September 2010 Form 10-Q

 ________________________________________________________________________________

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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 September 30, 2010     

 

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 registrant has 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 (§232.405 of this chapter) 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 October 31, 2010

Northeast Utilities
Common shares, $5.00 par value

176,317,768 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:

 

 

Boulos

E.S. Boulos Company

CL&P

The Connecticut Light and Power Company

HWP

HWP Company, formerly the Holyoke Water Power Company

NGS

Northeast Generation Services Company and subsidiaries

NGS Mechanical

NGS Mechanical, Inc.

NPT

Northern Pass Transmission LLC, a jointly owned limited liability company, held by NUTV and NSTAR on a 75 percent and 25 percent basis, respectively

NUTV

NU Transmission Ventures, Inc.

NU or the Company

Northeast Utilities and subsidiaries

NU Enterprises

NU Enterprises, Inc., the parent company of Select Energy, NGS, NGS Mechanical, SECI and Boulos  

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

SECI

Select Energy Contracting, Inc.

Select Energy

Select Energy, Inc.

SESI

Select Energy Services, Inc., a former subsidiary of NU Enterprises

WMECO

Western Massachusetts Electric Company

Yankee

Yankee Energy System, Inc.

Yankee Gas

Yankee Gas Services Company

 

 

REGULATORS:

 

 

 

DOE

U.S. Department of Energy

DPU

Massachusetts Department of Public Utilities

DPUC

Connecticut Department of Public Utility Control

FERC

Federal Energy Regulatory Commission

NHPUC

New Hampshire Public Utilities Commission

SEC

Securities and Exchange Commission


OTHER: 

 

 

 

2009 Form 10-K 

The Northeast Utilities and subsidiaries combined 2009 Annual Report on Form 10-K as filed with the SEC 

2010 Healthcare Act

Patient Protection and Affordable Care Act

AFUDC 

Allowance For Funds Used During Construction 

AMI

Advanced metering infrastructure

ARO 

Asset Retirement Obligation 

C&LM 

Conservation and Load Management 

CERCLA

The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980

CfD 

Contract for Differences 

CSC

Connecticut Siting Council

CTA 

Competitive Transition Assessment 

CWIP

Construction work in progress

CYAPC

Connecticut Yankee Atomic Power Company

EFSB

Massachusetts Energy Facilities Siting Board

EPS 

Earnings Per Share 

ERISA

Employee Retirement Income Security Act of 1974

ES 

Default Energy Service 

ESOP 

Employee Stock Ownership Plan 



i







FASB 

Financial Accounting Standards Board 

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 

Gigawatt Hours 

HG&E 

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

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

HQ Hydro Renewable Energy

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

IPP 

Independent Power Producers 

ISO-NE 

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

KV 

Kilovolt 

KWh 

Kilowatt-Hours 

LNG

Liquefied natural gas

LOC 

Letter of Credit 

LRS

Last resort service

MA DEP 

Massachusetts Department of Environmental Protection 

MGP 

Manufactured Gas Plant 

MMBtu

One million British thermal units

Money Pool 

Northeast Utilities Money Pool 

Moody's

Moody's Investors Services, Inc.

MW 

Megawatt 

MWh 

Megawatt-Hours 

MYAPC

Maine Yankee Atomic Power Company

NEEWS 

New England East-West Solution

Northern Pass

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

NU supplemental benefit trust 

The NU Trust Under Supplemental Executive Retirement Plan 

NWPP

Northern Wood Power Project

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

PGA 

Purchased Gas Adjustment 

PPA

Pension Protection Act

Regulatory ROE 

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

ROE 

Return on Equity 

RMR

Reliability Must Run

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 

VIE 

Variable interest entity 

WWL Project

The construction of a 16-mile gas pipeline between Waterbury and Wallingford, Connecticut and the increase of vaporization output of Yankee Gas' LNG plant

YAEC

Yankee Atomic Electric 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 SUBSIDIARIES
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

 

 

Condensed Consolidated Balance Sheets (Unaudited) - September 30, 2010 and December 31, 2009

2

 

Condensed Consolidated Statements of Income (Unaudited) - Three and Nine Months Ended September 30, 2010 and 2009

4

 

Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2010 and 2009

5

 

The Connecticut Light and Power Company and Subsidiaries

 

 

Condensed Consolidated Balance Sheets (Unaudited) - September 30, 2010 and December 31, 2009

8

 

Condensed Consolidated Statements of Income (Unaudited) - Three and Nine Months Ended September 30, 2010 and 2009

10

 

Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2010 and 2009

11

 

Public Service Company of New Hampshire and Subsidiaries

 

 

Condensed Consolidated Balance Sheets (Unaudited) - September 30, 2010 and December 31, 2009

14

 

Condensed Consolidated Statements of Income (Unaudited) - Three and Nine Months Ended September 30, 2010 and 2009

16

 

Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2010 and 2009

17

 

Western Massachusetts Electric Company and Subsidiary

 

 

Condensed Consolidated Balance Sheets (Unaudited) - September 30, 2010 and December 31, 2009

20

 

Condensed Consolidated Statements of Income (Unaudited) - Three and Nine Months Ended September 30, 2010 and 2009

22

 

Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2010 and 2009

23

 

Combined Notes to Condensed Consolidated Financial Statements (Unaudited - all companies)

24

 

Report of Independent Registered Public Accounting Firm

52




iii





 

Page

 

 

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

 

 

Northeast Utilities and Subsidiaries

53

 

The Connecticut Light and Power Company and Subsidiaries

72

 

Public Service Company of New Hampshire and Subsidiaries

76

 

Western Massachusetts Electric Company and Subsidiary

79

 

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk

82

 

 

ITEM 4 - Controls and Procedures

82

 

PART II - OTHER INFORMATION

 

ITEM 1 - Legal Proceedings

83

 

ITEM 1A - Risk Factors

83

 

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

84

 

 

ITEM 6 – Exhibits

85

 

SIGNATURES

87

 


 



iv




NORTHEAST UTILITIES AND SUBSIDIARIES



1





NORTHEAST UTILITIES AND SUBSIDIARIES

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

   Cash and Cash Equivalents

$

41,179

 

$

26,952

   Receivables, Net

 

526,280

 

 

512,770

   Unbilled Revenues

 

151,923

 

 

229,326

   Fuel, Materials and Supplies

 

247,254

 

 

277,085

   Marketable Securities

 

79,969

 

 

66,236

   Derivative Assets

 

10,651

 

 

31,785

   Prepayments and Other Current Assets

 

178,739

 

 

123,700

Total Current Assets

 

1,235,995

 

 

1,267,854

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

9,318,017

 

 

8,839,965

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

   Regulatory Assets

 

3,085,019

 

 

