative Liabilities

 

 924,308 

 

 

 959,876 

  Accrued Pension, SERP and PBOP

 

 1,241,433 

 

 

 1,326,037 

  Other Long-Term Liabilities

 

 414,004 

 

 

 420,011 

Total Deferred Credits and Other Liabilities

 

 4,751,325 

 

 

 4,840,385 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

  Long-Term Debt

 

 4,977,131 

 

 

 4,614,913 

 

 

 

 

 

 

 

 

   Noncontrolling Interest in Consolidated Subsidiary:

 

 

 

 

 

 

Preferred Stock Not Subject to Mandatory Redemption

 

 116,200 

 

 

 116,200 

 

 

 

 

 

 

 

 

   Equity:

 

 

 

 

 

 

Common Shareholders' Equity:

 

 

 

 

 

 

  Common Shares

 

 981,592 

 

 

 980,264 

 

  Capital Surplus, Paid In

 

 1,801,752 

 

 

 1,797,884 

 

  Retained Earnings

 

 1,698,553 

 

 

 1,651,875 

 

  Accumulated Other Comprehensive Loss

 

 (68,822)

 

 

 (70,686)

 

  Treasury Stock

 

 (344,774)

 

 

 (346,667)

   Common Shareholders' Equity

 

 4,068,301 

 

 

 4,012,670 

   Noncontrolling Interests

 

 3,359 

 

 

 2,956 

  Total Equity

 

 4,071,660 

 

 

 4,015,626 

Total Capitalization

 

 9,164,991 

 

 

 8,746,739 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

 15,978,354 

 

$

 15,647,066 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




























2




NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars, Except Share Information)

2012 

 

2011 

 

 

 

 

Operating Revenues

$

 1,099,623 

 

$

 1,235,251 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

Fuel, Purchased and Net Interchange Power

 

 398,013 

 

 

 474,109 

 

Other Operating Expenses

 

 225,958 

 

 

 251,978 

 

Maintenance

 

 69,826 

 

 

 67,764 

 

Depreciation

 

 80,839 

 

 

 73,951 

 

Amortization of Regulatory Assets, Net

 

 6,209 

 

 

 34,407 

 

Amortization of Rate Reduction Bonds

 

 18,347 

 

 

 17,282 

 

Taxes Other Than Income Taxes

 

 86,038 

 

 

 88,403 

 

 

Total Operating Expenses

 

 885,230 

 

 

 1,007,894 

Operating Income

 

 214,393 

 

 

 227,357 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

Interest on Long-Term Debt

 

 59,968 

 

 

 57,399 

 

Interest on Rate Reduction Bonds

 

 1,431 

 

 

 2,578 

 

Other Interest

 

 5,048 

 

 

 (1,428)

 

 

Interest Expense

 

 66,447 

 

 

 58,549 

Other Income, Net

 

 8,773 

 

 

 10,313 

Income Before Income Tax Expense

 

 156,719 

 

 

 179,121 

Income Tax Expense

 

 55,964 

 

 

 63,537 

Net Income

 

 100,755 

 

 

 115,584 

Net Income Attributable to Noncontrolling Interests

 

 1,493 

 

 

 1,429 

Net Income Attributable to Controlling Interests

$

 99,262 

 

$

 114,155 

 

 

 

 

 

 

 

 

Basic and Diluted Earnings Per Common Share

$

 0.56 

 

$

 0.64 

 

 

 

 

 

 

 

 

Dividends Declared Per Common Share

$

 0.29 

 

$

 0.28 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

Basic

 

 178,055,716 

 

 

 177,188,207 

 

Diluted

 

 178,437,453 

 

 

 177,480,996 

 

 

 

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



























3




NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011

 

 

 

 

 

 

 

 

 

Net Income

$

 100,755 

 

$

 115,584 

Other Comprehensive Income, Net of Tax:

 

 

 

 

 

 

Qualified Cash Flow Hedging Instruments

 

 423 

 

 

 1,173 

 

Changes in Unrealized Gains/(Losses) on Other Securities

 

 34 

 

 

 (5)

 

Change in Funded Status of Pension, SERP and PBOP Benefit Plans

 

 1,407 

 

 

 935 

Other Comprehensive Income, Net of Tax

 

 1,864 

 

 

 2,103 

Comprehensive Income Attributable to Noncontrolling Interests

 

 (1,493)

 

 

 (1,429)

Comprehensive Income Attributable to Controlling Interests

$

 101,126 

 

$

 116,258 

 

 

 

 

 

 

 

 

 

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

 



























4




NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

Net Income

$

 100,755 

 

$

 115,584 

 

Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

 

 

Provided by Operating Activities:

 

 

 

 

 

 

 

 Bad Debt Expense

 

 3,657 

 

 

 4,947 

 

 

 Depreciation

 

 80,839 

 

 

 73,951 

 

 

 Deferred Income Taxes

 

 52,474 

 

 

 52,429 

 

 

 Pension, SERP and PBOP Expense

 

 42,268 

 

 

 34,163 

 

 

 Pension and PBOP Contributions

 

 (98,910)

 

 

 (5,932)

 

 

 Regulatory (Under)/Over Recoveries, Net

 

 (28,352)

 

 

 44,420 

 

 

 Amortization of Regulatory Assets, Net

 

 6,209 

 

 

 34,407 

 

 

 Amortization of Rate Reduction Bonds

 

 18,347 

 

 

 17,282 

 

 

 Derivative Assets and Liabilities

 

 (1,770)

 

 

 (3,651)

 

 

 Other

 

 (7,371)

 

 

 (1,776)

 

Changes in Current Assets and Liabilities:

 

 

 

 

 

 

 

 Receivables and Unbilled Revenues, Net

 

 29,276 

 

 

 8,199 

 

 

 Fuel, Materials and Supplies

 

 30,108 

 

 

 42,990 

 

 

 Taxes Receivable/Accrued, Net

 

 11,758 

 

 

 18,312 

 

 

 Accounts Payable

 

 (190,232)

 

 

 (29,278)

 

 

 Other Current Assets and Liabilities, Net

 

 (40,240)

 

 

 (33,281)

Net Cash Flows Provided by Operating Activities

 

 8,816 

 

 

 372,766 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Investments in Property, Plant and Equipment

 

 (304,294)

 

 

 (236,689)

 

Proceeds from Sales of Marketable Securities

 

 40,947 

 

 

 38,646 

 

Purchases of Marketable Securities

 

 (41,570)

 

 

 (39,230)

 

Other Investing Activities

 

 2,448 

 

 

 328 

Net Cash Flows Used in Investing Activities

 

 (302,469)

 

 

 (236,945)

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

Cash Dividends on Common Shares

 

 (52,104)

 

 

 (48,588)

 

Cash Dividends on Preferred Stock

 

 (1,390)

 

 

 (1,390)

 

Increase/(Decrease) in Short-Term Debt

 

 343,000 

 

 

 (78,000)

 

Issuance of Long-Term Debt

 

 300,000 

 

 

 - 

 

Retirements of Rate Reduction Bonds

 

 (17,903)

 

 