3,244,931

   Goodwill

 

287,591

 

 

287,591

   Marketable Securities

 

45,727

 

 

54,905

   Derivative Assets

 

134,704

 

 

189,751

   Other Long-Term Assets

 

190,535

 

 

172,682

Total Deferred Debits and Other Assets

 

3,743,576

 

 

3,949,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

14,297,588

 

$

14,057,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 





2





NORTHEAST UTILITIES AND SUBSIDIARIES

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

   Notes Payable to Banks

$

156,000 

 

$

100,313 

   Long-Term Debt - Current Portion

 

66,286 

 

 

66,286 

   Accounts Payable

 

379,184 

 

 

457,582 

   Obligations to Third Party Suppliers

 

71,995 

 

 

44,978 

   Accrued Taxes

 

69,870 

 

 

50,246 

   Accrued Interest

 

107,828 

 

 

83,763 

   Derivative Liabilities

 

61,317 

 

 

37,617 

   Other Current Liabilities

 

144,668 

 

 

138,627 

Total Current Liabilities

 

1,057,148 

 

 

979,412 

 

 

 

 

 

 

Rate Reduction Bonds

 

246,711 

 

 

442,436 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

   Accumulated Deferred Income Taxes

 

1,546,255 

 

 

1,380,143 

   Regulatory Liabilities

 

434,498 

 

 

485,706 

   Derivative Liabilities

 

996,209 

 

 

955,646 

   Accrued Pension

 

759,263 

 

 

781,431 

   Other Long-Term Liabilities

 

781,246 

 

 

845,868 

Total Deferred Credits and Other Liabilities

 

4,517,471 

 

 

4,448,794 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

   Long-Term Debt

 

4,635,960 

 

 

4,492,935 

 

 

 

 

 

 

   Noncontrolling Interest in Consolidated Subsidiary:

 

 

 

 

 

     Preferred Stock Not Subject to Mandatory Redemption

 

116,200 

 

 

116,200 

 

 

 

 

 

 

   Equity:

 

 

 

 

 

     Common Shareholders' Equity:

 

 

 

 

 

       Common Shares

 

978,677 

 

 

977,276 

       Capital Surplus, Paid In

 

1,772,959 

 

 

1,762,097 

       Deferred Contribution Plan

 

 

 

(2,944)

       Retained Earnings

 

1,368,956 

 

 

1,246,543 

       Accumulated Other Comprehensive Loss

 

(40,979)

 

 

(43,467)

       Treasury Stock

 

(356,950)

 

 

(361,603)

     Common Shareholders' Equity

 

3,722,663 

 

 

3,577,902 

     Noncontrolling Interest

 

1,435 

 

 

   Total Equity

 

3,724,098 

 

 

3,577,902 

Total Capitalization

 

8,476,258 

 

 

8,187,037 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

14,297,588 

 

$

14,057,679 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 




3




NORTHEAST UTILITIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(Thousands of Dollars, Except Share Information)

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues

$

1,243,337

 

$

1,306,173

 

$

3,694,182

 

$

4,124,087

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

   Fuel, Purchased and Net Interchange Power

 

494,125

 

 

611,632

 

 

1,539,703

 

 

2,034,151

   Other Operating Expenses

 

233,472

 

 

250,296

 

 

688,409

 

 

732,562

   Maintenance

 

49,951

 

 

61,609

 

 

162,405

 

 

166,812

   Depreciation

 

70,954

 

 

77,074

 

 

228,685

 

 

231,825

   Amortization of Regulatory Assets, Net

 

50,341

 

 

10,542

 

 

50,908

 

 

19,194

   Amortization of Rate Reduction Bonds

 

60,434

 

 

56,669

 

 

175,000

 

 

163,871

   Taxes Other Than Income Taxes

 

84,427

 

 

75,798

 

 

244,431

 

 

216,651

      Total Operating Expenses

 

1,043,704

 

 

1,143,620

 

 

3,089,541

 

 

3,565,066

Operating Income

 

199,633

 

 

162,553

 

 

604,641

 

 

559,021

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

   Interest on Long-Term Debt

 

57,802

 

 

55,733

 

 

173,594

 

 

168,191

   Interest on Rate Reduction Bonds

 

4,661

 

 

8,657

 

 

16,985

 

 

28,889

   Other Interest

 

3,435

 

 

5,245

 

 

9,778

 

 

8,490

      Interest Expense

 

65,898

 

 

69,635

 

 

200,357

 

 

205,570

Other Income, Net

 

10,118

 

 

9,490

 

 

19,726

 

 

26,081

Income Before Income Tax Expense

 

143,853

 

 

102,408

 

 

424,010

 

 

379,532

Income Tax Expense

 

41,918

 

 

36,230

 

 

161,126

 

 

130,047

Net Income

 

101,935

 

 

66,178

 

 

262,884

 

 

249,485

Net Income Attributable to Noncontrolling Interests

 

1,411

 

 

1,390

 

 

4,204

 

 

4,169

Net Income Attributable to Controlling Interests

$

100,524

 

$

64,788

 

$

258,680

 

$

245,316

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

$

0.57

 

$

0.37

 

$

1.47

 

$

1.43

 

 

 

 

 

 

 

 

 

 

 

 

Fully Diluted Earnings Per Common Share

$

0.57

 

$

0.37

 

$

1.46

 

$

1.43

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared Per Common Share

$

0.26

 

$

0.24

 

$

0.77

 

$

0.71

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

   Basic

 

176,752,714

 

 

175,358,776

 

 

176,557,889

 

 

170,958,396

   Fully Diluted

 

177,012,278

 

 

175,995,506

 

 

176,762,088

 

 

171,532,913


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)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

   Net Income

$

262,884 

 

$

249,485 

   Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

      Provided by Operating Activities:

 

 

 

 

 

        Bad Debt Expense

 

24,632 

 

 

31,519 

        Depreciation

 

228,685 

 

 

231,825 

        Deferred Income Taxes

 

105,070 

 

 

77,617 

        Pension and PBOP Expense, Net of PBOP Contributions

 

41,709 

 

 

10,197 

        Pension Contribution

 

(45,000)

 

 

        Regulatory Overrecoveries, Net

 

44,479 

 

 

44,519 

        Amortization of Regulatory Assets, Net

 

50,908 

 

 

19,194 

        Amortization of Rate Reduction Bonds

 

175,000 

 

 

163,871 

        Derivative Assets and Liabilities

 

(9,228)

 

 

(18,519)

        Other

 

(46,190)

 

 

(13,485)

     Changes in Current Assets and Liabilities:

 

 

 

 

 

        Receivables and Unbilled Revenues, Net

 

20,905 

 

 

122,700 

        Fuel, Materials and Supplies

 

33,337 

 