 (16,868)

 

Other Financing Activities

 

 (1,130)

 

 

 989 

Net Cash Flows Provided by/(Used in) Financing Activities

 

 570,473 

 

 

 (143,857)

Net Increase/(Decrease) in Cash and Cash Equivalents

 

 276,820 

 

 

 (8,036)

Cash and Cash Equivalents - Beginning of Period

 

 6,559 

 

 

 23,395 

Cash and Cash Equivalents - End of Period

$

 283,379 

 

$

 15,359 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




5



This Page Intentionally Left Blank



6




THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash

$

 3,837 

 

$

 1 

 

Receivables, Net

 

 279,541 

 

 

 295,028 

 

Accounts Receivable from Affiliated Companies

 

 3,146 

 

 

 1,548 

 

Unbilled Revenues

 

 72,601 

 

 

 94,995 

 

Regulatory Assets

 

 172,277 

 

 

 170,197 

 

Materials and Supplies

 

 59,048 

 

 

 61,102 

 

Prepayments and Other Current Assets

 

 51,917 

 

 

 53,920 

Total Current Assets

 

 642,367 

 

 

 676,791 

 

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

 5,908,385 

 

 

 5,827,384 

 

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

 

Regulatory Assets

 

 2,070,122 

 

 

 2,103,830 

 

Derivative Assets

 

 90,614 

 

 

 93,755 

 

Other Long-Term Assets

 

 89,165 

 

 

 89,636 

Total Deferred Debits and Other Assets

 

 2,249,901 

 

 

 2,287,221 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

 8,800,653 

 

$

 8,791,396 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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



























7




THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Notes Payable to Banks

$

 275,000 

 

$

 31,000 

 

Notes Payable to Affiliated Companies

 

 9,275 

 

 

 58,525 

 

Long-Term Debt - Current Portion

 

 - 

 

 

 62,000 

 

Accounts Payable

 

 201,373 

 

 

 340,321 

 

Accounts Payable to Affiliated Companies

 

 50,681 

 

 

 53,439 

 

Obligations to Third Party Suppliers

 

 65,434 

 

 

 67,967 

 

Accrued Taxes

 

 71,182 

 

 

 59,046 

 

Regulatory Liabilities

 

 82,423 

 

 

 108,291 

 

Derivative Liabilities

 

 97,483 

 

 

 95,881 

 

Other Current Liabilities

 

 76,789 

 

 

 102,065 

Total Current Liabilities

 

 929,640 

 

 

 978,535 

 

 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

Accumulated Deferred Income Taxes

 

 1,244,748 

 

 

 1,215,989 

 

Regulatory Liabilities

 

 133,844 

 

 

 139,307 

 

Derivative Liabilities

 

 898,850 

 

 

 935,849 

 

Accrued Pension, SERP and PBOP

 

 259,814 

 

 

 260,571 

 

Other Long-Term Liabilities

 

 206,550 

 

 

 215,640 

Total Deferred Credits and Other Liabilities

 

 2,743,806 

 

 

 2,767,356 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

Long-Term Debt

 

 2,583,881 

 

 

 2,521,753 

 

 

 

 

 

 

 

 

   Preferred Stock Not Subject to Mandatory Redemption

 

 116,200 

 

 

 116,200 

 

 

 

 

 

 

 

 

 

Common Stockholder's Equity:

 

 

 

 

 

 

 

Common Stock

 

 60,352 

 

 

 60,352 

 

 

Capital Surplus, Paid In

 

 1,613,865 

 

 

 1,613,503 

 

 

Retained Earnings

 

 755,048 

 

 

 735,948 

 

 

Accumulated Other Comprehensive Loss

 

 (2,139)

 

 

 (2,251)

 

Common Stockholder's Equity

 

 2,427,126 

 

 

 2,407,552 

Total Capitalization

 

 5,127,207 

 

 

 5,045,505 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

 8,800,653 

 

$

 8,791,396 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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



























8




THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Revenues

$

 591,965 

 

$

 673,682 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

Fuel, Purchased and Net Interchange Power

 

 223,835 

 

 

 255,369 

 

Other Operating Expenses

 

 108,824 

 

 

 134,262 

 

Maintenance

 

 42,788 

 

 

 40,782 

 

Depreciation

 

 41,070 

 

 

 39,475 

 

Amortization of Regulatory Assets, Net

 

 8,313 

 

 

 19,343 

 

Taxes Other Than Income Taxes

 

 55,270 

 

 

 58,468 

 

 

Total Operating Expenses

 

 480,100 

 

 

 547,699 

Operating Income

 

 111,865 

 

 

 125,983 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

Interest on Long-Term Debt

 

 31,521 

 

 

 33,328 

 

Other Interest

 

 1,987 

 

 

 (3,575)

 

 

Interest Expense

 

 33,508 

 

 

 29,753 

Other Income, Net

 

 5,300 

 

 

 4,606 

Income Before Income Tax Expense

 

 83,657 

 

 

 100,836 

Income Tax Expense

 

 29,672 

 

 

 36,499 

Net Income

$

 53,985 

 

$

 64,337 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 



























9




THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

 

Net Income

$

 53,985 

 

$

 64,337 

Other Comprehensive Income, Net of Tax:

 

 

 

 

 

 

Qualified Cash Flow Hedging Instruments

 

 111 

 

 

 111 

 

Changes in Unrealized Gains on Other Securities

 

 1 

 

 

 - 

Other Comprehensive Income, Net of Tax

 

 112 

 

 

 111 

Comprehensive Income

$

 54,097 

 

$

 64,448 

 

 

 

 

 

 

 

 

 

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



























10




THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

Net Income

$

 53,985 

 

$

 64,337 

 

Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

 

 

(Used in)/Provided by Operating Activities:

 

 

 

 

 

 

 

 Bad Debt Expense

 

 347 

 

 

 679 

 

 

 Depreciation

 

 41,070 

 

 

 39,475 

 

 

 Deferred Income Taxes

 

 32,460 

 

 

 28,592 

 

 

 Pension, SERP and PBOP Expense, Net of PBOP Contributions

 

 9,095 

 

 

 6,075 

 

 

 Regulatory (Under)/Over Recoveries, Net

 

 (39,726)

 

 

 22,972 

 

 

 Amortization of Regulatory Assets, Net

 

 8,313 

 

 

 19,343 

 

 

 Other

 

 (6,746)

 

 

 (20,129)

 

Changes in Current Assets and Liabilities:

 

 

 

 

 

 

 

 Receivables and Unbilled Revenues, Net

 

 28,685 

 

 

 16,187 

 

 

 Taxes Receivable/Accrued, Net

 

 16,551 

 

 

 57,078 

 

 

 Accounts Payable

 

 (146,676)

 

 

 (14,135)

 

 

 Other Current Assets and Liabilities, Net

 

 (44,484)

 

 

 (15,511)

Net Cash Flows (Used in)/Provided by Operating Activities

 

 (47,126)

 

 

 204,963 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Investments in Property, Plant and Equipment

 

 (108,842)

 

 

 (106,829)

 

Other Investing Activities

 