 

18,900 

        Taxes Receivable/Accrued

 

(12,904)

 

 

59,641 

        Other Current Assets

 

(6,379)

 

 

(7,490)

        Accounts Payable

 

(59,601)

 

 

(242,179)

        Other Current Liabilities

 

35,340 

 

 

13,335 

Net Cash Flows Provided by Operating Activities

 

843,647 

 

 

761,130 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

  Investments in Property and Plant

 

(677,579)

 

 

(634,446)

  Proceeds from Sales of Marketable Securities

 

146,305 

 

 

182,131 

  Purchases of Marketable Securities

 

(148,075)

 

 

(183,814)

  Other Investing Activities

 

(10,412)

 

 

4,298 

Net Cash Flows Used in Investing Activities

 

(689,761)

 

 

(631,831)

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

  Issuance of Common Shares

 

 

 

388,529 

  Cash Dividends on Common Shares

 

(135,349)

 

 

(120,647)

  Cash Dividends on Preferred Stock

 

(4,169)

 

 

(4,169)

  Increase/(Decrease) in Short-Term Debt

 

55,687 

 

 

(293,663)

  Issuance of Long-Term Debt

 

145,000 

 

 

312,000 

  Retirements of Long-Term Debt

 

(4,286)

 

 

(54,286)

  Retirements of Rate Reduction Bonds

 

(195,724)

 

 

(183,208)

  Other Financing Activities

 

(818)

 

 

(14,694)

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

 

(139,659)

 

 

29,862 

Net Increase in Cash and Cash Equivalents

 

14,227 

 

 

159,161 

Cash and Cash Equivalents - Beginning of Period

 

26,952 

 

 

89,816 

Cash and Cash Equivalents - End of Period

$

41,179 

 

$

248,977 

 

 

 

 

 

 

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




5




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6




THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES



7





THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

   Cash

$

7,118

 

$

45

   Receivables, Net

 

350,738

 

 

327,969

   Accounts Receivable from Affiliated Companies

 

1,646

 

 

2,362

   Notes Receivable from Affiliated Companies

 

-

 

 

97,775

   Unbilled Revenues

 

91,434

 

 

140,632

   Materials and Supplies

 

62,292

 

 

65,623

   Derivative Assets

 

1,930

 

 

24,593

   Prepayments and Other Current Assets

 

79,116

 

 

18,385

Total Current Assets

 

594,274

 

 

677,384

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

5,487,899

 

 

5,340,561

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

   Regulatory Assets

 

1,965,529

 

 

2,068,778

   Derivative Assets

 

118,761

 

 

183,231

   Other Long-Term Assets

 

87,032

 

 

94,610

Total Deferred Debits and Other Assets

 

2,171,322

 

 

2,346,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

8,253,495

 

$

8,364,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 




8





THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

   Notes Payable to Affiliated Companies

$

26,325 

 

$

   Long-Term Debt - Current Portion

 

62,000 

 

 

62,000 

   Accounts Payable

 

178,654 

 

 

242,853 

   Accounts Payable to Affiliated Companies

 

41,816 

 

 

48,795 

   Obligations to Third Party Suppliers

 

65,907 

 

 

39,609 

   Accrued Taxes

 

48,417 

 

 

36,860 

   Accrued Interest

 

46,784 

 

 

49,867 

   Derivative Liabilities

 

33,544 

 

 

9,770 

   Other Current Liabilities

 

42,729 

 

 

61,237 

Total Current Liabilities

 

546,176 

 

 

550,991 

 

 

 

 

 

 

Rate Reduction Bonds

 

48,054 

 

 

195,587 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

   Accumulated Deferred Income Taxes

 

994,504 

 

 

901,527 

   Regulatory Liabilities

 

278,168 

 

 

316,160 

   Derivative Liabilities

 

960,228 

 

 

913,349 

   Accrued Pension

 

42,706 

 

 

51,319 

   Other Long-Term Liabilities

 

396,850 

 

 

425,887 

Total Deferred Credits and Other Liabilities

 

2,672,456 

 

 

2,608,242 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

   Long-Term Debt

 

2,520,914 

 

 

2,520,361 

 

 

 

 

 

 

   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

 

1,602,412 

 

 

1,601,792 

     Retained Earnings

 

689,744 

 

 

714,210 

     Accumulated Other Comprehensive Loss

 

(2,813)

 

 

(3,171)

   Common Stockholder's Equity

 

2,349,695 

 

 

2,373,183 

Total Capitalization

 

4,986,809 

 

 

5,009,744 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

8,253,495 

 

$

8,364,564 

 

 

 

 

 

 

 

 

 

 

 

 

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

 




9





THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(Thousands of Dollars)

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues

$

789,249

 

$

859,283

 

$

2,292,146

 

$

2,598,723

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

   Fuel, Purchased and Net Interchange Power

 

334,230

 

 

419,620

 

 

987,604

 

 

1,317,159

   Other Operating Expenses

 

127,779

 

 

149,302

 

 

382,884

 

 

419,887

   Maintenance

 

21,056

 

 

31,215

 

 

75,715

 

 

86,113

   Depreciation

 

38,100

 

 

46,519

 

 

133,568

 

 

140,000

   Amortization of Regulatory Assets, Net

 

32,997

 

 

7,911

 

 

55,308

 

 

24,551

   Amortization of Rate Reduction Bonds

 

43,778

 

 

40,976

 

 

125,985

 

 

117,725

   Taxes Other Than Income Taxes

 

59,884

 

 

53,648

 

 

168,001

 

 

149,736

      Total Operating Expenses

 

657,824

 

 

749,191

 

 

1,929,065

 

 

2,255,171

Operating Income

 

131,425

 

 

110,092

 

 

363,081

 

 

343,552

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

   Interest on Long-Term Debt

 

33,656

 

 

33,514

 

 

100,918

 

 

99,486

   Interest on Rate Reduction Bonds

 

1,529

 

 

4,455

 

 

6,805

 

 

15,342

   Other Interest

 

1,496

 

 

2,838

 

 

4,692

 

 

1,420

      Interest Expense

 

36,681

 

 

40,807

 

 

112,415

 

 

116,248

Other Income, Net

 

6,938

 

 

7,070

 

 

12,616

 

 

17,948

Income Before Income Tax Expense

 

101,682

 

 

76,355

 

 

263,282

 

 

245,252

Income Tax Expense

 

32,636

 

 

29,818

 

 

101,739

 

 

87,178

Net Income

$

69,046

 

$

46,537

 

$

161,543

 

$

158,074

 

 

 

 

 

 

 

 

 

 

 

 

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




10





THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

  Net Income

$

161,543 

 

$

158,074 

  Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

    Provided by Operating Activities:

 

 

 

 

 

       Bad Debt Expense

 

7,088 

 

 

11,170 

       Depreciation

 

133,568 

 

 

140,000 

       Deferred Income Taxes

 

49,636 

 

 

34,458 

       Pension and PBOP Expense, Net of PBOP Contributions

388 

 

 

(4,329)

       Regulatory Overrecoveries, Net

 

57,696 

 

 

51,378 

       Amortization of Regulatory Assets, Net

 

55,308 

 

 

24,551 

       Amortization of Rate Reduction Bonds

 

125,985 

 

 

117,725 

       Other

 

(38,073)

 

 

(25,452)

    Changes in Current Assets and Liabilities:

 

 

 

 

 

       Receivables and Unbilled Revenues, Net

 

2,653 

 

 

52,715 

       Materials and Supplies

 

3,331 

 

 

(6,205)

       Taxes Receivable/Accrued

 

(13,016)

 

 

63,404 

       Other Current Assets

 

(16,990)

 

 

(15,395)

       Accounts Payable

 

(55,383)

 

 

(121,852)

       Other Current Liabilities

 

17,026 

 

 

1,421 

Net Cash Flows Provided by Operating Activities

 

490,760 

 

 

481,663 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

  Investments in Property and Plant

 

(274,193)

 

 

(331,644)

  Decrease/(Increase) in NU Money Pool Lending

 

97,775 

 

 

(89,975)

  Other Investing Activities

 

205 

 

 

1,630 

Net Cash Flows Used in Investing Activities

 

(176,213)

 

 

(419,989)

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

  Cash Dividends on Common Stock

 

(181,841)

 

 

(85,386)

  Cash Dividends on Preferred Stock

 

(4,169)

 

 

(4,169)

  Decrease in Short-Term Debt

 

 

 

(154,982)

  Issuance of Long-Term Debt

 

 

 

312,000 

  Increase/(Decrease) in NU Money Pool Borrowings

 

26,325 

 

 

(102,725)

  Retirements of Rate Reduction Bonds

 

(147,533)

 

 

(137,859)

  Capital Contributions from NU Parent

 

 

 

116,591 

  Other Financing Activities

 

(256)

 

 

(2,923)

Net Cash Flows Used in Financing Activities

 

(307,474)

 

 

(59,453)

Net Increase in Cash

 

7,073 

 

 

2,221 

Cash - Beginning of Period

 

45 

 

 

Cash - End of Period

$

7,118 

 

$

2,221 

 

 

 

 

 

 

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



11




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12




PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES



13





PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

   Cash

$

643

 

$

1,974

   Receivables, Net

 

97,930

 

 

89,337

   Accounts Receivable from Affiliated Companies

 

917

 

 

286

   Unbilled Revenues

 

41,870

 

 

49,358

   Taxes Receivable

 

7,534

 

 

22,600

   Fuel, Materials and Supplies

 

102,765

 

 

127,447

   Prepayments and Other Current Assets

 

14,591

 

 

36,387

Total Current Assets

 

266,250

 

 

327,389

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

1,986,903

 

 

1,814,714

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

   Regulatory Assets

 

454,988

 

 

494,077

   Other Long-Term Assets

 

88,853

 

 

61,011

Total Deferred Debits and Other Assets

 

543,841

 

 

555,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

2,796,994

 

$

2,697,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 BALANCE SHEETS 

(Unaudited)

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

   Notes Payable to Affiliated Companies

$

26,600 

 

$

26,700 

   Accounts Payable

 

92,886 

 

 

109,521 

   Accounts Payable to Affiliated Companies

 

13,845 

 

 

20,083 

   Accrued Interest

 

16,825 

 

 

10,255 

   Derivative Liabilities

 

18,202 

 

 

18,785 

   Other Current Liabilities

 

35,339 

 

 

27,983 

Total Current Liabilities

 

203,697 

 

 

213,327 

 

 

 

 

 

 

Rate Reduction Bonds

 

151,479 

 

 

188,113 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

   Accumulated Deferred Income Taxes

 

315,948 

 

 

275,669 

   Regulatory Liabilities

 

68,868 

 

 

69,872 

   Derivative Liabilities

 

3,577 

 

 

7,635 

   Accrued Pension

 

241,287 

 

 

272,905 

   Other Long-Term Liabilities

 

96,175 

 

 

105,970 

Total Deferred Credits and Other Liabilities

 

725,855 

 

 

732,051 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

   Long-Term Debt

 

836,337 

 

 

836,255 

 

 

 

 

 

 

   Common Stockholder's Equity:

 

 

 

 

 

     Common Stock

 

 

 

     Capital Surplus, Paid In

 

544,000 

 

 

420,169 

     Retained Earnings

 

336,230 

 

 

307,988 

     Accumulated Other Comprehensive Loss

 

(604)

 

 

(712)

   Common Stockholder's Equity

 

879,626 

 

 

727,445 

Total Capitalization

 

1,715,963 

 

 

1,563,700 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

2,796,994 

 

$

2,697,191 

 

 

 

 

 

 

 

 

 

 

 

 

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 INCOME

(Unaudited)

 

 

 

Three Months Ended September 30,

Nine Months Ended September 30,

(Thousands of Dollars)

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues

$

276,976

 

$

275,135

 

$

773,866 

 

$

845,719 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

   Fuel, Purchased and Net Interchange Power

 

94,137

 

 

120,437

 

 

281,161 

 

 

395,156 

   Other Operating Expenses

 

53,133

 

 

55,038

 

 

172,332 

 

 

176,242 

   Maintenance

 

20,933

 

 

22,327

 

 

62,560 

 

 

58,701 

   Depreciation

 

17,454

 

 

15,567

 

 

49,443 

 

 

46,128 

   Amortization of Regulatory Assets/(Liabilities), Net

 

14,513

 

 

3,157

 

 

(2,809)

 

 

(1,656)

   Amortization of Rate Reduction Bonds

 

12,844

 

 

12,123

 

 

37,481 

 

 

35,337 

   Taxes Other Than Income Taxes

 

14,191

 

 

12,361

 

 

40,616 

 

 

34,374 

      Total Operating Expenses

 

227,205

 

 

241,010

 

 

640,784 

 

 

744,282 

Operating Income

 

49,771

 

 

34,125

 

 

133,082 

 

 

101,437 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

   Interest on Long-Term Debt

 

8,925

 

 

8,181

 

 

27,705 

 

 

24,551 

   Interest on Rate Reduction Bonds

 

2,320

 

 

3,146

 

 

7,557 

 

 

10,210 

   Other Interest

 

208

 

 

371

 

 

572 

 

 

34 

      Interest Expense

 

11,453

 

 

11,698

 

 

35,834 

 