 1,139 

 

 

 (45)

Net Cash Flows Used in Investing Activities

 

 (107,703)

 

 

 (106,874)

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

Cash Dividends on Common Stock

 

 (33,495)

 

 

 (131,507)

 

Cash Dividends on Preferred Stock

 

 (1,390)

 

 

 (1,390)

 

Increase in Short-Term Debt

 

 244,000 

 

 

 10,000 

 

(Decrease)/Increase in NU Money Pool Borrowings

 

 (49,250)

 

 

 18,950 

 

Other Financing Activities

 

 (1,200)

 

 

 (92)

Net Cash Flows Provided by/(Used in) Financing Activities

 

 158,665 

 

 

 (104,039)

Net Increase/(Decrease) in Cash

 

 3,836 

 

 

 (5,950)

Cash - Beginning of Period

 

 1 

 

 

 9,762 

Cash - End of Period

$

 3,837 

 

$

 3,812 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




11



This Page Intentionally Left Blank



12




PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash

$

 2,251 

 

$

 56 

 

Receivables, Net

 

 89,551 

 

 

 87,545 

 

Accounts Receivable from Affiliated Companies

 

 1,176 

 

 

 1,294 

 

Notes Receivable from Affiliated Companies

 

 - 

 

 

 55,900 

 

Unbilled Revenues

 

 39,304 

 

 

 45,403 

 

Fuel, Materials and Supplies

 

 115,383 

 

 

 124,744 

 

Regulatory Assets

 

 33,362 

 

 

 34,178 

 

Prepayments and Other Current Assets

 

 15,066 

 

 

 35,261 

Total Current Assets

 

 296,093 

 

 

 384,381 

 

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

 2,287,951 

 

 

 2,256,688 

 

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

 

Regulatory Assets

 

 375,122 

 

 

 393,941 

 

Other Long-Term Assets

 

 79,954 

 

 

 81,531 

Total Deferred Debits and Other Assets

 

 455,076 

 

 

 475,472 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 $

 3,039,120 

 

 $

 3,116,541 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




13






PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES  

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Notes Payable to Banks

$

 45,000 

 

$

 - 

 

Notes Payable to Affiliated Companies

 

 7,900 

 

 

 - 

 

Accounts Payable

 

 74,374 

 

 

 106,377 

 

Accounts Payable to Affiliated Companies

 

 16,489 

 

 

 18,895 

 

Accrued Interest

 

 14,454 

 

 

 9,670 

 

Regulatory Liabilities

 

 23,108 

 

 

 24,500 

 

Other Current Liabilities

 

 42,139 

 

 

 36,497 

Total Current Liabilities

 

 223,464 

 

 

 195,939 

 

 

 

 

 

 

 

 

Rate Reduction Bonds

 

 71,905 

 

 

 85,368 

 

 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

Accumulated Deferred Income Taxes

 

 405,834 

 

 

 392,712 

 

Regulatory Liabilities

 

 54,212 

 

 

 54,415 

 

Accrued Pension, SERP and PBOP

 

 172,802 

 

 

 258,718 

 

Other Long-Term Liabilities

 

 55,935 

 

 

 53,304 

Total Deferred Credits and Other Liabilities

 

 688,783 

 

 

 759,149 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

Long-Term Debt

 

 997,775 

 

 

 997,722 

 

 

 

 

 

 

 

 

 

Common Stockholder's Equity:

 

 

 

 

 

 

 

Common Stock

 

 - 

 

 

 - 

 

 

Capital Surplus, Paid In

 

 700,452 

 

 

 700,285 

 

 

Retained Earnings

 

 367,281 

 

 

 388,910 

 

 

Accumulated Other Comprehensive Loss

 

 (10,540)

 

 

 (10,832)

 

Common Stockholder's Equity

 

 1,057,193 

 

 

 1,078,363 

Total Capitalization

 

 2,054,968 

 

 

 2,076,085 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

 3,039,120 

 

$

 3,116,541 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 



























14




PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Revenues

$

 242,997 

 

$

 269,470 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

Fuel, Purchased and Net Interchange Power

 

 73,197 

 

 

 87,132 

 

Other Operating Expenses

 

 56,999 

 

 

 56,422 

 

Maintenance

 

 19,413 

 

 

 18,704 

 

Depreciation

 

 21,208 

 

 

 17,907 

 

Amortization of Regulatory (Liabilities)/Assets, Net

 

 (2,622)

 

 

 15,567 

 

Amortization of Rate Reduction Bonds

 

 13,930 

 

 

 13,135 

 

Taxes Other Than Income Taxes

 

 15,486 

 

 

 13,667 

 

 

Total Operating Expenses

 

 197,611 

 

 

 222,534 

Operating Income

 

 45,386 

 

 

 46,936 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

Interest on Long-Term Debt

 

 11,563 

 

 

 8,624 

 

Interest on Rate Reduction Bonds

 

 1,016 

 

 

 1,893 

 

Other Interest

 

 234 

 

 

 (60)

 

 

Interest Expense

 

 12,813 

 

 

 10,457 

Other Income, Net

 

 2,042 

 

 

 4,459 

Income Before Income Tax Expense

 

 34,615 

 

 

 40,938 

Income Tax Expense

 

 13,353 

 

 

 13,474 

Net Income

$

 21,262 

 

$

 27,464 

 

 

 

 

 

 

 

 

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



























15




PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011

 

 

 

 

 

 

 

 

 

Net Income

$

 21,262 

 

$

 27,464 

Other Comprehensive Income, Net of Tax:

 

 

 

 

 

 

Qualified Cash Flow Hedging Instruments

 

 290 

 

 

 926 

 

Changes in Unrealized Gains on Other Securities

 

 2 

 

 

 - 

Other Comprehensive Income, Net of Tax

 

 292 

 

 

 926 

Comprehensive Income

$

 21,554 

 

$

 28,390 

 

 

 

 

 

 

 

 

 

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



























16




PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

Net Income

$

 21,262 

 

$

 27,464 

 

Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

 

 

Provided by Operating Activities:

 

 

 

 

 

 

 

 Bad Debt Expense

 

 1,732 

 

 

 1,850 

 

 

 Depreciation

 

 21,208 

 

 

 17,907 

 

 

 Deferred Income Taxes

 

 8,908 

 

 

 3,672 

 

 

 Pension, SERP and PBOP Expense

 

 7,032 

 

 

 6,930 

 

 

 Pension and PBOP Contributions

 

 (89,012)

 

 

 (1,076)

 

 

 Regulatory Over/(Under) Recoveries, Net

 

 911 

 

 

 (1,271)

 

 

 Amortization of Regulatory (Liabilities)/Assets, Net

 

 (2,622)

 

 

 15,567 

 

 

 Amortization of Rate Reduction Bonds

 

 13,930 

 

 

 13,135 

 

 

 Other

 

 7,837 

 

 

 4,140 

 

Changes in Current Assets and Liabilities:

 

 

 

 

 

 

 

 Receivables and Unbilled Revenues, Net

 

 2,480 

 

 

 10,077 

 

 

 Fuel, Materials and Supplies

 

 9,361 

 

 

 16,043 

 

 

 Taxes Receivable/Accrued, Net

 

 10,138 

 

 

 18,971 

 

 

 Accounts Payable

 

 (16,073)

 

 

 (2,160)

 

 

 Other Current Assets and Liabilities, Net

 

 18,869 

 

 

 8,361 

Net Cash Flows Provided by Operating Activities

 

 15,961 

 

 

 139,610 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Investments in Property, Plant and Equipment

 

 (67,059)

 

 

 (57,718)

 

Decrease/(Increase) in NU Money Pool Lending

 

 55,900 

 

 

 (16,100)

 

Other Investing Activities

 

 963 

 

 

 369 

Net Cash Flows Used in Investing Activities

 

 (10,196)

 

 

 (73,449)

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

Cash Dividends on Common Stock

 

 (42,891)

 

 

 (14,707)

 

Increase/(Decrease) in Short-Term Debt

 

 45,000 

 

 

 (10,000)

 

Increase/(Decrease) in NU Money Pool Borrowings

 

 7,900 

 

 

 (47,900)

 

Capital Contributions from NU Parent

 

 - 

 

 

 20,000 

 

Retirements of Rate Reduction Bonds

 

 (13,463)

 

 

 (12,697)

 

Other Financing Activities

 

 (116)

 

 

 (68)

Net Cash Flows Used in Financing Activities

 

 (3,570)

 

 

 (65,372)

Net Increase in Cash

 

 2,195 

 

 

 789 

Cash - Beginning of Period

 

 56 

 

 

 2,559 

Cash - End of Period

$

 2,251 

 

$

 3,348 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




17



This Page Intentionally Left Blank



18




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash

$

 126 

 

$

 1 

 

Receivables, Net

 

 46,083 

 

 

 42,757 

 

Accounts Receivable from Affiliated Companies

 

 1,975 

 

 

 633 

 

Notes Receivable from Affiliated Companies

 

 - 

 

 

 11,000 

 

Unbilled Revenues

 

 13,666 

 

 

 16,277 

 

Regulatory Assets

 

 33,525 

 

 

 35,520 

 

Marketable Securities

 

 13,953 

 

 

 26,335 

 

Prepayments and Other Current Assets

 

 6,117 

 

 

 8,719 

Total Current Assets

 

 115,445 

 

 

 141,242 

 

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

 1,152,976 

 

 

 1,077,833 

 

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

 

Regulatory Assets

 

 242,181 

 

 

 233,247 

 

Marketable Securities

 

 43,443 

 

 

 30,794 

 

Other Long-Term Assets

 

 21,155 

 

 

 19,777 

Total Deferred Debits and Other Assets

 

 306,779 

 

 

 283,818 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

 1,575,200 

 

$

 1,502,893 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 



























19




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

(Thousands of Dollars)

2012

 

2011

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Notes Payable to Banks

$

 65,000 

 

$

 

Notes Payable to Affiliated Companies

 

 18,200 

 

 

 

Accounts Payable

 

 86,599 

 

 

 111,566 

 

Accounts Payable to Affiliated Companies

 

 9,314 

 

 

 10,626 

 

Regulatory Liabilities

 

 30,389 

 

 

 33,056 

 

Other Current Liabilities

 

 16,889 

 

 

 20,755 

Total Current Liabilities

 

 226,391 

 

 

 176,003 

 

 

 

 

 

 

 

 

Rate Reduction Bonds

 

 22,452 

 

 

 26,892 

 

 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

Accumulated Deferred Income Taxes

 

 264,178 

 

 

 244,511 

 

Regulatory Liabilities

 

 15,731 

 

 

 16,597 

 

Accrued Pension, SERP and PBOP

 

 28,893 

 

 

 29,546 

 

Other Long-Term Liabilities

 

 50,757 

 

 

 47,498 

Total Deferred Credits and Other Liabilities

 

 359,559 

 

 

 338,152 

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

Long-Term Debt

 

 499,594 

 

 

 499,545 

 

 

 

 

 

 

 

 

 

Common Stockholder's Equity:

 

 

 

 

 

 

 

Common Stock

 

 10,866 

 

 

 10,866 

 

 

Capital Surplus, Paid In

 

 340,179 

 

 

 340,115 

 

 

Retained Earnings

 

 120,260 

 

 

 115,506 

 

 

Accumulated Other Comprehensive Loss

 

(4,101)

 

 

 (4,186)

 

Common Stockholder's Equity

 

 467,204 

 

 

 462,301 

Total Capitalization

 

 966,798 

 

 

 961,846 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

 1,575,200 

 

$

 1,502,893 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 



























20




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Revenues

$

 114,025 

 

$

 106,684 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

Fuel, Purchased and Net Interchange Power

 

 39,504 

 

 

 40,204 

 

Other Operating Expenses

 

 24,019 

 

 

 26,230 

 

Maintenance

 

 4,724 

 

 

 4,771 

 

Depreciation

 

 7,697 

 

 

 6,338 

 

Amortization of Regulatory Assets/(Liabilities), Net

 

 121 

 

 

 (600)

 

Amortization of Rate Reduction Bonds

 

 4,418 

 

 

 4,146 

 

Taxes Other Than Income Taxes

 

 4,882 

 

 

 4,543 

 

 

Total Operating Expenses

 

 85,365 

 

 

 85,632 

Operating Income

 

 28,660 

 

 

 21,052 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

Interest on Long-Term Debt

 

 5,766 

 

 

 4,754 

 

Interest on Rate Reduction Bonds

 

 415 

 

 

 684 

 

Other Interest

 

 214 

 

 

 136 

 

 

Interest Expense

 

 6,395 

 

 

 5,574 

Other Income, Net

 

 1,092 

 

 

 739 

Income Before Income Tax Expense

 

 23,357 

 

 

 16,217 

Income Tax Expense

 

 9,171 

 

 

 6,251 

Net Income

$

 14,186 

 

$

 9,966 

 

 

 

 

 

 

 

 

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

 

 

 



























21




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011

 

 

 

 

 

 

 

 

 

Net Income

$

 14,186 

 

$

 9,966 

Other Comprehensive Income From Qualified

 

 

 

 

 

 

Cash Flow Hedging Instruments,  Net of Tax

 

 85 

 

 

 199 

Comprehensive Income

$

 14,271 

 

$

 10,165 

 

 

 

 

 

 

 

 

 

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



























22




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(Thousands of Dollars)

2012 

 

2011 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

Net Income

$

 14,186 

 

$

 9,966 

 

Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

 

 

Provided by Operating Activities:

 

 

 

 

 

 

 

 Bad Debt Expense

 

 739 

 

 

 1,337 

 

 

 Depreciation

 

 7,697 

 

 

 6,338 

 

 

 Deferred Income Taxes

 

 9,198 

 

 

 4,507 

 

 

 Pension, SERP and PBOP Expense, Net of PBOP Contributions

 

 1,766 

 

 

 1,096 

 

 

 Regulatory (Under)/Over Recoveries, Net

 

 (2,242)

 

 