 

34,795 

Other Income, Net

 

3,667

 

 

2,239

 

 

5,882 

 

 

6,469 

Income Before Income Tax Expense

 

41,985

 

 

24,666

 

 

103,130 

 

 

73,111 

Income Tax Expense

 

13,231

 

 

8,463

 

 

36,950 

 

 

22,843 

Net Income

$

28,754

 

$

16,203

 

$

66,180 

 

$

50,268 


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)

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

  Net Income

$

66,180 

 

$

50,268 

  Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

     Provided by Operating Activities:

 

 

 

 

 

       Bad Debt Expense

 

7,237 

 

 

7,014 

       Depreciation

 

49,443 

 

 

46,128 

       Deferred Income Taxes

 

31,876 

 

 

16,852 

       Pension and PBOP Expense, Net of PBOP Contributions

 

14,707 

 

 

13,137 

       Pension Contribution

 

(45,000)

 

 

       Regulatory Underrecoveries, Net

 

(5,450)

 

 

(10,316)

       Amortization of Regulatory Liabilities, Net

 

(2,809)

 

 

(1,656)

       Amortization of Rate Reduction Bonds

 

37,481 

 

 

35,337 

       Insurance Proceeds

 

10,000 

 

 

10,066 

       Other

 

(32,525)

 

 

(6,123)

  Changes in Current Assets and Liabilities:

 

 

 

 

 

     Receivables and Unbilled Revenues, Net

 

(8,973)

 

 

(6,937)

     Fuel, Materials and Supplies

 

28,188 

 

 

878 

     Taxes Receivable/Accrued

 

15,066 

 

 

1,934 

     Other Current Assets

 

12,863 

 

 

10,771 

     Accounts Payable

 

(11,599)

 

 

(77,433)

     Other Current Liabilities

 

8,989 

 

 

11,256 

Net Cash Flows Provided by Operating Activities

 

175,674 

 

 

101,176 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

  Investments in Property and Plant

 

(217,954)

 

 

(169,434)

  Decrease in NU Money Pool Lending

 

 

 

53,800 

  Other Investing Activities

 

(7,753)

 

 

(759)

Net Cash Flows Used in Investing Activities

 

(225,707)

 

 

(116,393)

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

  Cash Dividends on Common Stock

 

(37,938)

 

 

(30,633)

  (Decrease)/Increase in NU Money Pool Borrowings

 

(100)

 

 

12,700 

  Retirements of Rate Reduction Bonds

 

(36,635)

 

 

(34,515)

  Capital Contributions from NU Parent

 

123,551 

 

 

68,946 

  Other Financing Activities

 

(176)

 

 

(301)

Net Cash Flows Provided by Financing Activities

 

48,702 

 

 

16,197 

Net (Decrease)/Increase in Cash

 

(1,331)

 

 

980 

Cash - Beginning of Period

 

1,974 

 

 

195 

Cash - End of Period

$

643 

 

$

1,175 

 

 

 

 

 

 

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



17




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18




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY





19





WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

   Cash

$

1

 

$

1

   Receivables, Net

 

39,077

 

 

38,415

   Accounts Receivable from Affiliated Companies

 

312

 

 

191

   Unbilled Revenues

 

12,969

 

 

16,090

   Materials and Supplies

 

9,192

 

 

8,314

   Marketable Securities

 

38,424

 

 

28,261

   Prepayments and Other Current Assets

 

4,034

 

 

5,966

Total Current Assets

 

104,009

 

 

97,238

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

779,749

 

 

705,760

 

 

 

 

 

 

Deferred Debits and Other Assets:

 

 

 

 

 

   Regulatory Assets

 

228,094

 

 

240,804

   Marketable Securities

 

18,584

 

 

28,500

   Other Long-Term Assets

 

38,224

 

 

29,498

Total Deferred Debits and Other Assets

 

284,902

 

 

298,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

1,168,660

 

 $

1,101,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




20





WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

LIABILITIES AND CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

   Notes Payable to Affiliated Companies

$

10,200 

 

 $

136,100 

   Accounts Payable

 

40,027 

 

 

36,680 

   Accounts Payable to Affiliated Companies

 

4,011 

 

 

7,924 

   Other Current Liabilities

 

12,108 

 

 

14,147 

Total Current Liabilities

 

66,346 

 

 

194,851 

 

 

 

 

 

 

Rate Reduction Bonds

 

47,178 

 

 

58,735 

 

 

 

 

 

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

   Accumulated Deferred Income Taxes

 

218,250 

 

 

211,391 

   Regulatory Liabilities

 

21,887 

 

 

21,683 

   Other Long-Term Liabilities

 

58,207 

 

 

62,858 

Total Deferred Credits and Other Liabilities

 

298,344 

 

 

295,932 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

   Long-Term Debt

 

400,249 

 

 

305,475 

 

 

 

 

 

 

   Common Stockholder's Equity:

 

 

 

 

 

     Common Stock

 

10,866 

 

 

10,866 

     Capital Surplus, Paid In

 

248,105 

 

 

145,400 

     Retained Earnings

 

97,632 

 

 

90,549 

     Accumulated Other Comprehensive Loss

 

(60)

 

 

(8)

   Common Stockholder's Equity

 

356,543 

 

 

246,807 

Total Capitalization

 

756,792 

 

 

552,282 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Capitalization

$

1,168,660 

 

$

1,101,800 

 

 

 

 

 

 

 

 

 

 

 

 

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 INCOME

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(Thousands of Dollars)

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues

$

103,719

 

$

96,622 

 

$

296,400

 

$

309,823 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

   Fuel, Purchased and Net Interchange Power

 

39,922

 

 

42,403 

 

 

120,274

 

 

151,936 

   Other Operating Expenses

 

27,314

 

 

19,022 

 

 

73,607

 

 

64,503 

   Maintenance

 

4,915

 

 

5,196 

 

 

14,825

 

 

13,437 

   Depreciation

 

5,838

 

 

5,609 

 

 

17,658

 

 

16,758 

   Amortization of Regulatory Assets/(Liabilities), Net

 

2,735

 

 

(430)

 

 

445

 

 

(3,769)

   Amortization of Rate Reduction Bonds

 

3,812

 

 

3,569 

 

 

11,534

 

 

10,809 

   Taxes Other Than Income Taxes

 

4,319

 

 

4,104 

 

 

12,483

 

 

10,518 

      Total Operating Expenses

 

88,855

 

 

79,473 

 

 

250,826

 

 

264,192 

Operating Income

 

14,864

 

 

17,149 

 

 

45,574

 

 

45,631 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

   Interest on Long-Term Debt

 

4,691

 

 

3,534 

 

 

13,298

 

 

10,531 

   Interest on Rate Reduction Bonds

 