 7,620 

 

 

 Amortization of Regulatory Assets/(Liabilities), Net

 

 121 

 

 

 (600)

 

 

 Amortization of Rate Reduction Bonds

 

 4,418 

 

 

 4,146 

 

 

 Other

 

 (1,810)

 

 

 (1,370)

 

Changes in Current Assets and Liabilities:

 

 

 

 

 

 

 

 Receivables and Unbilled Revenues, Net

 

 (2,274)

 

 

 (2,384)

 

 

 Taxes Receivable/Accrued, Net

 

 1,051 

 

 

 10,019 

 

 

 Accounts Payable

 

 (21,870)

 

 

 (4,584)

 

 

 Other Current Assets and Liabilities, Net

 

 (5,885)

 

 

 (4,519)

Net Cash Flows Provided by Operating Activities

 

 5,095 

 

 

 31,572 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Investments in Property, Plant and Equipment

 

 (85,011)

 

 

 (33,037)

 

Proceeds from Sales of Marketable Securities

 

 31,579 

 

 

 32,414 

 

Purchases of Marketable Securities

 

 (31,680)

 

 

 (32,510)

 

Decrease in NU Money Pool Lending

 

 11,000 

 

 

 - 

 

Other Investing Activities

 

 (169)

 

 

 (333)

Net Cash Flows Used in Investing Activities

 

 (74,281)

 

 

 (33,466)

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

Cash Dividends on Common Stock

 

 (9,432)

 

 

 (6,576)

 

Increase in Short-Term Debt

 

 65,000 

 

 

 10,000 

 

Increase in NU Money Pool Borrowings

 

 18,200 

 

 

 3,000 

 

Retirements of Rate Reduction Bonds

 

 (4,440)

 

 

 (4,170)

 

Other Financing Activities

 

 (17)

 

 

 (7)

Net Cash Flows Provided by Financing Activities

 

 69,311 

 

 

 2,247 

Net Increase in Cash

 

 125 

 

 

 353 

Cash - Beginning of Period

 

 1 

 

 

 1 

Cash - End of Period

$

 126 

 

$

 354 

 

 

 

 

 

 

 

 


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

 



23



NORTHEAST UTILITIES AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY


COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout the combined notes to the unaudited condensed consolidated financial statements.


1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


A.

Presentation

Pursuant to the rules and regulations of the SEC, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the entirety of this combined Quarterly Report on Form 10-Q and the 2011 combined Annual Report on Form 10-K of NU, CL&P, PSNH and WMECO, which was filed with the SEC (2011 Form 10-K). The accompanying unaudited condensed consolidated financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly NU’s and the above companies’ financial positions as of March 31, 2012 and December 31, 2011, and the results of operations, comprehensive income and cash flows for the three months ended March 31, 2012 and 2011. The results of operations, comprehensive income and cash flows for the three months ended March 31, 2012 and 2011 are not necessarily indicative of the results expected for a full year.


The unaudited condensed consolidated financial statements of NU, CL&P, PSNH and WMECO include the accounts of all their respective subsidiaries.  Intercompany transactions have been eliminated in consolidation.  


The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.


As of March 31, 2012, NU and a subsidiary of NSTAR had formed, on a 75 percent and 25 percent basis, respectively, a limited liability company, NPT, to construct, own and operate the Northern Pass transmission project.  NPT and Hydro Renewable Energy entered into a TSA whereby NPT will sell to Hydro Renewable Energy electric transmission rights over the Northern Pass for a 40-year term at cost of service rates.  NPT will be required to maintain a capital structure of 50 percent debt and 50 percent equity.  NU determined, through its controlling financial interest in NPT, that it must consolidate NPT, as NU has the power to direct the activities of NPT, which most significantly impact its economic performance, including permitting and siting and operation and maintenance activities over the term of the TSA.  On April 10, 2012, upon consummation of the NU and NSTAR merger, an NSTAR subsidiary, which held 25 percent of NPT, was merged into NUTV, resulting in NUTV owning 100 percent of NPT.  See Note 2, "Merger of NU and NSTAR," to the unaudited condensed consolidated financial statements for further information regarding the merger.


Certain reclassifications of prior period data were made in the accompanying unaudited condensed consolidated balance sheets and statements of cash flows for all companies presented.  These reclassifications were made to conform to the current period’s presentation.


NU evaluates events and transactions that occur after the balance sheet date but before financial statements are issued and recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the balance sheet date and discloses, but does not recognize, in the financial statements subsequent events that provide evidence about the conditions that arose after the balance sheet date but before the financial statements are issued.  See Note 2, "Merger of NU and NSTAR," Note 10C, "Commitments and Contingencies – Exposure Regarding Complaint on FERC Base ROE," and Note 17, "Subsequent Events" to the unaudited condensed consolidated financial statements for further information.  


B.

Accounting Standards Recently Adopted

In the first quarter of 2012, NU adopted the Financial Accounting Standards Board’s (FASB) final Accounting Standards Update (ASU) on fair value measurement.  The ASU did not have an impact on NU’s financial position, results of operations or cash flows, but required additional financial statement disclosures related to fair value measurements.  For further information, see Note 5, “Derivative Instruments,” to the unaudited condensed consolidated financial statements.


In the first quarter of 2012, NU adopted the FASB’s final ASU on testing goodwill for impairment.  The ASU provides the election to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value; if so, quantitative testing is required.  The ASU does not change existing guidance relating to when an entity should test goodwill for impairment or the methodology to be utilized in performing quantitative testing.  NU has not and does not currently intend to utilize the election provided by this ASU.


In the first quarter of 2012, NU adopted the FASB’s final ASU on the presentation of comprehensive income.  The ASU does not change existing guidance on which items should be presented in other comprehensive income but requires other comprehensive income to be presented as part of a single continuous statement of comprehensive income or in a statement of other comprehensive



24



income immediately following the statement of net income.  The ASU did not affect the calculation of net income, comprehensive income or EPS.  The ASU did not have an impact on NU’s financial position, results of operations or cash flows.


C.

Provision for Uncollectible Accounts

NU, including CL&P, PSNH and WMECO, maintains a provision for uncollectible accounts to record receivables at an estimated net realizable value.  This provision is determined based upon a variety of factors, including applying an estimated uncollectible account percentage to each receivable aging category, based upon historical collection and write-off experience and management's assessment of collectibility from individual customers.  Management reviews at least quarterly the collectibility of the receivables, and if circumstances change, collectibility estimates are adjusted accordingly.  Receivable balances are written off against the provision for uncollectible accounts when the accounts are terminated and these balances are deemed to be uncollectible.


The provision for uncollectible accounts, which is included in Receivables, Net on the accompanying unaudited condensed consolidated balance sheets, is as follows:


(Millions of Dollars)

As of March 31, 2012

 

As of December 31, 2011

NU

$

34.8 

 

$

34.9 

CL&P

 

14.2 

 

 

14.8 

PSNH

 

7.9 

 

 

7.2 

WMECO

 

5.1 

 

 

4.6 


D.