811

 

 

1,057 

 

 

2,623

 

 

3,337 

   Other Interest

 

93

 

 

238 

 

 

275

 

 

632 

      Interest Expense

 

5,595

 

 

4,829 

 

 

16,196

 

 

14,500 

Other Income, Net

 

747

 

 

160 

 

 

1,512

 

 

1,095 

Income Before Income Tax Expense

 

10,016

 

 

12,480 

 

 

30,890

 

 

32,226 

Income Tax Expense

 

2,679

 

 

3,971 

 

 

12,645

 

 

11,764 

Net Income

$

7,337

 

$

8,509 

 

$

18,245

 

$

20,462 


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)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

(Thousands of Dollars)

 

2010

 

 

2009

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

   Net Income

$

18,245 

 

$

20,462 

   Adjustments to Reconcile Net Income to Net Cash Flows

 

 

 

 

 

     Provided by Operating Activities:

 

 

 

 

 

       Bad Debt Expense

 

5,602 

 

 

5,858 

       Depreciation

 

17,658 

 

 

16,758 

       Deferred Income Taxes

 

4,712 

 

 

17,227 

       Pension and PBOP Expense, Net of PBOP Contributions

 

(524)

 

 

(6,840)

       Regulatory (Underrecoveries)/Overrecoveries, Net

 

(8,696)

 

 

3,083 

       Amortization of Regulatory Assets/(Liabilities), Net

 

445 

 

 

(3,769)

       Amortization of Rate Reduction Bonds

 

11,534 

 

 

10,809 

       Other

 

(4,437)

 

 

(3,580)

     Changes in Current Assets and Liabilities:

 

 

 

 

 

        Receivables and Unbilled Revenues, Net

 

(2,896)

 

 

4,633 

        Materials and Supplies

 

(878)

 

 

124 

        Taxes Receivable/Accrued

 

1,203 

 

 

5,616 

        Other Current Assets

 

728 

 

 

1,016 

        Accounts Payable

 

(9,900)

 

 

(27,176)

        Other Current Liabilities

 

(2,109)

 

 

(5,720)

Net Cash Flows Provided by Operating Activities

 

30,687 

 

 

38,501 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

   Investments in Property and Plant

 

(77,710)

 

 

(63,726)

   Proceeds from Sales of Marketable Securities

 

94,575 

 

 

99,898 

   Purchases of Marketable Securities

 

(94,896)

 

 

(100,413)

   Other Investing Activities

 

(754)

 

 

581 

Net Cash Flows Used in Investing Activities

 

(78,785)

 

 

(63,660)

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

   Cash Dividends on Common Stock

 

(11,162)

 

 

(14,652)

   Increase in Short-Term Debt

 

 

 

45,227 

   Issuance of Long-Term Debt

 

95,000 

 

 

   (Decrease)/Increase in NU Money Pool Borrowings

 

(125,900)

 

 

4,600 

   Retirements of Rate Reduction Bonds

 

(11,557)

 

 

(10,833)

   Capital Contributions from NU Parent

 

102,600 

 

 

864 

   Other Financing Activities

 

(883)

 

 

(46)

Net Cash Flows Provided by Financing Activities

 

48,098 

 

 

25,160 

Net Increase in Cash

 

 

 

Cash - Beginning of Period

 

 

 

Cash - End of Period

$

 

$

 

 

 

 

 

 

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 SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY



COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


A.

Proposed Merger with NSTAR

On October 18, 2010, NU and NSTAR announced that each company's Board of Trustees unanimously approved a Definitive Merger Agreement (the "agreement") to create a combined company that will be called Northeast Utilities.  The transaction will be a merger of equals in a tax-free share for share transfer.  The combined company will provide electric and natural gas energy delivery service to approximately 3.5 million electric and natural gas customers through six regulated electric and natural gas utilities in Connecticut, Massachusetts and New Hampshire.


Under the terms of the agreement, NSTAR shareholders would receive 1.312 NU common shares for each common share of NSTAR that they own (the "exchange ratio").  The exchange ratio is 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.  Following completion of the merger, the market capitalization of the combined company would be comprised of approximately 56 percent of NU shareholders and approximately 44 percent of former NSTAR shareholders.  It is anticipated that NU would issue approximately 137 million shares to the NSTAR shareholders as a result of the merger.  Following the closing of the merger, NU's first dividend per common share declared after the closing would be increased to a rate that is equivalent to NSTAR's last dividend per common share paid prior to the closing divided by the exchange ratio.

Completion of the merger is subject to various conditions, including, among others, approval by holders of two-thirds of the outstanding common shares of both companies, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the effectiveness of the registration statement for the NU common shares to be issued to NSTAR shareholders in the merger, and receipt of all required regulatory approvals.  The companies anticipate that the regulatory approvals can be obtained in nine to twelve months.  The companies intend to seek shareholder approval of the merger in early 2011 and expect that the merger will close in the third quarter of 2011.


B.

Presentation

Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.  The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the entirety of this combined Quarterly Report on Form 10-Q, the first and second quarter 2010 combined Quarterly Reports on Form 10-Q, and the combined 2009 Annual Report on Form 10-K of Northeast Utilities (NU or the Company), CL&P, PSNH, and WMECO, which was filed with the SEC (NU 2009 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 September 30, 2010 and December 31, 2009, the results of operations for the three and nine months ended September 30, 2010 and 2009, and cash flows for the nine months ended September 30, 2010 and 2009.  The results of operations for the three months ended September 30, 2010 and 2009, and the results of operations and cash flows for the nine months ended September 30, 2010 and 2009, are not necessarily indicative of the results expected for a full year.  


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.


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.  


In accordance with accounting guidance on the consolidation of VIEs, the Company evaluates its variable interests to determine if it has a controlling financial interest in a VIE that would require consolidation.  The Company's variable interests outside of the consolidated group consist of contracts with developers of power plants that are required by regulation and provide for regulatory recovery of contract costs and benefits through customer rates.  The Company would consolidate a VIE if it had both the power to direct the activities of a VIE that most significantly impact the entity's economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE.  


For each variable interest in a power plant, NU evaluates the activities of that particular power plant that most significantly impact the VIE's economic performance to determine whether it has control over those activities.  NU's assessment of control includes an analysis of who operates and maintains the power plant including dispatch rights and who controls the activities of the power plant after the expiration of its power purchase agreement with NU.  NU also evaluates its exposure to potentially significant losses and benefits of the VIE.  As of September 30, 2010, NU held variable interests in VIEs through agreements with certain entities that are single power plant owners of renewable energy, peaking generation and other independent power producers.  NU does not control the activities that are economically significant to these VIEs or provide financial or other support to these VIEs.  NU does not have financial exposure



24




because the costs and benefits of all of these arrangements are fully recoverable from, or refundable to, NU's customers.  As of September 30, 2010, NU was not identified as the primary beneficiary of, and therefore does not consolidate, any power plant VIEs.  The Company does not have any variable interests in a VIE that are material to the accompanying unaudited condensed consolidated financial statements.  