Restricted Cash

As of March 31, 2012, NU, CL&P and PSNH had $18.3 million, $9.4 million, and $7.4 million, respectively, of restricted cash, primarily relating to amounts held in escrow related to property damage at CL&P and insurance proceeds on bondable property at PSNH, which were included in Prepayments and Other Current Assets on the accompanying unaudited condensed consolidated balance sheets.  As of December 31, 2011, these amounts for NU, CL&P and PSNH were $17.9 million, $9.4 million, and $7 million, respectively.


E.

Fair Value Measurements

NU, including CL&P, PSNH, and WMECO, applies fair value measurement guidance to all derivative contracts recorded at fair value and to the marketable securities held in the NU supplemental benefit trust and WMECO's spent nuclear fuel trust.  Fair value measurement guidance is also applied to investment valuations used to calculate the funded status of NU's Pension and PBOP Plans.


Fair Value Hierarchy:  In measuring fair value, NU uses observable market data when available and minimizes the use of unobservable inputs.  Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes.  The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement.  NU evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and NU's policy is to recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.  The three levels of the fair value hierarchy are described below:


Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  


Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.


Level 3 - Quoted market prices are not available.  Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable.  Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.  


Determination of Fair Value:  The valuation techniques and inputs used in NU's fair value measurements are described in Note 5, "Derivative Instruments," Note 6, "Marketable Securities," and Note 11, "Fair Value of Financial Instruments," to the unaudited condensed consolidated financial statements.


F.

Allowance for Funds Used During Construction

AFUDC is included in the cost of the Regulated companies' utility plant and represents the cost of borrowed and equity funds used to finance construction.  The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Other Interest Expense, and the AFUDC related to equity funds is recorded as Other Income, Net on the accompanying unaudited condensed consolidated statements of income.


NU

For the Three Months Ended

(Millions of Dollars, except percentages)

March 31, 2012

 

March 31, 2011

AFUDC:

 

 

 

 

 

 

Borrowed Funds

$

1.4   

 

$

3.2   

 

Equity Funds

 

2.8   

 

 

5.5   

Total

$

4.2   

 

$

8.7   

Average AFUDC Rate

 

6.6%

 

 

7.1%




25






 

 

For the Three Months Ended

 

For the Three Months Ended

 

 

March 31, 2012

 

March 31, 2011

(Millions of Dollars, except percentages)

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

AFUDC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowed Funds

$

 0.8   

 

$

 0.4   

 

$

 0.1   

 

$

 0.8   

 

$

 2.1   

 

$

 0.1   

 

Equity Funds

 

 1.2   

 

 

 0.9   

 

 

 0.3   

 

 

 1.5   

 

 

 3.5   

 

 

 0.1   

Total

$

 2.0   

 

$

 1.3   

 

$

 0.4   

 

$

 2.3   

 

$

 5.6   

 

$

 0.2   

Average AFUDC Rate

 

6.2%

 

 

7.5%

 

 

8.1%

 

 

8.1%

 

 

6.7%

 

 

7.3%


The Regulated companies' average AFUDC rate is based on a FERC-prescribed formula that produces an average rate using the cost of a company's short-term financings as well as a company's capitalization (preferred stock, long-term debt and common equity).  The average rate is applied to average eligible CWIP amounts to calculate AFUDC.  


G.

Other Income, Net

The other income/(loss) items included within Other Income, Net on the accompanying unaudited condensed consolidated statements of income primarily consist of investment income/(loss), interest income, AFUDC related to equity funds and equity in earnings, which relates to the Company's investments, including investments of CL&P, PSNH and WMECO in the Yankee Companies and NU's investment in two regional transmission companies.  


H.

Other Taxes

Certain excise taxes levied by state or local governments are collected by CL&P and Yankee Gas from their respective customers.  These excise taxes are shown on a gross basis with collections in revenues and payments in expenses.  Gross receipts taxes, franchise taxes and other excise taxes were included in Operating Revenues and Taxes Other Than Income Taxes on the accompanying unaudited condensed consolidated statements of income as follows:  


 

For the Three Months Ended

(Millions of Dollars)

March 31, 2012

 

March 31, 2011

NU

$

 35.0 

 

$

 38.7 

CL&P

 

 29.4 

 

 

 31.4 


Certain sales taxes are also collected by CL&P, WMECO, and Yankee Gas from their respective customers as agents for state and local governments and are recorded on a net basis with no impact on the accompanying unaudited condensed consolidated statements of income.   


I.

Supplemental Cash Flow Information

Non-cash investing activities include capital expenditures incurred but not yet paid as follows:

 

 

(Millions of Dollars)

As of March 31, 2012

 

As of December 31, 2011

 

NU

$

138.5 

 

$

168.5 

 

CL&P

 

36.6 

 

 

32.7 

 

PSNH

 

32.5 

 

 

51.1 

 

WMECO

 

56.6 

 

 

61.3 

 


Short-term borrowings of NU, including CL&P, PSNH and WMECO, have original maturities of three months or less.  Accordingly, borrowings and repayments are shown net on the accompanying unaudited condensed consolidated statements of cash flows.  


In February 2012, CL&P provided approximately $27 million of bill credits to its residential customers who remained without power after noon on November 5, 2011 as a result of the October 2011 snowstorm.  This disbursement is reflected as a use of cash and recorded in Other Current Assets and Liabilities, Net on the accompanying unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2012 for CL&P and NU.


2.

MERGER OF NU AND NSTAR


On April 10, 2012, NU acquired 100 percent of the outstanding common shares of NSTAR and NSTAR (through a successor, NSTAR LLC) became a direct wholly-owned subsidiary of NU.  NSTAR is a holding company engaged through its subsidiaries in the energy delivery business serving electric and natural gas distribution customers in Massachusetts.  The merger was structured as a merger of equals in a tax-free exchange of shares.  As part of the merger, NSTAR shareholders received 1.312 NU common shares for each NSTAR common share owned (the "exchange ratio") as of the acquisition date.  The exchange ratio was structured to result in a no-premium merger based on the average closing share price of each company's common shares for the 20 trading days preceding the announcement of the merger in October 2010.  NU issued approximately 136 million common shares to the NSTAR shareholders as a result of the merger, which brought the total common shares outstanding to approximately 314 million shares.  


Effective as of the merger date, NU provides energy delivery service to approximately 3.5 million electric and natural gas customers through six regulated utilities in Connecticut, Massachusetts and New Hampshire.  




26



Purchase Price:

Pursuant to the merger, all of the NSTAR common shares were exchanged at the fixed exchange ratio of 1.312 common shares of NU for each NSTAR common share.  The total consideration transferred in the merger was based on the closing price of NU common shares on April 9, 2012, the day prior to the date the merger was completed, and was calculated as follows:


 

 

 

NSTAR common shares outstanding as of April 9, 2012 (in thousands)*

 

 103,696 

Exchange ratio

 

1.312 

NU common shares issued for NSTAR common shares outstanding (in thousands)

 

 136,049 

Closing price of NU common shares on April 9, 2012

$

36.79 

Value of common shares issued (in millions)

$

 5,005 

Fair value of NU replacement stock-based compensation awards related to

  pre-merger service (in millions)

 

33 

Total purchase price (in millions)

$

 5,038 


*

Includes 109 thousand shares related to NSTAR stock-based compensation awards that vested immediately prior to the merger.


Certain of NSTAR’s stock-based compensation awards, including deferred shares, performance shares and all outstanding stock options, were replaced with NU awards upon consummation of the merger.  In accordance with accounting guidance for business combinations, a portion of the fair value of these awards is included in the purchase price as it represents consideration transferred in the merger.


The allocation of the total purchase price to the estimated fair values of the assets acquired and liabilities assumed was based on accounting guidance for fair value measurements, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill.  The allocation of goodwill has not yet been completed.


The allocation of the total purchase price includes adjustments to record the fair value of NSTAR’s unregulated telecommunication business, regulatory assets not earning a return, lease agreements, long-term debt and the preferred stock of an NSTAR subsidiary.  All purchase price adjustments are preliminary and subject to change as additional information is obtained.  The preliminary allocation of the purchase price is as follows:


(Millions of Dollars)

 

 

Current Assets

$

 746 

Property Plant and Equipment, Net

 

 5,150 

Goodwill

 

 3,231 

Other Long-Term Assets, excluding Goodwill

 

 2,131 

Current Liabilities

 

 (1,320)

Long-Term Liabilities

 

 (2,721)

Long-Term Debt and Other Long-Term Obligations

 

 (2,140)

Preferred Stock of Subsidiary

 

 (39)

Total Purchase Price

$

 5,038 


Regulatory Approvals:

On February 15, 2012, NU and NSTAR reached comprehensive settlement agreements with the Massachusetts Attorney General and the DOER.  The settlement agreement reached with the Attorney General covered a variety of rate-making and rate design issues, including a base distribution rate freeze at least through 2015 for NSTAR Electric, NSTAR Gas and WMECO and $15 million, $3 million and $3 million in the form of rate credits to their respective customers.  The settlement agreement reached with the DOER covered the same rate-making and rate design issues as the Attorney General's settlement agreement, as well as a variety of matters impacting the advancement of Massachusetts clean energy policy established by the Green Communities Act and Global Warming Solutions Act.  On April 4, 2012, the DPU issued a decision approving the settlement agreements and the merger of NU and NSTAR.


On March 13, 2012, NU and NSTAR reached a comprehensive settlement agreement with both the Connecticut Attorney General and the Connecticut Office of Consumer Counsel.  The settlement agreement covered a variety of matters, including a $25 million rate credit to CL&P customers, a CL&P base distribution rate freeze until December 1, 2014, and the establishment of a $15 million fund for energy efficiency and other initiatives to be disbursed at the direction of the DEEP.  In the agreement, CL&P agreed to forego recovery of $40 million of the deferred storm costs associated with restoration activities following Tropical Storm Irene and the October 2011 snowstorm.  Subject to the PURA review, the remaining storm costs are to be recovered during the six-year period beginning December 1, 2014.  On April 2, 2012, the PURA issued a decision approving the settlement agreement and the merger of NU and NSTAR.


The financial impacts of the settlement agreements will be recognized by NU, CL&P, NSTAR Electric, NSTAR Gas, and WMECO in the second quarter of 2012 in connection with the completion of the merger.




27



Pro Forma Financial Information:

The following unaudited pro forma financial information reflects the consolidated results of operations of NU and reflects the amortization of purchase price adjustments assuming the merger had taken place on January 1, 2011.  The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of NU.  The pro forma financial information does not include potential cost savings or non-recurring adjustments that will be recorded in the second quarter in connection with the merger.  This information is preliminary in nature and subject to change based on final purchase price adjustments.  


In the first quarters of 2012 and 2011, NU and NSTAR incurred non-recurring costs directly related to the merger that are not included in the pro forma earnings presented below.  The aggregate after-tax impacts of these costs were approximately $1.5 million ($1.1 million for NU) and $13 million ($8.3 million for NU) for the three months ended March 31, 2012 and 2011, respectively.  


 

For the Three Months Ended March 31,

(Pro forma amounts in millions, except per share amounts)

2012 

 

2011 

Revenues

$

 1,830 

 

$

 2,072 

Net Income Attributable to Controlling Interests

 

108 

 

 

185 

Basic and Diluted Earnings per Share

 

0.34 

 

 

0.59 


3.

REGULATORY ACCOUNTING


The Regulated companies continue to be rate-regulated on a cost-of-service basis; therefore, the accounting policies of the Regulated companies conform to GAAP applicable to rate-regulated enterprises and historically reflect the effects of the rate-making process.  


Management believes it is probable that the Regulated companies will recover their respective investments in long-lived assets, including regulatory assets.  If management determined that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to the Regulated companies' operations, or that management could not conclude it is probable that costs would be recovered or reflected in future rates, the costs would be charged to net income in the period in which the determination is made.


Regulatory Assets:  The components of regulatory assets are as follows:


 

As of March 31, 2012

 

As of December 31, 2011

(Millions of Dollars)

NU

 

NU

Deferred Benefit Costs

$

 1,322.2 

 

$

 1,360.5 

Regulatory Assets Offsetting Derivative Liabilities

 

 912.2 

 

 

 939.6 

Securitized Assets

 

 83.5 

 

 

 101.8 

Income Taxes, Net

 

 446.1 

 

 

 425.4 

Unrecovered Contractual Obligations

 

 95.4 

 

 

 100.9 

Regulatory Tracker Deferrals

 

 43.7 

 

 

 45.9 

Storm Cost Deferrals

 

 365.5 

 

 

 356.0 

Asset Retirement Obligations

 

 48.4 

 

 

 47.5 

Losses on Reacquired Debt

 

 24.2 

 

 

 24.5 

Deferred Environmental Remediation Costs

 

 37.6 

 

 

 38.5 

Other Regulatory Assets

 

 77.3 

 

 

 82.2 

Total Regulatory Assets

$

 3,456.1 

 

$

 3,522.8 

Less:  Current Portion

$

 241.9 

 

$

 255.1 

Total Long-Term Regulatory Assets

$

 3,214.2 

 

$

 3,267.7 


 

 

 

 

 

As of March 31, 2012

 

As of December 31, 2011

(Millions of Dollars)

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

Deferred Benefit Costs

$

 556.5 

 

$

 194.1 

 

$

 115.5 

 

$

 572.8 

 

$

 200.0 

 

$

 118.9 

Regulatory Assets Offsetting Derivative Liabilities

 

 899.9 

 

 

 - 

 

 

 12.3 

 

 

 932.0 

 

 

 - 

 

 

 7.3 

Securitized Assets

 

 - 

 

 

 62.5 

 

 

 21.0 

 

 

 - 

 

 

 76.4 

 

 

 25.4 

Income Taxes, Net

 

 348.0 

 

 

 37.7 

 

 

 29.3 

 

 

 339.6 

 

 

 38.0 

 

 

 17.8 

Unrecovered Contractual Obligations

 

 76.7 

 

 

 - 

 

 

 18.7 

 

 

 80.9 

 