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.


Certain reclassifications of prior period data were made in the accompanying unaudited condensed consolidated balance sheets and the 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 13, "Subsequent Events," for further information.  


C.

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 and non-recurring fair value measurements of NU's non-financial assets and liabilities, such as AROs and Yankee Gas' goodwill.  


Fair Value Hierarchy:  In measuring fair value, NU uses observable market data when available and minimizes the use of unobservable inputs.  Unobservable inputs are needed to value certain derivative contracts due to complexities in the terms of the contracts.  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.  Significant unobservable inputs are used in the valuations, including items such as energy and energy-related product prices in future years for which observable prices are not yet available, future contract quantities under full-requirements or supplemental sales contracts, and market volatilities.  Items valued using these valuation techniques are classified according to the lowest level for which there is at least one input that is significant to the valuation.  Therefore, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.


Determination of Fair Value:  The valuation techniques and inputs used in NU's fair value measurements are described in Note 2, "Derivative Instruments," and Note 10, "Marketable Securities," to the unaudited condensed consolidated financial statements.  There were no changes to the valuation methodologies for derivative instruments or marketable securities as of September 30, 2010 and December 31, 2009.  


D.

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.  All material net regulatory assets are earning a return, except for the majority of deferred benefit cost assets, regulatory assets offsetting derivative liabilities, securitized regulatory assets and income tax regulatory assets, all of which are not in rate base.  Amortization and deferrals of regulatory assets/(liabilities) are primarily included on a net basis in Amortization of Regulatory Assets/(Liabilities), Net on the accompanying unaudited condensed consolidated statements of income.  




25




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


 

 

As of September 30, 2010

 

As of December 31, 2009

(Millions of Dollars)

 

 

NU

 

 

NU

Deferred Benefit Costs

 

$

1,078.1

 

$

1,132.1

Regulatory Assets Offsetting Derivative Liabilities

 

 

922.4

 

 

855.6

Securitized Assets

 

 

236.6

 

 

432.9

Income Taxes, Net

 

 

380.8

 

 

363.2

Unrecovered Contractual Obligations

 

 

133.4

 

 

149.5

Regulatory Tracker Deferrals

 

 

83.9

 

 

104.1

Storm Cost Deferral

 

 

62.3

 

 

60.0

Asset Retirement Obligations

 

 

45.2

 

 

42.9

Losses on Reacquired Debt

 

 

22.2

 

 

24.0

Deferred Environmental Remediation Costs

 

 

35.5

 

 

24.6

Other Regulatory Assets

 

 

84.6

 

 

56.0

Totals

 

$

3,085.0

 

$

3,244.9


 

 

As of September 30, 2010

 

As of December 31, 2009

(Millions of Dollars)

 

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

Deferred Benefit Costs

 

$

477.3

 

$

142.6

 

$

98.9

 

$

502.4 

 

$

154.2 

 

$

104.9 

Regulatory Assets Offsetting Derivative Liabilities

 

 

899.8

 

 

21.8

 

 

-

 

 

828.6 

 

 

26.4 

 

 

Securitized Assets

 

 

48.0

 

 

142.7

 

 

45.9

 

 

195.4 

 

 

180.1 

 

 

57.4 

Income Taxes, Net

 

 

310.3

 

 

28.9

 

 

18.1

 

 

304.1 

 

 

21.9 

 

 

16.9 

Unrecovered Contractual Obligations

 

 

105.6

 

 

-

 

 

27.8

 

 

118.0 

 

 

 

 

31.5 

Regulatory Tracker Deferrals

 

 

37.4

 

 

25.5

 

 

16.2

 

 

70.3 

 

 

19.0 

 

 

11.3 

Storm Cost Deferral

 

 

4.7

 

 

42.3

 

 

15.3

 

 

 

 

50.8 

 

 

9.2 

Asset Retirement Obligations

 

 

25.5

 

 

14.4

 

 

3.0

 

 

23.8 

 

 

14.0 

 

 

2.8 

Losses on Reacquired Debt

 

 

11.7

 

 

8.6

 

 

0.4

 

 

12.7 

 

 

9.2 

 

 

0.4 

Deferred Environmental Remediation Costs

 

 

-

 

 

8.4

 

 

-

 

 

 

 

1.3 

 

 

Other Regulatory Assets

 

 

45.2

 

 

19.8

 

 

2.5

 

 

13.5 

 

 

17.2 

 

 

6.4 

Totals

 

$

1,965.5

 

$

455.0

 

$

228.1

 

$

2,068.8 

 

$

494.1 

 

$

240.8 


Additionally, the Regulated companies had $45.3 million ($0.5 million for CL&P, $25 million for PSNH, and $11.9 million for WMECO) and $27.1 million ($9.9 million for CL&P and $9.1 million for WMECO) of regulatory costs as of September 30, 2010 and December 31, 2009, 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.  


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


 

 

As of September 30, 2010

 

As of December 31, 2009

(Millions of Dollars)

 

 

NU

 

 

NU

Cost of Removal

 

$

197.6

 

$

209.2

Regulatory Liabilities Offsetting Derivative Assets

 

 

25.7

 

 

109.4

Regulatory Tracker Deferrals

 

 

99.2

 

 

62.5

AFUDC Transmission Incentive

 

 

58.3

 

 

51.1

Pension and PBOP Liabilities - Yankee Gas Acquisition

 

 

13.1

 

 

15.0

Other Regulatory Liabilities

 

 

40.6

 

 

38.5

Totals

 

$

434.5

 

$

485.7


 

 

As of September 30, 2010

 

As of December 31, 2009

(Millions of Dollars)

 

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

Cost of Removal

 

$

78.7

 

$

58.3

 

$

11.6

 

$

82.2

 

$

60.5

 

$

16.6

Regulatory Liabilities Offsetting
  Derivative Assets

 

 

25.7

 

 

-

 

 

-

 

 

109.0

 

 

0.4

 

 

-

Regulatory Tracker Deferrals

 

 

88.1

 

 

7.4

 

 

3.7

 

 

56.0

 

 

4.4

 

 

2.1

AFUDC Transmission Incentive

 

 

54.7

 

 

-

 

 

3.6

 

 

50.4

 

 

-

 

 

0.7

WMECO Provision For Rate Refunds

 

 

-

 

 

-

 

 

2.0

 

 

-

 

 

-

 

 

2.0

Other Regulatory Liabilities

 

 

31.0

 

 

3.2

 

 

1.0

 

 

18.6

 

 

4.6

 

 

0.3

Totals

 

$

278.2

 

$

68.9

 

$

21.9

 

$

316.2

 

$

69.9

 

$

21.7




26




E.

Property, Plant and Equipment and Accumulated Depreciation

The following tables summarize the NU, CL&P, PSNH, and WMECO investments in utility plant as of September 30, 2010 and December 31, 2009:


 

 

As of September 30, 2010

 

As of December 31, 2009

(Millions of Dollars)

 

NU

 

NU

Distribution - Electric

 

$

6,100.1 

 

$

5,893.9 

Distribution - Natural Gas

 

 

1,098.4 

 

 

1,071.1 

Transmission

 

 

3,286.4 

 

 

3,219.2 

Generation

 

 

680.0 

 

 

660.1 

Electric and Natural Gas Utility

 

 

11,164.9 

 

 

10,844.3 

Other (1)

 

 

282.1 

 

 

265.6 

Total Property, Plant and Equipment, Gross

 

 

11,447.0 

 

 

11,109.9 

Less:  Accumulated Depreciation

 

 

 

 

 

 

   Electric and Natural Gas Utility   

 

 

(2,844.5)

 

 

(2,721.3)

   Other

 

 

(121.8)

 

 

(120.3)

Total Accumulated Depreciation

 

 

(2,966.3)

 

 

(2,841.6)

Property, Plant and Equipment, Net

 

 

8,480.7 

 

 

8,268.3 

Construction Work in Progress

 

 

837.3 

 

 

571.7 

Total Property, Plant and Equipment, Net

 

$

9,318.0 

 

$

8,840.0 


(1)

These assets are primarily owned by RRR ($146.9 million and $143.8 million) and NUSCO ($122.3 million and $109 million) as of September 30, 2010 and December 31, 2009, respectively.  


 

 

As of September 30, 2010

 

As of December 31, 2009

(Millions of Dollars)

 

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

Distribution

 

$

4,117.3 

 

$

1,345.6 

 

$

669.1 

 

$

3,960.1 

 

$

1,309.2 

 

$

654.9 

Transmission

 

 

2,605.2 

 

 

459.7 

 

 

221.5 

 

 

2,573.2 

 

 

450.2 

 

 

195.7 

Generation

 

 

 

 

680.0 

 

 

 

 

 

 

660.1 

 

 

Total Property, Plant and Equipment, Gross

 

 

6,722.5 

 

 

2,485.3 

 

 

890.6 

 

 

6,533.3 

 

 

2,419.5 

 

 

850.6 

Less:  Accumulated Depreciation

 

 

(1,501.1)

 

 

(832.7)

 

 

(227.5)

 

 

(1,426.6)

 

 

(805.5)

 

 

(218.2)

Property, Plant and Equipment, Net

 

 

5,221.4 

 

 

1,652.6 

 

 

663.1 

 

 

5,106.7 

 

 

1,614.0 

 

 

632.4 

Construction Work in Progress

 

 

266.5 

 

 

334.3 

 

 

116.6 

 

 

233.9 

 

 

200.7 

 

 

73.4 

Total Property, Plant and Equipment, Net

 

$

5,487.9 

 

$

1,986.9 

 

$

779.7 

 

$

5,340.6 

 

$

1,814.7 

 

$

705.8 


F.

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 as of September 30, 2010 and December 31, 2009, which are included in Receivables, Net on the accompanying unaudited condensed consolidated balance sheets, were as follows:


(Millions of Dollars)

 

As of September 30, 2010

 

As of December 31, 2009

NU

 

$

55.2

 

$

55.3

CL&P

 

 

27.7

 

 

26.1

PSNH

 

 

6.5

 

 

5.1

WMECO

 

 

7.7

 

 

7.2


G.

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.


 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30, 2010

 

September 30, 2009

 

September 30, 2010

 

September 30, 2009

(Millions of Dollars, except percentages)

 

NU

 

NU

 

NU

 

NU

AFUDC:

 

 

 

 

 

 

 

 

 

 

 

 

  Borrowed Funds

 

$

2.8   

 

$

1.2   

 

$

6.9   

 

$

4.7   

  Equity Funds

 

 

4.6   

 

 

2.8   

 

 

11.6   

 

 

6.2   

Totals

 

$

7.4   

 

$

4.0   

 

$

18.5   

 

$

10.9   

Average AFUDC Rates

 

 

7.3%

 

 

6.4%

 

 

7.1%

 

 

6.2%




27







 

 

For the Three Months Ended

 

 

September 30, 2010

 

September 30, 2009

(Millions of Dollars, except percentages)

 

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

AFUDC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Borrowed Funds

 

$

0.7   

 

$

1.8   

 

$

0.1   

 

$

0.4   

 

$

0.8   

 

$

-    

  Equity Funds

 

 

1.2   

 

 

2.9   

 

 

0.2   

 

 

1.9   

 

 

0.9   

 

 

-    

Totals

 

$

1.9   

 

$

4.7   

 

$

0.3   

 

$

2.3   

 

$

1.7   

 

$

-    

Average AFUDC Rates

 

 

8.1%

 

 

6.9%

 

 

8.3%

 

 

8.2%

 

 

6.1%

 

 

0.8%


 

 

For the Nine Months Ended

 

 

September 30, 2010

 

September 30, 2009

(Millions of Dollars, except percentages)

 

CL&P

 

PSNH

 

WMECO

 

CL&P

 

PSNH

 

WMECO

AFUDC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Borrowed Funds

 

$

2.0   

 

$

4.4   

 

$

0.2   

 

$

1.9   

 

$

2.4   

 

$

0.2   

  Equity Funds

 

 

3.7   

 

 

7.1   

 

 

0.4   

 

 

3.5   

 

 

2.5   

 

 

-   

Totals

 

$

5.7   

 

$

11.5   

 

$

0.6   

 

$

5.4   

 

$

4.9   

 

$

0.2   

Average AFUDC Rates

 

 

8.4%

 

 

6.7%

 

 

5.8%

 

 

6.8%

 

 

6.7%

 

 

2.0%


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.  AFUDC is recorded on 100 percent of CL&P's and WMECO's CWIP for their NEEWS projects, all of which is being reserved as a regulatory liability to reflect current rate base recovery for 100 percent of the CWIP as a result of FERC-approved transmission incentives.


H.

Other Income, Net

The pre-tax components of other income/(loss) items are as follows:


 

For the Three Months Ended

 

For the Nine Months Ended

 

September 30, 2010

 

September 30, 2009

 

September 30, 2010

 

September 30, 2009

(Millions of Dollars)

NU

 

NU

 

NU

 

NU

Other Income: &nbs