 

 - 

 

 

 20.0 

Regulatory Tracker Deferrals

 

 4.7 

 

 

 14.5 

 

 

 22.7 

 

 

 5.5 

 

 

 11.9 

 

 

 22.1 

Storm Cost Deferrals

 

 280.9 

 

 

 41.7 

 

 

 42.9 

 

 

 268.3 

 

 

 44.0 

 

 

 43.7 

Asset Retirement Obligations

 

 28.5 

 

 

 13.7 

 

 

 3.3 

 

 

 27.9 

 

 

 13.5 

 

 

 3.2 

Losses on Reacquired Debt

 

 13.9 

 

 

 8.8 

 

 

 0.3 

 

 

 13.9 

 

 

 9.0 

 

 

 0.3 

Deferred Environmental Remediation Costs

 

 - 

 

 

 9.8 

 

 

 - 

 

 

 - 

 

 

 9.7 

 

 

 - 

Other Regulatory Assets

 

 33.3 

 

 

 25.7 

 

 

 9.7 

 

 

 33.1 

 

 

 25.6 

 

 

 10.0 

Total Regulatory Assets

$

 2,242.4 

 

$

 408.5 

 

$

 275.7 

 

$

 2,274.0 

 

$

 428.1 

 

$

 268.7 

Less:  Current Portion

$

 172.3 

 

$

 33.4 

 

$

 33.5 

 

$

 170.2 

 

$

 34.2 

 

$

 35.5 

Total Long-Term Regulatory Assets

$

 2,070.1 

 

$

 375.1 

 

$

 242.2 

 

$

 2,103.8 

 

$

 393.9 

 

$

 233.2 


Additionally, the Regulated companies had $32.6 million ($4.2 million for CL&P, $23.5 million for PSNH, and $1.6 million for WMECO) and $32.4 million ($5 million for CL&P, $22.4 million for PSNH, and $1.6 million for WMECO) of regulatory costs as of March 31, 2012 and December 31, 2011, respectively, which were included in Other Long-Term Assets on the accompanying unaudited condensed consolidated balance sheets.  These amounts represent incurred costs that have not yet been approved for recovery by the applicable regulatory agency.  Management believes these costs are probable of recovery in future cost-of-service regulated rates.



28




As part of the settlement agreement NU and NSTAR reached with both the Connecticut Attorney General and the Connecticut Office of Consumer Counsel on March 13, 2012, in the second quarter of 2012, CL&P will record a reserve of $40 million associated with the deferred storm costs related to Tropical Storm Irene and the October 2011 snowstorm.  CL&P will file with PURA for recovery of the total deferred storm costs.  The total approved costs, which will reflect the $40 million reserve, will be collected over a six year period beginning December 1, 2014.  Management believes CL&P's, PSNH's and WMECO's response to the 2011 storms was prudent and therefore believes it is probable that they will be allowed to recover these remaining deferred storm costs.  See Note 2, “Merger of NU and NSTAR,” to the unaudited condensed consolidated financial statements for further information.


Regulatory Liabilities:  The components of regulatory liabilities are as follows:


 

As of March 31, 2012

 

As of December 31, 2011

(Millions of Dollars)

NU

 

NU

Cost of Removal

$

 164.3 

 

$

 172.2 

Regulatory Tracker Deferrals

 

 112.9 

 

 

 139.1 

AFUDC Transmission Incentive

 

 66.7 

 

 

 67.0 

Pension Liability - Yankee Gas Acquisition

 

 9.4 

 

 

 10.0 

Overrecovered Spent Nuclear Fuel Costs and Contractual Obligations

 

 15.4 

 

 

 15.4 

Wholesale Transmission Overcollections

 

 9.0 

 

 

 9.6 

Other Regulatory Liabilities

 

 20.4 

 

 

 20.6 

Total Regulatory Liabilities

$

 398.1 

 

$

 433.9 

Less:  Current Portion

$

 149.8 

 

$

 167.8 

Total Long-Term Regulatory Liabilities

$

 248.3 

 

$

 266.1 


 

 

As of March 31, 2012

 

As of December 31, 2011

(Millions of Dollars)

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

Cost of Removal

$

 57.1 

 

$

 52.8 

 

$

 6.2 

 

$

 63.8 

 

$

 53.2 

 

$

 7.2 

Regulatory Tracker Deferrals

 

 69.7 

 

 

 14.0 

 

 

 17.7 

 

 

 94.4 

 

 

 17.3 

 

 

 21.3 

AFUDC Transmission Incentive

 

 57.4 

 

 

 - 

 

 

 9.3 

 

 

 57.7 

 

 

 - 

 

 

 9.3 

Overrecovered Spent Nuclear Fuel Costs and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual Obligations

 

 15.4 

 

 

 - 

 

 

 - 

 

 

 15.4 

 

 

 - 

 

 

 - 

Wholesale Transmission Overcollections

 

 5.1 

 

 

 4.4 

 

 

 10.8 

 

 

 4.5 

 

 

 2.6 

 

 

 9.5 

Other Regulatory Liabilities

 

 11.5 

 

 

 6.1 

 

 

 2.1 

 

 

 11.8 

 

 

 5.8 

 

 

 2.4 

Total Regulatory Liabilities

$

 216.2 

 

$

 77.3 

 

$

 46.1 

 

$

 247.6 

 

$

 78.9 

 

$

 49.7 

Less:  Current Portion

$

 82.4 

 

$

 23.1 

 

$

 30.4 

 

$

 108.3 

 

$

 24.5 

 

$

 33.1 

Total Long-Term Regulatory Liabilities

$

 133.8 

 

$

 54.2 

 

$

 15.7 

 

$

 139.3 

 

$

 54.4 

 

$

 16.6 


4.

PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

 

 

 

 

 

 

 

 

 

 

The following tables summarize the NU, CL&P, PSNH and WMECO investments in utility property, plant and equipment:

 

 

 

 

 

 

 

 

 

 

As of March 31, 2012

 

As of December 31, 2011

 

(Millions of Dollars)

NU

 

NU

 

Distribution - Electric

$

 6,645.0 

 

$

 6,540.4 

 

Distribution - Natural Gas

 

 1,259.9 

 

 

 1,247.6 

 

Transmission

 

 3,590.7 

 

 

 3,541.9 

 

Generation

 

 1,132.0 

 

 

 1,096.0 

 

Electric and Natural Gas Utility

 

 12,627.6 

 

 

 12,425.9 

 

Other (1)

 

 308.4 

 

 

 305.1 

 

Total Property, Plant and Equipment, Gross

 

 12,936.0 

 

 

 12,731.0 

 

Less:  Accumulated Depreciation

 

 

 

 

 

 

 

Electric and Natural Gas Utility   

 

 (3,077.5)

 

 

 (3,035.5)

 

 

Other

 

 (122.5)

 

 

 (120.2)

 

Total Accumulated Depreciation

 

 (3,200.0)

 

 

 (3,155.7)

 

Property, Plant and Equipment, Net

 

 9,736.0 

 

 

 9,575.3 

 

Construction Work in Progress

 

 877.2